1. A PROJECT REPORT ONPERFERENCE OF THE ADVISORS TOWARDS MUTUAL
FUND AT KARVY SECURITIES LTD., JAMNAGAR SUBMITED BY Badiyani Amit
(MBA IV SEM.) ACEDAMIC YEAR 2007-09 SUBMITTED TOSHRI JAYSUKHLAL
VADHAR INSTITUTE OF MANAGEMENT STUDIES JAMNAGAR. AFFILIATED TO
SAURASHTRA UNIVERSITY RAJKOT.Shri Jaysukhlal Vadhar Institute of
Management Studies, Jamnagar 1
2. ACKNOWLEDGEMENTI am really happy and exited in representing
this summer trainingproject report before you.I must express my
gratitude towards KARVY SECURITIES LTDfor giving mean opportunity
to work with on this report.And of course I am very much thankful
to our honorable Dy.Director Prof. Ajay Shah (PROJECT GUIDE) for
giving meopportunity and his guidance help me through out preparing
thisreport. He has also provided me a valuable suggestions
andexcellence guidance about this training, which proved very
helpfulto me to utilize my theoretical knowledge in practical
field.At last I am also thankful to my friends, to all known and
unknownindividuals who have given me their constructive advise,
educativesuggestion, encouragement, co-operation and motivation
toprepare this report. EXECUTIVE SUMMARY Shri Jaysukhlal Vadhar
Institute of Management Studies, Jamnagar 2
3. Indias economy is highly developing. The development is
taken placedue to the growth in the financial system. This
financial systemprovides the background to various investors
regarding varied optionsto invest. Thus, development of the economy
depends on how theseinvestors invest for the well being in long
run.As financial markets become more sophisticated and complex,
investorsneed a financial intermediary who provides the required
knowledge andprofessional expertise on successful investing. Mutual
Funds representperhaps the most appropriate investment opportunity
for investors. Nowonder the concept of Mutual Fund was initially
developed in the U.S.market, but the entry of the concept in the
Indian Financial Marketwas in the year 1964 with the formulation of
the UTI, at the initiativeof the RBI and Govt. of India.For most
people, money is a delicate matter and when it comes toinvesting
they are wary. Simply because there are many investmentoptions out
there, each out promising the other. An important questionfacing
many investors is whether to invest in Banks, National Savings,Post
office, Non-banking finance companies, Fixed deposits, Sharesetc.
or to invest distinctively in Mutual Funds.It has been perceived
that there is huge potential market in the regionof Saurashtra.
Thus an exploratory research with the hypothesis Theregion of
Saurashtra being progressively industrializing &
developingshould provide a large & wider market share for
Mutual Fund has beendone.Thus the purpose of this research was to
find why people do notactively invest in mutual fund in spite of
various benefits likeProfessional management, Diversification,
Convenience liquidity,Flexibility, Tax benefits etc. as well as to
find out potential of businessof KARVY in distribution of Mutual
Fund in Jamnagar City.After performing the detailed exploratory
research by interviewingdifferent persons who act as investment
advisor like Insurance advisorand Post office advisor etc. with the
help of questionnaire, certain Shri Jaysukhlal Vadhar Institute of
Management Studies, Jamnagar 3
4. facts were revealed regarding the view about Mutual Funds in
the mindof investors.I have observed that approximately 60% of the
people are unaware ofMutual Funds but most of them are interested
to know about MutualFunds and ready to attend seminar arranged by
KARVY. They are alsointerested to work with KARVY if sufficient
information is provided tothem about Mutual Fund and KARVY.People
from service class prefers safety of income plus the regularincome
as well as tax benefits while on the other hand Professional
andBusinessman focus on high return with some risk.For growth and
development of the Mutual Fund Industry, themisconception regarding
Mutual Fund should be removed & theawareness for the same
should be made. Shri Jaysukhlal Vadhar Institute of Management
Studies, Jamnagar 4
5. INTRODUCTION COMPANY DETAILSBackgroundKarvy Consultants
Limited was established in 1982 at Hydrabad. It wasestablished by a
group of Hydrabad-based practicing CharteredAccountants. At initial
stage it was very small in size. It was startedwith a capital of
Rs. 1,50,000.In starting it was only offering auditing and taxation
services. Later, itacts into the Registrar and Share transfer
activities and subsequentlyinto financial services and other
services like Financial ProductDistribution, Investment Advisory
Services, Demat Services,Corporate Finance, Insurance etc.All
along, Karvys strong work ethics and professional
backgroundleveraged with Information Technology enabled it to
deliver quality tothe individual. A decade of commitment,
professional integrity andvision helped Karvy achieving a
leadership position in its field when ithandled largest number of
corporate and retail that proved to be asound business
synergy.Today, Karvy has access to millions of Indian shareholders,
besidescompanies, banks, financial institutions and regulatory
agencies. Overthe past one and half decades, Karvy has evolved as a
veritable linkbetween industry, finance and people.In January 1998,
Karvy became first Depository Participant in AndhraPradesh. An ISO
9002 Company, Karvys commitment to quality andretail reach has made
it an Integrated Financial Services Company.Today, company has 230
branch offices in 164 cities all over the India.The company adds 5
new offices every month to the companys evergrowing national
network in every nook and corner of the country. Thecompany service
over 16 million individual investors, 180 corporate andhandle
corporate disbursements that exceed Rs.2500 Crores. Shri Jaysukhlal
Vadhar Institute of Management Studies, Jamnagar 5
6. WHERE KARVY STAND IN THE MARKET?KARVY is a legendary name in
financial services, Karvys credit isdefined by its mission to
succeed, passion for professionalism,excellent work ethics and
customer centric values.Today KARVY is well known as a premier
financial services enterprise,offering a broad spectrum of
customized services to its clients, bothcorporate and retail.
Services that KARVY constantly upgrade andimprove are because of
companys skill in leveraging technology. Beingone of the most
techno-savvy organizations around helps company todeliver even more
cost effective financial solutions in the shortestpossible
time.What bears ample testimony to Karvys success is the faith
reposed incompany by valued investors and customers, all across the
country.Indeed, with Karvys wide network touching every corner of
thecountry, even the most remote investor can easily access
Karvysservices and benefit from companys expert advice. Shri
Jaysukhlal Vadhar Institute of Management Studies, Jamnagar 6
7. KARVY GROUPKarvy Consultants LimitedKarvy Securities
LimitedKarvy Investor Services LimitedKarvy Stock broking
LimitedKarvy Computer Shares Pvt. Ltd.Board of DirectorsKarvy
Consultants LimitedParthasarathy CYugandhar MRamakrishna M SPrasad
V PotluriRobert GibsonSanjay Kumar DhirR Shyamsunder [Table1: BODs
of Karvy Consultants Limited] Karvy Investor Services
LimitedParthasarathy CYugandhar MRamakrishna M S [Table2: BODs of
Karvy Investor Services Limited] Shri Jaysukhlal Vadhar Institute
of Management Studies, Jamnagar 7
8. Karvy Securities LimitedParthasarathy CYugandhar
MRamakrishna M SAjay Kumar KWilliam SamuelNicholas Tully [Table3:
BODs of Karvy Securities Limited]Karvy Stock Broking
LimitedParthasarathy CYugandhar MRamakrishna M SAjay Kumar KKutumba
Rao VWilliam SamuelNicholas Tully [Table4: BODs of Karvy Stock
Broking Limited] Shri Jaysukhlal Vadhar Institute of Management
Studies, Jamnagar 8
9. Mission Statement of KarvyAn 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 advantageof new
opportunities or respond to new market conditions.Karvys mission
statement is To Bring Industry, Finance and Peopletogether.Karvy is
work as intermediary between industry and people. Karvy workas
investment advisor and helps people to invest their money same
wayKarvy helps industry in achieving finance from people by issuing
shares,debentures, bonds, mutual funds, fixed deposits etc.Companys
mission statement is clear and thoughtful which guidegeographically
dispersed employees to work independently yetcollectively towards
achieving the organizations goals.Vision of KarvyCompanys vision is
crystal clear and mind frame very directed. To bepioneering
financial services company. And continue to grow at ahealthy pace,
year after year, decade after decade. Companysforay into IT-enabled
services and internet business has provided anopportunity to
explore new frontiers and business solutions. To build acorporate
that sets benchmarks for others to follow. Shri Jaysukhlal Vadhar
Institute of Management Studies, Jamnagar 9
10. Behind the Picture: What Customers matter for KARVY? The
underlying picture forming answer for above question is given
below. Market Brand Customer Power Preference Value RELATIONSHIPS
OUR COMPETITIVE ADVANTAGE [Fig.1 Competitive Advantage of Karvy]
Every year with this picture keeping in mind Karvy accelerate with
Recovery, Revival and Reappearance. Karvy has started 2004 on a
strong note with the realization to signal some of the challenges
it faced previous year. In a competitive market and a branded
business, Karvy need to carefully manage itself to avoid down
trading or brand shifts by consumers. For Karvy, Jamnagar branch
2003 was truly exhilarating because of: Successful implementation
of a carefully crafted strategy. Excellence in execution. Immense
learning enabling to set up a launch pad for revitalizingitself.
Shri Jaysukhlal Vadhar Institute of Management Studies, Jamnagar
10
11. Some competitive advantages are long lasting. These are
intangible, difficult to replicate and thus more sustainable. Karvy
has focused on some of these to gain competitive advantages. There
are: Winning culture and a desire to excel in everything Karvy do.
Strong meaningful relationships with Customers along with
StrategicPartners in which Karvy operate and above all, its own
staff. Karvy value and carefully nurture relationships with
customers. Karvy truly believe that more than technological prowess
and business process innovations, it is the focus on relationships
which has been the corner stone of satisfying and successful
presence in India over many years. This has been possible with deep
insight of consumer behavior as well as market demand drivers,
understanding of the arena where to operate and quality execution
all thanks to a greater team that makes this happen. Karvys
customers consider themselves part of Karvy family and share their
experiences and dreams with other customers and thus Karvy becomes
successful not only in relating customers but also gains new
customers from satisfied prevailing customers. Karvy want to create
a strong emotional bond with new customers promoted by prevailing
customers. Shri Jaysukhlal Vadhar Institute of Management Studies,
Jamnagar 11
12. Karvy
Values:IntegrityResponsibilityReliabilityUnityUnderstandingExcellenceConfidentialityKarvy
has adequate internal control systems and procedurescommensurate
with the size nature of its business. These system andprocedures
provide reasonable assurance of maintenance of properaccounting
records, reliability of financial information, protection
ofresources and safeguarding of assets against unauthorized use.
Shri Jaysukhlal Vadhar Institute of Management Studies, Jamnagar
12
13. KARVY SERVICES AN OVERVIEW1. Stock broking2. Demat
services3. Investment product distribution4. Investment advisory
services5. Corporate finance & Merchant banking6. Insurance7.
Mutual fund services8. IT enabled services9. Registrars &
Transfer agents10. Loans1. Stock Broking:KARVY is working as
Capital Market Intermediaries. Stockbrokers areregulated by SEBI
[Stock-brokers and Sub-brokers] Regulations, 1992.The stockbroker
is a member of the stock exchange. Stockbrokersare the
intermediaries who are allowed to trade in securities on
theexchange of which they are members. They buy and sell on their
ownbehalf as well as on behalf of their clients.Stockbrokers expand
their business by engaging sub-broker. Sub-brokers mean any person
not being a member of a stock exchange whoacts on behalf of a stock
broker as an agent or otherwise for assistingthe investors in
buying, selling or dealing in securities through
suchstock-brokers.2. Demat Services:Karvy is a depository
participant with the National SecuritiesDepository Limited (NSDL)
for trading and settlement ofdematerialized shares.Depository
Participants (DPs) are described as an agent of thedepository. They
are intermediaries between the depository and theinvestors. The
relationship between the DPs and the depository is Shri Jaysukhlal
Vadhar Institute of Management Studies, Jamnagar 13
14. governed by an agreement made between the two under
DepositoriesAct.A DP can offer depository-related services only
after obtaining acertificate of registration from SEBI.Since Karvy
is also in the broking business, investors who use Karvysdepository
services get a dual benefit. They can use Karvys brokerageservices
to execute transactions and Karvys depository services tosettle
them.3. Investment Products Distribution:Company is also concern
with the distribution of investment productslike(a). Fixed
Deposit(b). Bonds(c). IPO(a). Fixed Deposit:KARVY is dealer of 34
fixed deposits of various types which includesfixed deposits of
Public Sector, Non Banking Finance Companies,Housing Finance
Companies and Manufacturing Companies.Company is dealer of
following Fixed DepositsPUBLIC SECTORSl. No. Company Name1 HUDCO2
Sardar Sarovar Narmada Nigam Ltd.3 Tamilnadu Power Finance
Corporation Ltd.4 NTPC [Table5: Public Sector FD with which Karvy
deals]NON BANKING FINANCE COMPANIES Shri Jaysukhlal Vadhar
Institute of Management Studies, Jamnagar 14
15. Sl. No. Company Name1 Ashok Leyland Finance Ltd.2 Bajaj
Auto Finance Ltd.3 Birla Home Finance Ltd.4 Cholamandalam
Investment & Finance Co. Ltd.5 Escorts Finance Ltd.6 First
Leasing Company of India Ltd.7 IDBI Suvidha8 Nicco Uco Alliance
Credit Ltd. [Table6: FD of Non Banking Finance Companies with which
Karvy deals]HOUSING FINANCE COMPANIESSl. No. Company Name1 Can Fin
Homes Ltd.2 Dewan Housing Finance Corporation Ltd.3 Gruh Finance
Ltd.4 HDFC Ltd.5 PNB Housing Finance Ltd.6 Sundaram Home Finance
Ltd. [Table7: FD of Housing Finance Companies with which Karvy
deals]MANUFACTURING COMPANIESSl. No. Company Name1 A P Paper Mills
Ltd.2 Amtek India Ltd.3 Atul Ltd.4 Ballarpur Industries Ltd.5
Chambal Fertilizers & Chemicals Ltd.6 Escort Ltd.7 Greaves
Ltd.8 Gujarat Alkalies & Chemicals Ltd.9 Indian Express10
Ind-Swift Ltd.11 JK Industries Ltd.12 Jindal Steel & Power
Ltd.13 Sound Craft Industries Ltd.14 Supreme Industries Ltd. Shri
Jaysukhlal Vadhar Institute of Management Studies, Jamnagar 15
16. 15 Zuari Industries Ltd. [Table8: FD of Manufacturing
Companies with which Karvy deals](b). Bonds:Karvy is dealer of
following bondsRBI Saving BondsNHBREC(c). IPO:Company is also
provides services related to Initial Public Offer ofcompany.
Company provides stationary at the time of IPO as well asprovides
information to investors regarding IPO and solves theirqueries.4.
Investment Advisory Services:This division provides portfolio
management services to high net-worthindividuals and corporate. The
expertise of Karvy in research and stockbroking gives it the right
perspective to provide investment advisoryservices. Company
provides advisory services to its clients.Financial goal of each
individual investor varies according to his dream,ambition and
family size and future financial planning for the children &old
age pension for self and wife so does the pathway to achieve
it.Karvy apply the principles of Financial Planning as both science
& art, itunderstands the time horizon, risk bearing capacity
and investmentgoals of investors keeping in mind their psyche and
financial needs.Based upon this Karvy helps individual investors to
plan their entire lifeup to retirement, Taxes, Insurance needs and
other important personalfinancial goals. It designs portfolio for
investor to invest their saving invarious financial products like
shares, bonds, debentures, mutual funds, Shri Jaysukhlal Vadhar
Institute of Management Studies, Jamnagar 16
17. fixed deposits, insurance etc., Company design portfolio by
consideringfollowing factors.Investors requirement of getting money
back,Investors willingness to take risk,Investors tax planning
etc.5. Corporate finance & Merchant banking:Corporate finance
is the financial activity of corporation. It deals withthe firms
operations with regard to investing and financing. Itconcerned with
how firms raise capital and the consequences ofalternative methods
of raising capital. Firms capital can be raised byraising loans,
issuing shares, and acquiring or merging with otherbusinesses by
public or private companies.Merchant banking is a financial
intermediation that matches entitiesthat need capital and those
that have capital. Hence they facilitate theflow of capital in the
market.Karvy enjoys SEBI category (I) authorization for Merchant
Banking.Karvy offers the full spectrum of Merchant Banking
Services,beginning from identifying the best time for an issue to
final stage ofmarketing it, to harvest unparalleled success.As a
merchant banker Karvy offer following services:Issue
managementInstrument designingPricing of the issueRegistration
process for the issue of sharesMarketing effortsFinal allotment to
investorsListing details on stock exchangesLoan syndicationLease
financingCorporate advisory servicesUnderwriting Shri Jaysukhlal
Vadhar Institute of Management Studies, Jamnagar 17
18. Portfolio management6. Insurance:Karvy is also dealer of
many private life insurance companies. AtJamnagar branch, company
is associated with dealing of followingcompanies.ICICI Prudential
Life InsuranceHDFC Life InsuranceTATA AIG Life Insurance7. Mutual
Fund Services:Since its inception in 1982, Karvy has demonstrated a
dedicationcoupled with dynamism that has inspired trust from
various segments corporate, government bodies and individuals.
Karvy has since beenperforming a pivotal role as the intermediary
the interface betweenthese players.With Mutual Funds emerging as a
distinct asset class, Karvy has made astrategic choice to leverage
the power of latest technology to providea cutting edge to its
services. Karvy, today, service nearly 80% of theasset management
companies (AMCs) across an extensive network ofservice centers with
assets under service in excess of Rs.10,000crores.Karvys ability to
mass customize and offer a diverse range ofproducts for a diverse
range of customers has helped mutual fundcompanies to uniquely
position themselves in the market place. Thesediverse range of
services cut across multiple delivery channels service centers,
web, mobile phones, call center has brought home thebenefits of
technology to investors, distributors, and the mutual funds.Going
forward, Karvy shall strive to create new products and
services,which would address the needs of the end customer.
Companys singleminded focus in delivering products for customers
has given it thedistinguished position of being the preferred
provider of financialservices in the country. Shri Jaysukhlal
Vadhar Institute of Management Studies, Jamnagar 18
19. List of Mutual Fund Clients of KARVY:1 Alliance Mutual
Fund2 Birla Mutual Fund3 Bank of Baroda Mutual Fund4 Can Bank
Mutual Fund5 Chola Mutual Fund6 Deutsche Mutual Fund7 DSP Merrill
Lynch Mutual Fund8 Franklin Templeton Investments9 GIC Mutual
Fund10 HDFC Mutual Fund11 HSBC Mutual Fund12 IL & FS Mutual
Fund13 JM Mutual Fund14 Kotak Mutual Fund15 LIC Mutual Fund16
Punjab National Bank Mutual Fund17 Prudential ICICI Mutual Fund18
Principal Mutual Fund19 Reliance Mutual Fund20 State Bank of India
Mutual Fund21 Standard Chartered Mutual Fund22 Sundaram Mutual
Fund23 SUN F&C Mutual Fund24 Tata Mutual Fund [Table9: List of
MF Companies with which Karvy deals]8. Income Tax enabled
services:Karvy has been started this service since March, 2004.
Karvy is workas TIN Facilitation Centre it provides following IT
enabled services.a. Distribution of PAN Card.b. Distribution of TAN
Card.c. Services related to e-TDS. Shri Jaysukhlal Vadhar Institute
of Management Studies, Jamnagar 19
20. Karvy work as an intermediary between NSDL and IT payers.
Karvyprovides various form for different IT enabled services and
guidepeople to fill that forms. It also solves queries of the tax
payers. Italso distributes PAN and TAN card to the tax payers.TIN
OverviewNational Securities Depository Ltd. (NSDL) has established
anationwide Tax Information Network (TIN) on behalf of the
IncomeTax Department (ITD). This is designed to make the tax
administrationmore effective, furnishing of returns convenient,
reduce compliancecost and bring greater transparency.While NSDL
will be the primary agency responsible for the
design,implementation and maintenance of TIN as per the
requirements ofITD, other agencies will also play key roles in the
TIN system.Karvy has established infrastructure required to provide
IT enabledservices so, Karvy provides TIN facilitation centers all
over India onbehalf of NSDL. Besides Karvy following companies can
also work asintermediary between NSDL and customers.Alankit
Assignments Ltd.Integrated Enterprise (I) Ltd.Shell Tran source
Ltd. Shri Jaysukhlal Vadhar Institute of Management Studies,
Jamnagar 20
21. [Fig.2 TIN System]The banking system, being the agency that
collects the money onbehalf of the ITD against tax obligations from
the tax payers will belinked to the TIN central system to provide
accounting information ontax paid by various entities under various
heads. As banks arerelatively technology-enabled entities, they
will directly be linkedelectronically to the TIN central system
enabling online tax accounting.On the other hand, the entities
depositing the tax (deductors) varysubstantially with respect to
their computer skills and hence TINdesign provides for TIN
Facilitation Centers managed by NSDL to helpdigitization and upload
of tax payment related information to the TINcentral system.Besides
NSDL, UTI Investor Services Ltd. may also provides ITEnabled
services. Shri Jaysukhlal Vadhar Institute of Management Studies,
Jamnagar 21
22. 9. Registrars & Transfer agents:In 1985, Karvy entered
the Registrar and Share Transfer Business tocreate a market niche
in the competitive field of financial services. In1994-95, it
reached a milestone when it processed 104 Public Issuesconstituting
46 per cent market share. Now in its second decade ofexistence,
Karvy is the leader in the industry: In an opinion pollconducted by
an independent market research agency - MARG, Karvyhas been rated
as Indias Most Admired Registrar on variousparameters: -Overall
Excellence.Handling of VolumesTimely DispatchQuality Management and
Technological Up gradation.A SEBI Category 1 Registrar, So far,
Karvy has handled over 675ISSUES as Registrars to public issues
processed over 52 millionapplications and is servicing over 16
million investors from variouslocations spread over 205 clients.10.
Loan:Karvy has recently started this service at selected branches
of metrocities. This service has not been started in
Saurashtra-Kucch region.Karvy provides loans for following.Vehicle
LoanHome LoanPersonal Loan Shri Jaysukhlal Vadhar Institute of
Management Studies, Jamnagar 22
23. MARKETING STRATEGY OF KARVYMarket Positioning:Market
positioning statements of Karvy are At Karvy we give yousingle
window service and We also ensure your comfort.So, Karvy focus on
the consumers who prefer almost all investmentactivities at same
place by providing number of various financialservices. At Karvy a
person can purchase or sell shares, debenturesetc. and at the same
place also demat it. Karvy also provides otherinvestment option to
the same person at same place like Mutual Fund,Insurance, Fixed
Deposit, and Bonds etc. and help the person indesigning his
portfolio. By this way Karvy provides comfort to itscustomers.Karvy
is also positioned according to Ries and Trout. Karvy is promotedas
a no. 1 investment product distributor and R & T agent of
India.Target Market:Karvy uses demographic segmentation strategy
and segment peoplebased on their occupation. Karvy uses selective
specialization strategyfor market targeting. Target person for the
Karvy Stock Broking andKarvy Investment Service are persons who can
work as sub-broker forthe companies. Companies focus on Advisors of
Insurance and postoffice, Tax consultants and CAs for making
sub-broker. Shri Jaysukhlal Vadhar Institute of Management Studies,
Jamnagar 23
24. Marketing channel System:Karvy uses one level marketing
channel for investment productdistribution. Sub-brokers work as
intermediary between consumer andcompany. Company has both forward
and backward flow of activitythrough channel. Company distributes
stationery, brokerage, andinformation forward to its sub-broker.
The sub-brokers send filledforms, queries, amount of investment
etc. back to the company.Training Channel Members:Karvy provides
training to the sub-brokers because they will be viewedas the
company by the investors. The executives of Karvy explainvarious
new schemes of investment to the sub-brokers with itsobjective,
risk factors and expected return. Company also periodicallyarrange
seminar to guide sub-brokers.Advertising and Promotion:The
objective of advertising of Karvy is to create awareness
aboutservices of Karvy among investors and sub-brokers and increase
sub-brokers of Karvy.Company doesnt give advertisement in media
like TV, Newspapers, andMagazines etc. Karvys advertisement is made
indirectly by thecompanies associate with it. Karvy is R & T
agent of around 700companies. They publish name, address and logo
of Karvy on theirannual report.Karvy also publish its weekly Stock
Market Newsletter Karvy BazaarBaatein and monthly magazine The
Finapolis to guide investors andsub-brokers about market. Shri
Jaysukhlal Vadhar Institute of Management Studies, Jamnagar 24
25. HR POLICY OF KARVYKarvys HR Department is located at
Hyderabad.Recruitment and Selection Policy:The upper level members
like zonal managers, regional managers,branch managers and senior
executives are recruited by publishingrecruitment advertisement in
leading national level newspaper. Thequalified applicant are then
called for interview and selected.The regional manager has
authority to select lower level employee likepeon, marketing
executives, accountant etc. by approval of zonalmanager.Training
and Development:Continuous training and upgrading technical,
behavioral and managerialskills is a way of life in Karvy. Karvy
encourages employees to honetheir skills regularly to enable them
to face the challenges of thechanging requirements of customers
that fit market up and down.Training needs analysis is done on a
regular basis and systematicmethodologies are ensured that skills
and capabilities of all employeesare constantly upgraded to enable
them to perform in the challengingwork environment.New employee has
given training under experienced employee. The newemployee work
under experience employee and observe his allactivities. When
company employs new technology or there is anychange in the working
of company the training program is arranged. Shri Jaysukhlal Vadhar
Institute of Management Studies, Jamnagar 25
26. Employee Motivation:Karvys employees are highly empowered.
They dont have to report anyperson of the same branch but they
report upper level branch. E.e.Marketing executive of Jamnagar
branch directly reports SeniorMarketing executive of Baroda zonal
office.If particular branch earn certain profit then Karvy gives
them specialincentives. E.g. last year Karvy had arranged two days
tour of Div fortheir employees of Rajkot, Jamnagar, Junagadh and
Bhavnagar branchwhich was totally free of cost. This also helps in
maintaining co-operation between employees. Shri Jaysukhlal Vadhar
Institute of Management Studies, Jamnagar 26
27. NATIONAL LEVEL ORGANIZATION CHART CM & MD (Hyderabad)
GM GM GM (Marketing) (Finance) (HRM) Zonal Manager (Baroda)
Regional Manager (Rajkot) Branch Mgr. Branch Mgr. Branch Mgr.
(Junagadh) (Jamnagar) (Bhavnagar) Accountant Sr. Executives
Executives [Fig.3 National Level Organization Chart of Karvy] Shri
Jaysukhlal Vadhar Institute of Management Studies, Jamnagar 27
29. Quality Policy Of Karvy: To achieve and retain leadership,
Karvy shall aim for complete customer satisfaction, by combining
its human and technological resources, to provide superior quality
financial services. In the process, Karvy will strive to exceed
Customers expectations. Quality Objectives of Karvy Build in-house
processes that will ensure transparent and harmoniousrelationships
with its clients and investors to provide high quality of services.
Establish a partner relationship with its investor service agents
andvendors that will help in keeping up its commitments to the
customers. Provide high quality of work life for all its employees
and equip themwith adequate knowledge & skills so as to respond
to customers needs. Continue to uphold the values of honesty &
integrity and strive toestablish unparalleled standards in business
ethics. Use state-of-the art information technology in developing
new andinnovative financial products and services to meet the
changing needs of investorsand clients. Strive to be a reliable
source of value-added financial products andservices and constantly
guide the individuals and institutions in making a judiciouschoice
of same. Strive to keep all stake-holders (shareholders, clients,
investors,employees, suppliers and regulatory authorities) proud
and satisfied. Shri Jaysukhlal Vadhar Institute of Management
Studies, Jamnagar 29
30. Achievements of Karvy: Largest mobilizer of funds as per
PRIME DATABASE First ISO - 9002 Certified Registrar in India A
Category- I Merchant banker A Category- I Registrar to Public
Issues Ranked as "The Most Admired Registrar by MARG Handled the
largest- ever Public Issue - IDBI Strategic tie-up with Jardine
Fleming India Securities Ltd Handled over 500 Public issues as
Registrars Handling the Reliance Account which accounts for nearly
10 millionaccount holders First Depository Participant from Andhra
Pradesh Shri Jaysukhlal Vadhar Institute of Management Studies,
Jamnagar 30
31. SWOT ANALYSIS OF KARVY Strengths: Employees are highly
empowered. Strong Communication Network. Good co-operation between
employees. Number 1 Registrar and Transfer agent in India. Number 1
dealer of Investment Products in India. Weaknesses: High Employee
Turnover. Opportunity: Growth rate of mutual fund industry is 40 to
50% during last year andit expected that this rate will be
maintained in future also. Marketing at rural and semi-urban areas.
Threats: Increasing number of local players. Past image of Mutual
Fund. Shri Jaysukhlal Vadhar Institute of Management Studies,
Jamnagar 31
32. About Jamnagar Branch:Jamnagar branch comes under Rajkot
branch which is a regional officeof Karvy for Saurashtra Kutch
region. It was established on Jan. 2002.In Saurashtra there are
four Branch Offices of Karvy:RajkotJamnagarJunagadhBhavnagarIn
Jamnagar Karvy has started Demat Services on 21 June 2002.DP ID of
Karvy is IN300394.In Jamnagar Karvy has started IT enabled services
on Mar. 2004. Shri Jaysukhlal Vadhar Institute of Management
Studies, Jamnagar 32
33. INDUSTRY DETAILSFollowing are list of Mutual Fund companies
in India.Sr. No. Mutual Fund Name No. of Schemes1 Alliance Mutual
Fund 362 Benchmark Mutual Fund 53 Birla Mutual Fund 744 Bank of
Baroda Mutual Fund 175 Can Bank Mutual Fund 256 Chola Mutual Fund
457 Deutsche Mutual Fund 408 DSP Merrill Lynch Mutual Fund 409
Escorts Mutual Fund 1510 Franklin Templeton Investments 13011 GIC
Mutual Fund 512 HDFC Mutual Fund 7913 HSBC Mutual Fund 3214 IL
& FS Mutual Fund 4315 ING Vysya Mutual Fund 5516 JM Mutual Fund
5517 Kotak Mutual Fund 5618 LIC Mutual Fund 3519 Morgan Stanley
Mutual Fund 120 Punjab National Bank Mutual Fund 421 Prudential
ICICI Mutual Fund 12422 Principal Mutual Fund 6823 Reliance Mutual
Fund 7424 Sahara Mutual Fund 1225 State Bank of India Mutual Fund
5926 Standard Chartered Mutual Fund 10027 Sundaram Mutual Fund 5228
SUN F&C Mutual Fund 129 Tata TD Mutual Fund 10030 Taurus Mutual
Fund 9 Shri Jaysukhlal Vadhar Institute of Management Studies,
Jamnagar 33
34. 31 Unit Trust of India 4232 UTI Mutual Fund 66 [Table10:
Mutual Funds in India]Development of Mutual Funds in IndiaThe
mutual fund industry in India started in 1963 with the formationof
Unit Trust of India, at the initiative of the Government of India
andReserve Bank the. The history of mutual funds in India can be
broadlydivided into four distinct phasesFirstPhase-1964-87Unit
Trust of India (UTI) was established on 1963 by an Act
ofParliament. It was set up by the Reserve Bank of India and
functionedunder the Regulatory and administrative control of the
Reserve Bank ofIndia. In 1978 UTI was de-linked from the RBI and
the IndustrialDevelopment Bank of India (IDBI) took over the
regulatory andadministrative control in place of RBI. The first
scheme launched byUTI was Unit Scheme 1964. At the end of 1988 UTI
had Rs.6,700crores 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 upby public sector banks
and Life Insurance Corporation of India (LIC)and General Insurance
Corporation of India (GIC). SBI Mutual Fundwas the first non- UTI
Mutual Fund established in June 1987 followedby 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 fundin June 1989 while
GIC had set up its mutual fund in December 1990.At the end of 1993,
the mutual fund industry had assets undermanagement of Rs.47,004
crores.Third Phase 1993-2003 (Entry of Private Sector Funds) Shri
Jaysukhlal Vadhar Institute of Management Studies, Jamnagar 34
35. With the entry of private sector funds in 1993, a new era
started inthe Indian mutual fund industry, giving the Indian
investors a widerchoice of fund families. Also, 1993 was the year
in which the firstMutual Fund Regulations came into being, under
which all mutual funds,except UTI were to be registered and
governed. The erstwhile KothariPioneer (now merged with Franklin
Templeton) was the first privatesector mutual fund registered in
July 1993.The 1993 SEBI (Mutual Fund) Regulations were substituted
by a morecomprehensive and revised Mutual Fund Regulations in 1996.
Theindustry now functions under the SEBI (Mutual Fund) Regulations
1996.The number of mutual fund houses went on increasing, with
manyforeign mutual funds setting up funds in India and also the
industry haswitnessed several mergers and acquisitions. As at the
end of January2003, there were 33 mutual funds with total assets of
Rs. 1,21,805crores. The Unit Trust of India with Rs.44,541 crores
of assets undermanagement was way ahead of other mutual
funds.Fourth Phase since February 2003In February 2003, following
the repeal of the Unit Trust of India Act1963 UTI was bifurcated
into two separate entities. One is theSpecified Undertaking of the
Unit Trust of India with assets undermanagement of Rs.29,835 crores
as at the end of January 2003,representing broadly, the assets of
US 64 scheme, assured return andcertain other schemes. The
Specified Undertaking of Unit Trust ofIndia, functioning under an
administrator and under the rules framedby Government of India and
does not come under the purview of theMutual Fund Regulations.The
second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOBand
LIC. It is registered with SEBI and functions under the MutualFund
Regulations. With the bifurcation of the erstwhile UTI which hadin
March 2000 more than Rs.76,000 crores of assets undermanagement and
with the setting up of a UTI Mutual Fund, conformingto the SEBI
Mutual Fund Regulations, and with recent mergers takingplace among
different private sector funds, the mutual fund industryhas entered
its current phase of consolidation and growth. As at theend of
September, 2004, there were 29 funds, which manage assets
ofRs.153108 crores under 421 schemes.The graph indicates the growth
of assets over the years. Shri Jaysukhlal Vadhar Institute of
Management Studies, Jamnagar 35
36. 180000 160000 154018 140000 120000 121805 121778Rs. In
Crores 100000 80000 79464 60000 47000 40000 20000 4564 0 25 Mar-65
Mar-87 Mar-93 Jan-03 Mar-03 Sep-03 May-04 Years [Fig. 5: Growth in
Assets Under Management] [Source: www.amfiindia.com] Mutual Funds
Organisation There are many entities involved and the diagram below
illustrates the organizational set up of a mutual fund: Shri
Jaysukhlal Vadhar Institute of Management Studies, Jamnagar 36
37. Shri Jaysukhlal Vadhar Institute of Management Studies,
Jamnagar 37
38. 45% 42% 40% 36% 35% 30% 25% 20% 15% 14% 10% 5% 3% 4% 1% 0%
ELSS Income Market Gilt Growth Money Balanced Fund Type [Fig. 6:
Assets Under Management By Fund Type] [Source: www.amfiindia.com]
40% 38% 35% 30% 25% 21% 20% 19% 17% 15% 10% 5% 5% 0% Bank Joint-I
Joint-F Private Institutions Fund Type [Fig. 7 Assets Under
Management By AMC] [Source: www.amfiindia.com]Shri Jaysukhlal
Vadhar Institute of Management Studies, Jamnagar 38
39. REGULATORY BODIESFinancial System is basically responsible
for the major up and downs inthe economy. So, there are some
regulatory bodies on it which ensureseffectiveness in the
management of fund of the investors andtransparency in the
transactions. Ministry of Finance SEBI RBI Dept. of IT Stock
Brokers Commercial PAN R & T Agent Banks TAN Mutual Fund NBF
Co. e-TDS [Fig.8: Regulatory bodies] Shri Jaysukhlal Vadhar
Institute of Management Studies, Jamnagar 39
40. COMPETITORS DETAILS1. Bajaj CapitalIt was established in
1964 at Delhi. In 1965 it innovates a new financialinstrument
Companies Fixed Deposits and becomes the first companyto raise
Fixed Deposits. The objective of company is to provideprofessional
guidance to investors on where, when and how to investand to assist
the corporate sector in its resource raising activities.Bajaj
Capital became the first company to set up InvestmentCenters all
over India for this purpose. Today, Bajaj Capital has90 offices in
over 40 important Indian Cities and has a team ofaround 500
employees nationwide.Services providedMerchant bankingBuying and
Selling of Money Market InvestmentsDistribution of financial
productsInvestment 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 Shri Jaysukhlal Vadhar Institute of Management Studies,
Jamnagar 40
41. Financial Planning Investment planning Retirement planning
Insurance planning Childrens 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, Ahmedabad and Baroda. Volumes Handled Share
registry activities for over 100 corporate servicing over 10million
investors. Mutual fund operations for 25 funds, servicing over 4.5
millioninvestors. Billing & settlement plan for Indian
operations of IATA Geneva for 1.2million tickets per annum covering
(26 airlines & over 1200 agents). Services Offered: Registrars
and Transfer Agents Registrars to IPOs /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. Shri Jaysukhlal Vadhar Institute of
Management Studies, Jamnagar 41
42. 3. N.J.India Investments Pvt. Ltd.NJ India Invest (formerly
known as NJ Capital stocks) was started in1994 to cater to the
growing financial services sector. NJ India Investevolved out as a
client focused need based investment advisory firm.NJ regards
mutual fund as one of the best investment avenue availableto
satisfy any kind of investment need.NJ India Investment has 11
branches in Gujarat including 3 branches
inSaurashtra.RajkotJamnagarBhavnagar4. ICICI Securities Ltd.ICICI
Securities Limited (i-SEC) is a wholly owned
investment-bankingsubsidiary of ICICI Limited. ICICI is the only
non-Japanese Asianfinancial institution to be listed on the New
York Stock Exchange(NYSE). ICICI Securities was formed on 22nd Feb.
1993, when ICICIsMerchant Banking Division was spun off into a new
company, ICICISecurities today is Indias leading Investment Bank
and one of themost significant players in the Indian capital
markets.ICICI Brokerage Services Limited (IBSL) set up in March
1995, IBSLis a 100% subsidiary of i-SEC. It commenced its
securities brokerageactivities in February 1996 and is registered
with the National StockExchange of India Limited and The Stock
Exchange, Mumbai.ICICI has started a website ICICIdirect.com which
is the mostcomprehensive website, which allows you to invest in
Shares, Mutualfunds, Derivatives (Futures and Options) and other
financial products.ICICI has a large network of branches all over
India. Shri Jaysukhlal Vadhar Institute of Management Studies,
Jamnagar 42
43. Services offered:Merchant BankingDemat ServiceStock
Broking5. HDFCHDFC is the leading financial company in India. IT
has large network ofbranches all over India. HDFC Securities which
is fully subsidiary ofHDFC provides demat service.HDFC and its
subsidiary provides following services.Demat ServiceLife
InsuranceBanking ServiceHousing FinanceVehicle FinanceEducation
LoanPersonal LoanMutual Fund6. Kotak Securities Ltd.Kotak
Securities needs no introduction as one of the largest stockbroking
houses in the country and a leading distributor of primarymarket
offerings. Kotak Securities limited is a joint venture betweenKotak
Mahindra Bank and Goldman Sachs, the international
investmentbanking 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 SecuritiesDepository
Limited (NSDL) for trading and settlement ofdematerialized shares.
Shri Jaysukhlal Vadhar Institute of Management Studies, Jamnagar
43
44. Services offered:Stock BrokingFinancial Product
DistributionDemat ServicesInvestment Advisory Services7. Motilal
Oswal Securities Ltd.Motilal Oswal Securities Ltd (MOSt) is one of
the leading equityresearch and broking houses of India. MOSt has a
20-memberresearch team, which is engaged round the clock in
analyzing the Indianeconomy and corporate sectors to identify
equity investment ideas.Asia Money Brokers Poll 2002 has rated MOSt
as one of the bestIndian broking house, for research, for the
second time since 2000.Motilal Oswal is member of NSDL and CDSIL
for DP. It has widenetwork of branches. It has 158 branches all
over India.Services Offered:Demat ServicesStock BrokingInvestment
Advisory Service Shri Jaysukhlal Vadhar Institute of Management
Studies, Jamnagar 44
45. PRODUCT DETAILSMutual funds serve as a link between the
saving people and the capitalmarket in that they mobilize saving
from investors and bring them toborrowers in the capital markets.
In short, it is a common pool ofmoney into which investors place
their contribution that is to beinvested in accordance with a
stated objective.A mutual fund uses the money collected from the
investors to buythose assets, which are specially permitted by its
stated investmentobjective. When an investor subscribes to a mutual
fund, he/she buys apart of asset or the pool of funds that are
outstanding at that time.A mutual fund is constituted as an
investment company and an investorbuys into the fund, means he buys
the share of the fund and is knownas a unit holder. Since each unit
holder is a part of owner of a mutualfund, it is necessary to
establish the value of his part. Since the unitheld by an investor
evidences the ownership of the funds assets, thevalue of the total
asset of the fund when divided by the totalnumber of units issued
by the mutual fund gives us the value of oneunit. This is called as
Net Asset Value (NAV). Shri Jaysukhlal Vadhar Institute of
Management Studies, Jamnagar 45
46. STRUCTURE OF INDIAN MUTUAL FUNDS Mutual fund industry is
highly regulated by the government keeping in view of the
protection of investors interest as well as to maintain operational
transparency. In India SEBI Regulations Act, 1996, guides the
formation and operation of Mutual Funds. A Mutual Fund comprises of
4 separate entities. 1. Sponsor 2. Board of Trusties 3. Asset
Management Company 4. Custodian and Depositories 5. Distributors 1.
Sponsor: Sponsor is defined under SEBI regulation as any person
who, acting alone or in combination with another body corporate,
establishes a mutual fund. The sponsor gets the fund registered
with SEBI. The sponsors form a trust and appoint a Board of
Trustees. The sponsor must contribute at least 40% of the net worth
of theAMC. The sponsor must posses a sound financial track record
over 5 yearsprior to registration. Shri Jaysukhlal Vadhar Institute
of Management Studies, Jamnagar 46
47. 2. Board of Trustees: Mutual funds are managed by Board of
Trustees. Trust is created by a document called the Trust Deed that
is executed by fund sponsor in favour of trustees. The trustees
appoint the AMC and custodian with the prior approvalof SEBI. They
also approve all the schemes floated by the AMC. They have right to
dismiss the AMC, with the approval of SEBI. Half of the trustees
should be independent persons. Neither theAMC, nor its employees
can act as trustee. A trustee can not be appointed as a trustee of
two or more mutualfunds until and unless he is an independent
person or has permission from theMutual Fund where he is trustee.
Trustees can be removed only by prior approval of SEBI. 3. Asset
Management Company: The role of an AMC is to act as the investment
manager of the Trust under the Board supervision and direction of
the Trustees. The AMC is required to be approved and registered
with SEBI. The AMC of a Mutual Fund must have a net worth of at
least Rs. 10crore at all time. The AMC can not act as a trustee of
any other Mutual Fund. They will float schemes only after obtaining
the prior approval of theTrustees and SEBI. The director of AMC
should be a person of reputed of high standingand at least have
five years experience in relevant field. AMC can be terminated with
75% unit holders or majority of trustees. Shri Jaysukhlal Vadhar
Institute of Management Studies, Jamnagar 47
48. 4. Custodian and Depositories:As per SEBI Regulations
Mutual Funds shall have a custodian who is notany way associated
with the AMC. It carry outs the activity of safekeeping the
securities or participating, in any clearing system. Thecustodian
should be independent from sponsors and AMC and shouldhave a sound
track record and adequate relevant experience.As Indian capital
markets are moving away from having physicalcertificates to
ownership of these securities in dematerialized formwith
Depository. Mutual Funds dematerialized securities are hold
bydepository participant.5. Distributors:For a fund to sell units
across a wide retail base of individual investors,an established
network of distribution agents is essential. AMCs usuallyappoint
Distributors or Brokers, who sell units on behalf of the fund.
Abroker usually acts on behalf of several mutual funds
simultaneouslyand may have several sub-brokers under him for the
purpose ofdistribution of units. Shri Jaysukhlal Vadhar Institute
of Management Studies, Jamnagar 48
49. MUTUAL FUND A GLOBALLY PROVEN INVESTMENTWorldwide, the
mutual fund has a long and successful history. Thepopularity of
mutual fund has increased manifold. In developedfinancial market,
like US mutual funds have almost overtaken bankdeposits and total
assets of over US $ 3 trillion.In India, Mutual Fund industry
started with the setting up of UTI in1964. Public sector banks and
financial institution began to establishMutual Funds in 1987. The
private sector and foreign institutions wereallowed to set up
Mutual Fund in 1993.WHAT IS MUTUAL FUND?A Mutual Fund is a trust
that pools the savings of a number ofinvestors who share a common
financial goal. The money thus collectedis then invested in capital
market instruments such as shares,debentures and other securities.
The income earned through theseinvestments and the capital
appreciation realized is shared by its unitholders in proportion to
the number of units owned by them. Thus aMutual Fund is the most
suitable investment for the common man as itoffers an opportunity
to invest in a diversified, professionally managedbasket of
securities at a relatively low cost. Shri Jaysukhlal Vadhar
Institute of Management Studies, Jamnagar 49
50. Critical View About Mutual FundAdvantages:1. Portfolio
Diversification:Each investor in a fund is a part owner of all the
funds assets, thusenabling investor to hold a diversified
investment portfolio even with asmall amount of investment, which
would otherwise require big capital.2. Professional
Management:Mutual Funds provide the services of experienced and
skilledprofessionals, backed by a dedicated investment research
team thatanalyze the performance and prospect of companies and
selectssuitable investments to achieve the objectives of the
scheme.3. Diversification:Mutual Fund invests in a number of
companies across a broad cross-section of industries and sectors.
This diversification reduces the riskbecause all stock can not go
through a downtrend at the same time andin the same proportion. You
achieve this diversification through amutual fund with powerless
money that you can do on your own.4. Reduction of Transaction
Cost:The investors bear all the cost of investing such as brokerage
orcustody of securities. When going through the fund investor has
thebenefit of economies of scale; the funds pay lesser cost because
oflarger volumes, a benefit passed on to its investors.5.
Liquidity:By investing in Mutual Funds the investors can cash their
investment byselling their units to the fund if open-ended, or
selling them in thestock market if the fund is close ended. Shri
Jaysukhlal Vadhar Institute of Management Studies, Jamnagar 50
51. 6. Convenience & Flexibility:Mutual Funds Companies
offer investor to transfer their holding fromone scheme to other.7.
Tax Benefits:The investors are totally exempt from paying any tax
on the incomethey receive from the Mutual Funds.Investment up to
10000 in ELSS qualifies for tax rebate of 20%.8. Regulatory
oversight:Mutual funds are subject to many government regulations
that protectinvestors from fraud.9. Convenience:You can usually buy
mutual fund shares by mail, phone, or over theInternet.10.Well
regulatedLimitations:1. No Control over Costs:An investor in a
mutual fund has no control over the overall cost ofinvesting.
He/she has to pay investment management fees as long ashe/she
remains with the fund. Fees are payable even while the value ofthe
investment may be declining.2. No Tailor made Portfolios:Investors
who invest on their own can build their own portfolios ofshares and
bonds and other securities. Investing through fund meanshe/she
delegates this decision to the fund managers.3. Managing a
Portfolio of Funds: Shri Jaysukhlal Vadhar Institute of Management
Studies, Jamnagar 51
52. Availability of a large number of funds can actually mean
too muchchoice for the investor. He/she may again need advice on
how to selecta fund to achieve his/her objectives, quite similar to
the situation whenhe/she has to select individual shares or bonds
to invest in.4. Entry and Exit Cost:When large bodies like a fund
invest in shares, the concentrated buyingor selling often result in
adverse price movements i.e. at the time ofbuying, fund has to pay
high and vise-versa.5. No Guarantees:No investment is risk free. If
the entire stock market declines in value,the value of mutual fund
shares will go down as well, no matter howbalanced the portfolio.
Investors encounter fewer risks when theyinvest in mutual funds
than when they buy and sell stocks on their own.However, anyone who
invests through a mutual fund runs the risk oflosing money. Shri
Jaysukhlal Vadhar Institute of Management Studies, Jamnagar 52
53. MUTUAL FUND CYCLE [Fig.9: Mutual Fund Cycle] [Source:
amfiindia.com]From above cycle, it can be observed clearly that how
the money fromthe investors flow and they get returns out of it.
With a very smallamount of fund, investors pool their money with
fund managers.After studying the market, the fund manager invests
money of theinvestors in various securities like shares, bonds,
debentures,government securities etc. to achieve goal of the
investors.With ups and downs in the market returns are generated
and they arepassed on to the investors in form of dividend or
capital gain or lost.The above cycle is very clear and also very
effective.The fund manager while investing on behalf of investors
takes intoconsideration various factors like time, risk; amount
etc. so thathe/she can make proper investment decision. Shri
Jaysukhlal Vadhar Institute of Management Studies, Jamnagar 53
54. Types of Mutual FundTypes of Mutual Fund By Objective
Equity Fund Debt Fund Balanced Money Gilt Fund By Duration Open
Ended Close Ended Interval By Load Load Fund No Load Fund Other
Fund Tax Saving Index Fund Sector Fund Comm. Fund Offshore [Fig.10:
Types of Mutual Funds] Shri Jaysukhlal Vadhar Institute of
Management Studies, Jamnagar 54
55. 1. By objective:Investment goals vary from person to
person. While somebody wantssecurity, others might give more
weightage to returns alone. Somebodyelse might want to plan for his
childs education while somebody mightbe saving for the proverbial
rainy day or even life after retirement.With objectives defying any
range, it is obvious that the productsrequired will vary as well.
So, Mutual funds can be classified based onthe objectives of the
investor.(a). Equity Fund:Equity funds invest a major portion of
their corpus in equity sharesissued by companies. NAV of equity
funds are fluctuated by fluctuationin price of shares that it
holds. So there is a high risk as well as highreturn in equity
fund. Potential to earn in such funds is higher whenthey are
invested for long term.The leading example of such funds
arePrudential ICICI Growth Plan,Tata Pure Equity Fund,Reliance
Vision,Franklin India Prima Fund etc.(b). Debt Fund:Debt funds
invest in debt instruments debt instruments issued bygovernments,
private companies, banks and financial institutions. Byinvesting in
debt, these funds target low risk and stable incomeinvestors. These
funds are low risk low return funds.The leading examples areBirla
Income Plus,Principal Income Fund,HDFC Income Fund,UTI Bond Fund
etc. Shri Jaysukhlal Vadhar Institute of Management Studies,
Jamnagar 55
56. (c). Balanced Fund:A balanced fund is one that has a
portfolio comprising debtinstruments as well as preference and
equity shares. The idea is toreduce volatility of funds, while
providing some upside for capitalappreciation. They are best
suitable for the people looking for acombination for capital
appreciation and regular income and best timespend for such
investment is more than 3 years.The leading examples arePrudential
ICICI Balanced Fund,Birla Balance Fund,Franklin India Balance
Fund,Sundaram Balance Fund etc.(d). Money Market Fund:Money market
funds invest in securities of a short-term nature, whichgenerally
means securities of less than one-year maturity such asTreasury
Bills issued by governments, Certificates of deposit issued bybanks
and Commercial paper issued by companies.The major strength of
money market funds are the liquidity and safetyof principal that
the investors can normally expect from short terminvestments.The
leading examples arePrudential ICICI Liquid Plan,Templeton India
Liquid Fund,Grindlays Cash Fund etc.(e). Gilt Fund:These funds are
sort of government funds wherein the investments aremade in debt
instrument of government, which carry no risk of nonpayment of
interest as the RBI manages the payment of interest and Shri
Jaysukhlal Vadhar Institute of Management Studies, Jamnagar 56
57. principal on the investments. These funds are best suited
for regularincome and long term investment objectives.The leading
examples arePrudential ICICI Gilt Fund,Tata Gilt Securities
Fund,Templton India Government Securities Fund etc.2. By
Duration:(a). Open-ended Fund:An open ended fund is one that is
available for subscription andrepurchase on a continuous basis.
These schemes do not have a fixedmaturity period. Investors can
conveniently buy and sell units at NAVrelated prices which are
declared daily basis. The key feature of thisfund is liquidity.(b).
Close-ended Fund:A close ended fund has a stipulated maturity
period e.g. 5-7 years. Thefund is open for subscription only during
a specified period at the timeof launch of the scheme. Investors
can invest in the scheme at thetime of initial public issue and
thereafter they can buy or sell units onstock exchange where the
units are listed at NAV. These mutual fundschemes disclose NAV
generally on weekly basis.(c). Interval Fund:Interval funds combine
the features of open-ended and close-endedschemes. They are open
for sale or redemption during pre determinedintervals at NAV
related prices. Shri Jaysukhlal Vadhar Institute of Management
Studies, Jamnagar 57
58. Risk Return GridRisk Benefits offeredTolerance/Return Focus
Suitable Products by MFsExpected Bank/ Company FD, Liquidity,
BetterLow Debt Debt based Funds Post-Tax returns Balanced Funds,
Some Partially Liquidity, Better Diversified Equity Debt, Post-Tax
returns,Medium Funds and some debt Partially Better Management,
Funds, Mix of shares Equity Diversification and Fixed Deposits
Diversification, Capital Market, Equity Expertise in stockHigh
Equity Funds (Diversified as picking, Liquidity, well as Sector)
Tax free dividends [Table11: Risk Return Grid of various MF]3. By
Load:(a). Load Fund:Marketing of new mutual fund scheme involves
initial expenses. Theseinitial expenses may be recovered from the
investors by entry or exitload.(i). Entry Load or Front-end Load:If
initial expenses recovered from investors at the time of
investorsentry into the fund, by deducting a specific amount from
his initialcontribution it is called Entry Load. Shri Jaysukhlal
Vadhar Institute of Management Studies, Jamnagar 58
59. (ii). Exit Load or Back-end Load: If initial expenses
recovered at the time of the investors exit from the scheme, by
deducting a specified amount from the redemption proceeds payable
to the investor it is called exit load. (iii). Deferred Load: The
load amount charged to the scheme over a period of time is called a
deferred load. (b). No Load Fund: Funds that dont charge entry,
exit, or deferred load or any other charges for sales expenses are
called no load funds. Now, generally all Mutual Fund companies
charge 2 to 2.5% entry loadon equity fund. Generally there is no
exit load on equity and sectoral funds to maintainliquidity of that
funds. Generally there is no entry load on gilt scheme and income
fund. There is 0.25 to 1% exit load on gilt and income fund if
investors exitfrom fund before specified time which is generally 3
to 6 months. Shri Jaysukhlal Vadhar Institute of Management
Studies, Jamnagar 59
60. 4. Other types of fund:(a). Tax Saving Funds:These schemes
offer tax rebates to the investors under specificprovisions of the
Income Tax Act, 1961 as the Government offers taxincentives for
investment in specified avenues. E.g. Equity LinkedSaving Scheme
(ELSS). Pension schemes also offer tax benefits.The leading
examples arePrudential ICICI Tax Plan,Templeton India Pension
Plan,Franklin India Taxshield etc.(b). Index Funds:Index Funds
replicate the portfolio of a particular index such as theBSE
Sensitive index, S&P NSE 50 index (Nifty), etc. These
schemesinvest in the securities in the same weightage comprising of
an index.NAV of such funds are changed accordance with the change
in theindex.The leading examples areBirla Index Fund,HDFC Index
Fund,Prudential ICICI Index Fund,UTI Index Fund etc. Shri
Jaysukhlal Vadhar Institute of Management Studies, Jamnagar 60
61. (C). Sector Funds:These are the funds which invest in the
securities of only thosesectors or industries as specified in the
offer documents. E.g.Pharmaceuticals, Software, Petroleum etc.
These types of funds aremore risky compared to diversified
funds.The leading examples areBirla IT Fund,Pru. ICICI FMCG
Fund,Franklin India Pharma Fund etc.(d). Commodity Funds:Commodity
funds invest into the different commodities directly orthrough
shares of commodity companies. E.g. Commodity fund invest ingold or
shares of gold mines. Commodity funds have not yet developedin
India.(e). Off Shore Funds:These funds invest in equities in one or
more foreign countries thereby achieving diversification across the
countrys borders. However theyalso have additional risks such as
the foreign exchange rate risk andtheir performance depends on the
economic conditions of the countriesthey invest in. Shri Jaysukhlal
Vadhar Institute of Management Studies, Jamnagar 61
62. PROBLEM FORMULATIONMarketing Research being a logical
process definitely follows ourpredetermined sequence or steps in
order to obtain the desired resultsor outcomes. Though the entire
process of Marketing Research is quitecomplex and requires a
considerable degree of knowledge and skill, thestep of the Problem
Formulation is the most challenging and critical onefor the
researcher as well as the research. It is rightly said that
aproblem, well defined is half solved.In todays competitive world
companies can not afford to reactive,instead the trend is toward
proactive. It is due to the increasingcompetition that the
companies can not afford to undertake researchuntil something goes
wrong. This can curtail the future growth or evenaffect the very
existence of the organization seeing to the trend ofbeing proactive
in the future; companies are allocating more resourcesto the
disciplines of research. In such case it becomes a duty
ofresearcher to ensure that the organization gets an optimum return
onthe resources it has invested. Thus, Problem Formulation
assumesgreat importance in Marketing Research.The Marketing
Research project undertaken by me for the KarvySecurities Limited
encompasses within its scope, the study of TheMutual Fund and to
find out market potential of KARVY InvestorService Ltd. with
special reference to distribution of Mutual Fundin Jamnagar City.
Company wants to increase its sub-brokers whocan work as
intermediary between company and the investors. Shri Jaysukhlal
Vadhar Institute of Management Studies, Jamnagar 62
63. RESEARCH OBJECTIVES Any activity done without an objective
in a mind cannot turn fruitful. An objective provides a specific
direction to an activity. Objectives may range from very general to
very specific, but they should be clear enough to point out with
reasonable accuracy what researcher wants to achieve through the
study and how it will be helpful to the decision maker in solving
the problem. The objective of any research is basically divided
into two categories. Primary Objective: To find out market
potential of Karvy Investor Service Ltd. Secondary Objectives:
Following are secondary objectives. To assess an awareness of
mutual funds in Jamnagar City. To find out level of awareness of
mutual funds in Jamnagar City. To find out how many investment
advisors are interested in dealing ofmutual fund. To find out how
many investment advisors are willing to work withKarvy. Shri
Jaysukhlal Vadhar Institute of Management Studies, Jamnagar 63
64. RESEARCH METHODOLOGY1.Research Design:A research design is
a pattern or an outline of a research projectsworking. It is a
statement of only the essential elements of a study,those that
provide the basic guidelines for the details of the project.It
comprises a series of prior decision that taken together
providemaster plans for executing a research projects.A research
design serves as a bridge between what has beenestablished i.e.,
the research objectives and what is to be done, inconduct of the
study to relish those objectives. If there were noresearch design,
the research would have only foggy notions as aboutwhat is to be
done.I have used Cross-Sectional Design of Exploratory Type.
Theresearch is of both qualitative as well as quantitative type.2.
Unit of Analysis:Mutual Fund Advisors.Characteristics of
interest:Advisors knowledge about Mutual FundAdvisors knowledge
about KarvyAdvisors interest in getting knowledge of Mutual
FundAdvisors willingness to deal in Mutual Fund with KarvyAdvisors
preference in selecting tax saving instrument of investmentAdvisors
preference in selecting dealer Shri Jaysukhlal Vadhar Institute of
Management Studies, Jamnagar 64
65. 3. Sources of Data:a. Primary Source:The primary data is
collected using sampling method and by surveyusing questionnaire.b.
Secondary Source:Secondary data includes information regarding
present marketscenario, Information regarding Mutual Funds and
competitors arecollected by Internet, Magazines and News papers and
books.4. Sample Planning:Sample Size: 50 unitsSample Extent:
Jamangar CitySampling Design:A Sample Design is a definite plan for
obtaining a sample from a givenpopulation. It refers to the
technique or method the researcher wouldadopt in selecting items
for the sample.I have used both Convenience Sampling Method and
Snow BallSampling Method. Shri Jaysukhlal Vadhar Institute of
Management Studies, Jamnagar 65
66. 5. Data Collection Method:I have used Survey Method to
collect data. I have collected datausing
questionnaire.Questionnaire PlanI have used Structured
Questionnaire for gathering the requireddata through contacting
respondent personally.Type of Information:I have collected Fact,
Awareness, Attitude, Future action plan andreason using
questionnaire.Type of Questions:Close-ended questions of
Dichotomous and Multiple Choice typeare asked in the questionnaire
for data collection.6. Data Analysis & Interpretation:Data
Analysis is based on the data collected by way of
Questionnaires.From the collected data findings are extracted. The
data is tabulatedand frequency distribution chart is prepared. Shri
Jaysukhlal Vadhar Institute of Management Studies, Jamnagar 66
67. RESEARCH ANALYSIS AND INTERPRETATIONRate reason for
choosing particular dealer. Mutual Fund Advisors Suggestion Shares
Mutual Fund Insurance FD Tax Bond PPF [Fig.12: Mutual Fund Advisors
Suggestions] Reasons of Choosing Above Returns Risk Safety Tax
Benefite Others [fig.13: Reasons of Choosing Above] 15 15 12 No. of
Advisors 10 8 6 5 5 4 0 1000 1000 No. of Clients [Fig.17:
Differentiate advisors according to no of their clients} Shri
Jaysukhlal Vadhar Institute of Management Studies, Jamnagar 67
68. 60% 55% 50% 40% 30% 20% 14% 14% 11% 10% 5% 1% 0% Insurance
ELSS PPF Pension NSC Bond Plan Investment Options [Fig. 18 Advisors
gets invested IT payers in] 60% 60% 50% 40% 40% 30% 20% 10% 0%
Interested Not Interested[Fig.20: Advisors who are interested in
dealing of Mutual Funds] Shri Jaysukhlal Vadhar Institute of
Management Studies, Jamnagar 68
69. 100% 90%80%60%40%20% 10% 0% Know Dont KNOW [Fig.22: Advisor
know about MF services provided by Karvy] 70% 66% 60% 50% 40% 34%
30% 20% 10% 0% Interested Not Interested [Fig.23: Advisor who are
interested to attend seminar on MF]75% 70%60%45%30% 24%15% 6% 0% No
Time Not Answered Not Interested [Fig.24 Reason for not attending
Seminar] Shri Jaysukhlal Vadhar Institute of Management Studies,
Jamnagar 69
70. 60% 54%50% 46%40%30%20%10% Interested Not Inteested
[Fig.25: Advisors who are interested to work with KARVY] 60% 52%
50% 40% 30% 22% 20% 11% 10% 5% 0% Not No time Lack of Dont want to
Answered Knowledge expand services [Fig.26: Reasons for not
interested in work with KARVY] Shri Jaysukhlal Vadhar Institute of
Management Studies, Jamnagar 70
71. FINDINGS The awareness level about Mutual Funds is quite
low in the JamnagarCity among advisors. Approximately 40% of
advisers are aware of and interested in dealingof Mutual Funds. The
reason for not interested in dealing of Mutual Fund isunawareness
about Mutual Fund. Only 10% investment advisors are aware of MF
services provided byKarvy, so we can say that awareness level about
MF services of Karvy is very low. Most of advisers are interested
to know about Mutual Funds andinterested to attend seminar on
Mutual Funds arranged by Karvy. Only 46% of advisers are interested
to work with Karvy. Most ofadvisors dont want to work with Karvy
because they have no time for expandingtheir services. Most of
people invest in insurance to save tax followed by PPF.Insurance is
widely used as tax-saving instrument. Shri Jaysukhlal Vadhar
Institute of Management Studies, Jamnagar 71
72. LIMITATIONS Due to limitation of time and cost constrains a
sample size of only 50respondents are chosen. Data Analysis and
interpretation done may not be that strong due tosmall sample and
Convenience Sampling Method. The sample extent for research is only
Jamnagar City. Some of the respondents may be biased in giving
responses. My inexperience in research area might have affected
results. Shri Jaysukhlal Vadhar Institute of Management Studies,
Jamnagar 72
73. CONCLUSIONS Mutual Fund Advisors give emphasis on mutual
funds than otherinvestment options. Mutual Funds have given a new
direction to the flow of personal savingand enable small and medium
investors in remote rural and semi urban areas to reapthe benefits
of the stock market investment. Indian Mutual Funds are thus
playinga very important develo