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A Dissertation submitted to

Submitted by-
P.G.P.B.M., M.B.A.
SESSION 2008-2010

Corporate guide: Academic guide:

Miss Sheela Kathane

Manager (HR) Prof. Meghendra Gajpal

M.O.S.L NAGPUR Kohinoor Business School,




Firstly I would like to acknowledge our institute Kohinoor Business School for providing
me an opportunity to work on the field of marketing. I am also thankful to Dr. B. P. Verma,
Director, KBS on allotting his valuable time for interaction that helps in attaining proper
orientation to the study.

With due respect, I am sincerely thankful to Miss Sheela Kathane (HR) and Mr. Prashant
Pimpalwar (Managing Director) of Motilal Oswal Securities Ltd. (Nagpur) for supporting,
motivating, guiding and providing kind co-operation to me throughout my training period.

I am also Thankful to Prof. Sayeed Javed and Prof. Meghendra Gajpal for guiding, inspiring,
and motivating me to work in this area. Without their line of action, invaluable guidance and
support it would not have been possible for me to complete this project work.


This Project Report is submitted in partial fulfilment of the requirements for a degree at
Kohinoor Business School, Khandala. I declare that this Project Report is my own work and that
it does not contravene any academic offence as specified in the College's regulations.

I agree that, should the College wish to retain it for reference purposes, a copy of my Project
Report may be held by Kohinoor Business School normally for a period of 3 academic years. I
understand that my Project Report may be destroyed once the retention period has expired. I am
also aware that the College does not guarantee to retain this Project Report for any length of time
(if at all) and that I have been advised to retain a copy for my future reference.

I confirm that this Project Report does not contain information of a commercial or confidential
nature or include personal information other than that which would normally be in the public
domain unless the relevant permissions have been obtained. In particular any information which
identifies a particular individual's religious or political beliefs, information relating to their
health, ethnicity, criminal history or personal life has been anonymised unless permission for its
publication has been granted from the person to whom it relates.

The copyright for this Project Report remains with me.

Requests for Information

I agree that this Project Report may be made available as the result of a request for information
under the Freedom of Information Act.

Signature: ……………………………………………………………………………

Name: ……………………………………………………………………………

Date: ……………………………………………………………………………

Program : ……………………………………………………………………………

India’s economy is highly developing. The development is taken place due to the growth in the financial
system. This financial system provides the background to various investors regarding varied options to
invest. Thus, development of the economy depends on how these investors invest for the well being in
long run.

As financial markets become more sophisticated and complex, investors need a financial intermediary
who provides the required knowledge and professional expertise on successful investing. Mutual Funds
represent perhaps the most appropriate investment opportunity for investors. No wonder the concept of
Mutual Fund was initially developed in the U.S. market, but the entry of the concept in the Indian
Financial Market was in the year 1964 with the formulation of the UTI, at the initiative of the RBI and
Govt. of India.

For most people, money is a delicate matter and when it comes to investing they are wary. Simply
because there are many investment options out there, each out promising the other. An important question
facing many investors is whether to invest in Banks, National Savings, Post office, Non-banking finance
companies, Fixed deposits, and shares etc. or to invest distinctively in Mutual Funds.

It has been perceived that there is huge potential market in the region of VIDARBHA Thus an
exploratory research with the hypothesis “The region of VIDARBHA being progressively industrializing
& developing should provide a large & wider market share for Mutual Fund” has been done.

Thus the purpose of this research was to find why people do not actively invest in mutual fund in spite of
various benefits like Professional management, Diversification, Convenience liquidity, Flexibility, Tax
benefits etc. as well as to find out potential of business of MOTILAL OSWAL SECURITIES LIMITED
in distribution of Mutual Fund in NAGPUR City.

After performing the detailed exploratory research by interviewing different persons who act as
investment advisor like Insurance advisor and Post office advisor etc. with the help of questionnaire,
certain facts were revealed regarding the view about Mutual Funds in the mind of investors.

I have observed that approximately 60% of the people are unaware of Mutual Funds but most of them are
interested to know about Mutual Funds and ready to attend seminar arranged by M.O.S.L. They are also
interested to work with M.O.S.L. if sufficient information is provided to them about Mutual Fund and

A PERSON FROM SERVICE CLASS PREFERS safety of income plus the regular income as well as tax
benefits while on the other hand Professional and Businessman focus on high return with some risk.
For growth and development of the Mutual Fund Industry, the misconception regarding Mutual Fund
should be removed & the awareness for the same should be made




Executive Summary










Motilal Oswal Securities Ltd. was founded in 1987 as a small sub-broking unit, with just two people
running the show. Focus on customer-first-attitude, ethical and transparent business practices, respect for
professionalism, research-based value investing and implementation of cutting-edge technology has
enabled us to blossom into an almost 2000 member team.

Today we are a well diversified financial services firm offering a range of financial products and services
such as

• Wealth Management

• Broking & Distribution

• Commodity Broking

• Portfolio Management Services

• Institutional Equities

• Private Equity

• Investment Banking Services and

• Principal Strategies

We have a diversified client base that includes retail customers (including High Net worth Individuals),
mutual funds, foreign institutional investors, financial institutions and corporate clients. We are
headquartered in Mumbai and as of March 31st, 2009, had a network spread over 548 cities and towns
comprising 1,289 Business Locations operated by our Business Partners and us. As at March 31st, 2009,
we had 5, 41,372 registered customers.

In 2006, the Company placed 9.48% of its equity with two leading private equity investors based out of
the US – New Vernon Private Equity Limited and Bessemer Venture Partners.

The company got listed on BSE and NSE on September 9, 2007. The issue which was priced at Rs.825
per share (face value Rs.5 per share) got a overwhelming response and was subscribed 27.18 times in
turbulent market conditions. The issue gave a return of 21% on the date of listing.

As of end of financial year 2008, the group net worth was Rs.7 bn and market capitalization as of March
31, 2008 was Rs.19 bn.
For year ended March 2008, the company showed a strong top line growth of 91% to Rs.7 bn as
compared to Rs.3.68 bn, last year. New businesses like investment banking, asset management and fund
based activities have contributed to this growth.

Rs. Crores FY 2007- 08 Growth (YoY)

Total Revenues 701 91%

EBIDTA 270 97%

PAT 156 100%

Credit rating agency Crisil has assigned the highest rating of P1+ to the Company’s short-term debt

Shareholding Pattern at on 31st December 08

As of December 31st, 2008; the total shareholding of the Promoter and Promoter Group stood at 70.37%.
The shareholding of institutions stood at 10.07% and non-institutions at 19.56%. (click here for detailed
shareholding pattern)

Our Business Streams

Our businesses and primary products and services are:

Wealth Management
Financial planning for individual, family and business wealth creation and management needs. These are
provided to customers through our Wealth Management service called ‘Purple’

Broking & Distribution services

• Equity (cash and derivatives)

• Commodity Broking

• Portfolio Management Services

• Distribution of financial products

• Financing

• Depository Services

• IPO distribution

We offer these services through our branches, Business Partner locations, the internet and mobile
channels. We also have strategic tie-ups with State Bank of India and IDBI Bank to offer our online
trading platform to its customers.
Commodity Broking
Through Motilal Oswal Commodities Broker (P) Ltd our fully owned subsidiary; we provide commodity
trading facilities and related products and services on MCX and NCDEX. Besides access to the best of
research in the form of Daily Fundamentals & Technical Reports on highly traded commodities, our
clients also get access to our exclusive Customized Trading Advice on both the trading platforms. We
offer these services through our branches, Business Partner locations, the internet and mobile channels

Portfolio Management Services

Motilal Oswal Portfolio Management Services offer a range of investments solutions through
discretionary services. We at Motilal Oswal have helped create wealth for our customers through our
Portfolio Management Services. Our knowledge of the markets together with our understanding of our
customers and their risk profiles has helped us design a range of portfolio offerings for our clients. These
in0clude the Value Strategy, Bulls Eye Strategy, Trillion Dollar Opportunity Strategy and Focused
Strategy Series I. As of March 31st, 2009, the Assets under Management of our various portfolio schemes
stood at Rs.4.77 bn.

Motilal Oswal group has applied to the regulatory bodies for a license to operate as a Domestic Asset
Management Company (Mutual Fund) and we expect to begin operations soon.

Institutional Equities
We offer equity broking services in the cash and derivative segments to institutional clients in India and
overseas. These clients include companies, mutual funds, banks, financial institutions, insurance
companies, and FIIs. As at March 31st, 2009, we were empanelled with over 300 institutional clients
including 200 FIIs. We service these clients through dedicated sales teams across different time zones.

Investment Banking
We offer financial advisory services relating to mergers and acquisitions (domestic and cross-border),
divestitures, restructurings and spin-offs through Motilal Oswal Investment Advisors Private Ltd.

We also offer capital raising and other investment banking services such as the management of public
offerings, private placements (including qualified institutional placements), rights issues, share buybacks,
open offers/delisting and syndication of debt and equity.

MOIAPL has closed 23 transactions in 2007-08 worth US$ 1.8 billion and had 18 mandates in hand as at
March 31, 2008.
Private Equity
In 2006, our private equity subsidiary, Motilal Oswal Private Equity Advisors Private Ltd (MOPEAPL)
was appointed as the investment manager and advisor to a private equity fund, India Business Excellence
Fund, which was launched with a target of raising US$100 mn. The fund is aimed at providing growth
capital to small and medium enterprises in India, with investments typically in the range of US$3 mn to
US$7 mn.

MOPEAPL will manage and advise the fund and other private equity funds, which may be raised in the
future. In its final closing, in December 2007, the fund obtained commitments of US$125 mn (Rs.4, 875
mn) from investors in India and overseas. The Fund has deployed/ committed $ 58 mn across 8 deals.

MOPEAPL has recently launched an INR 750 crores domestic Real Estate Private Equity Fund called
“India Realty Excellence Fund” sponsored by Motilal Oswal Financial Services Ltd.

Principal Strategies Group

For effective management of treasury operations and to capitalize on market opportunities, the Group has
set up a 30 member team which would be responsible for effective deployment of funds into different
trading and arbitrage strategies.

Focus on Research
Research is the solid foundation on which Motilal Oswal Securities advice is based. Almost 10% of
revenue is invested on equity research and we hire and train the best resources to become advisors. At
present we have 22 equity analysts researching over 27 sectors. From a fundamental, technical and
derivatives research perspective; Motilal Oswal's research reports have received wide coverage in the
media (over a 1000 mentions last year). Our consistent efforts towards quality equity research has
reflected in an increase in the ratings and rankings across various categories in the Asia Money Brokers
Poll over the years

Our unique Wealth Creation Study, authored by Mr. Raamdeo Agrawal, Managing Director, is now in its
13th year. Investors keenly await this annual study for the wealth of information it has on the companies
that created wealth during the preceding five years.
Awards and Accolades
Motilal Oswal Financial Services has received many accolades in the year gone by. Some of them are:

• Rated ‘Best Overall Country Research’ for a Local Brokerage in the 2007 Asia Money Brokers

• Rated India’s top broking house in terms of total number of trading terminals by the Dun &
Bradstreet survey

• Rated ‘Outstanding Commodity Broking House-2007’ by Globoil India

• Ranked second best for Customer Responsiveness in the Financial Sector at the Avaya Global
Connect Customer Responsiveness awards

Strong Management Team

The organization finds its strength in its team of young, talented and confident individuals.
Qualified professionals carry out different functions under the able leadership of its promoters,
Mr. Motilal Oswal and Mr. Raamdeo Agrawal. Our talented pool of people comprises qualified
and experienced professionals with an established track record. We believe that our
management's entrepreneurial spirit, strong technical expertise, leadership skills, insight into
market / customer needs provide us with a competitive strength which will help us implement
our business strategies.


M.O.S.L. is a legendary name in financial services, M.O.S.L. credit is defined by its mission to
succeed, passion for professionalism, excellent work ethics customer centric values and its
research and advice.

Today M.O.S.L is well known as a premier financial services enterprise, offering a broad
spectrum of customized services to its clients, both corporate and retail. Services that M.O.S.L.
constantly upgrade and improve are because of company’s skill in leveraging technology. Being
one of the most techno-savvy organizations around helps company to deliver even more cost
effective financial solutions in the shortest possible time.

What bears ample testimony to success of Motilal Oswal is the faith reposed in company by
valued investors and customers, all across the country. Indeed, with Motilal’s wide network
touching every corner of the country, even the most remote investor can easily access Motilal’s
services and benefit from company’s expert advice.
Mission Statement of ‘M.O.S.L.’-:
An organization exists to accomplish something or achieve something. The mission statement indicates
what an organization wants to achieve. The mission statement may be changed periodically to take
advantage of new opportunities or respond to new market conditions.

M.O.S.L’s mission statement is “To Bring Industry, Finance and People together.”

M.O.S.L. is work as intermediary between industry and people. M.O.S.L. work as investment advisor and
helps people to invest their money same wayM.O.S.L. Helps industry in achieving finance from people
by issuing shares, debentures, bonds, mutual funds, fixed deposits etc.

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

Vision of M.O.S.L-:
Company’s vision is crystal clear and mind frame very directed. “To be pioneering financial services
company. And continue to grow at a healthy pace, year after year, decade after decade.” Company’s
foray into IT-enabled services and internet business has provided an opportunity to explore new frontiers
and business solutions. To build a corporate that sets benchmarks for others to follow.

Behind the Picture: What Customers matter for M.O.S.L.?

Market Power Brand Preference Customer Value

Relationship is our Competitive Advantage

Every year with this picture keeping in mind M.O.S.L. accelerate with Recovery, Revival and
M.O.S.L. Values:


M.O.S.L. has adequate internal control systems and procedures commensurate with the size
nature of its business. These system and procedures provide reasonable assurance of
maintenance of proper accounting records, reliability of financial information, protection of
resources and safeguarding of assets against unauthorized use.


Market Positioning:

Market positioning statements of M.O.S.L. are “At M.O.S.L. we give you single window service”
and “We also ensure your comfort”.

So, M.O.S.L. focus on the consumers who prefer almost all investment activities at same place
by providing number of various financial services. At M.O.S.L. a person can purchase or
sell shares, debentures etc. and at the same place also demat it. M.O.S.L also provides other
investment option to the same person at same place like Mutual Fund, Insurance, Fixed
Deposit, and Bonds etc. and help the person in designing his portfolio. By this way M.O.S.L
provides comfort to its customers. M.O.S.L is also positioned according to Ries and Trout.
M.O.S.L is promoted as a no. 1 investment product distributor and R & T agent of India.

Target Market:

M.O.S.L. uses demographic segmentation strategy and segment people based on their
occupation M.O.S.L uses selective specialization strategy for market targeting. Target person for
the M.O.S.L Stock Broking and M.O.S.L Investment Service are persons who can work as sub-
broker for the companies. Companies focus on Advisors of Insurance and post office, Tax
consultants and CAs for making sub-broker.

Marketing channel System:

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

Training Channel Members:

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

Advertising and Promotion:

The objective of advertising of M.O.S.L is to create awareness about services of M.O.S.L among
investors and sub-brokers and increase sub-brokers of M.O.S.L.
Company doesn’t give advertisement in media like TV, Newspapers, and Magazines etc.
M.O.S.L.’s advertisement is made indirectly by the companies associate with it. M.O.S.L is R &
T agent of around 700 companies. They publish name, address and logo of M.O.S.L on their
annual report.


Recruitment and Selection Policy:

The upper level members like zonal managers, regional managers, branch managers and senior
executives are recruited by publishing recruitment advertisement in leading national level
newspaper. The qualified applicant are then called for interview and selected.

The regional manager has authority to select lower level employee like peon, marketing
executives, accountant etc. by approval of zonal manager.

Training and Development:

Continuous training and upgrading technical, behavioral and managerial skills is a way of life in
M.O.S.L. M.O.S.L encourages employees to hone their skills regularly to enable them to face the
challenges of the changing requirements of customers that fit market up and down.

Training needs analysis is done on a regular basis and systematic methodologies are ensured that
skills and capabilities of all employees are constantly upgraded to enable them to perform in the
challenging work environment.
New employee has given training under experienced employee. The new employee work under
experience employee and observe his all activities. When company employs new technology or
there is any change in the working of company the training program is arranged.

Employee Motivation:

M.O.S.L.’s employees are highly empowered. They don’t have to report any person of the same
branch but they report upper level branch. i.e. Marketing executive of NAGPUR branch directly
reports Senior Marketing executive of PUNE zonal office.

If particular branch earn certain profit then M.O.S.L gives them special incentives. E.g. last year
M.O.S.L had arranged two days tour for their employees of Nagpur, This also helps in
maintaining co-operation between employees.

Quality Policy Of MO.S.L. :

To achieve and retain leadership, M.O.S.L. shall aim for complete customer satisfaction, by
combining its human and technological resources, to provide superior quality financial services.
In the process, M.O.S.L will strive to exceed Customer’s expectations.

Quality Objectives of M.O.S.L

• Build in-house processes that will ensure transparent and harmonious

relationships with its clients and investors to provide high quality of services.

• Establish a partner relationship with its investor service agents and

vendors that will help in keeping up its commitments to the customers.

• Provide high quality of work life for all its employees and equip them with
adequate knowledge & skills so as to respond to customer's needs.

• Continue to uphold the values of honesty & integrity and strive to

establish unparalleled standards in business ethics.
• Use state-of-the art information technology in developing new and
innovative financial products and services to meet the changing needs of investors and

• Strive to be a reliable source of value-added financial products and

services and constantly guide the individuals and institutions in making a judicious
choice of same.

• Strive to keep all stake-holders (shareholders, clients, investors,

employees, suppliers and regulatory authorities) proud and satisfied.



• Employees are highly empowered.

• Strong Communication Network.
• Good co-operation between employees.
• Number 1 Registrar and Transfer agent in India.
• Number 1 dealer of Investment Products in India.


• High Employee Turnover.

• Global Recession


• Growth rate of mutual fund industry is 40 to 50% during last year and it
expected that this rate will be maintained in future also.
• Marketing at rural and semi-urban areas.


• Increasing number of local players.

• Past image of Mutual Fund.

1. Bajaj Capital-:

It was established in 1964 at Delhi. In 1965 it innovates a new financial instrument ‘Companies
Fixed Deposits’ and becomes the first company to raise Fixed Deposits. The objective of
company is to provide professional guidance to investors on where, when and how to invest and
to assist the corporate sector in its resource raising activities. Bajaj Capital became the first
company to set up ‘Investment Centers’ all over India for this purpose. Today, Bajaj Capital has
90 offices in over 40 important Indian Cities and has a team of around 500 employees

Services provided
•Merchant banking
•Buying and Selling of Money Market Investments
•Distribution of financial products
•Investment Advisory Service
» Company fixed deposits
» Bonds

» Mutual funds

» Life insurance

» General insurance

» Pension schemes

» Post office schemes

» Tax saving schemes

» Insurance linked investment schemes

» Initial public offerings

» Housing loans

» NRI schemes

» Car insurance

•Financial Planning

» Investment planning

» Retirement planning

» Insurance planning

» Children's future planning

» Tax planning

» Short-term cash flow planning

2. MCS Ltd.
It is established in 1985 in Delhi. It is one of the largest Data Processing House employing more
than 600 people.

MCS Ltd. has 8 branches all over India including 2 in Gujarat,

Ahmadabad and Baroda.

Volumes Handled

•Share registry activities for over 100 corporate servicing over 10 million investors.

•Mutual fund operations for 25 funds, servicing over 4.5 million investors.

•Billing & settlement plan for Indian operations of IATA Geneva for 1.2 million tickets
per annumm covering (26 airlines & over 1200 agents).

Services Offered:

•Registrars and Transfer Agents

•Registrars to IPO’s /Right Issues

•Registrars to Open Offers

•Registrars to Mutual Funds

•Data Processing for Airlines

•Print Shop Services

MCS is a major player in these activities in the Country with a market share of about 25%. MCS
today provides these services to over 140 Corporate and Mutual Funds for a total investor base of
15 million.

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

NJ India Invest (formerly known as NJ Capital stocks) was started in 1994 to cater to the
growing financial services sector. NJ India Invest evolved out as a client focused need based
investment advisory firm. NJ regards mutual fund as one of the best investment avenue available
to satisfy any kind of investment need.

4. ICICI Securities Ltd.

ICICI Securities Limited (i-SEC) is a wholly owned investment-banking subsidiary of ICICI
Limited. ICICI is the only non-Japanese Asian financial institution to be listed on the New York
Stock Exchange (NYSE). ICICI Securities was formed on 22nd Feb. 1993, when ICICI's
Merchant Banking Division was spun off into a new company, ICICI Securities today is India's
leading Investment Bank and one of the most significant players in the Indian capital markets.

ICICI Brokerage Services Limited (IBSL) set up in March 1995, IBSL is a 100% subsidiary of i-
SEC. It commenced its securities brokerage activities in February 1996 and is registered with the
National Stock Exchange of India Limited and The Stock Exchange, Mumbai.

ICICI has started a website which is the most comprehensive website, which
allows you to invest in Shares, Mutual funds, Derivatives (Futures and Options) and other
financial products

ICICI has a large network of branches all over India.

Services offered:

•Merchant Banking
•Demat Service
•Stock Broking

HDFC is the leading financial company in India. IT has large network of branches all over India.
HDFC Securities which is fully subsidiary of HDFC provides demat service.

HDFC and its subsidiary provides following services.

•Demat Service
•Life Insurance
•Banking Service
•Housing Finance
•Vehicle Finance
•Education Loan
•Personal Loan
•Mutual Fund

6. Kotak Securities Ltd.

Kotak Securities needs no introduction as one of the largest stock broking houses in the country
and a leading distributor of primary market offerings. Kotak Securities limited is a joint venture
between Kotak Mahindra Bank and Goldman Sachs, the international investment banking and
brokerage firm.

Kotak Securities is a corporate member of both the BSE and the NSE. It is also a depository
participant with the National Securities Depository Limited (NSDL) for trading and settlement of
dematerialized shares.
Services offered:

•Stock Broking
•Financial Product Distribution
•Demat Services
•Investment Advisory Services


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 stated objective. The joint
ownership of the fund is thus “Mutual”, i.e. the fund belongs to all investors. The money thus
collected is then invested in capital market instruments such as shares, debentures and other
securities. The income earned through these investments and the capital 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 opportunity 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 investors access to a well-diversified portfolio of equities,
bonds and other securities. Each shareholder participates in the gain or loss of the fund. Units are
issued and can be redeemed as needed. The fund’s Net Asset value (NAV) is determined each

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 proportion at the same time. Mutual fund issues units to the investors
in accordance with quantum of money invested by them.

When an investor subscribes for the units of a mutual fund, he becomes part owner of the assets
of the fund in the same proportion as his contribution amount put up with the corpus (the total
amount of the fund). Mutual Fund investor is also known as a mutual fund shareholder or a unit

Any change in the value of the investments made into capital market instruments (such as shares,
debentures etc) is reflected in the Net Asset Value (NAV) of the scheme. NAV is defined as the
market value of the Mutual Fund scheme's assets net of its liabilities. NAV of a scheme is
calculated by dividing the market value of scheme's assets by the total number of units issued to
the investors.
• Portfolio Diversification

• Professional management

• Reduction / Diversification of Risk

• Liquidity

• Flexibility & Convenience

• Reduction in Transaction cost

• Safety of regulated environment

• Choice of schemes

• Transparency


• No control over Cost in the Hands of an Investor

• No tailor-made Portfolios

• Managing a Portfolio Funds

• Difficulty in selecting a Suitable Fund Scheme


• The mutual fund industry in India started in 1963 with the formation of Unit Trust of
India, at the initiative of the Government of India and Reserve Bank. Though the growth was
slow, but it accelerated from the year 1987 when non-UTI players entered the Industry.

• In the past decade, Indian mutual fund industry had seen 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 Aum 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 tremendous space with the mutual
fund industry can be broadly put into four phases according 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-linked from the RBI and the Industrial Development
Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The
first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700
crores of assets under management.

Second Phase – 1987-1993 (Entry of Public Sector Funds)

• 1987 marked the entry of non- UTI, public sector mutual funds set up by public sector
banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India
(GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed
by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank
Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC
established its mutual fund in June 1989 while GIC had set up its mutual fund in December
1990.At the end of 1993, the mutual fund industry had assets under management of Rs.47,004

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

• 1993 was the year in which the first Mutual Fund Regulations came into being, under
which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari
Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund
registered in July 1993.

• The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive
and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI
(Mutual Fund) Regulations 1996. As at the end of January 2003, there were 33 mutual funds
with total assets of Rs. 1,21,805 crores.

Fourth Phase – since February 2003

• In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was
bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India
with assets under management of Rs.29,835 crores as at the end of January 2003, representing
broadly, the assets of US 64 scheme, assured return and certain other schemes

The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered
with SEBI and functions under the Mutual Fund Regulations. consolidation and growth. As at
the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores
under 421 schemes


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 point of

• Close-ended funds: These funds raise money from investors only once. Therefore, after
the offer period, fresh investments can not be made into the fund. If the fund is listed on a stocks
exchange the units can be traded like stocks (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. With fluctuating share
prices, such funds show volatile performance, even losses. However, short term fluctuations in the
market, generally smoothens out in the long term, thereby offering higher returns at relatively lower
volatility. At the same time, such funds can yield great capital appreciation as, historically, equities have
outperformed all asset classes in the long term. Hence, investment in equity funds should be considered
for a period of at least 3-5 years. It can be further classified as:

i) Index funds- In this case a key stock market index, like BSE Sensex or Nifty is tracked.
Their portfolio mirrors the benchmark index both in terms of composition and individual stock

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.

iv) Thematic funds- Invest 100% of the assets in sectors which are related through some theme.

e.g. -An infrastructure fund invests in power, construction, cements sectors etc.

v) Sector funds- Invest 100% of the capital in a specific sector. 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 result, 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 across various instruments. Following are
balanced funds classes:

i) Debt-oriented funds -Investment below 65% in equities.

ii) Equity-oriented funds -Invest at least 65% in equities, remaining in debt.

Debt fund: They invest only in debt instruments, and are a good option for investors averse to
idea of taking risk associated with equities. Therefore, they invest exclusively in fixed-income
instruments like bonds, debentures, Government of India 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 funds 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 government securities of and T-bills.

iii) Floating rate funds - Invest in short-term debt papers. Floaters invest in debt instruments
which have variable coupon rate.

iv) Arbitrage fund- They generate income through arbitrage opportunities due to mis-pricing
between cash market and derivatives market. Funds are allocated to equities, derivatives and
money markets. Higher proportion (around 75%) is put in money markets, in the absence of
arbitrage opportunities.

v) Gilt funds LT- They invest 100% of their portfolio in long-term government securities.

vi) Income funds LT- Typically; such funds invest a major portion of the portfolio in long-term
debt papers.

vii) MIPs- Monthly Income Plans have an exposure of 70%-90% to debt 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
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 debit facilities. The investor gets
fewer units when the NAV is high and more units when the NAV is low. This is called as the
benefit of Rupee Cost Averaging (RCA)

2. Systematic Transfer Plan: under this an investor invest in debt oriented fund and give
instructions to transfer a fixed sum, at a fixed interval, to an equity scheme of the same mutual

3. Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual fund then he
can withdraw a fixed amount each month.

Following are list of Mutual Fund companies in India:-

Sr. No. Mutual Fund Name No. of


1 Alliance Mutual Fund 36

2 Benchmark Mutual Fund 5

3 Birla Mutual Fund 74

4 Bank of Baroda Mutual Fund 17

5 Can Bank Mutual Fund 25

6 Chola Mutual Fund 45

7 Deutsche Mutual Fund 40

8 DSP Merrill Lynch Mutual Fund 40

9 Escorts Mutual Fund 15

10 Franklin Templeton Investments 130

11 GIC Mutual Fund 5

12 HDFC Mutual Fund 79

13 HSBC Mutual Fund 32

14 IL & FS Mutual Fund 43

15 ING Vysya Mutual Fund 55

16 JM Mutual Fund 55

17 Kotak Mutual Fund 56

18 LIC Mutual Fund 35

19 Morgan Stanley Mutual Fund 1

20 Punjab National Bank Mutual Fund 4

21 Prudential ICICI Mutual Fund 124

22 Principal Mutual Fund 68

23 Reliance Mutual Fund 74

24 Sahara Mutual Fund 12

25 State Bank of India Mutual Fund 59

26 Standard Chartered Mutual Fund 100

27 Sundaram Mutual Fund 52

28 SUN F&C Mutual Fund 1

29 Tata TD Mutual Fund 100

30 Taurus Mutual Fund 9

31 Unit Trust of India 42

32 UTI Mutual Fund 66

The graph indicates the growth of assets over the years:-




There are many entities involved and the diagram below illustrates the organizational set
up of a mutual fund:
45% 42%
15% 14%
5% 3% 4%





Fund Type


40% 38%
20% 19%
5% 5%




Fund Type
Assets Under Management By AMC(source-
Financial System is basically responsible for the major up and downs in the economy So, there
are some regulatory bodies on it which ensures effectiveness in the management of fund of the
investors and transparency in the transaction.



-Stock broker -commercial bank -PAN

-R and T agent -NBF Co. -TAN

-Mutual fund - Etds


Objective of the study-:

1. To find out the Preferences of the investors for Asset Management Company.

2. To know the Preferences for the portfolios.

3. To know why one has invested or not invested in Mutual fund

4. To find out the most preferred channel.

5. To find out what should do to boost Mutual Fund Industry.

Scope of the study-:

A big boom has been witnessed in Mutual Fund Industry in recent times. A large number of new
players have entered the market and trying to gain market share in this rapidly improving market.

The research was carried on in Nagpur. I had been sent at one of the branch of M.O.S.L. Where
I completed my Project work. I surveyed on my Project Topic “preference of the advisors
towards mutual funds” on the visiting customers of the different stock broaking companies.

The study will help to know the preferences of the customers, which 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 planning and strategy.

This report is based on primary as well secondary data, however primary data collection was
given more importance since it is overhearing factor in attitude studies. One of the most
important users of research methodology is that it helps in identifying the problem, collecting,
analyzing the required information data and providing an alternative solution to the problem .It
also helps in collecting the vital information that is required by the top management to assist
them for the better decision making both day to day decision and critical ones.

Data sources-:
Research is totally based on primary data. Secondary data can be used only for the reference.
Research has been done by primary data collection, and primary data has been collected by
interacting with various people. The secondary data has been collected through various journals
and websites.

Duration of Study:

The study was carried out for a period of three months, from 6th April to 30th June 2009.

 Sampling procedure-:

The sample was selected of them who are the customers/visitors M.O.S.L., V.I.P. Road
Dharampeth Nagpur irrespective of them being investors or not or availing the services or not. It
was also collected through personal visits to persons, by formal and informal talks and through
filling up the questionnaire prepared. The data has been analyzed by using
mathematical/Statistical tool.

 Sample size:

The sample size of my project is limited to 200 people only. Out of which only120 people had
invested in Mutual Fund. Other 80 people did not have invested in Mutual Fund.
 Sample design:

Data has been presented with the help of bar graph, pie charts, line graphs etc.


 Some of the persons were not so responsive.

 Possibility of error in data collection because many of investors may have not

Given actual answers of my questionnaire.

 Sample size is limited to 200 visitors of M.O.S.L. V.I.P. Road Dharampeth Nagpur

Branch, out of these only 120 had invested in Mutual Fund. The sample.

Size may not adequately represent the whole market.

 Some respondents were reluctant to divulge personal information which can

Affect the validity of all responses.

 The research is confined to a certain part of Nagpur.



1-(a) Age distribution of the Investors of Nagpur

Age Group <= 30 31-35 36-40 41-45 46-50 >50

No. of 12 18 30 24 20 16

Investors invested in Mutual Fund




15 30
10 18 20
5 12

<=30 31-35 36-40 41-45 46-50 >50
Age group of the Investors

According to this chart out of 120 Mutual Fund investors of Nagpur the most are in the

age group of 36-40 yrs. i.e. 25%, the second most investors are in the age group of 41-

45yrs i.e. 20% and the least investors are in the age group of below 30 yrs.

(b). Educational Qualification of investors of

Educational Number of
Qualification Investors
Graduate/ Post Graduate 88

Under Graduate 25

Others 7

Total 120


Graduate/Post Graduate
Under Graduate


Out of 120 Mutual Fund investors 71% of the investors in Nagpur are Graduate/Post

Graduate, 23% are Under Graduate and 6% are others (under HSC).

c). Occupation of the investors .

Occupation No. of
Govt. Service 30
Pvt. Service 45
Business 35
Agriculture 4
Others 6

No. of Investors 50
20 45
35 30
4 6
Govt. Pvt. Business Agriculture Others
Service Service
Occupation of the customers


In Occupation group out of 120 investors, 38% are Pvt. Employees, 25% are

Businessman, 29% are Govt. Employees, 3% are in Agriculture and 5% are in


(d). Monthly Family Income of the Investors of Nagpur.

Income Group No. of

<=10,000 5
10,001-15,000 12
15,001-20,000 28
20,001-30,000 43
>30,000 32
No. of Investors

20 43
15 32
5 12
<=10 10-15 15-20 20-30 >30
Income Group of the Investorsn (Rs. in Th.)


In the Income Group of the investors of Nagpur, out of 120 investors, 36%

investors that is the maximum investors are in the monthly income group Rs.

20,001 to Rs. 30,000, Second one i.e. 27% investors are in the monthly income

group of more than Rs. 30,000 and the minimum investors i.e. 4% are in the

monthly income group of below Rs. 10,000

(2) Investors invested in different kind of investments.

Kind of Investments No. of

Saving A/C 195
Fixed deposits 148
Insurance 152
Mutual Fund 120
Post office 75
Shares/Debent 50
Gold/Silver 30
Real Estate 65

Kinds of Investment

SC ilv

ce ol d



c e






0 50 100 150 200 250

g n

No.of Respondents

Interpretation: From the above graph it can be inferred that out of 200 people, 97.5% people
have invested in Saving A/c, 76% in Insurance, 74% in Fixed Deposits, 60% in Mutual Fund,

37.5% in Post Office, 25% in Shares or Debentures, 15% in Gold/Silver and 32.5% in Real Estate.

3. Preference of factors while investing

Factors (a) Liquidity (b) Low (c) High (d) Trust

Risk Return
No. of 40 60 64 36


18% 20%

32% 30%

Liquidity Low Risk High Return Trust


Out of 200 People, 32% People prefer to invest where there is High Return, 30% prefer to

invest where there is Low Risk, 20% prefer easy Liquidity and 18% prefer Trust

4. Awareness about Mutual Fund and its Operations-:

Response Yes No
No. of Respondents 135 65


Yes No


From the above chart it is inferred that 67% People are aware of Mutual Fund and

its operations and 33% are not aware of Mutual Fund and its operations.

5. Source of information for customers about Mutual Fund-:

Source of information No. of Respondents

Advertisement 18
Peer Group 25
Bank 30
Financial Advisors 62



No. of
30 62
25 30
10 18
Advertisement Peer Group Bank Financial
Source of Information


From the above chart it can be inferred that the Financial Advisor is the most important

source of information about Mutual Fund. Out of 135 Respondents, 46% know about

Mutual fund Through Financial Advisor, 22% through Bank, 19% through Peer Group

and 13% through Advertisement

6-Investors invested in Mutual Fund-:

Response No. of
YES 120
NO 80

Total 200



Out of 200 People, 60% have invested in Mutual Fund and 40% do not have invested in

Mutual Fund.
7. Reason for not invested in Mutual Fund-:

Reason No. of

Not Aware 65
Higher Risk 5
Not any Specific 10


Not Aware Higher Risk Not Any


Out of 80 people, who have not invested in Mutual Fund, 81% are not aware of Mutual

Fund, 13% said there is likely to be higher risk and 6% do not have any specific reason.
8. Investors invested in different Assets Management Co. (AMC)

Name of AMC No. of Investors

UTI 75
Reliance 75
ICICI Prudential 56
Kotak 45
Others 70

Name of AMC

Kotak 45
UTI 75

0 20 40 60 80
No. of Investors


In Nagpur most of the Investors preferred UTI and Reliance Mutual Fund. Out of 120

Investors 62.5% have invested in each of them, only 46% have invested in SBIMF, 47%

in ICICI Prudential, 37.5% in Kotak and 25% in HDFC.

9. Reason for invested in M.F.-:

Reason No. of
Associated with RBI 35
Better Return 5
Agents Advice 15


9% 64%

RBI Better Return AgentsAdvice


Out of 55 investors of MF 64% have invested because of its association with Brand SBI,

27% invested on Agent’s Advice, 9% invested because of better return.

10. Reason for not invested in M.F.-:

Reason No. of

Not Aware 25
Less Return 18
Agent’s Advice 22


Not Aware Less Return Agent's Advice


Out of 65 people who have not invested in MF, 38% were not aware with MF, 28% do

not have invested due to less return and 34% due to Agent’s Advice.

11. Preference of Investors for future investment in Mutual Fund-:

Name of AMC No. of Investors
UTI 45
Reliance 82
ICICI Prudential 80
Kotak 60
Others 75

Others 75

Kotak 60
Name of AMC

ICICI Prudential 80

Reliance 82


UTI 45


0 20 40 60 80 100

No. of Investors


Out of 120 investors, 68% prefer to invest in Reliance, 67% in ICICI Prudential, 63% in

SBIMF, 62.5% in others, 50% in Kotak, 37.5% in UTI and 29% in HDFC Mutual Fund.

12. Channel Preferred by the Investors for Mutual Fund Investment-:

Channel Financial Advisor Bank AMC

No. of 72 18 30




Financial Advisor Bank AMC


Out of 120 Investors 60% preferred to invest through Financial Advisors, 25% through

AMC and 15% through Bank.

13. Mode of Investment Preferred by the Investors-:

Mode of Investment One time Investment Systematic Investment Plan

No. of Respondents 78 42


One time Investment SIP


Out of 120 Investors 65% preferred One time Investment and 35 % Preferred through

Systematic Investment Plan.

14. Preferred Portfolios by the Investors:-

Portfolio No. of Investors

Equity 56
Debt 20
Balanced 44



Equity Debt Balance


From the above graph 46% preferred Equity Portfolio, 37% preferred Balance and 17%

preferred Debt portfolio.

15. Option for getting Return Preferred by the Investors-:

Option Dividend Payout Dividend Growth

No. of 25 10 85





Dividend Payout Dividend Reinvestment Growth


From the above graph 71% preferred Growth Option, 21% preferred Dividend Payout and

8% preferred Dividend Reinvestment Option.

16. Preference of Investors whether to invest in Sectoral Funds-:

Response No. of

Yes 25
No 95


Yes No


Out of 120 investors, 79% investors do not prefer to invest in Sectoral Fund because there

is maximum risk and 21% prefer to invest in Sectoral Fund.


 In Nagpur in the Age Group of 36-40 years were more in numbers. The second most
Investors were in the age group of 41-45 years and the least were in the age group of below 30

 In Nagpur most of the Investors were Graduate or Post Graduate and below HSC there
were very few in numbers.

 In Occupation group most of the Investors were Govt. employees, the second most
Investors were Private employees and the least were associated with Agriculture.

 In family Income group, between Rs. 20,001- 30,000 were more in numbers, the second
most were in the Income group of more than Rs.30, 000 and the least were in the group of below
Rs. 10,000.

 About all the Respondents had a Saving A/c in Bank, 76% Invested in Fixed Deposits,
Only 60% Respondents invested in Mutual fund.

 Mostly Respondents preferred High Return while investment, the second most preferred
Low Risk then liquidity and the least preferred Trust.

 Only 67% Respondents were aware about Mutual fund and its operations and 33% were

 Among 200 Respondents only 60% had invested in Mutual Fund and 40% did not have
invested in Mutual fund.

 Out of 80 Respondents 81% were not aware of Mutual Fund, 13% told there is not any
specific reason for not invested in Mutual Fund and 6% told there is likely to be higher risk in
Mutual Fund.

 Most of the Investors had invested in Reliance or UTI Mutual Fund, ICICI Prudential has
also good Brand Position among investors, SBIMF places after ICICI Prudential according to the

 Out of 55 investors of SBIMF 64% have invested due to its association with the Brand
RBI, 27% Invested because of Advisor’s Advice and 9% due to better return.

 Most of the investors who did not invested in MF due to not Aware of MF, the second
most due to Agent’s advice and rest due to Less Return.

 For Future investment the maximum Respondents preferred Reliance Mutual Fund, the
second most preferred ICICI Prudential, SBIMF has been preferred after them.

 60% Investors preferred to Invest through Financial Advisors, 25% through AMC (means
Direct Investment) and 15% through Bank.
 65% preferred One Time Investment and 35% preferred SIP out of both type of Mode
of Investment.

 The most preferred Portfolio was Equity, the second most was Balance (mixture of both
equity and debt), and the least preferred Portfolio was Debt portfolio.

 Maximum Number of Investors Preferred Growth Option for returns, the second most
preferred Dividend Payout and then Dividend Reinvestment.

 Most of the Investors did not want to invest in Sectoral Fund, only 21% wanted to invest
in Sectoral Fund.

Running a successful Mutual Fund requires complete understanding of the peculiarities of the
Indian Stock Market and also the psyche of the small investors. This study has made an attempt
to understand the financial behavior of Mutual Fund investors in connection with the preferences
of Brand (AMC), Products, and Channels etc. I observed that many of people have fear of
Mutual Fund. They think their money will not be secure in Mutual Fund. They need the
knowledge of Mutual Fund and its related terms. Many of people do not have invested in mutual
fund due to lack of awareness although they have money to invest. As the awareness and income
is growing the number of mutual fund investors are also growing.

“Brand” plays important role for the investment. People invest in those Companies where they
have faith or they are well known with them. There are many AMCs in Nagpur but only some
are performing well due to Brand awareness. Some AMCs are not performing well although
some of the schemes of them are giving good return because of not awareness about Brand.
Reliance, UTI, SBIMF, ICICI Prudential H.D.F.C. etc. they are well known Brand, they are
performing well and their Assets Under Management is larger than others whose Brand name are
not well known like Principle, Sunderam, etc.

Distribution channels are also important for the investment in mutual fund. Financial Advisors
are the most preferred channel for the investment in mutual fund. They can change investors’
mind from one investment option to others. Many of investors directly invest their money
through AMC because they do not have to pay entry load. Only those people invest directly who
know well about mutual fund and its operations and those have time.


 The most vital problem spotted is of ignorance. Investors should be made aware of the benefits.
Nobody will invest until and unless he is fully convinced. Investors should be made to realize that
ignorance is no longer bliss and what they are losing by not investing.
 Mutual funds offer a lot of benefit which no other single option could offer. But most of the
people are not even aware of what actually a mutual fund is? They only see it as just another investment
option. So the advisors should try to change their mindsets. The advisors should target for more and more
young investors. Young investors as well as persons at the height of their career would like to go for
advisors due to lack of expertise and time.

 Mutual Fund Company needs to give the training of the Individual Financial Advisors about the
Fund/Scheme and its objective, because they are the main source to influence the investors.

 Before making any investment Financial Advisors should first enquire about the risk tolerance of
the investors/customers, their need and time (how long they want to invest). By considering these three
things they can take the customers into consideration.

 Younger people aged under 35 will be a key new customer group into the future, so making
greater efforts with younger customers who show some interest in investing should pay off.

 Customers with graduate level education are easier to sell to and there is a large untapped market
there. To succeed however, advisors must provide sound advice and high quality.

 Systematic Investment Plan (SIP) is one the innovative products launched by Assets
Management companies very recently in the industry. SIP is easy for monthly salaried person as it
provides the facility of do the investment in EMI. Though most of the prospects and potential investors
are not aware about the SIP. There is a large scope for the companies to tap the salaried persons.