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Company Name : Bonanza Portfolio Pvt. Ltd.

and address Plot M-2, Cama Industrial Estate
Walbhat Road, Goregaon(e),
Mumbai- 400063

Industry Guide’s : Bhushan Ajani, Mobile: 9867711055

Details Fax: 022-26865762

Personal Details : Rishabh Kapoor Mobile: 9833123391

Address: Plot 134, Notre Maison, Sector 5B,
Near Charkop Bus Depot,
Kandivali, Mumbai.
Email :

Institute’s Details: Atharva Institute of Management Studies
Address: AET Campus, Malad-Marve Road,
Charkop Naka,Malad(W),
Mobile: 9821086497
Email :
Fax : +91-22-40294911

Table of

Chapter No. Title Page No.

Declaration from student 5
Certificate from organization 6
Certificate from Guide 7
Acknowledgement 8
Executive Summary 9

1 Introduction 10
1.1 Current Financial Sector 11
1.2 Company profile 15
1.3 Services Provided by Bonanza 17
1.4 Competitors of Bonanza 18

2 The Product
2.1 What is mutual fund 20
2.2 Concept of Mutual Fund 21

3 The Project 22
3.1 The Buying cycle 23
3.2 Rules for Selling of Financial Products 24
3.3 What is Distribution Channel 25
3.4 Distribution of Mutual Funds 25
3.5 Bonanza – An Advice Channel 27

Table of
3.6 Essentials of a Good Distribution 29
3.7 Role of various Channels 30
3.8 Importance of Distribution Channels 31

3.9 Distribution Staff at Bonanza 34

3.10 Training of Sub brokers at Bonanza 35
3.11 Establishing Channel Relationship 39

4 Research Methodology 41
4.1 Findings of the Research 44
4.2 Observations 47
4.3 Recommendations 53

5 Conclusions 54

6 Webliography 55

I Appendices
Questionnaire 56


I, RISHABH KAPOOR, hereby declare that this project report is the record of authentic work
carried out by me during the period from MAY 10, 2009 to JUNE 30, 2009 and has not been
submitted to any other University or Institute for the award of any degree / diploma etc.



This is to certify that Mr. RISHABH KAPOOR of Atharva Institute of Management Studies has
successfully completed the project work titled “IMPORTANCE OF CHANNEL IN SELLING
OF MUTUAL FUNDS” in partial fulfillment of requirement for the completion of MMS course
as prescribed by the University of Mumbai.

This project report is the record of authentic work carried out by him during his Summer
Training. He has worked under my guidance.

Bhaktidhara Mohapatra Dr. N S Rajan

Project Guide (Internal) Dean
Date: Atharva Institute of Management Studies


The successful completion of this report would not have been possible without the co-operation
and support of our Dean Dr. N. S RAJAN who is always a Motivating factor for me. I would like
to acknowledge the relentless and wholehearted support of our Director Dr. S
BHATTACHARJEE whose encouragement has made this project a Success.
I would like to thank my External Guide Mr. Bhushan Ajani for being a support factor in all
my appointments with the sub brokers and for teaching me the detailed aspects of selling a
Mutual Fund and a special Mention of the Vice President of Bonanza Portfolio Mr. Rakesh
Goyal who brings out the best in all his employees and always motivate us to perform better and
I am Thankful to my Internal Guide Mrs. Bhaktidhara Mohpatra who extended her full
support during the term of the project to make the project not only a source of knowledge but
also a skill enhancing platform.
Above All I would like to thank my Parents; without their blessings and support, this project
would not have been possible.

Without the support extended by all these, the success of the report would have been a mere
obligation, thank you once again.



With Market Sentiments turning Positive there has been a ripple effect seen in the Financial
Sector. When sensex had dropped from around 22000 to nearly 6000, all the Mutual Funds had
incurred huge losses and their NAV(Net Asset Value) was reduced to half (or even one-fourth in
few cases) of its value when sensex was above 15000.This had affected the sentiments of the
investors to a great extent. Now with the Market being stabilized with sensex at around 15000,
the confidence of investors have increased but still they are watchful about their investments and
always consult their brokers/ Financial Advisors for the investments. Hence irrespective of the
market conditions the distributors or Intermediaries always play a crucial role in success of a

In the past 25 years, there have been dramatic changes in how mutual funds are sold to the
investing public. Today The Distribution channels play a very crucial role in selling of Mutual
Funds primarily because AMCs are located at selected locations only so it’s the task of the
intermediaries /Distributors to ensure that the fund penetrates in the smaller towns as well. The
aim of this project is to highlight the types of the Distribution channels in Mutual Funds and their
importance in selling of the same and also the importance of maintaining good Channel

This project also includes a research done for the company to find out the opinion of the sub
brokers about the company and what the company needs to do to ensure long term relationship
with its sub brokers. The findings, observations and the recommendations for the company is
also a part of this report.

Chapter – I



With market sentiment turning positive due to the formation of a stable newly elected
government, the ripple effect is likely to felt across all the financial services in India. The
sectors, including banking and insurance, and mutual funds are all beginning to reap the benefits
of a good closure for 2008-09. In 2008-09, the Indian economy is estimated to have grown by 6.7
per cent. According to the latest Central Statistical Organization (CSO) data, financial services
and real estate sector rose by 9.5 per cent in the first quarter of 2009-2010.

The government has taken a number of steps in recent months to revive the economy, including
slashing interest rates, lowering factory levies and more than doubling the limit on foreign
investment in corporate bonds. The financial services space is a rapidly growing one in India.
The country received US$ 45 billion in foreign currency remittances from non-resident Indians
in 2008, the highest in the world.

The period April-May 2009 saw increased inflow in to equity with investors steadily turning
positive on equity according to mutual fund analysts. As per the Securities and Exchange Board
of India (SEBI), on May 15, net investment of mutual funds in equity was around US$ 83.3
million lowering to US$ 20.5 million on May 21. As against this, net investment of mutual funds
in debt has more than tripled from US$ 42.9 million on May 15 to US$ 134.2 million on May 31,

There is optimism in the economy as funds are investing in corporate bonds, making liquidity
available to enterprises. The total amount traded in corporate bonds tripled from US$ 17.8
million to US$ 55.7 million during May 15 to May 21, 2009.

The largest fund house, Reliance Mutual Fund, registered 16 per cent growth in its average assets
under management (AUM) to US$ 21.6 billion in May 2009 compared to April’s figure of US$
18.6 billion. The second-largest fund house, HDFC Mutual Fund, grew 18 per cent to US$ 16
billion, compared with the previous month’s figure of US$ 13.4 billion.

The Spice Group is now looking for a US$ 1-billion valuation in financial services business in
the next three to five years. It has put US$ 105.2 million as seed money for the financial services
business and is roping in a Singapore-based firm as a partner for the asset reconstruction

India has increased its exposure to American debt securities by over three-fold to US$ 38.2
billion till March 2009 as against US$ 11.8 billion in March 2008, according to the data from the
US Treasury Department.



The manner of investing in mutual funds has changed over a period of time for individuals. This
is likely to shift even more dramatically in the coming days.
The decision of the Securities and Exchange Board of India (SEBI) to abolish the entry load on
schemes has been a big surprise for everyone. For investors this signals a possible change in the
way they take their investment decisions.

There will be some benefit available, but at the same time there also has to be some element of
care taken in the process so that it is completed properly.

Entry load

The entry load is the additional expense that has to be paid by the investor when they make an
investment in the mutual fund. The entry load usually was in the range of 2-2.5 per cent of the
investment and this was an extra burden for the investor.
The load is usually used to cover various selling expenses of the scheme like payment of
distributor’s commission, miscellaneous expenses and so on. Till some time ago, there was an

option for the investor to actually save the entry load by making their own investments directly
and this ensured that the burden did not fall on them.

Now according to the new guidelines, the schemes should not charge any entry load at all so the
investor would not have to pay anything extra. When an entry load is charged, the investor ends
up getting a lesser number of units for the same investment.

So, if for example, the net asset value of the scheme is Rs 15 and the entry load is 2 per cent the
investor will actually get the units at Rs 15.30 which means that for the same investment there
will be a lesser number of units allotted to them.

Selection of scheme

Now with the abolition of the entry load, the investor has to concentrate on the process of
selecting the right scheme. There are such a large number of options that need to be considered
and this will require some element of work.

Investors will need to consider its performance more closely while making decisions. With no
entry load present, the final returns that are coming in for the investor will be influenced largely
by the performance or the returns that are generated by the scheme. In such a situation, the
investor would do well to concentrate more on the potential returns that can be generated, so that
this will help them in their decision-making.

The investor should also look at the fund manager, because this is an important factor that will
play a role for their selection.

Payment to distributor

The condition about how the investor goes about the entire investment process is important
because this can give rise to another element of negotiation.

Under the new conditions, if one uses the service of the distributor then there is no fixed fee for
the distributor that will be paid by the mutual fund. Rather than this, one will have to pay the
distributor, but this will have to be done after discussion and mutual agreement.

The figure will thus vary from person to person and hence there has to be a very clear idea about
the manner in which this part of the transaction will actually take place.

The amount that one is willing to pay and how one actually makes the decision and the points to
consider will vary from person to person, so the right balance needs to be struck in deciding this

Own efforts

There could be a lot of efforts that have to be done on their own by investors because of the
entire change due to the fact that there could be a very low interest from the distributor to
actually serve the customer.

With the financial incentive gone, there could be a reduction in the services and the only option
for the investor is to ensure that they complete a lot of work on their own.

This will require some more time and effort along with the knowledge about the process. The
effort could involve the issue of doing some amount of follow up or even communicating
directly with the mutual fund, but this can vary depending upon the exact situation for the
investor. This factor has to be brought into the consideration, as it will impact the way in which
the overall investment is done.

Bonanza a leading Financial Services & Brokerage House working diligently since 1994 can be
described in a single word as a "Financial Powerhouse". With acknowledged industry leadership
in execution and clearing services on

Exchange Traded Derivatives and cash market products. Bonanza has spread its trustworthy
tentacles all over the country with more than 1025 outlets spread across 340 cities.

It provides an extensive smorgasbord of services in equity, commodities, currency derivatives,

wealth management, distribution of third party products etc. Keeping in par with the modern
tech-savvy world , Bonanza makes an integrated and innovative use of technology; it also
enables its clients to trade online as well as offline and the strategic tie-ups with the latest
technology partners has earned Bonanza this prestigious place in one of the top brokerage houses
in the country. Client -focused philosophy backed by memberships of all principal Indian Stock
and Commodity Exchanges makes Bonanza stand apart from its competitors and a preferred
service provider in the industry for value-based services.

To add to our ever-growing achievements, a study by Dun and Bradstreet has

rated Bonanza as the SIXTH largest broking house in terms of equity terminal listings in the
country. If this is not enough, Bonanza Portfolio Ltd was recently nominated amongst the Top 3
Retail Financial Advisors of the country in an event conducted by CNBC-TV18 and OptiMix
Financial Advisor Awards 2008. Also Bonanza has been awarded by BSE the "Major Volume
driver for the year 2004-2005, 2006-2007 and 2008-2009".

1. Top Equity Broking House in terms of branch expansion for 2008*.

2. 3rd in terms of Number of Trading Accounts for 2008*.

3. 6th in terms of trading terminals in for two consecutive years 2007- 2008*.

4. 9th in terms of Sub Brokers for 2007*

5. Awarded by BSE 'Major Volume Driver 04-05, 06-07, 07-08’.

6. Nominated among the Top 3 for the "Best Financial Advisor Awards '08" in the category
of National Distributors - Retail instituted by CNBC-TV18 and OptiMix.

* As per the survey by DUN & BRADSTREET.


The company has Corporate Tie ups with Birla Sunlife ,Bajaj Allianz, ICICI Prudential, SBI ,
Aviva , Kotak Mahindra and Reliance for Life Insurance and General Insurance.
In General Insurance, Bonanza provides Insurance for Motor, Health, Travel,
Housekeeper, Shopkeeper, Marine, Personal and Group Insurance.


1. Mutual Funds

2. Insurance
• Life Insurance
• General Insurance

3. PMS

4. Share Broking

5. IPO

6. Currency Derivatives

7. Share Broking

8. Commodity Broking




Mutual Fund pools up the money from individual / corporate investors and invests the same on
behalf of the investors /unit holders, in equity shares, Government securities, Bonds, Call money
markets etc., and distributes the profits. The income earned through these investments and the
capital appreciation realised are shared by its unit holders in proportion to the number of units
owned by them. This pooled income is professionally managed on behalf of the unit-holders, and
each investor holds a proportion of the portfolio i.e. entitled not only to profits when the
securities are sold, but also subject to any losses in value as well.





R Recognition of Needs

E Evaluation of 22
E Eliminating Doubts

D Decide

Post Sale Service

1. Recognition of Needs: The First stage in the Buying cycle is to

understand the needs of the client, whether he wants to invest into Mutual funds or is
looking for life insurance/general insurance etc.

2. Evaluation of options: Once the needs are identified then the

corresponding products can be pitched to the client. For example If the client wants to invest
then Options are Mutual Funds, Fixed Deposits etc but if the client wants moderate as well
as assured returns then we would not pitch him for Mutual Funds rather we shall present
Different Fixed Deposits schemes to him.

3. Elimination of Doubts: Once it is known that the client would put

his money in Fixed deposits then the client is eager to know the different options like
manufacturing companies(Tata Motors, Jaypee Associates etc), Banks(HDFC, ICICI etc)
and many more so the client is interested in clarification of his doubts as to what is the
difference between investing in manufacturing companies and banks. Many people are
afraid that the manufacturing companies can go bankrupt and cannot be chased for their
money but bank will surely be returning their money although with less Interest but the
reliability is surely high.

4. Decide: When the client agrees on doing the business, the decision
is made to go ahead with the paper work. The customer can now look forward to receiving
the benefits of the proposed deal.

5. Post Sale Service: Once the client made a decision to invest

through the distributors then it is the responsibility of the distributors to provide good post
sale service to the client by updating him/her about the current market conditions and as per
the suggestions made by the research team what should he do with his investments i.e.
Should he hold the units or sell them.


1 In First Meeting with the customer identify where the customer is on the Buying

2 Until the need is recognized and stated by the customer do not pitch the product.

3 All Broking Customers have the same set of needs.

4 Use Few and Specific Background questions.

5 Needs Ranking is Important

6 Present aspects of products in terms of the ‘needs ranking’. Do not present everything
about Bonanza or the products.

7 Present only Benefits of the Products.

8 When Customer asks specific questions about the company he is at ‘Elimination of

Doubts Stage’, immediately attempt to close the sale.


Distribution: The Commercial activity of Transporting and Selling goods from a producer to
a consumer.

Channel: Any Distinct part of a distribution system through which a supplier reaches a

Distribution Channel: The mechanism by which products are directed to customers either
through Intermediaries or Direct.


Mutual funds are sold through five principal distribution channels

(1) The direct channel,

(2) The advice channel,
(3) The retirement plan channel,
(4) The supermarket channel and
(5) The institutional channel.

The first four channels primarily serve individual investors. In the direct channel, investors carry
out transactions directly with mutual funds. In the advice, retirement plan, and supermarket
channels, individual investors use third parties or intermediaries that conduct transactions with
mutual funds on their behalf. Third parties also provide services to fund investors on behalf of
mutual funds. The most important feature of the advice channel is the provision of investment
advice and ongoing assistance to fund investors by financial advisers at full-service securities
firms, banks, insurance agencies, and financial planning firms. Advisers are compensated
through sales loads or from asset-based fees.

The retirement plan channel primarily consists of employer-sponsored defined contribution plans
in which employers provide mutual funds and other investments for purchase by plan
participants through payroll deductions.

The supermarket channel is made up of discount brokers that offer mutual funds from a large
number of fund sponsors. Many of the fund offerings are subject to no transaction charges or
sales loads.

Businesses, financial institutions, endowments, foundations and other institutional investors use
the institutional channel to conduct transactions either directly with mutual funds or through
third parties.

1. In the direct channel, investors carry out transactions directly with mutual funds themselves
by mail, phone, the Internet, or at customer service centres.

2. In the advice channel, investors purchase and redeem shares through financial advisers at
securities firms, banks, insurance agencies, and financial planning firms.

3. In the supermarket channel, discount brokers offer a large number of mutual funds to
investors from a broad array of fund companies.

4. In the retirement plan channel, employers sponsoring defined contribution plans select a
limited number of mutual funds for retirement plan participants to purchase.

5. Finally, the institutional channel consists of non personal accounts held by trusts,
corporations, financial institutions, endowments, non profit businesses and other

In contrast to the institutional channel, investors in the other four channels are principally
individuals. Among these four channels, it is only in the direct channel that investors interact
with mutual funds themselves. In the other three channels — advice, supermarket, and
retirement plan — a third party or intermediary, whether a discount broker, financial adviser,
or a retirement plan administrator, places transaction orders with mutual funds on behalf of
investors and provides services to investors on behalf of mutual funds. In many instances, the
funds themselves may not know the identity of the investors but only that of the

As a share of mutual fund assets, the advice channel is the largest, accounting for an
estimated 55 percent of all mutual fund assets at the end of 2008. The retirement plan
channel is second in size with an asset share of 16 percent. The institutional channel has an
estimated 13 percent, the direct channel 12 percent, and the supermarket channel 5 percent of
all fund assets.

Bonanza- An Advice Channel

The principal feature of the advice channel is the provision of investment guidance, assistance,
and advice by financial professionals. These include full-service brokers at national wirehouses,
independent financial planners and advisers, registered sales representatives at banks and savings
institutions, and insurance agents. Such advisers help fund shareholders identify financial goals
such as retirement, tax management, education savings, and estate planning. They assess the risk

tolerance of their clients and select mutual funds and other investments to meet these goals. As
an intermediary between investors and funds, financial professionals conduct transactions for the
shareholder, maintain the financial records for the investments under their management, send
periodic financial statements to shareholders, and coordinate the distribution of prospectuses,
financial reports, and proxy statements to shareholders on behalf of the funds. Shareholders’
questions about their funds and accounts often are handled by the financial professionals rather
than by the fund companies themselves. Fund shareholders must compensate financial
professionals for their services with payments over and above the fees and expenses that their
fund is charged for the fund’s management. Alternatively, some financial professionals charge
their clients directly for their services. These advisers typically assess a fee amounting to a
percentage of an investor’s assets managed by the financial professional. This fee might range
from 1 to 2 percent of assets per year, depending on the size of the account.


The distribution channels that have evolved in India are: Independent Financial Advisors (IFA),
the big distribution firms, banks and direct selling, including online selling of mutual funds. The
various factors which influence the success of distribution channel are trust, customer servicing,
including multiple and accessible service points, good infrastructure, including IT support, the
comfort factor & exclusivity.

An efficient and effective distribution network is as important as any other consumer industry.
The customer base is huge here too. The industry since its inception has been trying hard to
attract retail investors by taking well calibrated steps. It has entered into previously untapped
markets. There is more stress on product innovation. Three years ago, there were very few
options before the high net worth individual (HNI), leave alone normal investors. Now, all
investors can invest in real estate, private equity and even stocks and mutual funds abroad. The
minimum investment amounts can be really small.

Retailisation of the Indian MF Industry

As already stated in brief, the retail push to MFs in India has been spearheaded by the big
distribution houses, IFAs and banks, including PSBs. MFs are now expanding their own
networks to this end. Online distribution, while catching up among the computer-savvy segment
of the public, will not be a very significant contributor, at least in the near future.

Essentials of a Good Distribution System

Distribution success for mutual funds or any financial product is dependent on certain key
elements. These are:

• Careful product selection

• A careful selection of internal sales staff (who will sell)

• Right targeting of customers - a properly graded geographical strategy based on a demographic

study will propel a smooth, seamless customer penetration and sales volumes

• Proper training - Training is the axle on which the entire distribution revolves. Continuous
training of the sales force is essential in this dynamic environment

• Educating/counselling the customer about products, keeping in mind rising customer

expectations and increasing buyer expertise

• After sales servicing

Role of Various Channels

 Direct Selling: Direct selling is the least significant element today. Normally, only very
big ticket items are done through this. Alternatively, it derives its inflows mainly from
online sales. However, recent changes in regulation are all set to give this channel a fillip.
MFs are gearing up by opening their own offices in more places. Also R&T Agents are
expanding their infrastructure to facilitate this.

 Organised distributors: Organised distributors are the backbone of MF distribution. They

have infrastructure and flexibility to adapt to the need of the hour. They too have realized
the importance of going to smaller centres and are establishing offices in urban and semi-
urban locations. This is the sector which needs to be nurtured to expand. Banks as
distributors: Mutual fund distribution by banks is emerging a key element. Banks have
huge potential to build and improve the retail segment, which needs to become as strong as
its institutional counterpart. Even among banks there are two major types of distributors.
There are those that handle wealth management of their clients and, on their behalf,
manage portfolios wherein investment in mutual funds is one asset class. Such banks have
sophisticated wealth management practices with qualified staff and well-heeled clients.
MNC banks, private banks and a few niche players (like HSBC, Citi, ICICI, HDFC, Kotak
etc) are examples. Then there are banks that use their networks to sell MFs as just another
financial service. Most of the PSBs and other commercial banks including large
cooperative banks fall under this category. For the banks the existing customer base serves
as a captive prospective investor base for marketing mutual funds. They have the
advantage of having already won the trust of the customer. There is no other distribution
channel that can have a more effective retail penetration across Tier-II and Tier-III cities as
well as across rural India. This channel has slowly realized its own potential and is now
emerging as a big player.

Abroad banks are among the leading fund supermarkets. The Post Office too has been
emerging as an effective channel. For all practical purposes, it can be clubbed with PSBs.
Banks with post offices are likely to emerge as a very crucial channel for “financial
inclusion” in the MF arena. This combination along with the online variants in the near
future will dominate the distribution of mutual funds.

 Independent Financial Advisors: Presently the IFA is the friendly neighbourhood guy –
one who is very effective in selling the product. However, he has to manage his costs from
the commission he gets. Advisory services are today given gratis. The scenario is changing
and the space in advisory services will undergo a rapid change in the next few years.
Financial Planning services will be much sought after and Certified Financial Planners will
be in demand for their specialized services.


Intermediaries (Channels) play a pivotal and valuable role in selling of Mutual Funds because as
a Broking firm Bonanza may not be able to reach maximum number of people on its own hence
they employ Sub brokers to encourage more & more clients to do business through Bonanza.

Bonanza Portfolio maintains a large database of its sub brokers and contacts them on a regular
basis for new product and services.

Hence Sub brokers convince their clients to do business through Bonanza Portfolio and
Bonanza in return pays them their commission. Commission can be either Brokerage or trail
commission. After the form filled by the client gets accepted by its company, the company gives
brokerage to Bonanza and Bonanza forwards 90% of this amount to the sub broker who had
convinced the client to do the Business for Bonanza. But trail Commission is given yearly to
only those sub brokers who are AMFI certified.

Following shows the importance of Distribution channels

1 Expanding the Distribution reach: AMCs are at selected locations only, it is ensured
by distributors that a fund penetrates in smaller towns as well.
It is because of their strong network in the smaller towns and cities that allows better
penetration of the fund. The Trustee companies realizing this ensures that the fund forms
are available with maximum agents and Broking firms so that more and more clients can
be reached.

2 Regularly updating about the Markets: The clients are also benefitted because the
Bonanza sends regular updates about the market to the clients in the form of a performance
sheet which shows performance of all open ended and close ended funds and hence the
clients are always aware about the market scenario.

3 Portfolio Advisory: The very dedicated research team which always keeps a close eye on
the market conditions helps the clients in deciding whether to hold a fund or to sell it.
These advices are very crucial and can lead to a huge profit or a great loss. This is a post
sale service which makes the clients happy and increases the brand value of a broking firm.

4 Settlement of Redemption: When a client invests through an intermediary then it is this

intermediary which ensures that the client gets his/her amount after redemption. Whenever
the client feels that he/she wants to sell all/some of the units of a fund then he approaches
his/her Broker(Bonanza) for redemption and Bonanza sends a person at client’s residence
and get the redemption form filled by him and then couriers it to the trustee company, The
company then sends the acknowledgement to the client and then in 2-3 days the amount
reaches the client.


AMFI stands for Association of Mutual Fund of India.

AMFI is an apex body of all Asset Management Companies (AMC) which has been registered
with SEBI. All the AMCs that have launched mutual fund schemes are its members. The
Association of Mutual Funds in India (AMFI) is dedicated to developing the Indian Mutual Fund
Industry on professional, healthy and ethical lines and to enhance and maintain standards in all
areas with a view to protecting and promoting the interests of mutual funds and their unit

Association of Mutual Funds India follows the principle of both protecting and promoting the
interests of mutual funds as well as their unit holders. It develops a team of well qualified and
trained Agent distributors. It implements a Programme of training and certification for all
intermediaries and other engaged in the mutual fund industry. It also disseminates information on
Mutual Fund Industry and undertakes studies and researches either directly or in association with
other bodies.

Mutual funds are emerging as an important financial intermediary for the investing public in
India. Conceptually and operationally they are different. The investors need to understand the
working of a mutual fund and the increasingly diverse and complex investment options brought

to them by a large number of mutual funds. Hence the key channel in bringing the mutual funds
to a large number of investors all over the country is the network of

The intermediaries/distributors have to take on the role of financial advisors to investors, a role
for which they need preparation. AMFI Mutual Fund Certification and Registration Programme
has been put together to give the fund distributors the knowledge and insights required for them
to become both better intermediaries and more informed mutual fund advisors.

The Securities and Exchange Board of India (SEBI) has made mandatory for any entity / person
engaged in marketing and selling of mutual fund products to pass AMFI certification test
(Advisors Module) and obtain registration number from AMFI. Firms and corporates will have
to obtain certification of registration from AMFI and all employees of corporate distributors
engaged in selling and marketing of mutual fund products have to pass the AMFI certification
test (Advisors Module) and obtain registration with AMFI before canvassing business of mutual

The advantage of having an AMFI certificate comes into the picture for Trail Commission
because like other Financial Service Providers Bonanza also gives trail to only those sub brokers
who are AMFI certified.

Another Advantage of AMFI Certification is that the distributors have complete knowledge and
understanding of the working of mutual fund in its totality which helps the distributors to
convince and motivate the investors especially when the economy is going through a rough



The List of the Candidates who have cleared AMFI examination is displayed on the website, the distribution team sends messages using the software XLERATOR to all

the successful candidates and attracts them to work for Bonanza. Interested Candidates contact
Bonanza and hence becomes its sub broker.

This is the way software works:

Firstly Bonanza buys the software XLERATOR and registers on the site after which the company’s licenses gets registered and then in excel
sheet an additional toolbar gets inserted by the name Xlerator. Now when the company wants to
send messages to all the successful AMFI certified candidates then first company find their
contact details from amfi’s site and then sends message to all of them. This is a very economic
software for the company because using this software the company is able to promote itself in
the most cost effective manner.


The Distribution staff at Bonanza is always supposed to be on the field to promote the different
products, to hire the new sub brokers, to encourage the clients to invest in the new Mutual Funds
or simply to meet the current Sub brokers & have their feedback on the services offered by
Bonanza. Many sub brokers are unable to attend the training session which is organized in the
company and hence are unaware about the product so it is the responsibility of the distribution
team to make such sub brokers aware about the new product which is done by meeting them
personally and explaining them all the details about the product.

Majority of the times, the sub brokers do not have any complaints about the services offered by
Bonanza but there are instances where they are not happy mainly because they have not received
their commission Cheques on time. I came across one such instance where the sub broker had
not received his commission for the business which he had done a year back and he had been a
very potential customer for us but because of this experience he stopped doing business through
us. When I visited him he showed me the records of all the transaction detailing on
Application/Folio number of the forms which helped me trace the details in accounts department

& found out that the Cheques were issued way back & it kept coming back because of address
problem so a fresh Cheque was issued and was I hand delivered the Cheque to him and then he
gave us a business of 1 lac.

The Distribution team hence ensures that we provide the best sales and post sales service
to all our sub brokers by picking up filled forms from their residence, keeping a track of their
Cheques, sending them acknowledgement within 2 days of collection of the forms so that they
are always satisfied with our service which is very important in this competitive market.


Bonanza trains its sub brokers by conducting training sessions in the branch office every
weekend and the intimation for the same is given to them via Telephone calls. The training is
given by the representative from the company which is coming with the New Fund Offer (NFO).
The training not only involves the information about the product but also involves means of
selling the product with ease i.e. all the distinguished points are so well highlighted that selling
that product becomes very easy. The training session is usually conducted on weekends so that
maximum number of sub brokers can come and attend the training session.

This section shows the training of Sub brokers for a New Fund Offer- Reliance Infrastructure

After knowing the Government’s Intention of investing some $500 billion in infrastructure by
2012 to attract foreign investment and boost economic growth, Mr. Anil Ambani was quick in
announcing its New Fund Offer (NFO) by the name Reliance Infrastructure Fund and appointed
Mr. Sunil Singhania as its Fund Manager. Experts from the Industry knows the role essayed by
Mr. Sunil Singhania in the outstanding performance of Reliance Growth and hence Reliance
Fund started off so well because many investors were ready to invest in the name of Mr. Sunil

The Prime objective of the fund is to invest the total amount collected from the investors in
infrastructure that includes Telecomm, Roads, Railways, ports etc.

The Distribution of the fund is as shown below:

Types of Instruments Normal Asset allocation (%) Risk Profile

Minimum Maximum
Equities and Equity related 65% 100% Medium to High
Debt and money market 0% 35% Low to Medium

The minimum amount for the retail investors is Rs. 5000 and that for Institutional Investors is
Rs. 5 crore and starts with NAV of Rs. 10 plus applicable Entry Load.

Entry Load is 2.25% for investment upto 2 crore, 1.25% for investment between 2 crore and 5
crore and nil if investment is above 5 crore. Whereas the exit load is 1% if redemption is done
within a year. After a year No Exit load shall be applicable.

USP of Reliance New Fund Offer

Normally for any Mutual Fund when the client wants to sell all the units, He/she has to go to the
broker and submit the redemption form after which the broker sends the same in the company
where the NAV will be verified and then the total amount will reach the client in 3-4 days but
Reliance provided an option by the name ATM( Any Time Money) and as per that the clients
will be getting ATM cards using which they can withdraw the amount any time and the units

corresponding to the amount withdrawn will be deducted from the original units and the
remaining units will be displayed. This allows clients to withdraw the amount whenever they

Hence It was Bonanza’s responsibility to train its sub brokers on how to promote the NFO
amongst their clients. To do that the training sessions were held in the company but not many
sub brokers were present there & hence the Distribution team had to ensure that each and every
sub broker have the complete knowledge about the product so Telephone calls were made to the
sub brokers to fix appointment with them. Once an appointment was given the people from the
Distribution Department would go and explain the NFO to the sub brokers and to clients also (If

The Training was divided into 2 sessions:

1. In the First Session the product knowledge was imparted to the sub brokers
i.e. the in depth explanation of each and every clause so that when the customer is stuck
somewhere then the sub broker is able to clarify the point and hence close the deal.

2. In the second session all the necessary tactics to sell the NFO effectively was provided to
the sub brokers. This session was an important one because it showed how the product can
be sold to a new / not very active
Investor and also to the one who is extremely active in the market and all that the sub
broker had to do was to play with the terminologies.

For example If the client is relatively new to the market then obviously if we tell him about
the fund manager and how the fund would be distributed in stocks and Fixed securities
then the client will not get impressed but if he/she is told about the returns assured
(minimum) and in what time then he would surely pay attention and might even close the

And if the client is smarter who keeps an eye on the stock Market and knows that the other
products of Reliance is not doing well then it takes something extra to convince him/her for

investing . In such cases the client already knows about the risk prevailing in the market so
to tell him that his money will get doubled in 2 years wouldn’t be a smart move so a better
way to pitch the product would be to tell him how Mr. Sunil Singhania (The Fund
Manager) would be investing the total accumulated fund which would be in Telecomm,
Roads, Railways, ports etc and when Mr. Manmohan Singh after winning the elections
have announced a huge amount towards improving India’s Infrastructure then this sector is
bound to grow no matter what. This way and also ensuring other benefits it is possible to
close the deal with such clients as well.

Promotion of Reliance Infrastructure fund

The Reliance has been aggressively promoting their New Fund Offer (NFO) through all the
possible Mediums; Be it Electronic Media (All News Channels), Print Media (The Economic
Times, The Business Standard, DNA Money etc), Hoardings or posters on Busses and Trains in
order to convey the message to all the investors that this is the right time to invest in
infrastructure. The message to all the broking firms was clear Promote it by all possible means
and generate sales.

At Bonanza, We were engaged in promoting Reliance Infrastructure fund and hence we had
installed Stalls at Malls (Mega Mall, Jogeshwari) and Residential Complex (Thakur Complex,
Kandivali (e)) where we would go and approach people and tell them about the product. Even
though most people would not listen to what the product is, but those who stayed actually were
interested in investing and hence gave us their contact details so that we could send our sales
person with the form and hence this is a good medium which shows that there are several other
modes of promoting your product which are comparatively cost efficient and you are able to
directly communicate with the people and hence get to know their side of the story and
consequently pitch the product.

Pitfalls of Reliance Infrastructure Fund

1. Even though Reliance Infrastructure Fund had all the nice features but still if an
investor is smart then he/she can easily find pitfalls in Reliance NFO, Firstly this is a
sector fund i.e. the fund manager has his hands tied up so no matter how hard he tries
he has to invest in Infrastructure only.

2. The company was investing 1.75% of the total fund in expenses like
Selling and Distribution expenses compared to 1.5% which is an industry’s ideal
figure. Hence the investor could easily figure out that the company is investing more
of its fund in its expenses and hence lesser amount is actually being invested.

Even though there were these pitfalls but since we are into selling we have to make sure that the
customer buys what we are selling irrespective of its drawbacks and so it was a challenging job
but still we were able to convince the customers to invest.

This way Bonanza was able to attract many investors and did the business of over 10 crore for
Reliance Infrastructure Fund which is as per the target that was set for Bonanza and the team is
glad that we could reach there just on time.


Since channel members must be convinced to handle a marketer’s product it makes sense to
consider channel partner’s needs in the same way the marketer considers the final user’s needs.
However, the needs of channel members are much different than those of the final customer.

• Delivery – Intermediaries want the product delivered on-time and in good condition in
order to meet customer demand and avoid inventory out-of-stocks.

• Profit Margin – Intermediaries are in business to make money so a key factor in their
decision to handle a product is how much money they will make on each product sold.
They expect that the difference (i.e., margin) between their cost for acquiring the product
from a supplier and the price they charge to sell the product to their customers will be
sufficient to meet their profit objectives

• Other Incentives – Besides profit margin, Intermediaries want other incentives to entice
them especially if they are required to give extra effort selling the product. These
incentives may be in the form of additional free products or even bonuses (e.g., bonus,
free trips) for achieving sales goals.
For example In case of Reliance Infrastructure Fund, To ensure that the sub brokers at
Bonanza gives their 100% in selling the NFO there was a scheme by the name Monsoon
Dhamaka under which the sub brokers will be rewarded with pen drives, mp3 players,
Home theatre system etc depending upon the Business they do for Reliance Fund.

• Training – Some products require the intermediaries to have strong knowledge of the
product including demonstrating the product to customers. Marketers must consider
offering training to intermediaries to ensure the intermediaries has the knowledge to
present the product accurately.

• Promotional Help – Intermediaries often seek additional help from the product supplier to
promote the product to customers. Such help may come in the form of funding for
advertisements, point-of-purchase product materials, or in-store demonstrations.


1. Introduction to Research – This research was meant for the sub brokers of Bonanza to
find out how satisfied they are with the services offered by the firm and what do they feel
about the Training sessions organized in the firm. This research was conducted in
Mumbai region and the sample size is 50. Geographically the areas of Kandivali, Malad,
Andheri, Vile parle, Borivali, Khar, Bandra and Goregaon were taken into consideration
because majority of the sub brokers are from these regions. Moreover, The sub brokers in
areas like Dombivali, Kalyan, Dahanu Road who could not be reached because of
distance constraint were contacted via emails and telephone calls.

2. Objectives of Research – Following illustrates the objectives of the research:

a) To find out what the sub brokers think of Bonanza portfolio limited.

b) To find out the effectiveness of the training sessions organized by the company.

c) To find out what the company needs to do to have Long Term Relationship with
its Clients.

d) To find out which is the biggest competitor of Bonanza and what unique services
are provided by the competitors?

3. Collection of data: For collection of data following methods were used:

a) During the Calls: The Majority of the Questionnaires were filled up by the Sub
brokers during the appointments i.e. When we meet the sub brokers either for training
or to solve their queries then just before concluding the meeting, the questionnaire
was handed over to them and they would fill it with a smile.

b) By mailing the Questionnaires: The Sub brokers who could not be reached
personally were sent the Questionnaire with the request to return after completing the

c) Through Telephonic Interviews: The Female sub brokers who were not having
internet connection preferred to reply to the Questionnaire over the phone. Although
there were several instances when the sub brokers would not take much interest in
this activity but still I was successful in getting a lot of information through this

4. Defining the Hypothesis-

i) Null Hypothesis: The proximity of training location has no effect on sub
broker’s attendance at the training sessions.

ii) Alternate Hypothesis: The proximity of training location has an effect on sub
broker’s attendance at the training sessions.
5. Mode : SPSS( Statistical Package for Social Studies)


1. How did you come to know about Bonanza Portfolio Ltd.?

2. The USP of Bonanza Portfolio Ltd.

3. Biggest Competitor of Bonanza Portfolio Ltd.

4.The most preferred product at Bonanza

5.The areas of improvement for Bonanza Portfolio Ltd.

6. How often do you attend the training Session organized in the company?

7.The Reasons for not attending the Training Sessions

Cross Tabs

1. Cross Tab to find out how Quality of Service delivered by Bonanza affects

Customer’s decision on having Long Term Relation with the company.

"What do you think about Quality of Service delivered by Bonanza" * "Would you
like to have a long term Relation with Bonanza" Crosstabulation
"Would you like to have a
long time Relation with
Yes no Total
"What do you think I am very happy 24 6 30
about Quality of I want better
14 2 16
Service delivered by service
Bonanza" Better Commission
3 1 4
and trail structure
Total 41 9 50

Interpretation: The Cross-tab shows that out of 50 sub brokers, there are 30 who are very
happy with the service and 24 such sub brokers would want to have long term
relation with Bonanza but there are 9(out of 50) who do not want to have long
term Relation with us because they are not very happy with the services.

2. Cross Tab to find out how many AMFI Certified sub brokers are aware of

advantages of being AMFI Certified.

"Are you AMFI/ IRDA certificate" * "Are you aware of advantages of being AMFI
certified" Crosstabulation
"Are you aware of advantages of
being AMFI certified"
Yes No Total
"Are you AMFI/ IRDA Yes 32 0 32
certificate" No 5 13 18
Total 37 13 50

Interpretation: The Cross Tab shows that out of 50, 32 are AMFI certified and all of them are
aware of its advantages but remaining 18 are not AMFI certified and 16 of this 18 are not aware
of advantages of being AMFI certified.

3. Cross Tab to find out the reasons for lack of attendance at Training Sessions.

"How often do you attend the training sessions organized by the company" * "Reasons
for not attending Training Sessions" Cross tabulation
"Reasons for not attending Training
Proximity of
Lack of Training Other plans at
Time location weekends Total
"How often do you Not very often 6 19 6 31
attend the training Sometimes 3 11 2 16
sessions organized by Very often
1 0 2 3
the company"
Total 10 30 10 50

Interpretation : The above Cross tabulation shows that out of 50 people majority of the people
(31) attend the sessions very rarely and although two out of the three factors (‘Lack of Time’ and
‘ Other plans at Weekends’ cannot be controlled ) but the third factor proximity of training
location can be taken care of by the firm.


1. To find out how correlated are Quality of Service at Bonanza and its impact
on Long Term Relationship of clients with Bonanza.

"What do you
think about "Would you
Quality of like to have a
Service long time
delivered by Relation with
Bonanza" Bonanza"
Spearman's rho "What do you think Correlation
1.000 .797**
about Quality of Coefficient
Service delivered by Sig. (2-tailed) . .000
Bonanza" N 50 50
"Would you like to Correlation
.797** 1.000
have a long time Coefficient
Relation with Bonanza" Sig. (2-tailed) .000 .
N 50 50
**. Correlation is significant at the 0.01 level (2-tailed).

There is a high Degree of Direct Correlation (0.797) between Quality of Service delivered by
Bonanza and its impact on sub brokers having Long term relationship with the firm. Hence if the
sub brokers are Happy with the service then they would have a long term relation with the firm
which is what a firm needs “Loyal Customers”.

2.To Find out how correlated are Preference Product at Bonanza and its impact
on Business they have done through Bonanza.

"On an
Average How
"Which is much
your Business have
Preferred you done
Product at through
Bonanza" Bonanza"
Spearman's rho "Which is your Correlation
1.000 -.055
Preferred Product at Coefficient
Bonanza" Sig. (2-tailed) . .707
N 50 50
"On an Average How Correlation
-.055 1.000
much Business have Coefficient
you done through Sig. (2-tailed) .707 .
Bonanza" N 50 50

There is a very low negative correlation (-0.055) between the preferred product AND how much
business Sub brokers have done which shows that there are sub brokers whose preferred product
is Mutual fund (Option a of Q.9) but have done a business of over 3 crore (Option e of Q.8) and
another sub broker with same preferred product but has done a business of less than 3 lacs
(option a of Q.8) hence there is no correlation between these two parameters.


Since the sample size is 50(Greater than 30) so Chi-Square test is used for testing the

A Test is performed to find out how the proximity of Training Location affects the Lack of
Attendance at Training Sessions. We have already defined the Hypothesis before performing this
test as:

i) Null Hypothesis : The proximity of training location has no effect on sub broker’s
attendance at the training sessions.

ii) Alternate Hypothesis: The proximity of training location has an effect on sub broker’s
attendance at the training sessions.

Chi-Square Tests

Value df Asymp. Sig. (2-sided)

Pearson Chi-Square 5.032 a
2 .081
Likelihood Ratio 6.046 2 .049
Linear-by-Linear Association 1.079 1 .299
N of Valid Cases 50
a. 2 cells (33.3%) have expected count less than 5. The minimum expected count is 1.20.

The Chi- square test revealed the significant association between the ‘Proximity of Training
Location’ and its impact on ‘Attendance at Training sessions’. From the Chi- Square output table
we see a significance level of 5.032 has been achieved. This shows a significant association
between the two variables at 91.9% confidence level (100-8.1).

Hence it can be concluded that at 90% confidence level, PROXIMITY OF TRAINING

LOCATION and ATTENDANCE AT TRAINING SESSIONS are significantly associated.

Recommendations for Bonanza

1. In order to retain the sub brokers and ensure that they have a long term relation with us, it is
very important that the company keep providing good service to all our sub brokers and
ensure that those who are not interested to have Long Term Relation changes their mind.

2. Around 36% people are not AMFI certified and further 89% of such Non AMFI people are
not even aware of its advantages so I would suggest that the company organizes the training
session for AMFI certification which would further build a good rapport about the firm in the
minds of the people.

3. It is very important that Bonanza keep updating the clients about daily market status and
also pay the brokerage to its sub broker on time ensuring that the sub brokers get what they
deserve and hence keep doing business for us in the future also.

4. Around 33% of those people who do not attend the training sessions do not do so because of
the proximity of training location which shows that in order to attract more and more sub
brokers for attending the training sessions it is very important that the training is organized
at more locations so that sub brokers can attend training sessions accordingly.


1. The Research shows that Good Sales Service is the USP of Bonanza and the company
should hold on to the customers by providing them the kind of services they prefer.

2. The company should continuously update the clients about the market conditions and also
they should be sending the commission to the sub brokers on time to ensure that the
customers are loyal to the firm.

3. The company should ensure that more & more sub brokers should attend the training
sessions so that they are well aware about the product and its selling skills.

4. The major reason for not attending the training session is ‘The proximity of training
location’ so that more and more people are comfortable with the location and hence can
attend the sessions.

5. There is a high degree of correlation between Quality of Service delivered by Bonanza and
its impact on the sub broker’s decision to have a long term relation with them.

Hence Intermediaries play a very important role in selling of financial products. It depends on
how the Brokerage houses holds on to their sub brokers and encourage them to get the maximum
business for the firm.













Name : Sub Broker code:

Q.1 How did you find out about bonanza
a) Through Friends/colleagues
b) Internet
c) Sales Person from Bonanza
d) other sub brokers

Q.2 what do you like the most about Bonanza?

a) Good Sale Services
b) Good Commission Structure
c) Nice Post Sale Service
d) Trail Structure is good
e) All of the above

Q.3 Are you a sub broker of any other firm apart from Bonanza?
a) Yes b) No
If, Yes Please Specify the name
a) Kotak Securities
b) Anand Rathi
c) SMC Securities
d) Reliance Securities
e) Motilal Oswal
f) Other please specify______________________________________

Q 4 How do you rate bonanza on the scale of 1 to 5 ?

(1 represents least satisfied and 5 being highly satisfied)

Sales Service _____________

Speedy Service _____________
Post Sale Service _____________

Commission Structure _____________
Trail Structure _____________

Q.5 What are the areas of improvement for Bonanza Portfolio Ltd.?
a) Continuously update the clients about market status
b) Timely Payment of Brokerage
c) Send updates on New products as early as possible
d) Competitive Commission Structure

Q.6 Would you like to have a Long Term Relation with Bonanza?
a) Yes b) No

Q.7 What do you think about quality of service delivered by Bonanza?

a) I am very happy with the service and don’t have any complaints or issues
b) I want Better after Sales Service
c) I want better commission and trail structure
d) Any other__________________________________________________

Q.8 On an average how much Business have you done through Bonanza (in the Last 12 months)?
a) 1 lac - 5 lacs
b) 5 lacs – 15 lacs
c) 15 lacs – 30 lacs
d) More than 30 lacs
e) More than 3 Crore

Q 9 Which is your Preferred Product from the following:

a) Mutual Fund c) Life Insurance
b) General Insurance d) PMS
e) Share broking and Derivatives f) Others___________________

Q.10 How often do you expect Bonanza Portfolio to inform your clients about Daily Market
status or NAV?
a) Daily
b) Weekly
c) Monthly

Q.11 How often do you attend the training sessions organized by the company (In the Last 12
a) Not very often
b) Sometimes
c) Very often
d) Every Week
e) Have not attended even a single session but i am looking forward to attend in the upcoming

Q.12 Is Proximity of training location a reason for not attending the Training sessions?
a) Yes
b) No

IF No, Which of the following is a reason for the same?

a) Lack of Time
b) Don’t receive calls for the same
c)Other Plans at Weekends

Q.13 If you have attended training sessions then according to you how effective are these
a) Not much effective
b) Somewhat Effective
c) Very Effective
d) Not attended the sessions yet

Q.14 Are you AMFI/IRDA certified?
a) Yes b) No

Q.15 Are you aware of advantages of being AMFI/IRDA certified?

a) Yes b) No

Q.16 Would you recommend your friends /Relatives/Colleagues to be a sub broker at Bonanza
Portfolio Ltd. ?
a) Yes b) No