14172131 karvy

A PROJECT REPORT
ON
PERFERENCE OF THE ADVISORS TOWARDS
MUTUAL FUND
AT
KARVY SECURITIES LTD., JAMNAGAR

SUBMITED BY
Badiyani Amit
(MBA – IV SEM.)

ACEDAMIC YEAR
2007-09

SUBMITTED TO
SHRI JAYSUKHLAL VADHAR INSTITUTE OF
MANAGEMENT STUDIES
JAMNAGAR.

AFFILIATED TO
SAURASHTRA UNIVERSITY
RAJKOT.

Shri Jaysukhlal Vadhar Institute of Management Studies, Jamnagar 1

ACKNOWLEDGEMENT
I am really happy and exited in representing this summer training
project report before you.

I must express my gratitude towards KARVY SECURITIES LTD
for 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 me
opportunity and his guidance help me through out preparing this
report. He has also provided me a valuable suggestions and
excellence guidance about this training, which proved very helpful
to me to utilize my theoretical knowledge in practical field.

At last I am also thankful to my friends, to all known and unknown
individuals who have given me their constructive advise, educative
suggestion, encouragement, co-operation and motivation to
prepare this report.

EXECUTIVE SUMMARY


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

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

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

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

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

After performing the detailed exploratory research by interviewing
different persons who act as investment advisor like Insurance advisor
and Post office advisor etc. with the help of questionnaire, certain


facts were revealed regarding the view about Mutual Funds in the mind
of investors.

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

People from service class prefers safety of income plus the regular
income as well as tax benefits while on the other hand Professional and
Businessman focus on high return with some risk.

For growth and development of the Mutual Fund Industry, the
misconception regarding Mutual Fund should be removed & the
awareness for the same should be made.


INTRODUCTION
COMPANY DETAILS
Background

Karvy Consultants Limited was established in 1982 at Hydrabad. It was
established by a group of Hydrabad-based practicing Chartered
Accountants. At initial stage it was very small in size. It was started
with a capital of Rs. 1,50,000.

In starting it was only offering auditing and taxation services. Later, it
acts into the Registrar and Share transfer activities and subsequently
into financial services and other services like Financial Product
Distribution, Investment Advisory Services, Demat Services,
Corporate Finance, Insurance etc.

All along, Karvy’s strong work ethics and professional background
leveraged with Information Technology enabled it to deliver quality to
the individual. A decade of commitment, professional integrity and
vision helped Karvy achieving a leadership position in its field when it
handled largest number of corporate and retail that proved to be a
sound business synergy.

Today, Karvy has access to millions of Indian shareholders, besides
companies, banks, financial institutions and regulatory agencies. Over
the past one and half decades, Karvy has evolved as a veritable link
between industry, finance and people.

In January 1998, Karvy became first Depository Participant in Andhra
Pradesh. An ISO 9002 Company, Karvy’s commitment to quality and
retail 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 company’s ever
growing national network in every nook and corner of the country. The
company service over 16 million individual investors, 180 corporate and
handle corporate disbursements that exceed Rs.2500 Crores.


WHERE KARVY STAND IN THE MARKET?

KARVY is a legendary name in financial services, Karvy’s credit is
defined 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, both
corporate and retail. Services that KARVY constantly upgrade and
improve are because of company’s skill in leveraging technology. Being
one of the most techno-savvy organizations around helps company to
deliver even more cost effective financial solutions in the shortest
possible time.

What bears ample testimony to Karvy’s success is the faith reposed in
company by valued investors and customers, all across the country.
Indeed, with Karvy’s wide network touching every corner of the
country, even the most remote investor can easily access Karvy’s
services and benefit from company’s expert advice.


KARVY GROUP

Karvy Consultants Limited

Karvy Securities Limited

Karvy Investor Services Limited

Karvy Stock broking Limited

Karvy Computer Shares Pvt. Ltd.

Board of Directors

Karvy Consultants Limited

Parthasarathy C
Yugandhar M
Ramakrishna M S
Prasad V Potluri
Robert Gibson
Sanjay Kumar Dhir
R Shyamsunder

[Table1: BODs of Karvy Consultants Limited]

Karvy Investor Services Limited

Parthasarathy C
Yugandhar M
Ramakrishna M S

[Table2: BODs of Karvy Investor Services Limited]


Karvy Securities Limited

Parthasarathy C
Yugandhar M
Ramakrishna M S
Ajay Kumar K
William Samuel
Nicholas Tully

[Table3: BODs of Karvy Securities Limited]

Karvy Stock Broking Limited

Parthasarathy C
Yugandhar M
Ramakrishna M S
Ajay Kumar K
Kutumba Rao V
William Samuel
Nicholas Tully

[Table4: BODs of Karvy Stock Broking Limited]


Mission Statement of ‘Karvy’

An organization exists to accomplish something or achieve something.
The mission statement indicates what an organization wants to achieve.
The mission statement may be changed periodically to take advantage
of new opportunities or respond to new market conditions.

Karvy’s mission statement is “To Bring Industry, Finance and People
together.”

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

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

Vision of Karvy

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


Behind the Picture: What Customers matter for
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 revitalizing
itself.


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 Strategic
Partners 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.

Karvy’s 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.


Karvy Values:

Integrity
Responsibility
Reliability
Unity
Understanding
Excellence
Confidentiality

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


KARVY SERVICES – AN OVERVIEW

1. Stock broking
2. Demat services
3. Investment product distribution
4. Investment advisory services
5. Corporate finance & Merchant banking
6. Insurance
7. Mutual fund services
8. IT enabled services
9. Registrars & Transfer agents
10. Loans

1. Stock Broking:

KARVY is working as Capital Market Intermediaries. Stockbrokers are
regulated by SEBI [Stock-brokers and Sub-brokers] Regulations, 1992.
The stockbroker is a member of the stock exchange. Stockbrokers
are the intermediaries who are allowed to trade in securities on the
exchange of which they are members. They buy and sell on their own
behalf 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 who
acts on behalf of a stock broker as an agent or otherwise for assisting
the investors in buying, selling or dealing in securities through such
stock-brokers.”

2. Demat Services:

Karvy is a depository participant with the National Securities
Depository Limited (NSDL) for trading and settlement of
dematerialized shares.

Depository Participants (DPs) are described as an agent of the
depository. They are intermediaries between the depository and the
investors. The relationship between the DPs and the depository is

governed by an agreement made between the two under Depositories
Act.

A DP can offer depository-related services only after obtaining a
certificate of registration from SEBI.

Since Karvy is also in the broking business, investors who use Karvy’s
depository services get a dual benefit. They can use Karvy’s brokerage
services to execute transactions and Karvy’s depository services to
settle them.

3. Investment Products Distribution:

Company is also concern with the distribution of investment products
like

(a). Fixed Deposit
(b). Bonds
(c). IPO

(a). Fixed Deposit:

KARVY is dealer of 34 fixed deposits of various types which includes
fixed deposits of Public Sector, Non Banking Finance Companies,
Housing Finance Companies and Manufacturing Companies.

Company is dealer of following Fixed Deposits

PUBLIC SECTOR
Sl. No. Company Name
1 HUDCO
2 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


1 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 Suvidha
8 Nicco Uco Alliance Credit Ltd.

[Table6: FD of Non Banking Finance Companies with which Karvy deals]

HOUSING FINANCE COMPANIES
1 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 COMPANIES
1 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 Express
10 Ind-Swift Ltd.
11 JK Industries Ltd.
12 Jindal Steel & Power Ltd.
13 Sound Craft Industries Ltd.
14 Supreme Industries Ltd.

15 Zuari Industries Ltd.

[Table8: FD of Manufacturing Companies with which Karvy deals]

(b). Bonds:

Karvy is dealer of following bonds

•RBI Saving Bonds
•NHB
•REC

(c). IPO:

Company is also provides services related to Initial Public Offer of
company. Company provides stationary at the time of IPO as well as
provides information to investors regarding IPO and solves their
queries.

4. Investment Advisory Services:

This division provides portfolio management services to high net-worth
individuals and corporate. The expertise of Karvy in research and stock
broking gives it the right perspective to provide investment advisory
services. 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, it
understands the time horizon, risk bearing capacity and investment
goals of investors keeping in mind their psyche and financial needs.
Based upon this Karvy helps individual investors to plan their entire life
up to retirement, Taxes, Insurance needs and other important personal
financial goals. It designs portfolio for investor to invest their saving in
various financial products like shares, bonds, debentures, mutual funds,


fixed deposits, insurance etc., Company design portfolio by considering
following factors.

•Investor’s requirement of getting money back,
•Investor’s willingness to take risk,
•Investor’s tax planning etc.

5. Corporate finance & Merchant banking:

Corporate finance is the financial activity of corporation. It deals with
the firm's operations with regard to investing and financing. It
concerned with how firms raise capital and the consequences of
alternative methods of raising capital. Firm’s capital can be raised by
raising loans, issuing shares, and acquiring or merging with other
businesses by public or private companies.

Merchant banking is a financial intermediation that matches entities
that need capital and those that have capital. Hence they facilitate the
flow 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 of
marketing it, to harvest unparalleled success.

As a merchant banker Karvy offer following services:

•Issue management
•Instrument designing
•Pricing of the issue
•Registration process for the issue of shares
•Marketing efforts
•Final allotment to investors
•Listing details on stock exchanges
•Loan syndication
•Lease financing
•Corporate advisory services
•Underwriting


•Portfolio management

6. Insurance:

Karvy is also dealer of many private life insurance companies. At
Jamnagar branch, company is associated with dealing of following
companies.

•ICICI Prudential Life Insurance
•HDFC Life Insurance
•TATA AIG Life Insurance

7. Mutual Fund Services:

Since its inception in 1982, Karvy has demonstrated a dedication
coupled with dynamism that has inspired trust from various segments –
corporate, government bodies and individuals. Karvy has since been
performing a pivotal role as the intermediary – the interface – between
these players.

With Mutual Funds emerging as a distinct asset class, Karvy has made a
strategic choice to leverage the power of latest technology to provide
a cutting edge to its services. Karvy, today, service nearly 80% of the
asset management companies (AMCs) across an extensive network of
service centers with assets under service in excess of Rs.10,000
crores.

Karvy's ability to mass customize and offer a diverse range of
products for a diverse range of customers has helped mutual fund
companies to uniquely position themselves in the market place. These
diverse range of services cut across multiple delivery channels –
service centers, web, mobile phones, call center – has brought home the
benefits 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. Company’s single
minded focus in delivering products for customers has given it the
distinguished position of being the preferred provider of financial
services in the country.

List of Mutual Fund Clients of KARVY:

1 Alliance Mutual Fund
2 Birla Mutual Fund
3 Bank of Baroda Mutual Fund
4 Can Bank Mutual Fund
5 Chola Mutual Fund
6 Deutsche Mutual Fund
7 DSP Merrill Lynch Mutual Fund
8 Franklin Templeton Investments
9 GIC Mutual Fund
10 HDFC Mutual Fund
11 HSBC Mutual Fund
12 IL & FS Mutual Fund
13 JM Mutual Fund
14 Kotak Mutual Fund
15 LIC Mutual Fund
16 Punjab National Bank Mutual Fund
17 Prudential ICICI Mutual Fund
18 Principal Mutual Fund
19 Reliance Mutual Fund
20 State Bank of India Mutual Fund
21 Standard Chartered Mutual Fund
22 Sundaram Mutual Fund
23 SUN F&C Mutual Fund
24 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 work
as 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.


Karvy work as an intermediary between NSDL and IT payers. Karvy
provides various form for different IT enabled services and guide
people to fill that forms. It also solves queries of the tax payers. It
also distributes PAN and TAN card to the tax payers.

TIN Overview

National Securities Depository Ltd. (NSDL) has established a
nationwide Tax Information Network (TIN) on behalf of the Income
Tax Department (ITD). This is designed to make the tax administration
more effective, furnishing of returns convenient, reduce compliance
cost and bring greater transparency.

While NSDL will be the primary agency responsible for the design,
implementation and maintenance of TIN as per the requirements of
ITD, other agencies will also play key roles in the TIN system.

Karvy has established infrastructure required to provide IT enabled
services so, Karvy provides TIN facilitation centers all over India on
behalf of NSDL. Besides Karvy following companies can also work as
intermediary between NSDL and customers.

•Alankit Assignments Ltd.
•Integrated Enterprise (I) Ltd.
•Shell Tran source Ltd.


[Fig.2 TIN System]

The banking system, being the agency that collects the money on
behalf of the ITD against tax obligations from the tax payers will be
linked to the TIN central system to provide accounting information on
tax paid by various entities under various heads. As banks are
relatively technology-enabled entities, they will directly be linked
electronically to the TIN central system enabling online tax accounting.

On the other hand, the entities depositing the tax (deductors) vary
substantially with respect to their computer skills and hence TIN
design provides for TIN Facilitation Centers managed by NSDL to help
digitization and upload of tax payment related information to the TIN
central system.

Besides NSDL, UTI Investor Services Ltd. may also provides IT
Enabled services.


9. Registrars & Transfer agents:

In 1985, Karvy entered the Registrar and Share Transfer Business to
create a market niche in the competitive field of financial services. In
1994-95, it reached a milestone when it processed 104 Public Issues
constituting 46 per cent market share. Now in its second decade of
existence, Karvy is the leader in the industry: In an opinion poll
conducted by an independent market research agency - MARG, Karvy
has been rated as India’s Most Admired Registrar on various
parameters: -

•Overall Excellence.
•Handling of Volumes
•Timely Dispatch
•Quality Management and Technological Up gradation.

A SEBI Category 1 Registrar, So far, Karvy has handled over 675
ISSUES as Registrars to public issues processed over 52 million
applications and is servicing over 16 million investors from various
locations spread over 205 clients.

10. Loan:

Karvy has recently started this service at selected branches of metro
cities. This service has not been started in Saurashtra-Kucch region.
Karvy provides loans for following.

•Vehicle Loan
•Home Loan
•Personal Loan


MARKETING STRATEGY OF KARVY

Market Positioning:

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

So, Karvy focus on the consumers who prefer almost all investment
activities at same place by providing number of various financial
services. At Karvy a person can purchase or sell shares, debentures
etc. and at the same place also demat it. Karvy also provides other
investment option to the same person at same place like Mutual Fund,
Insurance, Fixed Deposit, and Bonds etc. and help the person in
designing his portfolio. By this way Karvy provides comfort to its
customers.

Karvy is also positioned according to Ries and Trout. Karvy is promoted
as a no. 1 investment product distributor and R & T agent of India.

Target Market:

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


Marketing channel System:

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

Training Channel Members:

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

Advertising and Promotion:

The objective of advertising of Karvy is to create awareness about
services of Karvy among investors and sub-brokers and increase sub-
brokers of Karvy.

Company doesn’t give advertisement in media like TV, Newspapers, and
Magazines etc. Karvy’s advertisement is made indirectly by the
companies associate with it. Karvy is R & T agent of around 700
companies. They publish name, address and logo of Karvy on their
annual report.

Karvy also publish its weekly Stock Market Newsletter ‘Karvy Bazaar
Baatein’ and monthly magazine ‘The Finapolis’ to guide investors and
sub-brokers about market.


HR POLICY OF KARVY

Karvy’s 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 publishing
recruitment advertisement in leading national level newspaper. The
qualified applicant are then called for interview and selected.

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

Training and Development:

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

Training needs analysis is done on a regular basis and systematic
methodologies are ensured that skills and capabilities of all employees
are constantly upgraded to enable them to perform in the challenging
work environment.

New employee has given training under experienced employee. The new
employee work under experience employee and observe his all
activities. When company employs new technology or there is any
change in the working of company the training program is arranged.


Employee Motivation:

Karvy’s employees are highly empowered. They don’t have to report any
person of the same branch but they report upper level branch. E.e.
Marketing executive of Jamnagar branch directly reports Senior
Marketing executive of Baroda zonal office.

If particular branch earn certain profit then Karvy gives them special
incentives. E.g. last year Karvy had arranged two days tour of Div for
their employees of Rajkot, Jamnagar, Junagadh and Bhavnagar branch
which was totally free of cost. This also helps in maintaining co-
operation between employees.


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]


BRANCH LEVEL ORGANIZATION CHART

Branch Manager

Sr. Executive Executives Executive
(Investment) (SB - 4) (IT)

Marketing Clerk
Executives-3

Executive
(Demat) Accountant

Peon Peon

[Fig.4 Branch Level Structure of Karvy]


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 Customer’s expectations.

Quality Objectives of Karvy

•Build in-house processes that will ensure transparent and harmonious
relationships with its clients and investors to provide high quality of services.

•Establish a partner relationship with its investor service agents and
vendors that will help in keeping up its commitments to the customers.

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

•Continue to uphold the values of honesty & integrity and strive to
establish unparalleled standards in business ethics.

•Use state-of-the art information technology in developing new and
innovative financial products and services to meet the changing needs of investors
and clients.

•Strive to be a reliable source of value-added financial products and
services and constantly guide the individuals and institutions in making a judicious
choice of same.

•Strive to keep all stake-holders (shareholders, clients, investors,
employees, suppliers and regulatory authorities) proud and satisfied.


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 million

account holders

•First Depository Participant from Andhra Pradesh


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 and
it 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.


About Jamnagar Branch:

Jamnagar branch comes under Rajkot branch which is a regional office
of Karvy for Saurashtra Kutch region. It was established on Jan. 2002.
In Saurashtra there are four Branch Offices of Karvy:

•Rajkot
•Jamnagar
•Junagadh
•Bhavnagar

In 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.


INDUSTRY DETAILS

Following are list of Mutual Fund companies in India.

Sr. No. Mutual Fund Name No. of
Schemes
1 Alliance Mutual Fund 36
2 Benchmark Mutual Fund 5
3 Birla Mutual Fund 74
4 Bank of Baroda Mutual Fund 17
5 Can Bank Mutual Fund 25
6 Chola Mutual Fund 45
7 Deutsche Mutual Fund 40
8 DSP Merrill Lynch Mutual Fund 40
9 Escorts Mutual Fund 15
10 Franklin Templeton Investments 130
11 GIC Mutual Fund 5
12 HDFC Mutual Fund 79
13 HSBC Mutual Fund 32
14 IL & FS Mutual Fund 43
15 ING Vysya Mutual Fund 55
16 JM Mutual Fund 55
17 Kotak Mutual Fund 56
18 LIC Mutual Fund 35
19 Morgan Stanley Mutual Fund 1
20 Punjab National Bank Mutual Fund 4
21 Prudential ICICI Mutual Fund 124
22 Principal Mutual Fund 68
23 Reliance Mutual Fund 74
24 Sahara Mutual Fund 12
25 State Bank of India Mutual Fund 59
26 Standard Chartered Mutual Fund 100
27 Sundaram Mutual Fund 52
28 SUN F&C Mutual Fund 1
29 Tata TD Mutual Fund 100
30 Taurus Mutual Fund 9


31 Unit Trust of India 42
32 UTI Mutual Fund 66

[Table10: Mutual Funds in India]

Development of Mutual Funds in India

The mutual fund industry in India started in 1963 with the formation
of Unit Trust of India, at the initiative of the Government of India and
Reserve Bank the. The history of mutual funds in India can be broadly
divided into four distinct phases

FirstPhase-1964-87
Unit Trust of India (UTI) was established on 1963 by an Act of
Parliament. It was set up by the Reserve Bank of India and functioned
under the Regulatory and administrative control of the Reserve Bank of
India. In 1978 UTI was de-linked from the RBI and the Industrial
Development Bank of India (IDBI) took over the regulatory and
administrative control in place of RBI. The first scheme launched by
UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700
crores of assets under management.

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

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

With the entry of private sector funds in 1993, a new era started in
the Indian mutual fund industry, giving the Indian investors a wider
choice of fund families. Also, 1993 was the year in which the first
Mutual Fund Regulations came into being, under which all mutual funds,
except UTI were to be registered and governed. The erstwhile Kothari
Pioneer (now merged with Franklin Templeton) was the first private
sector mutual fund registered in July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more
comprehensive and revised Mutual Fund Regulations in 1996. The
industry now functions under the SEBI (Mutual Fund) Regulations 1996.
The number of mutual fund houses went on increasing, with many
foreign mutual funds setting up funds in India and also the industry has
witnessed several mergers and acquisitions. As at the end of January
2003, there were 33 mutual funds with total assets of Rs. 1,21,805
crores. The Unit Trust of India with Rs.44,541 crores of assets under
management was way ahead of other mutual funds.

Fourth Phase – since February 2003
In February 2003, following the repeal of the Unit Trust of India Act
1963 UTI was bifurcated into two separate entities. One is the
Specified Undertaking of the Unit Trust of India with assets under
management of Rs.29,835 crores as at the end of January 2003,
representing broadly, the assets of US 64 scheme, assured return and
certain other schemes. The Specified Undertaking of Unit Trust of
India, functioning under an administrator and under the rules framed
by Government of India and does not come under the purview of the
Mutual Fund Regulations.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB
and LIC. It is registered with SEBI and functions under the Mutual
Fund Regulations. With the bifurcation of the erstwhile UTI which had
in March 2000 more than Rs.76,000 crores of assets under
management and with the setting up of a UTI Mutual Fund, conforming
to the SEBI Mutual Fund Regulations, and with recent mergers taking
place among different private sector funds, the mutual fund industry
has entered its current phase of consolidation and growth. As at the
end of September, 2004, there were 29 funds, which manage assets of
Rs.153108 crores under 421 schemes.
The graph indicates the growth of assets over the years.


180000

160000
154018

140000

120000 121805 121778
Rs. 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:


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]

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]


REGULATORY BODIES

Financial System is basically responsible for the major up and downs in
the economy. So, there are some regulatory bodies on it which ensures
effectiveness in the management of fund of the investors and
transparency in the 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]


COMPETITORS DETAILS

1. Bajaj Capital

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

Services provided

•Merchant banking
•Buying and Selling of Money Market Investments
•Distribution of financial products
•Investment Advisory Service

» Company fixed deposits
» Bonds
» Mutual funds
» Life insurance
» General insurance
» Pension schemes
» Post office schemes
» Tax saving schemes
» Insurance linked investment schemes
» Initial public offerings
» Housing loans
» NRI schemes
» Car insurance


•Financial Planning
» Investment planning
» Retirement planning
» Insurance planning
» Children's future planning
» Tax planning
» Short-term cash flow planning

2.MCS Ltd.

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

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

Volumes Handled

•Share registry activities for over 100 corporate servicing over 10
million investors.
•Mutual fund operations for 25 funds, servicing over 4.5 million
investors.
•Billing & settlement plan for Indian operations of IATA Geneva for 1.2
million tickets per annum covering (26 airlines & over 1200 agents).

Services Offered:

•Registrars and Transfer Agents
•Registrars to IPO’s /Right Issues
•Registrars to Open Offers
•Registrars to Mutual Funds
•Data Processing for Airlines
•Print Shop Services

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


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

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

NJ India Investment has 11 branches in Gujarat including 3 branches in
Saurashtra.

•Rajkot
•Jamnagar
•Bhavnagar

4. ICICI Securities Ltd.

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

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

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

ICICI has a large network of branches all over India.


Services offered:

•Merchant Banking
•Demat Service
•Stock Broking

5. HDFC

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

HDFC and its subsidiary provides following services.

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

6. Kotak Securities Ltd.

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

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


Services offered:

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

7. Motilal Oswal Securities Ltd.

Motilal Oswal Securities Ltd (MOSt) is one of the leading equity
research and broking houses of India. MOSt has a 20-member
research team, which is engaged round the clock in analyzing the Indian
economy and corporate sectors to identify equity investment ideas.
Asia Money Broker's Poll 2002 has rated MOSt as one of the best
Indian broking house, for research, for the second time since 2000.

Motilal Oswal is member of NSDL and CDSIL for DP. It has wide
network of branches. It has 158 branches all over India.

Services Offered:

•Demat Services
•Stock Broking
•Investment Advisory Service


PRODUCT DETAILS

Mutual funds serve as a link between the saving people and the capital
market in that they mobilize saving from investors and bring them to
borrowers in the capital markets. In short, it is a common pool of
money into which investors place their contribution that is to be
invested in accordance with a stated objective.

A mutual fund uses the money collected from the investors to buy
those assets, which are specially permitted by its stated investment
objective. When an investor subscribes to a mutual fund, he/she buys a
part of asset or the pool of funds that are outstanding at that time.

A mutual fund is constituted as an investment company and an investor
buys into the fund, means he buys the share of the fund and is known
as a unit holder. Since each unit holder is a part of owner of a mutual
fund, it is necessary to establish the value of his part. Since the unit
held by an investor evidences the ownership of the fund’s assets, the
value of the total asset of the fund when divided by the total
number of units issued by the mutual fund gives us the value of one
unit. This is called as Net Asset Value (NAV).


STRUCTURE OF INDIAN MUTUAL FUNDS

Mutual fund industry is highly regulated by the government keeping in
view of the protection of investor’s 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 the
AMC.
•The sponsor must posses a sound financial track record over 5 years
prior to registration.


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 approval
of 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 the
AMC, nor its employees can act as trustee.
•A trustee can not be appointed as a trustee of two or more mutual
funds until and unless he is an independent person or has permission from the
Mutual 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. 10
crore 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 the
Trustees and SEBI.
•The director of AMC should be a person of reputed of high standing
and at least have five years experience in relevant field.
•AMC can be terminated with 75% unit holders or majority of trustees.


4. Custodian and Depositories:

As per SEBI Regulations Mutual Funds shall have a custodian who is not
any way associated with the AMC. It carry outs the activity of safe
keeping the securities or participating, in any clearing system. The
custodian should be independent from sponsors and AMC and should
have a sound track record and adequate relevant experience.

As Indian capital markets are moving away from having physical
certificates to ownership of these securities in “dematerialized” form
with Depository. Mutual Fund’s “dematerialized” securities are hold by
depository 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 usually
appoint Distributors or Brokers, who sell units on behalf of the fund. A
broker usually acts on behalf of several mutual funds simultaneously
and may have several sub-brokers under him for the purpose of
distribution of units.


MUTUAL FUND – A GLOBALLY PROVEN
INVESTMENT

Worldwide, the mutual fund has a long and successful history. The
popularity of mutual fund has increased manifold. In developed
financial market, like US mutual funds have almost overtaken bank
deposits and total assets of over US $ 3 trillion.

In India, Mutual Fund industry started with the setting up of UTI in
1964. Public sector banks and financial institution began to establish
Mutual Funds in 1987. The private sector and foreign institutions were
allowed to set up Mutual Fund in 1993.

WHAT IS MUTUAL FUND?

A Mutual Fund is a trust that pools the savings of a number of
investors who share a common financial goal. The money thus collected
is then invested in capital market instruments such as shares,
debentures and other securities. The income earned through these
investments and the capital appreciation realized is shared by its unit
holders in proportion to the number of units owned by them. Thus a
Mutual Fund is the most suitable investment for the common man as it
offers an opportunity to invest in a diversified, professionally managed
basket of securities at a relatively low cost.


Critical View About Mutual Fund

Advantages:

1. Portfolio Diversification:

Each investor in a fund is a part owner of all the funds assets, thus
enabling investor to hold a diversified investment portfolio even with a
small amount of investment, which would otherwise require big capital.

2. Professional Management:

Mutual Funds provide the services of experienced and skilled
professionals, backed by a dedicated investment research team that
analyze the performance and prospect of companies and selects
suitable 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 risk
because all stock can not go through a downtrend at the same time and
in the same proportion. You achieve this diversification through a
mutual 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 or
custody of securities. When going through the fund investor has the
benefit of economies of scale; the funds pay lesser cost because of
larger volumes, a benefit passed on to its investors.

5. Liquidity:

By investing in Mutual Funds the investors can cash their investment by
selling their units to the fund if open-ended, or selling them in the
stock market if the fund is close ended.


6. Convenience & Flexibility:

Mutual Funds Companies offer investor to transfer their holding from
one scheme to other.

7. Tax Benefits:

The investors are totally exempt from paying any tax on the income
they 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 protect
investors from fraud.

9. Convenience:

You can usually buy mutual fund shares by mail, phone, or over the
Internet.

10.Well regulated

Limitations:

1. No Control over Costs:

An investor in a mutual fund has no control over the overall cost of
investing. He/she has to pay investment management fees as long as
he/she remains with the fund. Fees are payable even while the value of
the investment may be declining.

2. No Tailor made Portfolios:

Investors who invest on their own can build their own portfolios of
shares and bonds and other securities. Investing through fund means
he/she delegates this decision to the fund managers.

3. Managing a Portfolio of Funds:


Availability of a large number of funds can actually mean too much
choice for the investor. He/she may again need advice on how to select
a fund to achieve his/her objectives, quite similar to the situation when
he/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 buying
or selling often result in adverse price movements i.e. at the time of
buying, 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 how
balanced the portfolio. Investors encounter fewer risks when they
invest in mutual funds than when they buy and sell stocks on their own.
However, anyone who invests through a mutual fund runs the risk of
losing money.


MUTUAL FUND CYCLE

[Fig.9: Mutual Fund Cycle]
[Source: amfiindia.com]

From above cycle, it can be observed clearly that how the money from
the investors flow and they get returns out of it. With a very small
amount of fund, investors pool their money with fund managers.

After studying the market, the fund manager invests money of the
investors 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 are
passed 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 into
consideration various factors like time, risk; amount etc. so that
he/she can make proper investment decision.


Types of Mutual Fund

Types 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]


1. By objective:

Investment goals vary from person to person. While somebody wants
security, others might give more weightage to returns alone. Somebody
else might want to plan for his child’s education while somebody might
be saving for the proverbial rainy day or even life after retirement.
With objectives defying any range, it is obvious that the products
required will vary as well. So, Mutual funds can be classified based on
the objectives of the investor.

(a). Equity Fund:

Equity funds invest a major portion of their corpus in equity shares
issued by companies. NAV of equity funds are fluctuated by fluctuation
in price of shares that it holds. So there is a high risk as well as high
return in equity fund. Potential to earn in such funds is higher when
they are invested for long term.

The leading example of such funds are

Prudential 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 by
governments, private companies, banks and financial institutions. By
investing in debt, these funds target low risk and stable income
investors. These funds are low risk low return funds.

The leading examples are

Birla Income Plus,
Principal Income Fund,
HDFC Income Fund,
UTI Bond Fund etc.


(c). Balanced Fund:

A balanced fund is one that has a portfolio comprising debt
instruments as well as preference and equity shares. The idea is to
reduce volatility of funds, while providing some upside for capital
appreciation. They are best suitable for the people looking for a
combination for capital appreciation and regular income and best time
spend for such investment is more than 3 years.


Prudential 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, which
generally means securities of less than one-year maturity such as
Treasury Bills issued by governments, Certificates of deposit issued by
banks and Commercial paper issued by companies.

The major strength of money market funds are the liquidity and safety
of principal that the investors can normally expect from short term
investments.

Prudential ICICI Liquid Plan,
Templeton India Liquid Fund,
Grindlays Cash Fund etc.

(e). Gilt Fund:

These funds are sort of government funds wherein the investments are
made in debt instrument of government, which carry no risk of non
payment of interest as the RBI manages the payment of interest and


principal on the investments. These funds are best suited for regular
income and long term investment objectives.


Prudential 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 and
repurchase on a continuous basis. These schemes do not have a fixed
maturity period. Investors can conveniently buy and sell units at NAV
related prices which are declared daily basis. The key feature of this
fund is liquidity.

(b). Close-ended Fund:

A close ended fund has a stipulated maturity period e.g. 5-7 years. The
fund is open for subscription only during a specified period at the time
of launch of the scheme. Investors can invest in the scheme at the
time of initial public issue and thereafter they can buy or sell units on
stock exchange where the units are listed at NAV. These mutual fund
schemes disclose NAV generally on weekly basis.

(c). Interval Fund:

Interval funds combine the features of open-ended and close-ended
schemes. They are open for sale or redemption during pre determined
intervals at NAV related prices.


Risk Return Grid

Risk
Benefits offered
Tolerance/Return Focus Suitable Products
by MFs
Expected
Bank/ Company FD, Liquidity, Better
Low 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 stock
High 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. These
initial expenses may be recovered from the investors by entry or exit
load.

(i). Entry Load or Front-end Load:

If initial expenses recovered from investors at the time of investor’s
entry into the fund, by deducting a specific amount from his initial
contribution it is called Entry Load.


(ii). Exit Load or Back-end Load:

If initial expenses recovered at the time of the investor’s 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 don’t 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 load
on equity fund.

•Generally there is no exit load on equity and sectoral funds to maintain
liquidity 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 exit
from fund before specified time which is generally 3 to 6 months.


4. Other types of fund:

(a). Tax Saving Funds:

These schemes offer tax rebates to the investors under specific
provisions of the Income Tax Act, 1961 as the Government offers tax
incentives for investment in specified avenues. E.g. Equity Linked
Saving Scheme (ELSS). Pension schemes also offer tax benefits.


Prudential 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 the
BSE Sensitive index, S&P NSE 50 index (Nifty), etc. These schemes
invest in the securities in the same weightage comprising of an index.
NAV of such funds are changed accordance with the change in the
index.


Birla Index Fund,
HDFC Index Fund,
Prudential ICICI Index Fund,
UTI Index Fund etc.


(C). Sector Funds:

These are the funds which invest in the securities of only those
sectors or industries as specified in the offer documents. E.g.
Pharmaceuticals, Software, Petroleum etc. These types of funds are
more risky compared to diversified funds.


Birla IT Fund,
Pru. ICICI FMCG Fund,
Franklin India Pharma Fund etc.

(d). Commodity Funds:

Commodity funds invest into the different commodities directly or
through shares of commodity companies. E.g. Commodity fund invest in
gold or shares of gold mines. Commodity funds have not yet developed
in India.

(e). Off Shore Funds:

These funds invest in equities in one or more foreign countries there
by achieving diversification across the country’s borders. However they
also have additional risks such as the foreign exchange rate risk and
their performance depends on the economic conditions of the countries
they invest in.


PROBLEM FORMULATION

Marketing Research being a logical process definitely follows our
predetermined sequence or steps in order to obtain the desired results
or outcomes. Though the entire process of Marketing Research is quite
complex and requires a considerable degree of knowledge and skill, the
step of the Problem Formulation is the most challenging and critical one
for the researcher as well as the research. It is rightly said that a
problem, well defined is half solved.

In today’s competitive world companies can not afford to reactive,
instead the trend is toward proactive. It is due to the increasing
competition that the companies can not afford to undertake research
until something goes wrong. This can curtail the future growth or even
affect the very existence of the organization seeing to the trend of
being proactive in the future; companies are allocating more resources
to the disciplines of research. In such case it becomes a duty of
researcher to ensure that the organization gets an optimum return on
the resources it has invested. Thus, Problem Formulation assumes
great importance in Marketing Research.

The Marketing Research project undertaken by me for the ‘Karvy
Securities Limited’ encompasses within its scope, the study of “The
Mutual Fund and to find out market potential of KARVY Investor
Service Ltd. with special reference to distribution of Mutual Fund
in Jamnagar City. Company wants to increase it’s sub-brokers who
can work as intermediary between company and the investors.”


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 of
mutual fund.
•To find out how many investment advisors are willing to work with
Karvy.


RESEARCH METHODOLOGY

1.Research Design:

A research design is a pattern or an outline of a research project’s
working. 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 provide
master plans for executing a research projects.

A research design serves as a bridge between what has been
established i.e., the research objectives and what is to be done, in
conduct of the study to relish those objectives. If there were no
research design, the research would have only foggy notions as about
what is to be done.

I have used ‘Cross-Sectional Design’ of ‘Exploratory Type’. The
research is of both qualitative as well as quantitative type.

2. Unit of Analysis:

Mutual Fund Advisors.

Characteristics of interest:

•Advisor’s knowledge about Mutual Fund
•Advisor’s knowledge about Karvy
•Advisor’s interest in getting knowledge of Mutual Fund
•Advisor’s willingness to deal in Mutual Fund with Karvy
•Advisor’s preference in selecting tax saving instrument of investment
•Advisor’s preference in selecting dealer


3. Sources of Data:

a. Primary Source:

The primary data is collected using sampling method and by survey
using questionnaire.

b. Secondary Source:

Secondary data includes information regarding present market
scenario, Information regarding Mutual Funds and competitors are
collected by Internet, Magazines and News papers and books.

4. Sample Planning:

Sample Size: 50 units
Sample Extent: Jamangar City

Sampling Design:

A Sample Design is a definite plan for obtaining a sample from a given
population. It refers to the technique or method the researcher would
adopt in selecting items for the sample.

I have used both ‘Convenience Sampling Method’ and ‘Snow Ball
Sampling Method’.


5. Data Collection Method:

I have used ‘Survey Method’ to collect data. I have collected data
using questionnaire.

Questionnaire Plan

I have used ‘Structured Questionnaire’ for gathering the required
data through contacting respondent personally.
Type of Information:

I have collected Fact, Awareness, Attitude, Future action plan and
reason using questionnaire.

Type of Questions:

‘Close-ended questions’ of ‘Dichotomous’ and ‘Multiple Choice’ type
are 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 tabulated
and frequency distribution chart is prepared.


RESEARCH ANALYSIS AND INTERPRETATION

Rate 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
<100 100-300300-500500-750 750- >1000
1000
No. of Clients

[Fig.17: Differentiate advisors according to no of their clients}

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]


100%
90%
80%

60%

40%

20%
10%
0%
Know Don't 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]


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 Don't want to
Answered Knowledge expand
services

[Fig.26: Reasons for not interested in work with KARVY]


FINDINGS

•The awareness level about Mutual Funds is quite low in the Jamnagar
City among advisors.

•Approximately 40% of advisers are aware of and interested in dealing
of Mutual Funds. The reason for not interested in dealing of Mutual Fund is
unawareness about Mutual Fund.

•Only 10% investment advisors are aware of MF services provided by
Karvy, 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 and
interested to attend seminar on Mutual Funds arranged by Karvy.

•Only 46% of advisers are interested to work with Karvy. Most of
advisors don’t want to work with Karvy because they have no time for expanding
their services.

•Most of people invest in insurance to save tax followed by PPF.
Insurance is widely used as tax-saving instrument.


LIMITATIONS

•Due to limitation of time and cost constrains a sample size of only 50
respondents are chosen.

•Data Analysis and interpretation done may not be that strong due to
small 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.


CONCLUSIONS

•Mutual Fund Advisors give emphasis on mutual funds than other
investment options.

•Mutual Funds have given a new direction to the flow of personal saving
and enable small and medium investors in remote rural and semi urban areas to reap
the benefits of the stock market investment. Indian Mutual Funds are thus playing
a very important developmental role in allocation of scares resources in the
emerging economy.

•Karvy is not able to provide sufficient services to the investors due to
unawareness among advisors regarding services.

•The awareness level of investor is low in advisors are interested in
dealing in mutual fund.

•Very less advisors are knowing about services provided by karvy.


RECOMMENDATIONS

•There is high potential market for Mutual Fund Advisors in Jamnagar
city, but this market needs to be explored as investors are still hesitated to invest
their money in Mutual Funds.

•In Jamngar investors have inadequate knowledge about Mutual Funds,
So proper Marketing of various schemes is required, company should arranges more
and more seminars on Mutual Funds.

•Awareness of MF services provided by Karvy is also very low so
company needs proper marketing of their all services by advertising, distribution
of pamphlet, arranging seminars etc.

•Most of advisors are not interested in dealing of Mutual Funds
because they don’t want to expand their services due to lack of time, so company
should provide them knowledge about single window services by which investor can
get all financial services from one place.

•Company should also provide knowledge about the growth rate and the
expected growth rate of Mutual Fund industry in India.

•Most of people aware of life insurance, NSC and PPF for tax saving so,
company should market various tax saving schemes of Mutual Funds and their
benefits.

•The interface among the investors and the Mutual Fund Companies is
the agents, so the agents should have proper knowledge about Mutual Funds as well
as market so that they can help investors in their investment decisions. The
quality of agents performance and investors trust on them can be improved only if
they are permanent in nature.


ANNEXURE

QUESTIONNAIRE

We assure you that all the information that will be collected from you
will remain fully confidential and it is used for study purpose only.

1. As a financial investment adviser which investment options you
suggest to your customers?

Shares Mutual Fund
Insurance Fixed Deposit
Tax Bond PPF
Other

2. Please indicate reason for choosing above.

Returns Risk
Safety Tax Benefits
Timely Brokerage
Other

3. Approximately how many customers you have?
4. What is the brokerage Payment Period?
5. Expected Brokerage Payment Period

6. If a service person who pays Income Tax wants to invest,
generally which option do you suggest for investment?

Insurance
Pension Plan
PPF
Infrastructure Bond
ELLS Scheme
Other _______________________________________
7. Are you interested to deal in MF?

Yes
No
If No Why?

8. Do you know about MF services provided by Karvy’s Jamnagar
Branch?

Yes
No

9. In future will you attend seminar arranged by Karvy to guide
investors about MF?

Yes
No
If No Why?

10. Will you like to work with Karvy Securities Ltd for dealing in
mutual fund?
Yes
No
If No Why?

11. Name :
Address :

Phone (O) (R)
Mobile :
Email :

Thank You


GLOSSARY

Corporate advisory services

Merchant bankers offer customised solutions to solve the financial
problems of their clients. Merchant bankers study the working capital
practices that exist within the company and suggest alternative
policies. They also advise the company on rehabilitation and turnaround
strategies, which would help companies to recover from their current
position. They also provide advice on appropriate risk management
strategies.

Loan syndication

Arrangement of loans for clients, by analysing their cash flow pattern,
so that the terms of borrowing meet the client’s cash requirements and
offer assistance in loan documentation procedures.

Portfolio

Total number of all holdings held by a company is called portfolio. The
portfolio mix is aimed at spreading the risk over different sectors. It
consists of all assets of company.

NAV

Net Asset Value is the current market worth of the mutual fund
shares. It is calculated daily by taking the funds total asset securities,
cash and any accrued earning deducting liabilities, and dividing the
reminder by the number of shares outstanding.


Depository

The principal function of a depository is to dematerialize securities and
enable their transactions in book-entry form. A depository established
under the Depositories Act can provide any service connected with
recording of allotment of securities or transfer of ownership of
securities in the record of a depository.

Capital gain

The profit made from selling shares, mutual funds etc.

IPO

Abbreviation for initial public offering. Generally associated with
admission to listing of the share capital on the stock exchange.


DETAILS OF TABLES & FIGURES

Tables:

No. Particulars Page
No.
1 BODs of Karvy Consultants Limited 5
2 BODs of Karvy Investor Services Limited 5
3 BODs of Karvy Securities Limited 6
4 BODs of Karvy Stock Broking Limited 6
5 Public Sector FD with which Karvy deals 12
6 FD of Non Banking Finance Companies with which 13
Karvy deals
7 FD of Housing Finance Companies with which Karvy 13
deals
8 FD of Manufacturing Companies with which Karvy 13
deals
9 List of MF Companies with which Karvy deals 17
10 Mutual Funds in India 31
11 Risk Return Grid of various MF 53


Figures:

No. Particulars Pg. No.
1 Competitive Advantage of Karvy 8
2 TIN System 19
3 National Level Organization Chart of Karvy 25
4 Branch Level Structure of Karvy 26
5 Growth in Assets Under Management 33
6 Assets Under Management By Fund Type 34
7 Assets Under Management By AMC 34
8 Regulatory bodies 35
9 Mutual Fund Cycle 48
10 Types of Mutual Funds 49
11 Differentiate advisors according to yearly amount 62
they get invested
12
13
14
15
16
17
18 Instrument in which advisors gets invested to IT 64
payers
19
20 Advisors who are interested in dealing of Mutual 65
Funds
21 Reasons for not interested in dealing of Mutual 65
Funds
22 Advisor know about MF services provided by Karvy 65
23 Advisor who are interested to attend seminar on 66
MF
24 Reason for not attending Seminar 66
25 Advisors who are interested to work with KARVY 66
26 Reasons for not interested in work with KARVY 67


BIBLIOGRAPHY

1. www.mutualfundsindia.com
2. www.amfiindia.com
3. www.themanagementor.com
4. www.dewb-vc.com
5. www.karvy.com
6. www.indiacorporateadvisor.com
7. www.nsdl.co.in
8. www.incometaxdelhi.nic.in
9. www.incometaxindia.gov.in
10. David J. Luck & Ronald S. Rubin, “Marketing Research”,
Ed. – 7 (ISBN)
11. D.C.Anjaria & Dhaivat Anjaria, “AMFI Workbook”, Ed. – 2
(Association of Mutual Funds in India)


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