An endeavor over a period can be successful only with the advice and support of well-wishers. I take this opportunity to express my gratitude and appreciation to all those who encouraged me to complete this project. I am deeply indebted to Prof: L.R.S.MANI, Dean MATS School Of Business Belgaum for my successful completion of the project. I express my profound and sincere thanks to Dr. ESHWARN Dean who acted as a mariner’s compass and steered me through out my project voyage through his excellent guidance and constant inspiration. I shall be failing in my duty if I don’t acknowledge my debt to Mr. Nagraj, Relationship manager of IL&FS INVESTSMART, Belgaum for his valuable guidance and support, which helped me in giving a shape to my study. I extend my hearty thanks to Mr. Nithin Londe, Manager of IL&FS INVESTSMART, Belgaum for giving me an opportunity to take up the project work and providing all the facilities for the same. I also extend my hearty thanks to all other faculty members of MATS School Of Business Belgaum for their eternal support and guidance. I acknowledge with profound gratitude and reverence the help and guidance of one and all in my endeavor for gainful project work I undertook at IL&FS INVESTSMART, Belgaum

Place: Belgaum

Mahantesh c kolaki


I here by declare that Summer Training Report submitted as a requirement of fulfillment of my PGDBM(IB) course is my original work and not submitted for the award of any other degree, diploma, fellowship or other similar title or prizes.

Mahantesh Kolaki PGDBM(IB) 2ND SEM

Executive summary
The project titles “Analysis and Interpretation of Mutual Funds is undertaken in IL&FS INVESTSMART LTD. The project is related to the study of the Technical Analysis of Equity Diversified schemes in different Mutual Fund companies. The project title “Analysis and Interpretation of Mutual Funds “is mainly divided in to 5 phases:  Study of Security Market.  Company profile.  Study of Mutual Funds.  Methodology.  Findings& suggestions. In security market the study is on Primary market, Secondary Market, types of investment alternatives. Mutual fund is one of the best investment alternatives as compared to other alternatives. IL&FS Investsmart Limited (IIL) is one of India’s leading financial services organizations providing individuals and corporate with customized financial management solutions. Mutual Fund is an investment company or trust that pools the recourses from through of it shareholders or unit holders, who share common investment goal. There are vast varieties of schemes available each day for in nature in much respect. Basic difference comes from the objective of each scheme. The schemes are classified on the basis of Operational, Portfolio and Geographical.The Study with main objectives of evaluate investment performance of Mutual Funds in the terms of risk and return and To find out the financial performance of mutual fund schemes…

1.1 Definition and Overview 1.2 Problem identification 1.3 Objective of the study

1.1 Introduction:
The money you earn is partly spent and the rest saved for meeting future expenses. Instead of keeping the savings idle you may like to use savings in order to get return on it in the future, which is known as ‘investment’. There are various investment avenues such as Mutual funds, Equity, Bonds, Insurance, Bank Deposit etc. The project is related to the study of the Technical Analysis of Equity Diversified schemes in different Mutual Fund companies.A there are various factors which affects investments such as annual income, government policy, natural calamities, economical changes etc

1.2 Problem identification:
Analyzes and interpretation of mutual funds and to create awreness of mutual fund and the company IL&FS INVESTSMART LTD, and the popularity of different products provided by IL&FS INVESTSMART LTD for investment.

1.3 Objectives of Study
The research is undertaken with an objective to know the following aspects:  To study the concept mutual funds.  To Study individual saving patterns.  To know the awareness level of mutual funds  To know the parameters the people look in while investing in mutual fund.  To study the investor perception towards mutual fund.  To find whether investment in mutual fund is better than other investments.  To create strategies to increase sales of mutual fund

Industry Profile
2.1 Introduction. 2.2.Retail broking. 2.2 securities 2.3 .SEBI 2.4.Mutual Funds. 2.4.1 .Charactristics of mutual fund. 2.4.2.Mutual fund industry. 2.4.3.Regulatory structure. 2.4.4.Concept and role of mutual fund. 2.4.5.Types of mutual fund. 2.4.6.Major mutual fund companies. 2.4.7.Five easy steps to invest in mutual fund. 2.4.8.Tax rules for mutual fund investers. 2.4.9.Advantages and disadvantages. 2.4.10.Who can invest in mutual fund.

Introduction An investment means employment of funds on assets (i.e. securities or mutual funds or any of the investment avenues) with the aim of earning of income as well as capital appreciation. There are mainly two attributes while investing to any of the means, i.e. time and risk. There are mainly four objectives, which the investments activities will carry on those are: • • • • • Return Risk Liquidity Hedge against inflation Safety

There are many alternatives which investment avenues are open to the investors to suit their needs and nature .The selection of investment alternatives are depends up on the required level of return and the risk tolerance level. These alternatives range from financial securities to traditional non-securities investment.

Following are the various investment alternatives. 1) Negotiable and fixed income securities 3) Preference share 5) Bonds 7) Government securities Non-negotiable securities 1) Bank deposit 3) NBFC deposit 5) Public provident fund scheme 7) Life insurance 9) Real estate 2) Post office deposit 4) Tax saving schemes 6) National saving scheme 8) Mutual funds 2) Equity shares 4) Debentures 6) Indira vikas patra 8) Money market securities

Retail broking in India.

• Retail broking, highly fragmented industry

Present Scenario
–Over 2000 brokers, 10000 sub brokers and 1 crores investors –New aggressive players –Falling brokerages –Value added services –Online trading and offline trading.  The inevitable shake out..  Handful brokers and growing investor base  Strong Competition Banks Vs Securities firms

Companies raise funds to finance their projects through various methods. The promoters can bring their own money or barrow from the financial institutions or mobilizes capital by issuing securities. The funds may be raised through issue of fresh share at per or premium. Preference shares debenture or global depository receipts. These are mainly two markets which any company can raise their funds; those are primary market and secondary market .the companies raise funds for the following purposes: • • • • • To promote a new company. To expand an existing company. To diversify the production. To meet the regular working capital requirement. To capitalize the reserves.

Security and exchange board of India (SEBI):
Security and exchange board of India has started its operation with the objectives of protect the interests of the investors insecurities and to promote the development and regulate the security market. The main functions of security market are:  Regulate the business in stock exchange and any other security market.  Registering and regulating the work of stockbrokers, and sub-brokers and transfer agent, brokers to the issue. Merchant bankers, underwriters, portfolio managers, investment advisers and such others intermediaries who are associated with security market.  Registering and regulating the work of collective investment schemes including Mutual Funds.  Prohibiting insider trading in securities.  Regulating substantial acquisition of shares and take-over of companies. SEBI has legal and investigation departments. It has got separate committees for primary and secondary market to assist the policy formulation. It has regulated: • • • • Primary market Secondary market Mutual Funds Foreign institutional investment.

Mutual funds:
A mutual fund is a form of collective investment that pools money from many investors and invests their money in stocks, bonds, short-term money market instruments, other securities etc. In a mutual fund, the fund manager trades the fund's underlying securities, realizing capital gains or losses, and collects the the dividend or interest income. The investment proceeds are then passed along to the individual investors.

A mutual fund is created when investor put their money together. It is therefore a pool of the investor’s funds. The term mutual means that investors contribute to the pool and also benefit from the pool. There are no other claimants to funds. The pool of funds help mutually by investors is the mutual fund. A mutual fund business is to invest the funds thus collected according to the wishes of the investors who created the pool the invested appoints professional investment mangers, to mange their funds.

1. A mutual fund actually belongs to the investors who have pooled their funds. The ownership of the mutual fund is in the hand of the investor 2. A mutual fund is managed by investment professional and other service providers who earn a fee for their services from the fund 3. The pool of funds is invested in a portfolio of marketable investments. The value of the portfolio is updated every day. 4. The investor’s share in the fund is denominated by “UNIT”. The value of the unit changes with changes in the portfolio value every day the value of the unit of investment is called as the Net Assets Value or NAV. 5. The investment portfolio of the fund is created according to the stated investment objectives of the fund.

About Mutual Fund Industry
Mutual Funds are financial intermediaries which pool the savings of numerous individuals and invest the money, thus related in a diversified portfolio of securities, including equity, bonds debentures and other money market instruments, thus spreading and reducing risk. The objective of mutual fund is to maximize the return to the investor who participates in equity indirectly through mutual funds. Even though the mutual fund industry grown in asset value from Rs.7000 Crores to 2,00,000/- Crores today, this is just the tip of the iceberg. According to most Fund Managers, the real boom is yet to come. The sum of Rs. 2,00,000/- Crores represents just 3% - 4% of the total market capitalization of 25,00,000 Crore. This compares poorly with the US, where the mutual funds have nearly $ 6.8 billion of market capitalization of roughly Rs.70000 Crore, barely 3% - 4% of total market capitalization. This is not expected, because mutual fund history in India, which dates back to 1964, when the first open-ended mutual fund scheme Unit-64 was launched by Unit Trust of India, is still dominated by it. The focus initially was income earning securities, with only 20 % of the Corpus going into equity. The early 80’s saw other schemes like the growing income, fixed income, and monthly income being introduced by the UTI. But it was only in 1986 that the first pure Growth equity scheme Master share was launched.

The 1989-90 was another landmark year in the history of mutual funds. For the fist time, the monopoly of UTI over the industry was broken. The government allowed public sector banks and insurance companies to enter this sector to bring in some competition. But it was only in 1993, when the private sector was given the green signal to float mutual funds, that excitement and competition came. Not only did the Government allowed Indian companies to float mutual funds, it even allowed foreign funds to set in shop in India and float funds. Thus, in one stroke, this sector was truly privatized. Today there are about 12-14 private players in the market including foreign funds such as Morgan Stanley, besides the nine public sector players and UTI. Together, these funds have mobilized around Rs.6500 Crore from the market. The collections could have been better, had not the public sector funds been busy complying with the SEBI guidelines pertaining to the formation of asset management companies etc. But the best is yet to come. A number of companies have plans to float mutual funds at various stages of implementation. Some of the major names which are likely to come to the market are Tata Sons in collaboration with Kleinwort Benson, ITC Classic with Thread needle UR, Oppenheimer of US, plus a host of others. And according to conservative guesstimates, mutual funds are set to collect over Rs.10000 Crore from the market this year. The reason for such confidence is that with SEBI firm about the small investor taking the mutual fund route to investments in the stock market, and the regulatory changes making it much more difficult to get allotments in primary markets, small investors will not be left with many opportunities.

Regulatory Structure of Mutual Fund in India

The structure of mutual fund in India is governed by SEBI (MUTUAL FUND) regulations 1996. These regulations make it mandatory for mutual funds to have a threetier structure of SPONSOR-TRUSTEE-ASSET MANAGEMENT COMPANY (AMC).

Concept and role of Mutual Fund

A Mutual Fund is common pool of money into which Investor place their contributions that are to be invested in accordance with a stated objective. The ownership of the Fund is thus joint or “mutual”; the fund belongings to all investors. A single investor’s ownership of the fund is in the same proportion as the amount of the contribution made by him or her bears to the total amount of the fund.

A Mutual fund uses the money collected from investors to buy those assets, which are specifically permitted by its stated investment objective. Thus, an Equity Fund would buy mainly Equity assets-ordinary shares, preference shares, warrants etc. A bond fund would mainly buy debt instruments such as debentures, bonds or government securities. It is these assets, which are owned by the investors in the same proportions as there contribution bears to the total contribution of all investors put together.

When an investor subscribes to a mutual fund, he or she buys a part of these assets or the pool of funds that are outstanding at that time. It’s no different from buying “shares” of a joint stock company, in which case the purchase makes the investor a part owner of the company and its assets. In fact, in the USA, a Mutual fund is constituted as an investment company and an investor “buys into the fund”, meaning he buys the shares of the fund. In India, a mutual fund is constituted as a Trust and the investor subscribes to the “units “ issued by the fund, which is where the term unit Trust comes from.

Types of Mutual Funds Schemes
Schemes floated by the various mutual funds are essentially of two types, namely open-ended and close-ended. The basic characteristics of these two types of mutual fund schemes are given below:

OPEN ENDED SCHEMES: Open-ended schemes are available for subscription all the year round excluding the period of book-closing. They may or may not have a specified redemption period. The sale and repurchase prices are fixed by the mutual fund concerned from time to time. Repurchases are generally allowed al specified rated. Each open-ended scheme must have a minimum corpus of Rs.50 crore. In case the fund manager is not able to raise this amount at the time of issue, or 60 % of the targeted amount whichever is higher, the entire subscription must be returned to the investor. CLOSE-ENDED SCHEMES

These are open for subscription only during a specified period. Generally the redemption dates are also specified when the investor can redeem their units. The duration of this scheme varies: normally it is 5-7 years. Repurchase during the intervening period may or may not be allowed. Some of the schemes though have a repurchase facility after a certain period. Many of these schemes are listed in stock exchanges, except for some of the close-ended income schemes .

Equity Oriented Schemes:
These schemes, also commonly called Growth Schemes, seek to invest a majority of their funds in equities and a small portion in money market instruments. Such schemes have the potential to deliver superior returns over the long term. However, because they invest in equities, these schemes are exposed to fluctuations in value especially in the short term. Equity schemes are hence not suitable for investors seeking regular income or needing to use their investments in the short-term. They are ideal for investors who have a long-term investment horizon. The NAV prices of equity fund fluctuates with market value of the underlying stock which are influenced by external factors such as social, political as well as economic. HDFC Growth Fund, HDFC Tax saver and HDFC Index Fund are examples of equity schemes.

Debt Based Schemes:
These schemes, also commonly called Income Schemes, invest in debt securities such as corporate bonds, debentures and government securities. The prices of these schemes tend to be more stable compared with equity schemes and most of the returns to the investors are generated through dividends or steady capital appreciation. These schemes are ideal for conservative investors or those not in a position to take higher equity risks, such as retired individuals. However, as compared to the money market schemes they do have a higher price fluctuation risk and compared to a Gilt fund they have a higher credit risk.

 INCOME SCHEMES : These schemes provide returns in the form of dividends. The returns may be cumulative or non-cumulative on a monthly, quarterly, or yearly basis. Mutual Funds carry market risks and are prohibited by SEBI from declaring any guaranteed rate of returns. The money under such schemes are predominantly invested in fixed income securities like debentures, bonds, Government securities etc.  Liquid Income Schemes: Similar to the Income scheme but with a shorter maturity than Income schemes. An example of this scheme is the HDFC Liquid Fund.  Money Market Schemes: These schemes invest in short term instruments such as commercial paper (“CP”), certificates of deposit (“CD”), treasury bills (“T-Bill”) and overnight money (“Call”). The schemes are the least volatile of all the types of schemes because of their investments in money market instrument with short-term maturities. These schemes have become popular with institutional investors and high net worth individuals having short-term surplus funds.

Gilt Funds:
This scheme primarily invests in Government Debt. Hence the investor usually does not have to worry about credit risk since Government Debt is generally credit risk free. HDFC Gilt Fund is an example of such a scheme.


These schemes are commonly known as balanced schemes. These schemes invest in both equities as well as debt. By investing in a mix of this nature, balanced schemes seek to attain the objective of income and moderate capital appreciation and are ideal for investors with a conservative, long-term orientation. HDFC Balanced Fund and HDFC Children’s Gift Fund are examples of hybrid schemes.

Interval Schemes:
These schemes combine the features of open-ended and closed-ended schemes. They may be traded on the stock exchange or may be open for sale or redemption during pre-determined intervals at NAV based prices. From the investments point of view the existing schemes can be further divided into 4 major categories : 1. GROWTH SCHEMES : These are usually close-ended schemes. The aim of such schemes is to provide capital appreciation to their investors and accordingly a substantial part of the Corpus is invested in equities an convertible debentures. Such schemes are usually listed in the major stock exchanges and the capital appreciation is reflected in their market value i.e. NAV. They may or may not declare dividends even though the declaration of annual dividends represents the health of a scheme. 2. EQUITY-LINKED SCHEMES (ELSS) : These are popularly known as taxplanning schemes . They are essentially close-ended growth schemes in nature. They are floated by almost all the public sector mutual funds in the last quarter of each financial year, some of the essential characteristics are : a. Investment up to a ceiling of Rs.1,00,000/ come under Section 80C of the Income Tax Act. b. Repurchase is allowed after a specified period- usually 3 years. c. During the lock-in period of 3 years their units cannot be traded, pledged or transferred.

3. VALUE-ADDED SCHEMES : they are in addition to the growth/income schemes. Some of the mutual funds schemes have provision for ‘value addition’. This is usually in the nature of personal insurance cover for accidents, etc. GIC Mutual Fund was the first to introduce this concept.

Major Mutual Fund Companies in India
1) ABN AMRO Mutual Fund. 3) Bank of Baroda Mutual Fund. 5) HSBC Mutual Fund. 7) Prudential ICICI Mutual Fund. 9) State Bank of India Mutual Fund. 11) Kotak Mahindra Mutual Fund . 13) Reliance Mutual Fund. 15) Franklin Templeton India Mutual Fund. 17) Escorts Mutual Fund 19) Benchmark Mutual Fund. 21) Chola Mutual Fund. 2) Birla Sun Life Mutual Fund 4) HDFC Mutual Fund 6) ING Vysya Mutual Fund 8) Sahara Mutual Fund 10) TATA Mutual Fund 12) UTI Mutual Fund 14) Standard Chartered Mutual Fund 16) Morgan Stanley Mutual Fund 18) Alliance Capital Mutual Fund 20) Canbank Mutual Fund 22) LIC Mutual Fund

5 Easy Steps to Invest in Mutual Funds

1) Search: “Where to look for if we want to invest in MF” • • • Contacting an Investment advisor in a bank or a brokerage house or an

Independent Financial Advisor is the first step to gathering information. Mutual funds units can also be bought over the Internet. Mutual funds are much like any other product, in that there are manufacturers who provide the product and there are dealers who sell them. 2) Evaluation: “Evaluation: choosing the right mutual fund for you As an investor one may • • • • • for the short term or long term want to invest want regular income or growth want to target lower risk or higher returns be convinced of a particular sector and want to invest in it

3) Purchase: Systematic Investment Plan (SIP): Allows you to save a part of your income regularly. Also used to reduce risk when investing in schemes targeting aggressive growth. • Systematic Withdrawal Plan (SWP): Allows you to withdraw a part of your investment regularly. Used when you want to withdraw your investment for a specific regular payment, like insurance premium payments of monthly/quarterly frequency. • • Automatic debit: Saves the hassle of writing a cheque when making an investment. Your account is debited automatically for the amount invested. Dividend Plan :  Dividend Payout: Under this plan investor can redeem his/her dividend at specific times.  Dividend Reinvestment: Under this plan investor’s dividend is reinvested back to it’s principal amount which therefore increase the number of units investor is holding.

 Growth: Under this plan income generated from investment will put back to it’s invested amount which therefore increases the value of each unit customer is holding. 4) Post Purchase Monitoring: Once you have invested in an ongoing fund, expect a period of two to three days before you receive an account statement on the address mentioned by you in your application form. • • The Account Statement :Your account statement indicates your current holding in the scheme that you have invested. The transaction slip: The transaction slip at the end of the account statement can be used for additional purchases, redemptions or to intimate the mutual fund on any change in bank mandates/address. • NAV: The NAVs of all the open-ended schemes are published at the fund's website, financial newspapers and AMFI (Association of Mutual Funds) web-site 5) EXIT: Every AMC advice that every investor should monitor the his/her units NAV periodically but AMC also recommend their unit holders to not get swayed by short term considerations in deciding their exit. Redemption: In case of open ended funds investor can redeem his/her invested amount. Most funds take 1-3 days to credit your account with your redemption proceeds.

5 Pointers to Measure Mutual Fund Performance


DESCRIPTION Deviation allows to evaluate

IDEAL RANGE the Should be near to it’s mean

volatility of the fund. The standard deviation of a return. fund measures this risk by measuring the degree to which the fund fluctuates in relation to its mean return.


Beta > 1 = high risky Beta is a fairly commonly used measure of risk. It Beta = 1 = Avg basically indicates the level of volatility associated Beta <1 = Low Risky with the fund as compared to the benchmark.


R- square measures the correlation of a fund’s R-squared



movement to that of an index. R-squared between 0 and 1, where 0 describes the level of association between the represents no correlation and fund's volatility and market risk. ALPHA Alpha is the difference between the returns one 1 represents full correlation. Alpha is positive = returns

would expect from a fund, given its beta, and the of stock are better then return it actually produces. It also measures the market returns. unsystematic risk . Alpha is negative = returns of stock are worst then market. Alpha is zero = returns are same as market. SHARPE RATIO Sharpe Ratio= Fund return in excess of risk free The higher the Sharpe ratio, return/ Standard deviation of Fund. Sharpe ratios the better a funds returns are ideal for comparing funds that have a mixed relative to the amount of risk asset classes. taken.

Tax Rules For Mutual Fund Investors*

Equity schemes Short Term Capita l Gains Resident Individua l / HUF Partners hip Firms 10% NIL 30% 10% Long Term Capita l Gain NIL Other schemes Short Term Capital Gains AS PER 10% (20% with indexation ) 10% (20% with indexation AOP/BOI 10% NIL AS PER ) 10% (20% with indexation ) Domestic Compani es NRIs 10% NIL AS PER 10% NIL 30% 10% (20% with indexation ) 10% (20% with indexation ) STCG30%LTCG20% TAX FREE NIL NIL TAX FREE NIL NIL TAX FREE NIL NIL TAX FREE NIL NIL TAX FREE NIL 28.32% (25%+10%s urcharge+ed ucation cess) 28.32% (25%+10%s urcharge+ed ucation cess) 28.32% (25%+10%s urcharge+ed ucation cess) 28.32% (25%+10%s urcharge+ed ucation cess) 28.32% (25%+10%s urcharge+ed ucation cess) 14.16% (12.5%+10%su rcharge+3%ed ucation cess) 22.66% (20%+10% surcharge+3% education cess) 22.66% (20%+10% surcharge+3% education cess) 22.66% (20%+10% surcharge+3% education cess) 14.16% (12.5%+10%su rcharge+3%ed ucation cess) SLAB Long Term Capital Gain TDS Dividen d income All Schemes Dividend distribution tax Equity Schem es Liquid Schemes Other Schemes



POINTS:  Portfolio Diversification – Mutual Funds normally invest in a well-diversified portfolio or securities where the investor can hold a diversified investment portfolio even with a small amount of investment.  Professional Management – The investors does not have the skills and the resources of their own to succeed in today’s fast moving, global and sophisticated markets. Thereby they benefits from the professional management skills brought in by the fund in the management of investor’s portfolio.  Diversification of Risk- Since the investor acquires a diversified portfolio, it reduces a risk of loss as compared to investing directly in one or two shares or debentures or other instruments. While investing in a pool of funds with other investors any loss, on one or two securities is also shared with other investors. This risk reduction is one of the most important benefits of a collective investment vehicle like the mutual fund.

 Reduction of Transaction Costs –When going through a fund the investor has the benefit of economies of scale, funds pay lesser cost because of larger volumes, and this benefit is passed onto its investors.  Liquidity- Investment in a mutual fund is more liquid as an investor can liquidate the investment, by selling the unit to the fund if open-end, or selling them in a market if the fund is close-end and collect funds at the end of the period specified by the mutual fund or the stock market.  Convenience and Flexibility – Mutual Fund management companies offer many investor services where in the investor can easily transfer their holdings from one scheme to the other, get updated market information, and so on. DISADVANTAGES OF MUTUAL FUNDS:  No Control over cost – An investor in Mutual Funds has no control over the overall cost investing as he pays investment management fees as long as he remains with the fund. He also pays fund distribution costs, which he would not incur in direct investing.  No Tailor-made Portfolios –Investors who invest on their own can build their own portfolios whereas investing through funds involves delegating this decision to the fund managers.  Managing portfolio of fund- Availability of the large number of funds can actually mean too much choice for the investor wherein he needs an advice on selecting a fund to achieve his objectives, to suit the situation when he selects individual shares or bonds to invest in.

Who Can Invest In Mutual Funds In India? Mutual funds in India are open to investment by: a) Residents including 1) Resident Indian Individuals 2) Indian Companies 3) Indian Trusts/Charitable Institutions 4) Banks 5) Non-Banking Finance Companies 6) Insurance Companies 7) Provident Funds b) Non Residents including 1) Non-Resident Indians, and 2) Overseas Corporate Bodies (OCBs) and c) Foreign entities, viz; 1) Foreign Institutional Investors (FIIs) registered with SEBI. Foreign citizens/ entities are however not allowed to invest in Mutual funds in India.

Company Profile
3.1 Basic facts about IL&FS 3.2 Service profile of IL&FS 3.3 Product profile of IL&FS

3.1 Basic facts about IL&FS
IL&FS INVESTSMART LTD. • One of the leading financial services companies in India – – Focused on retail broking (including margin financing), distribution of financial products and IPO financing Significant growing presence in Merchant Banking, & Institutional Brokerage Businesses • Pan India presence with a network of 259 outlets (including business associates) spread across 124 major cities in India • Total Income in FY 06 of Rs. 2170 mn. and net profit of Rs. 691 mn.

Shareholding Pattern
FIIs & Public 33% IL&FS 30%


SAIF 10%

Promoter History IL&FS  Promoted by Infrastructure Leasing and Financial Services Ltd.  Shareholders of IL&FS include SBI, ORIX-Japan, IFC-Washington, Credit Commercial de France, Indivest Pte Ltd (an Affiliate of Govt. of Singapore).  Business operations of the promoter  Infrastructure and Development Services: Sectors such as Surface Transport and Transportation Systems, Water Supply, Hydro Power, Special Economic Zone, Port and Environment & Social Management Group.

 Investment Banking: Strategy, Asset Financing, Corporate Advisory, Capital Markets, Project Financing.  Made contributions to the following trusts: IL&FS Infrastructure Equity Fund, IL&FS Investment Trust –I, II, IV.  The Indian Innovation Award-2005: Awarded to IL&FS by President of India VISION STATEMENT: To become the preferred long term financial partner to a wide base of customers whilst optimizing stakeholders value! MISSION STATEMENT To establish a base of 1 million satisfied customers by 2010. We will create this by being a responsible and trustworthy partner CORPORATE ACTION: An Approach to Business that reflects Responsibility, Transparency and Ethical Behaviour. Respect for Employees, Clients & Stakeholder groups.

3.2 Service profile of IL&FS
Product Portfolio

Key Milestones
ETM as Strategic Investor and SAIF as financial partner Commenced commodity broking

Commenced equity broking on BSE ORIX & K Raheja joined as new shareholders

Merchant Banking and Debt on Net merges with IIL

Acquired Apeejay Securities Completed business restructuring Received the Best Performing National Financial Advisor Award for 2006 by CNBC Crossed over 250 retail outlets spanning 125 Indian cities

1998–99 19992000
First full year of equity broking on NSE Commenced retail operations at Bangalore, Chennai & Kolkata

20002001 2001-2002
Commenced derivative broking on NSE Launched investment advisory products Registered as Portfolio Manager

2003–2004 20042005

20052006 20062007

Acquired 4 branches of Tata TD Waterhouse Acquired Insurance Training Business

Completed IPO Completed GDR Strategic investment in ESOP Direct

3.3 Product profile of IL&FS Retail broking; Largest network of branded broking outlets in the country servicing 100,000 clients Pioneers of online trading in India…  Amongst the top online trading websites from India  Winner of ‘Best Performing National Financing Advisor-Retail Segment At Cnbc TV 18 National Financial Advisory Awards 2006. The services of IL&FS 1) Research Based Investment Advice. 2) Investment and Trading Services. 3) Integrated Demat Facility 4)  Technology Based Investment Tools 5) Training and Seminars MANAGEMENT TEAM: 1. Mr.R.C.Bawa Age : 52 Position: managing director and ceo Brief profile:

 Severed as deputy MD since August 2003.  Has more than 20 years of experience in Indian banking sector.  Holds a master degree in arts and post graduate diploma in industrial relationship. 2. Mr Sandeep Presswala Age: 39 Position: chief operating officer. Brief profile:
   Served as COO since October 1999 Has over 14 years of experience in Capital Markets Holds a Bachelors Degree in Commerce from Bombay University and is a Chartered Accountant.

3. Mr Sachin Joshi Age: 40 Position: chief financial officer Brief profile;  Served as CFO since October 1999  Has over 16 years of Financial Management experience  Holds a Bachelors degree in Commerce and is a LLB(Gen), Chartered Accountant and Cost and Works Accountants

4. Mr. Girish Nadkarni Age :37 Position: chief operating officer Brief profile:
 Has over 15 years of industry experience in financial services  Holds a PGDM from IIM-A, Bachelors in Commerce from Mumbai University and is a Cost and Works Accountant

Data Analysis and Interpretation
4.1 Methodology 4.2 Data Analysis

It was important to collect detailed information on various aspects for effective analysis. As “Marketing today is becoming more of a battle based on information than one based only on sales power”. In today’s information based society companies with superior information enjoys a competitive advantage.

The information was collected through personal interview and interview was conducted through the mode of questionnaire

The data was collected through primary as well as secondary sources Primary data: Primary data was collected from 155 respondents using a schedule of questions and a survey was conducted. The tabular and graphical data was Microsoft Excel. Secondary data: Secondary data was collected mainly from the Internet, printed journals on the capital markets of India, newspaper articles and books written on the Indian stock markets.

SAMPLING Judgmental , non-random sampling was used. Respondents were requested to help with the schedules at their offices, homes or at the IL&FS office. PROFILE OF RESPONDENTS The respondents were asked to answer questions to a schedule. To get a graphical idea of the respondents’ profile, please refer the tables and graphs. AGE DISTRIBUTION OF CLIENTS
Age interval Frequency 1 46 48 38 14 10 157 157 Percent .6 29.3 30.6 24.2 8.9 6.4 100.0 100.0

<20 20-30 30-40 40-50 50-60 60-70 Total Total

60-70 50-60





30% of the respondents are in the age group of 30 to 40 years.

Occupation Frequency 102 33 13 4 5 157 157 Percent 65.0 21.0 8.3 2.5 3.2 100.0 100.0

Business Employees
Retired Housewife Student Total Total

s dn tu e t Hu e i os w fe R tir d e e e po e ml y s

Bs es u in s mn a

Employees dominated the respondent profile with 65 percent, followed by 21 percent business men .

inv e stme nt inte rv als Frequency 43 69 21 17 7 157 157 Percent 27.4 43.9 13.4 10.8 4.5 100.0 100.0


<100000 100000-500000 500000-1000000 1000000-5000000 5000000-20000000 Total


5000000- 20000 000 1000000- 50000 00 500000-1 00000 0

<10000 0

100000-5 00000

69% percent of the respondents invest from 1 lakh to 5 lakhs . 43% percent of them invest less than 1 lakh . GENDER DISTRIBUTION OF RESPONDENTS

Gender Frequency 147 10 157 157 Percent 93.6 6.4 100.0 100.0

Male Female Total Total



A massive 93%of the clients were men .

Respondents’ overall asset allocation Assets Name Saving Acc & Fixed Deposits Bonds & Mutual Funds Equity & Equity Funds Real estate Insurance Others Total % share in Portfolio 7% 30% 26% 15% 18% 4% 100%

Overall asset allocation

30 25 20 value (% ) 15 10 5 0
Ac c& FD


26 15 18

s & F M i ty qu E s Ef R ea te s In u nc ra e s er

& a st th O

v Sa


ds on B


 It is evident from the chart that Mutual Fund has highest score of 30 percent share in portfolio followed by Stocks (Equity and equity funds) i.e. 26 percent, whereas Insurance, Saving accounts and Fixed deposits and Real Estate and other allocations have more or less the same rating i.e. 18, 7, 15 and 4 percent respectively.

Top 3 income group asset allocation

Assets Name Saving Acc & Fixed Deposits Bonds & Mutual Funds Equity & Equity Funds Real estate Insurance Others Total

% share in portfolio 6 27 30 19 15 3 100

Asset allocation of top 3 income brackets


27 30 19 6

20 10 0

15 3

v Sa


s s e F Ef stat an ce h er M t & O l e sur & s& y cc ond qu it Rea In A E B g

 Now if we calculate from the top three income brackets it is seen that 30 percent of their portfolio comprise Equity and equity funds followed by 27 percent in bonds and mutual funds, thereby 19 percent in real estate, 15 percent in insurance and a very negligible portion in saving accounts and others.

Types of Investment: Types of investment Short Term Investment Long Term Investment Both Frequency 21 44 35

Types of investment

Both 35%

Short Term Investment 21%

Long Term Investment 44%

Interpretation: Among the total sample size 44 per cent investors are prefer to investing in long term and 21 percent are prefer to investment in short term. Where as 35 per cent of investors are preferred to invest in both long terms as well as in short term investment avenues.

Investment pattern affected by market movement: Options Yes No Frequency 53 27

Investment pattern affected by market movement

No 34% Yes 66%



Interpretation: From this we can come to know that 53 investors investment pattern will affect if any market movement (BSE index, inflation rate etc). So majority investor’s investment pattern will affect if any changes pattern 8. Factors influence to choice various investment alternatives: in the of the Factors influence Risk Involved Return they give Past performance Future Growth Other factor Percentage 16 30 20 24 10

market. Market movement is very important factor for changing in investment

Factors influence on investment decision
Other factor Future 10% Growth 24% Past performance 20% Risk Involved Future Growth Return they give Other factor Risk Involved 16% Return they give 30%

Past performance

Interpretation: By seeing this findings we can say 30% of investor investment decision is depend on return on investment, second important factor is future growth and past performance of the company. 16% of investor’s investment is based on risk involved. Choice of factor is changing from investor to investor.

5.1. Comparison of Investment products 5.2. Five most common mistakes

5.3 .swot analysis 5.4. Risk factors

Comparison of Investment products Investor tends to constantly compare one form of investment with another Investors certainly look for the best returns for different option. However, to determine which option is better, the comparison should be made in terms of other benefits that the investor ought to look for in any investment. Investment Equity FI Bonds Corporate Debentures Corporate FDs Bank Deposits PPF Life Insurance Gold Real Estate Mutual Funds Objective Capital appreciation Income Income Income Income Income Risk cover Inflation hedge Inflation hedge Capital growth Income & Returns High Moderate Moderate Moderate Low Moderate Low Moderate High High Risk Tolerance High Low High High Generally low Low Low Low Low High Investment Horizon Long term Med-long Med Med Flexible Long term Long term Long term Long term Flexible Liquidity High Moderate Low Low High Moderate Low Moderate Low High

THE FIVE MOST COMMON MISTAKES MUTUAL FUND INVESTORS MAKE  Failing to stay invested for a longer period  Worrying about portfolio turnover or dividends it pays  Being affected by new in the market when you’re supposed to be investing for the long term  Selling out during bad markets  Being impatient and losing confidence too soon.

SWOT ANALYSIS Strengths: ⇒ Brand image. ⇒ Image of an Ethical player. ⇒ Brand Reach ⇒ Prompt service provider. ⇒ Good relationship with distributors ⇒ Efficient Sales Staff ⇒ Fair understanding of market and competition. Opportunity: ⇒ Unexplored/ outstation market. ⇒ Target export segment aggressively Threats: ⇒ Substitute products like bank FDs, RDs etc. ⇒ New entrants Weakness: ⇒ Inability to fully cover the outstation market ⇒ Lack of manpower.

RISK FACTORS • Mutual Funds and Securities investment are subject to market risks and there can be assurance or guarantee that the scheme objectives will be achieved. • As with any investment in securities, the Net Asset Value of Unit issued under the Scheme may go up or down depending on the various factors and farces affecting the capital markets.

Past performance of the Sponsors and their affiliates / AMC / Mutual Fund and its scheme do not indicate the future performance of the schemes of the Mutual Fund.

The Sponsors are not responsible or liable for any loss or shortfall resulting from the operations of the scheme beyond the contribution of Rs 1 lakh each made by them towards the corpus of the Mutual Fund.

As per SEBI circular ref. SEBI/IMD/CIR No. 10/22701/03 dated December 12, 2003 read with circular ref SEBI/IMD/CIR NO. 1/42529/05 dared June 14, 2005, it is specified inter alias that each portfolio under a scheme should have a minimum of 20 investors and no single investor should account for more than 25% of the corpus of such portfolio.

Summary and Findings
6.1 Findings

6.2 Suggestions


6.3 Limitation and scope for further research

6.1 Findings
After having met more than 100 individuals the views expressed by these respondents have been vary significant. Some of views express by them about the Mutual Funds.  From the respondents, 34% of the respondents lies in the income level of Rs. 150000 to Rs. 300000 and the majority of the respondents saving Rs. 1000 to Rs.3000 regularly.

 Majority of the respondents of the sample are invested their money in Bank Deposits and Insurance.  From the respondents surveyed, 69% of the respondents are aware about the concept of Mutual Fund and remaining are not aware of this. Friends and Print Media create large part of this awareness of concept of Mutual Fund.  Among the 69 aware respondents 53% are invested their money in Mutual Funds Schemes and the remaining respondents are not invested because of risk factor involved in it and lack of information about the various scheme of Mutual Funds. While investing in Mutual Funds people look in for some attributes they are:  Reputation of the Company: In this project I have found that the name of Mutual Fund Company matters lot. If the company’s name is good then the people will think that their money will be more secured in the reputed company.  Service: I found that wanted good services from the AMC i.e. information of Mutual Funds Schemes, details of NAV should be available on phone calls.  Past performance of Funds: while investing in Mutual Fund majority of the people will look for the past performance of the funds. If it is good people will think that their money is safer and they can get good returns.  Portfolio of the Scheme: it is the very important parameter that the clients consider because the returns of the schemes depended upon the portfolio.  Sector Portfolio: These portfolios consist of the company only one sector like Auto sector, IT sector etc and they will invest in that sector funds, which is in boom period.

 Flexibility: the clients wanted an exit option whenever they required. They also wanted option of shifting from one scheme to another.  The respondents those who are already invested in Mutual Funds gives mixed opinion about investing there increased savings in Mutual Funds. Those who are given positive opinion towards this are wanted some extra feature like sufficient information about the various schemes and wanted agent’s service and those who are not given the positive opinion are wanted to invest their money in bank deposits and in Insurance (ULIP) because of the safety and the fluctuations in the stock markets. And very few of investors are invested in the S.I.P (systematic investment plans).  In this project I found that respondents preferred debt fund to equity fund because of regular returns, less risk, and high fluctuation in the stock markets. And they are having vague information about the Mutual Funds

 Client awareness program has to be conducted by IL&FS for Stock Brokering Services and mutual fund, because most of the people in Belgaum are unaware about it.  Since the intent and web based communication is getting popular IL&FS should update web site frequently and provide information up to date

 IL&FS can rethink on its Brokerage rate. Because the charges are comparatively little higher than the service charged by its competitors and also customers are expressing dissatisfaction towards its brokerage rate.  As investors’ investment decision is based on the study of different sources, IL&FS should start giving advertisement in business newspaper and in business magazine.  IL&FS should expand its business by setting up of new branches in various places where they have lot of client for example Bijapure.

LIMITATIONS While completing this study, there were some constraints. They were: • Time: To undertake a project of this magnitude, eight weeks is a short time. To collect more data from a much larger, varied sample would take additional time. • Sample size: Due to constraints on time, the sample size had to be limited at 155. This, by and large, may not represent the entire community of the Indian investor. • The study is restricted to Belgaum only.

Learning Outcomes
7.1 Data Interpretation of Investors


Data Interpretation of Investors:  From the given analysis we see that 75% of the investors do not deal in Mutual funds but they still believe in the traditional mode of investment, which means there still exists a high degree of Mutual Fund un-awareness among the people. Therefore focus should be on Investors education.  There is a great diversity in the pattern of investment, majority of people who are mostly the business class people invest for long term as they look for the high returns and long term capital appreciation. These people have great capacity to take risk they are called as Risk Takers , while rest invest for short term which mostly comprise of service class people who go for regular/Monthly income plans i.e. short term benefits.  Customers who are aware of the market situations perfectly find it futile to invest through bank and generally had brokers who refund part of the commission to them.

References and Bibliography
7.1 Articles 7.2 Books 7.3 Websites 7.4 Questioner

References & Bibliography:
7.1 Article  Capital Market Review 2003-04, Published by SHCIL

7.2 Books     Financial Management, PRASANNA CHANDRA, 6th edition Financial Management, KHAN & JAIN, 3rd edition Security Analysis and Portfolio Management , FISCHER & JORDAN Research Methodology, David .R. Cooper and Schindler

7.3 Websites    

QUESTIONNAIRE Kindly fill up the following questionnaire. 1. Name : 2. Educational level  PUC  Graduation  Post-Graduation

 Professional  Others (Please Specify) ………….. 3. Age  Less than 20  20 – 30  More than 60 4. Number of persons in the family 1 5. Occupation  Employed  Private Sector  Public Sector  Self employed  Business  Profession (CA/Lawyer/Doctor/Others ……………)  Not employed  Retired 6. Annual income and savings a. Annual income (in Rs.)  Less than 1 lakh  1 – 2 lakhs  2 – 3.5 lakhs  3.5 – 5 lakhs  More than 5 lakhs b. Annual savings (in Rs.) 2 3 4  More than 4  31 – 40  41 – 60

 Less than 10,000  10,000 – 20,000  20,001 – 30,000  30,001 – 40,000  40,001 & above 7. Investment avenues that you like to choose  Equity  FI Bonds  Corporate Debenture  Bank Deposits  Small / Post-office Savings  Mutual Funds

 Company Fixed Deposits  PPF  Gold  Life Insurance  Real Estate

 Others …………. 8. Average amount (in Rs.) invested in a year in the following avenues  Equity  FI Bonds  Corporate Debenture  Bank Deposits  Small / Post-office Savings  Mutual Funds

 Company Fixed Deposits  PPF  Gold  Life Insurance  Real Estate

 Others …………. 9. Are you a short term or long term investor?  Short term  Long term  Both  Broker’s Advice  Media  Quarterly 10. State reason behind choice of your investment options  Self – Awareness  Financial Advisors

 Friends’ or Relatives’ Advice 11. What is your frequency of investments?  Weekly  Half-yearly  Monthly  Yearly

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