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EXECUTIVE SUMMARY In few year investment advisory services has emerged as a tool for ensuring one’s financial well

being. Advisory services has not only contributed to the Individu al growth story but have also helped economy to mobilize the savings. As informa tion and awareness is rising more and more people are enjoying the benefits of i nvestment advisory services. The reason for low number of people investing with investment advisory services is low awareness among people about financial servi ces available and their benefits. But once people are aware of investment adviso ry services, the number may grow. This Project gave me a great learning experien ce and at the same time it gave me enough scope to implement my analytical abili ty. The analysis and advice presented in this Project Report is based on market research on the saving and investment practices of the investors and preferences of the investors for investment in fixed deposits and other options. This Repor t will help to know about the investors’ Preferences in making investment. Report will help us know how does a investor weigh fixed deposits against other investm ent options like insurance, mutual funds, NSCs. It will also help us to know tha t what are the factors which affects the investment decision of investor, whethe r it is being affected by brand name, security or ratings by CRISIL or ICRA, or type of deposit i.e. company deposits, secured deposit. The first part gives an insight about Fixed deposit and other investment options and its various aspects , the Company Profile, Objectives of the study, Research Methodology. One can ha ve a brief knowledge about Investment options and its basics through the Project . The second part of the Project consists of data and its analysis collected thr ough survey done on 343 people. For the collection of Primary data I made a ques tionnaire and surveyed of 343 people. I also taken interview of many People thos e who were coming at Banks and their ATMs. This Project covers the topic “ANALYSIS OF INVESTMENT OPTIONS WITH FOCUS ON FIXED DEPOSIT.” The data collected has been w ell organized and presented. I hope the research findings and conclusion will be of use. 1|Page

OBJECTIVE OF THE PROJECT The main objective of undertaking the project with Mahindra Finance was to under stand the functioning of the investment division of a NBFC and analyze the vario us investment options available in the Indian financial market. The main objecti ves of the project are:Understand the various investment options available in Indian market. Concepts o f Mutual Fund and Corporate Fixed Deposits Understanding asset allocation and we alth management Analyzing various Tax Saving options available Understanding the marketing and promotional activities involved in promoting the various investment products offered by Mahindra Finance. Developing communication skills and presentation skills 2|Page

INTRODUCTION TO MUTUAL FUND AND ITS ASPECTS Mutual fund is a trust that pools the savings of a number of investors who share a common financial goal. This pool of money is invested in accordance with a st ated objective. The joint ownership of the fund is thus “Mutual”, i.e. the fund belo ngs to all investors. The money thus collected is then invested in capital marke t instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciations realized are shared by its unit holders in proportion the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportun ity to invest in a diversified, professionally managed basket of securities at a relatively low cost. A Mutual Fund is an investment tool that allows small inve stors access to a well-diversified portfolio of equities, bonds and other securi ties. Each shareholder participates in the gain or loss of the fund. Units are i ssued and can be redeemed as needed. The fund’s Net Asset value (NAV) is determine d each day. Investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proporti on at the same time. Mutual fund issues units to the investors in accordance wit h quantum of money invested by them. Investors of mutual funds are known as unit holders. 3|Page

Company Profile Mahindra Finance is a subsidiary of the prestigious Mahindra & Mahindra (M&M) gr oup and is one of the leading non-banking financial companies. It largely focuse s on the rural and semi-urban sector providing finance for utility vehicles, tra ctors and cars. Having been incorporated in January, 1991 as Maxi Motors Financi al Services Limited, it changed its name to Mahindra & Mahindra Financial Servic es Limited (MMFSL) in November, 1992. MMFSL provides financial loans to tractors , utility vehicles, light commercial vehicles, cars, three-wheelers and used veh icles. It also provides financial services which include Mutual Fund distributio ns and financial advisory services. Goal of MMFSL is to be the preferred provide r of retail financing services in the rural and semi-urban areas of India, while our strategy is to provide a range of financial products and services to our cu stomers through our nationwide distribution network. We seek to position ourselv es between the organised banking sector and local money lenders, offering our cu stomers competitive, flexible and speedy lending services. Mahindra Finance prin cipally finance UVs used both for commercial and personal purposes, tractors and cars. While we predominantly finance M&M UVs and tractors, we have continued to expand our lending to vehicles not manufactured by Mahindra & Mahindra Ltd.. MMFSL is a company with a strong foundation and a shining legacy, growing every day to create a legacy of our own. Our leading promoter Mahindra & Mahindra hold s the majority of our Equity Shares and is also a leading tractor and UV manufac turer with over 60 years’ experience in the Indian market. As a supplement to our business, in May 2004, we started an insurance broking business through our whol ly owned subsidiary, Mahindra Insurance Brokers Limited. In short, At Mahindra F inance they have a wide range of products and services, with something to suit e veryone’s needs. Right from finance for two wheelers, tractors, farm equipment, ca rs and utility vehicles to commercial vehicles and construction equipment, we al so have a group of experts providing investment advice, surveying available mark et products and choosing the most suitable to our customers’ needs. 4|Page

Investment Options in India The table below compares the investment options under the broad heads viz. retur n, safety, volatility, liquidity and convenience Investment Option Equity FI Bonds CD’s Company FD’s Bank Deposits PPF Life Insurance Gold Real Estate Mutual Funds Convenience High Moderate Moderate Moderate High Moderate Moderate Moderate Low High Return High Moderate Moderate Moderate Moder ate Moderate Low Low High High Safety Low High Moderate Low High High High High Moderate High Volatility High Moderate Moderate Low Low Low Low Moderate High Mo derate Liquidity High Moderate Low Low High Moderate Low Moderate Low High Table No.1 Comparison of Various Investment Options MARKET SURVEY ON PREFERENCE OF MUTUAL FUNDS The awareness of Mutual Funds as a f inancial instrument has been comparatively low in India. Though the concept of m utual fund in India dates back to mid 1960s, but only around 2% of India’s populat ion has invested till date in mutual funds(Source: www. Thus it was very important to know about the investor’s preference towards Mutual Funds. I t is always crucial to be aware of the requirements of the potential customers a nd thus adjusting the schemes accordingly. The questionnaire used for the survey is attached in appendix #. The survey was conducted with a target population of 500 to determine the level of awareness about Mutual Funds. The target populati on constituted of basically employees of IT Companies, who were in the age group of 25-40years. 5|Page

Objective of the Survey: The prime objective of performing the survey was to unde rstand the customer’s preference and interest in various Financial Instruments, an d especially in Mutual Fund. Though Mutual Funds are a safer option than investi ng directly in the Equity market, there has been very low awareness of MFs among st the people and the masses are still not comfortable in investing in this inst rument. MUTUAL FUND INDUSTRY IN INDIA ALL ABOUT MUTUAL FUNDS WHAT IS MUTUAL FUND BY STRUCTURE BY NATURE EQUITY FUND DE BT FUNDS BY INVESTMENT OBJECTIVE OTHER SCHEMES PROS & CONS OF INVESTING IN MUTUA L FUNDS ADVANTAGES OF INVESTING MUTUAL FUNDS DISADVANTAGES OF INVESTING MUTUAL F UNDS MUTUAL FUNDS INDUSTRY IN INDIA MAJOR PLAYERS OF MUTUAL FUNDS IN INDIA HISTO RY OF THE INDIAN MUTUAL FUND INDUSTRY CATEGORIES OF MUTUAL FUNDS INVESTMENT STRA TEGIES WORKING OF A MUTUAL FUND 6|Page



When an investor subscribes for the units of a mutual fund, he becomes part owne r of the assets of the fund in the same proportion as his contribution amount pu t up with the corpus (the total amount of the fund). Mutual Fund investor is als o known as a mutual fund shareholder or a unit holder. Any change in the value o f the investments made into capital 7|Page

market instruments (such as shares, debentures etc) is reflected in the Net Asse t Value (NAV) of the scheme. NAV is defined as the market value of the Mutual Fu nd scheme s assets net of its liabilities. NAV of a scheme is calculated by divi ding the market value of scheme s assets by the total number of units issued to the investors.

ADVANTAGES OF MUTUAL FUND Portfolio Diversification Professional management Reduction / Diversification Risk Liquidity Flexibility & Convenience Reduction in Transaction cost Safety o f regulated environment Choice of schemes Transparency DISADVANTAGE OF MUTUAL FUND No control over Cost in the Hands of an Investor No tailor-made Portfolios Manag ing a Portfolio Funds Difficulty in selecting a Suitable Fund Scheme 8|Page

HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY The mutual fund industry in India started in 1963 with the formation of Unit Tru st of India, at the initiative of the Government of India and Reserve Bank. Thou gh the growth was slow, but it accelerated from the year 1987 when non-UTI playe rs entered the Industry. In the past decade, Indian mutual fund industry had see n a dramatic improvement, both qualities wise as well as quantity wise. Before, the monopoly of the market had seen an ending phase; the Assets under Management (AUM) was Rs67 billion. The private sector entry to the fund family raised the Aim to Rs. 470 billion in March 1993 and till April 2004; it reached the height if Rs. 1540 billion. The Mutual Fund Industry is obviously growing at a tremendo us space with the mutual fund industry can be broadly put into four phases accor ding to the development of the sector. Each phase is briefly described as under. First Phase – 1964-87 Unit Trust of India (UTI) was established on 1963 by an Act of Parliament 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-link ed from the RBI and the Industrial Development Bank of India (IDBI) took over th e regulatory and administrative control in place of RBI. The first scheme launch ed by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of as sets 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 s ector 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 e stablished in June 1987 followed by Canbank Mutual Fund (Dec 87), Punjab Nationa l Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Ju n 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in J une 1989 while GIC had set up 9|Page

its mutual fund in December 1990.At the end of 1993, the mutual fund industry ha d assets under management of Rs.47, 004 crores. Third Phase – 1993-2003 (Entry of Private Sector Funds) 1993 was the year in which the first Mutual Fund Regulatio ns came into being, under which all mutual funds, except UTI were to be register ed and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templet on) was the first private sector mutual fund registered in July 1993. The 1993 S EBI (Mutual Fund) Regulations were substituted by a more comprehensive and revis ed Mutual Fund Regulations in 1996. The industry now functions under the SEBI (M utual Fund) Regulations 1996. As at the end of January 2003, there were 33 mutua l funds with total assets of Rs. 1,21,805 crores. Fourth Phase – since February 20 03 In February 2003, following the repeal of the Unit Trust of India Act 1963 UT I 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, assu red return and certain other schemes The second is the UTI Mutual Fund Ltd, spon sored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under t he Mutual Fund Regulations. consolidation and growth. As at the end of September , 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 s chemes. 10 | P a g e


Mutual funds can be classified as follow:

Based on their structure: Open-ended funds: Investors can buy and sell the units from the fund, at any Close-ended funds: These funds raise money from investors only once. point of time. Therefore, after the offer period, fresh investments can not be made into the fu nd. If the fund is listed on a stocks exchange the units can be traded like stoc ks (E.g., Morgan Stanley Growth Fund). Recently, most of the New Fund Offers of close-ended funds provided liquidity window on a periodic basis such as monthly or weekly. Redemption of units can be made during specified intervals. Therefore , such funds have relatively low liquidity.

Based on their investment objective: Equity funds: These funds invest in equities and equity related instruments. Wit h fluctuating share prices, such funds show volatile performance, even losses. How ever, short term fluctuations in the market, generally smoothens out in the long term, thereby offering higher returns at relatively lower volatility. At the sa me time, such funds can yield great capital appreciation as, historically, equit ies have outperformed all asset classes in the long term. Hence, investment in e quity funds should be considered for a period of at least 3-5 years. It can be f urther classified as: i) Index funds- In this case a key stock market index, lik e BSE Sensex or Nifty is tracked. Their portfolio mirrors the benchmark index bo th in terms of composition and individual stock weightings. ii) Equity diversified funds- 100% of the capital is invested in equities spreading across different sectors and stocks. iii|) Dividend yield funds- it is similar to the equity diversified funds except that they invest in companies offering high dividend yields. 12 | P a g e

iv) Thematic funds- Invest 100% of the assets in sectors which are related throu gh some theme. e.g. -An infrastructure fund invests in power, construction, ceme nts sectors etc. v) Sector funds- Invest 100% of the capital in a specific secto r. e.g. - A banking sector fund will invest in banking stocks. vi) ELSS- Equity Linked Saving Scheme provides tax benefit to the investors. Balanced fund: Their investment portfolio includes both debt and equity. As a re sult, on the risk-return ladder, they fall between equity and debt funds. Balanced funds are the ideal mutual funds vehicle for investors who prefer spreading their risk acr oss various instruments. Following are balanced funds classes: i) Debt-oriented funds -Investment below 65% in equities. ii) Equity-oriented fu nds -Invest at least 65% in equities, remaining in debt. Debt fund: They invest only in debt instruments, and are a good option for inves tors averse to idea of taking risk associated with equities. Therefore, they invest e xclusively in fixed-income instruments like bonds, debentures, Government of Ind ia securities; and money market instruments such as certificates of deposit (CD) , commercial paper (CP) and call money. Put your money into any of these debt fu nds depending on your investment horizon and needs. i) Liquid funds- These funds invest 100% in money market instruments, a large portion being invested in call money market. ii) Gilt funds ST- They invest 100% of their portfolio in governm ent securities of and Tbills. iii) Floating rate funds - Invest in short-term de bt papers. Floaters invest in debt instruments which have variable coupon rate. 13 | P a g e

iv)Arbitrage fund- They generate income through arbitrage opportunities due to m ispricing between cash market and derivatives market. Funds are allocated to equ ities, derivatives and money markets. Higher proportion (around 75%) is put in m oney markets, in the absence of arbitrage opportunities. v) Gilt funds LT- They invest 100% of their portfolio in long-term government securities. vi)Income fun ds LT- Typically, such funds invest a major portion of the portfolio in longterm debt papers. vii) MIPs- Monthly Income Plans have an exposure of 70%-90% to deb t and an exposure of 10%-30% to equities. viii) FMPs- fixed monthly plans invest in debt papers whose maturity is in line with that of the fund. INVESTMENT STRATEGIES 1. Systematic Investment Plan: under this a fixed sum is invested each month on a fixed date of a month. Payment is made through post dated cheques or direct de bit facilities. The investor gets fewer units when the NAV is high and more unit s when the NAV is low. This is called as the benefit of Rupee Cost Averaging (RC A) 2. Systematic Transfer Plan: under this an investor invest in debt oriented f und and give instructions to transfer a fixed sum, at a fixed interval, to an eq uity scheme of the same mutual fund. 3. Systematic Withdrawal Plan: if someone w ishes to withdraw from a mutual fund then he can withdraw a fixed amount each mo nth. 14 | P a g e

RISK V/S. RETURN: 15 | P a g e

Scope of the study A lot of ups and down has been witnessed by financial industry since January 200 8, and collapse of Lehman Brothers only added to worry of financial industry and bail out packaged pleaded by international banks questioned the fundamentals of financial industry. All this events had a direct or indirect effect on trust of investor and its attitude towards financial industry, in specific investment se rvices and banks. Due to which many of companies faced problems in raising capit al for further expansion of business and some of them sought the way of fixed de posits seeing and assessing the present situation. The research was carried in B angalore. I was working on project from Jaynagar office of Mahindra Finance, fro m where i carried out all the studies and completed my project. The main focus o f study has been towards fixed deposit industry and preference of investor for f ixed deposits. The study will help to know the preferences of the customers, whi ch company, portfolio, mode of investment, and option for getting return and so on they prefer. This project report may help the company to make further plannin g and strategy. 16 | P a g e

CORPORATE FIXED DEPOSITS Company Fixed Deposit market in India has an interesting phase of evolution. It basically grew out of the need of Corporate Sector for raising short term financ e and requirements of small investors to earn superior returns as compared to re turns offered by the Banks. The concept of company fixed deposits was started in India in 1964 by Bajaj Capital Ltd. by launching first ever Company Fixed Depos it of Oberoi Group - East India Hotels Ltd.(now EIH Ltd.).The success of East In dia Hotels prompted others private and public sector companies which started acc epting deposits from public. Since then company deposit market has grown by leap s and bounds. Today, company deposit market has grown to approximately Rs.25,000 crores. Hundreds of top companies belonging to reputed industrial houses like T ata, Birla, Escorts, Godrej etc. and government companies like HUDCO are accepti ng deposits from public. The number of depositors has increased to around 5 mill ion. The benefits of company deposit are numerous like superior returns from rep uted companies, fixed and assured returns, premature encashment, simplicity of t ransactions, TDS benefits, wide choice, all these features have made company dep osits a preferred instrument of investment. Features: Company Fixed Deposits are non transferable that means there is no fear of FD re ceipt being stolen. In case it falls into wrong hands, it cannot be misused. The FD holder in such a case should write to the company which shall issue duplicat e deposit receipt upon execution of an indemnity and cancel the previous one.

No income tax is deducted at source if the interest income is up to Rs 5000/-in one financial year. One can spread his investment in more than one company, so t hat interest from one company does not exceed Rs. 5000/-

Further, advantage of investing in company fixed deposits is that one can analyz e the company before investing in it because companies accepting deposits are ol d-established reputed companies with proven track records.

It is also important that company fixed deposit should be made for short term, i .e., tenure should be for 1-3 years depending upon the rate of interest. This wi ll help the investor to switch to other company if need be

Recently, nomination facility has been introduced in company fixed deposits. 17 | P a g e

Recruiting students for summer internships: In addition to dealing with the finance market we were assigned the task to recr uit 50 MBA students for pursuing their summer internship at Mahindra Finance. Th is task provided an opportunity to understand the HR aspects in addition to the finance and marketing part of the training. It helped us analyze the recruitment policies of different institutes as well as to know how one should represent a company. The students thus recruited were assigned projects in either finance or marketing. The recruitment was done mostly for the Bangalore centre of the comp any. Corporate presentation:

In addition to the survey and the marketing activities conducted by me I was als o asked to fix up an appointment with a corporate house and present the investme nt options Mahindra Finance has to offer with a special focus on the fixed depos its. I fixed up an appointment with sonata software located in RT Nagar and gave the presentation in front of 35 of their employees it was an enriching experien ce as this boosted up my confidence to a great extent as it helped me market my products in front of the corporate. Designing & Implementation of a Marketing Campaign for Fixed Deposit Scheme: Mahindra & Mahindra Financial Services Ltd. re-launched its fixed deposit scheme from 1st January ’09 after 3 years. The interest rates were revised by the compan y on 20 th April ’09. The deposit came be made in 2 Schemes: Cumulative and non-Cu mulative Scheme.

The salient features of our Fixed Deposit scheme are:Cumulative Schemes:Amount P ayable (Rs.) 10,900 11,430 11,990 13,310 Effective Yield p.a.** 9.00% 9.53% 9.95 % 11.03% Minimum Amount Period (Months) 12 18 Interest* p.a. 9.00% 9.25% 9.50% 10.00% Rs 10,000 24 36 Table No.2 Cumulative Scheme of Fixed Deposit 18 | P a g e

Non-Cumulative Schemes:Minimum Amount Period (Months) 12 Rs 25,000 24 36 Table N o.3 Non-Cumulative Scheme of Fixed Deposit Interest*# p.a 8.75% 9.25% 9.75%

* Senior Citizens/ Shareholders/ Employees will get an additional rate of 0.25% per annum. # Interest payment half yearly on 30th September and 31st March only through ECS ** Compounded Annually Since the management had modified the interest rates of the FD schemes, we had t o devise a marketing campaign to promote the FD and increase the level of awaren ess amongst the potential customers. The task which was more difficult was that these promotional activities should necessarily be cost effective and can be imp lemented by individuals without any expenses incurred by the company. We also ha d to give a corporate presentation on the Fixed Deposit schemes in any organizat ion with a minimum employee base of 20 and we also had to make sure that the pre sentation was attended by at least 20 employees of the company. The promotional activities I performed were:

Displaying Posters: This included displaying posters and banners at the nearby b akeries and restaurants which included high frequency of people who come in dail y to these places

Pamphlets: This included distributing pamphlets to the people in the nearby area to generate awareness for Mahindra fixed deposits to do this at a large scale I made arrangements to distribute pamphlets through newspaper vendors to cover a large area of population.

Some Innovative marketing: Stamping the tissues used at eateries and restaurants , Creating awareness at the nearest election campaigns to generate awareness of the product.

Market Survey: This included a survey which tried to capture the interest of the respondents towards the Fixed Deposit. 19 | P a g e

Empanel Fixed Deposit Agents:Following the promotional campaign for Mahindra Fin ance Fixed Deposits we were assigned the task of recruiting agents/advisors for the same. These agents were supposed to empanel with Mahindra Finance and subseq uently they would be eligible for the commission as decided by the company. The slab for commission is as follows: Tenure of Fixed Deposit(in months) 12 18 24 3 6 Commission (as %age of Amount invested) * 0.5 0.5 0.75 1.0 Table No.4 Brokerage of FD agents/Advisors *An additional 0.25% would be paid if the agent gets a business of Rs 1 crore in a month and an additional 0.5% would be paid if the agent rakes in a business o f Rs 5 crore in a month. In addition to being associated with Fixed Deposit an a gent can also partner with Mahindra Finance for selling Mutual Funds provided he /she is AMFI certified. 20 | P a g e

FINANCIAL PLANNING Wealth Management is the next step in financial planning. It challenges advisers , especially those with high-net-worth clients, to bring together all aspects of a client s financial life into a single plan-from investment advice to estate p lanning to long-term-care insurance. The components, and the methods of approach ing them, vary as widely as the number of practitioners who are moving into this area. We generally plan for everything we do in life, be it career, success, tr avel, shopping or family. But most of us do not plan for financial security and hence peace of mind. Most of the times, we do not have the time to think about o ur own financial management. If we do have the time, we may lack the required kn owledge, expertise and research capabilities. Hence, we often make decisions but after a while realize its incorrectness. Financial Planning is a critical need and the implementation of a well crafted Financial Plan. It is like a blueprint for the management of all our financial affairs for our entire life. Managing mo ney is getting more complicated hence Planning is as important as earning it now adays. A Financial Planner has to study and analyze gamut of investment products in the Indian market ranging from Equities and derivatives trading, Commodities trading, Portfolio Management Services, Mutual Funds, Life Insurance, Fixed dep osits, GoI bonds and other small savings instruments. Financial Planner has to g uide clients on all financial matters that have or will have an impact on their life today and in future. The primary responsibility of a financial planner is t o plan their financial affairs, then execute the plan and finally keep monitorin g their assets lifelong for the fulfillment of all their financial objectives. T he Creation of a Financial Plan Having a professionally made financial plan woul d provide solutions to the following issues and many more; How to manage changin g financial needs & requirements from time to time How to manage loans and other short & long term liabilities How to ensure that the budget never goes into a d eficit What are the best strategies for hedging income & managing liabilities 21 | P a g e

How to do a comprehensive planning for education funding during the time span of the child’s career

What provisions need to be made for retirement funding so as to have ample cash flow during retired years and not make any compromises whatsoever

How to be prepared for anything in life so as to have ample financial security H ow not to be left grappling for funds when we need them the most What is a good roadmap for long term wealth creation Methodology Mahindra Finance is one of the leading NBFCs in the market and is al so corporate brokers to almost all the AMCs in the market. They also have their Fixed Deposits in the market with currently two schemes: Cumulative and Non-Cumu lative Schemes. The following methodology was adopted in the process of drawing an investment plan for a customer. Training has been given to all the financial planners on Fixed Deposits, Mutual Funds and Portfolio Management Services. Fina ncial planners have to fix up an appointment with the already existing clients o f Mahindra Finance who have invested in any mutual fund and meet them either at residence or office based on their convenience. Financial planners have to ident ify and analyze the requirements of the clients and make an appropriate portfoli o based on their risk appetite and their future financial requirements. Strategy used in planning and managing the money Firstly, Financial Planner estimates an amount that is required for keeping as a safety margin. Safety margin constitut es the amount required for protecting client’s family against liabilities and the loss of income in his absence for which he needs an insurance cover. Once this c over is in place, Financial Planner estimates the contingency funds that are nee ded to manage emergencies. Deducting the amounts needed for the above, all the b alance funds find their way into assets capable of delivering highest possible r eturns. The Financial Planner then estimates 22 | P a g e

the fund requirements for retirement, child’s education, holiday’s and other financi al goals. Financial Planner would then prepare an investment plan, do the analys is and create an appropriate portfolio based on the client’s risk appetite. Investment plan for a person of age 50 years: A simulation We were asked to prep are a financial plan of Mr. X (name not to be disclosed) when he is of the age o f 50 years. This was basically a simulation exercise before letting us meet the actual clients. Following are the investment plans: 2.1. Investment plan of Mr. X at the age of 50 years: Current Status of Mr. X : on : Age 16 years Currently in Std XI Plans to do Graduation Two Daughters: Age 20 years: Age 23 years : Presently in 2nd year engineering Plans to do MBA Pursuing MBA (in final year) S

Note: Mr. X plans to get his daughters married at the age of 25 23 | P a g e

Assets of Mr. X: PARTICULARS Stocks NSC Insurance Medical Insurance 2 Houses Rent Monthly income 30 lacs 7 lac (maturing after 2 years) 15 lacs (maturing after 2 yrs) 3 lacs 1.5 cr 25000/month 75000/month Table No.5 Assets of Mr. X VALUE (in Rs.) Liabilities of Mr. X: PARTICULARS Personal loan Education loan Life Insurance Expenditure Medical Insu rance Son’s Education Daughter’s Education Daughter’s Marriage 1 lac 3 lacs 30000/year 35000/month 10000/year 4 lacs 8 lacs 20 lacs Table No.6 Liabilities of Mr. X Af ter 2 years After 2 years AMOUNT (present value in Rs.) 1 year 3 years 2 years T IME Now we will look into the requirements of Mr. X in the coming years and will ana lyze the financial liabilities and how to finance them with the assets available . After two years he has the following liabilities to be taken care off: PARTICULARS Daughter marriage : 23 years old Son’s Education(Graduation) Daughter’s Education ( PG ) Total 23 lacs 4.6 lacs 9.2 lacs 37 lacs Table No.7 Liabilities of Mr. X at the age of 52 AMOUNT REQUIRED* (in Rs.) *Note: Considering inflation at 7% on an average 24 | P a g e

The suggestions to finance these liabilities are: PARTICULARS National Saving Certificate Life Insurance Corporation Stocks conver ted to Fixed Deposit Total AMOUNT (in Rs.) 11.5 lacs (@ 8.5% p.a**.) 15 lacs 8.5 lacs (@ 9.75% p.a**.) 37 lacs Table No.8 Suggestive Investments to finance Mr.X’s liabilities ** The rates of return are standards practiced in the market. REMAR KS At maturity At maturity Invested 2 years back I suggested him to invest in fixed deposit because looking at the market conditi ons and the volatility in the equity market it would not be a heady decision to risk neither the daughters’ marriage nor their education. At the age of 55 which i s 5 years from now he has following major expenses apart from his daily expenses : PARTICULARS Son’s PG Daughter’s Marriage (20 years old) Total AMOUNT REQUIRED* (in R s.) 28.25 lacs 28.25 lacs 56.5lacs Table No.9 Liabilities of Mr. X at the age of 52 *Note: Considering inflation at 7% on an average This amount of Rs. 57 lacs of l iabilities will be financed in the following manner: PARTICULARS Systematic Investment Plan Stocks to FD# Stocks to FD# Recurring Dep osit Recurring Deposit Total Required Deficit AMOUNT** (in Rs.) 20,000 p.m. (@ 1 5% p.a.) 11.6 lacs (@ 10% p.a.) 3.3 lacs (@ 10% p.a.) 9,000 p.m. (@ 5% p.a.) 10, 000 p.m. (@ 5% p.a.) Maturity Amount (In Rs.) 18 lacs 18 lacs 5.1 lacs 4.8 lacs 2.48 lacs 48.38 lacs 56 lacs 7.62 lacs Table No.10 Suggestive Investments to fin ance Mr.X’s liabilities ** The rates of return are standards practiced in the mark et. # invested in two different Fixed Deposits to diversify risk REMARKS At the age of 55 At the age of 55 At the age of 55 Started at 51 years Started at 53 ye ars 25 | P a g e

This deficit of Rs. 7.62 lacs was proposed to be financed by an Educational Loan @ 15% for 7 years. This would give him an additional tax benefit under section 80(c) and section 80(g) on the interest payment of the loan. Now we will see his liabilities at the age of 60 years: PARTICULARS Monthly Expenses Contingency Requirement World Tour Repayment of Edu cation Loan in 7 yrs AMOUNT REQUIRED (IN RS.) 50000/Month 1 lac 2 lacs 9,500 EMI for 7 years from 57 years of age Table No.11 Requirements of Mr. X after the age of 60 years For the repayment of Education Loan Mr. X needs to start investing Rs. 18750 p.m . in a Recurring Deposit which would fetch him a moderate return of 6% p.a. and will amount to Rs. 4.9 lacs after 2 years (from the age of 55yrs to 57yrs). This amount can be utilized to pay back some amount to loan to reduce the EMI amount . At the age of 60, Mr. X has an excess cash amount of Rs. 41 lacs which needs t o be invested for suffice his future requirements. This Rs. 41 lac of cash amoun t has been obtained from the following: + Earning of Rs 18 lacs from a SIP done at the age of 55 years (Rs 20,000 p.m) + Rs 10 lacs in PF account + Rs 16 lacs f rom FD after tax of 10% on interest. (Rs 6.6 lacs invested for 10 years in a cum ulative scheme@ 10% per annum.) - Rs 2 lacs reserved for a tour - Rs 1 lac reser ved for contingency = Net Surplus worth Rs. 41 lacs. These Rs. 41 lacs should be invested in the following way: Invest Rs 41.5 lac in a FD @ 10% p.a. Return of R s 34,166 p.m. Less: 10% tax (tax on interest income) Total: Rs 30,750 26 | P a g e

He also has an additional income from the farm house: at the market rate of 5% p.a.) Less: 30% tax

Rent: Rs 41,111(Incremented

Total : Rs 28,800 So his net earnings is Rs. 59,750 and his requirements are Rs. 59,500(Rs. 50,000 for monthly expenditure + Rs. 9500 for EMI of the education l oan) Meeting up with the actual clients The final stage of this assignment was to fix up appointments with the clients o f Mahindra Finance who have already invested in Mutual Funds through the company . We were asked to arrange meetings with these clients and were asked to push Fi xed Deposits to these clients as this was a safer option in terms of assured ret urns with a reasonably good return of around 8.5% to 10% p.a. In order to advise the clients to invest in Fixed Deposit we needed to analyze the requirements of the clients as well as his risk appetite. I used a questionnaire in order to be aware of the customer’s requirements (Refer to appendix for the questionnaire). T he scores of the responses from the investors helped me to decide upon the apt a llocation of his/her money in equity and debt market depending upon his/her capa city to take risk and the amount of return he/she is expecting out of the invest ment made. LIMITATIONS Mutual Funds & Mahindra Finance are both new entrants to the market Security market’s continuous volatility Economic factors showing it is not a perfe ct time for investing in security market Awareness of the FD of Mahindra Finance is very low 27 | P a g e

CONCLUSION The internship with M&MFSL was a very enriching experience and helped me to unde rstand the various concepts involved in the functioning of the Investment divisi on of a NBFC. During the entire period of our internship we were given weekly as signments which helped us to gain insights about the various aspects in promotin g business and advising Mutual Funds and Fixed Deposits. It also helped me gain valuable insights about the financial market. Working with such an esteemed orga nization also helped me gain confidence and as the company is well established a nd has a high brand value, it helped me understand how the customer base is made and maintained and also the importance of building long term relationship with the clients as well as promoters. 28 | P a g e

BIBLIOGRAPHY Mallette Paul, Doing the Right Thing: Bank One’s Response to the Mutu al Fund Scandal, Colorado State University Benefits of investing in Mutual Funds, Reliance AMC Basic of Mutual Fund, Relian ce AMC Mutual Fund industry is going down to 6.26%, Business Line, April 2, 2008 Safe Investment, Outlook Profit, July 2007 edition Portfolio Management & Mutual Funds, ICFAI Press Marketing Management, ICFAI Press Business Research Methods, ICFAI Press Fact Sheets of different AMCs WEBSITES: 29 | P a g e

APPENDIX Questionnaire for MUTUAL FUND SURVEY Name: Occupation: Phone No.: Email-ID: 1.) What are your present investment needs? a. To build a corpus for retirement b. T o save for Children’s education & marriage c. To provide for medical emergencies d . To provide for family financial security e. To create wealth f. All of the abo ve 2.) Are you aware of investment options for tax aversion under section 80(c)? a. Mutual Funds b. Fixed Deposit c. Insurance d. PPF e. All of the above 3.) Wh ich is your preferred investment option? a. Mutual Fund b. Fixed Deposit c. Dire ct Equity d. Life Insurance e. Post Office Deposit 4.) Have you ever invested in Mutual Fund? a. Yes b. No 5.) Do you need help on Tax Effective investment opti ons? a. Yes b. No 30 | P a g e Age: Address: Mobile No.:

Questionnaire for FIXED DEPOSIT AWARENESS Name: Address: Contact No.: Email-ID: 1.) Which age group do you belong to? a. 23-35yrs b. 35-50yrs c. above 50 years 2.) Which income bracket do you fall in (per annum)? a. 1-3 lacs b. 3-6 lacs c. More than 6 lacs 3.) Are you interested in Fixed Deposit? a. Yes b. No 4.) What are the investment options you are looking for? a. Mutual Fund b. Fixed Deposit c. Equity d. Insurance e. Post Office Fixed Deposit 5.) What is the expected rat e of Interest? a. 7-8% b. 8-9% c. more than 9% 6.) What is the tenure you are lo oking for the deposit? a. less than 1 year b. 1-2 years c. 2-3years d. more than 3 years 31 | P a g e

Questionnaire for INVESTOR‟s PREFRENCE Part A: (Choose one answer which best descr ibes your nature and preferences) 1. If the performance of an investment you hav e recently made were below your expectations, how would you feel? a. Very upset b. Somewhat upset, but hope that it will improve in the future. c. Uneasy but wi lling to take it in my stride d. Not upset because I know that all investments c arry risk. 2. What do you normally associate the word „risk‟ with? a. Danger b. Unce rtainty c. Opportunity d. Thrill 3. If you had to choose between being a salarie d employee and running your own business, which one would you prefer? a. Being a salaried employee b. Doing a salaried job and may be run a part-time business. c. Running a partnership business d. Running my own business. 4. When you invest your money, what thought comes to your mind first? a. I should not lose my mone y. b. This should not turn out to be a bad investment. c. This should turn out t o be a good investment. d. I know this is a good decision. 5. After you have mad e an investment, how do you usually feel? a. Very worried. b. Somewhat worried. c. Somewhat satisfied. d. Very satisfied. 6. If you had the choice between a fix ed salary and a partly variable one, depending on your performance and the profi ts of your company, which one would you prefer? 32 | P a g e

a. I would prefer a fixed salary, even if it is small. b. I would prefer most of my salary to be fixed, with only a small variable part. c. I would prefer half my salary to be fixed, and the other half to be variable. d. I would prefer most of my earnings to be performance-linked. 7. If you had to make an investment de cision without consulting or discussing it with anybody, how would you feel? a. Very unsure. b. Not very confident. c. Somewhat confident. d. Very confident. 8. Consider this scenario. You had invested in a company, but its performance was so bad past your investment, that you sold off your investments at a loss. Then you hear that the same company has begun to do well. Would you invest in the com pany again? a. Definitely not. b. May be, but am not very sure. c. Perhaps I wil l. d. Definitely yes. 9. Experts tell you that investments are subject to risk a nd you have to be prepared for losses as well as gains. What is the level of los s in your investment that you are willing to accept? a. I would hate to see any kind of loss in my investments. b. I will be willing to take up to a 20% loss. c . I can perhaps bear a loss of up to 40%. d. I am willing to take any kind of lo ss. 10. If you looked at the portfolio of the investments that you have already made, how would you characterize them? a. Only assured return investments. b. Li mited investment in risky products c. Divided between risky and safe products d. Mostly risky investments. 33 | P a g e

11. If your investment adviser told you that you could enjoy better returns if y ou were willing to take the risk, to what extent would you be willing to expose your investments to risk, to earn a higher return? a. None at all. b. About 20%. c. About 40% d. More than 50% 12. Interest rates can go up or down. If you had to take a loan and had the choice between a fixed rate and a variable one, which one would you prefer? a. I will always choose a fixed rate. b. I will choose a combination of 70% fixed and 30% variable. c. I will choose a combination of 30% fixed and 70% variable. d. I will choose 100% variable. CUSTOMER DETAILS Name: Age: Address: Tel. Investment Amount: Rs._______________. Investment Horizon (In Yrs.): ______________ Score: Give yourself 10 marks for every (a); 20 marks for (b); 30 marks for (c) and 40 marks for (d). Add up your score. YOUR RISK PROFIL E SCORE = Sex: Male / Female 34 | P a g e

Part B: Demographic Profile Fill up your details in the table below. For every a ttribute in Column A that you have, enter “1” in the score column next to it; for ev ery attribute in Column B that you have, enter “0” in the score column next to it. YOUR DEMOGRAPHIC SCORE = YOUR RISK PROFILE IS… The product that is likely to suit your risk and demographic profile can be located in the matrix below:

VAIS – Very Aggressive; AIS – Aggressive MIS – Moderate; CIS – Cautious; VCIS – Very Cauti ous 35 | P a g e