A Project Report on

STUDY OF DIFFERENT DISTRIBUTION CHANNELS OF

SUNDARAM MUTUAL

UNDER SUPERVISION OF
Project Guide
Mr Salil Kumar Palai
Branch head, Sundaram Mutual (Bhubaneswar)
And Mr Krishna Akalamkam (lecturer, BIMTECH)

SUBMITTED BY:

Snehasish Kanungo
PGDM (D)
16DM220
 DECLARATION

I hereby affirm that this project report titled Study on the Distribution Channels of
Sundaram Mutual being submitted to the Birla Institute of Management Technology,
Greater Noida in partial fulfillment of the requirement for the award of the Post Graduate
Diploma in Business Management is bonafide work carried out by me.

Mr Salil Kumar Palai Snehasish Kanungo

Project Guide
Branch head, Sundaram Mutual (Bhubaneswar)
 COMPANY PROFILE

Sundaram Mutual, founded in 1996, is a fully owned subsidiary of one of India's oldest NBFCs - Sundaram
Finance Limited. Unearthing Opportunities is their motto.
They have an experienced Research team and their success has been built on a combination of intense
research driven bottom-up stock picking for mid and small cap stocks and a top down sector analysis for
picking large cap stocks. They have branches present across 86 locations in the country, and also have
one in Dubai as well as a wholly owned subsidiary in Singapore.
At Sundaram Mutual, identifying an investment opportunity long before it manifests as one, is the heart
of their business belief. Once they unearth a potential opportunity, their Financial Experts spend countless
time to research the companies, to see what will deliver the best returns for customers money.

OFFERINGS
They offer products across debt and equity as well as Portfolio Management Services with a combined
AUM of approximately Rs. 25, 000 crores
Their equity products span across Large Cap Funds, Mid Cap Funds, Small Cap Funds, Micro Cap Funds,
Multi Cap Funds, ELSS, RGESS Funds, Thematic Funds - Infrastructure, Financial Services, PSU,
Entertainment, Fund of Funds, Balanced Fund, International Equities.
They also offer two funds out of Their Singapore subsidiary - Sundaram India Midcap Fund, (a USD
denominated mid-cap equity fund in Singapore, which follows the mid-cap strategy of the group) and
Sundaram Global Brand Fund.
Their debt products span across Liquid Funds, Ultra Short Term, Short Term Debt Funds, Debt Income
Funds (Medium to Long Term), Gilt Funds, Capital Protection Funds, Hybrid Funds and Fixed Term Plans
Their Portfolio Management Services has been highly successful with different strategies tailored to meet
specific customer requirements and complements Their Mutual Fund asset management business by
being able to offer customers a wider choice.
A robust Operations department ensures that their strong Investment management capability is well
supported by well-defined processes and their strong Sales and Customer Service teams strive daily
towards the goal of making Sundaram Mutual Fund the most respected Asset Management Company in
the Country for Customer Service.

Management Team
Harsha Viji Managing Director
Sunil Subramaniam Chief Executive Officer
Lakshminarayanan
Chief Operating Officer
Duraiswamy
S.Krishnakumar Chief Investment Officer - Equity
Dwijendra Srivastava Chief Investment Officer - Debt
Head Global Business Development & Product
R Vijayendiran
Strategy
VISION
To be a significant player in the Indian asset management space and be one of the top asset managers.

MISSION
To provide people the best experience in assessing financial markets.

PHILOSOPHY
Respect others, their needs and sentiments.
Develop and maintain trust.
Communicate freely and maintain confidentiality.
Be on time always.
Never ever take short cuts.
Admit and share mistakes.

PRODUCT PROFILE

1-Equity Products

Market Based Funds

Sundaram select midcap
Sundaram select focus
Sundaram S.M.I.L.E
Sundaram World Brand Fund
Sundaram Equity multiplier
Sundaram Equity plus
Sundaram select micro-cap
Sundaram Small cap
Sundaram Value fund
Theme Based Funds

Sundaram Infrastructure advantage fund

Sundaram Financial Services opportunities
Sundaram Rural India

Tax saving Funds

Sundaram Tax saver

Sundaram top 100
Sundaram Long term tax advantage fund

Fund of Funds

Sundaram Global advantage fund

Balanced Funds

Sundaram Balanced fund

2-Fixed Income Products

Sundaram Money fund

Sundaram Ultra shirt term fund
Sundaram Flexible fund short term plan
Sundaram Select debt short term asset plan
Sundaram Bond saver
Sundaram Income plus
Sundaram Flexible fund flexible income plan
Sundaram Gilt fund
Sundaram Flexible term plan
Sundaram Capital protection orientated fund
Sundaram Monthly Income Plan, Regular saving fund.
Sundaram Hybrid fund plan
Sundaram Banking and PSU debt fund
 FINANCIAL STATUS
Financial Highlights

Amount ` in crores

Own Funds
Year Average AUM PBT PAT Dividend %
Paid-up capital Free Reserves

2010-11 15.33 43.94 13,945.54 20.81 13.36 25

2011-12 15.33 51.38 14,226.33 15.52 11.00 20

2012-13 15.33 62.86 13,573.76 24.85 16.86 30

2013-14 15.33 72.75 15,248.25 22.63 15.27 30

2014-15 20.00 114.05 19,511.40 31.93 21.69 30

 Balance
Sheet
As at 31st March, 2015 (Amount in `)

Particulars Note 31.03.15 31.03.14

I. Equity and Liabilities
1. Shareholders' Funds
(a) Share Capital 2 20,00,00,000 15,33,32,290
114,05,25,99
(b) Reserves and Surplus 3 1 72,74,85,114
(c) Money received against share
warrants - -
134,05,25,991 88,08,17,404
Share Application Money Pending
2. Allotment - -
3. Non-Current Liabilities
(a) Long Term Borrowings 4 13,60,60,611 -
(b) Deferred Tax Liabilities 5 4,50,68,012 2,21,20,374
(c) Other Long Term Liabilities 6 92,26,000 1,07,02,000
(d) Long Term Provisions - -
19,03,54,623 3,28,22,374
4. Current Liabilities
(a) Short Term Borrowings - -
(b) Trade Payables 7 6,01,03,145 8,83,81,369
(c) Other Current Liabilities 8 28,98,32,322 6,11,57,769
(d) Short Term Provisions 9 7,47,88,051 5,68,18,789
42,47,23,518 20,63,57,927
Total 195,56,04,132 111,99,97,705
II. Assets
1. Non-Current Assets
(a) Fixed Assets
(i) Tangible Assets 10 2,96,10,649 3,47,39,493
(ii) Intangible Assets 10 1,84,342 13,64,996
(iii) Capital work-in-progress - -
(iv) Intangible Asset Under
Development - -
(b) Non-Current Investments 11 26,14,57,170 22,41,86,020
(c) Deferred Tax Assets - -
(d) Long Term Loans and Advances 12 81,76,73,319 40,43,41,201
(e) Other Non-Current Assets - 110,89,25,480 - 66,46,31,710
2. Current Assets
(a) Current Investments 13 32,26,80,000 16,51,80,241
(b) Inventories - -
(c) Trade receivables 14 5,78,99,586 9,87,03,093
(d) Cash and Bank Balances 15 3,16,94,139 1,60,09,746
(e) Short Term Loans and Advances 16 43,44,04,927 17,54,72,915
(f) Other Current Assets - 84,66,78,652 - 45,53,65,995
Total 195,56,04,132 111,99,97,705
 Profit and Loss Statement
For the year ended 31st March 2015 (Amount in `)

Particulars Note 2014-15 2013-14

Income

Revenue from operations 17 146,81,58,816 119,66,08,594

Other Income 18 3,01,79,046 4,40,08,080

Total (A) 149,83,37,862 124,06,16,674

Expenditure

Employee Benefit expenses 19 38,71,88,349 34,45,06,585

Administrative and other expenses 20 31,94,39,995 30,03,62,863

Scheme expenses borne by the company 21 43,52,08,073 35,07,43,451

Finance Cost - Interest 1,08,41,881 -

Depreciation 10 2,63,59,055 1,87,14,185

Total (B) 117,90,37,353 101,43,27,084

Profit before tax (A-B) 31,93,00,509 22,62,89,590

Less : Tax

Current Tax 7,81,00,000 7,98,00,000

Deferred Tax 2,42,69,063 10,23,69,063 (62,20,274) 7,35,79,726

Profit after Tax 21,69,31,446 15,27,09,864

Earnings per Equity Share

Number of Equity Shares (Face Value ` 10/- Per Share) 2,00,00,000 1,53,33,229

Weighted Average Number of Shares (Face Value ` 10/- Per Share) 1,53,58,800 1,53,58,800

Basic & Diluted Earnings per Equity Share 14.12 9.94

 DISTRIBUTION CHANNELS OF SUNDARAM MUTUAL

Mutual Fund / Insurance Distribution Channels in India.

Categorizing distributions channels in India is a difficult task, in particular given the relatively poor
disclosure by AMFI & SEBI of distribution activity in the mutual fund as well as life insurance industry (as
compared with disclosure of performance data.

As per IRDA, Insurance (ULIPs) products are sold in India through various channels like agents, corporate
agents (including banks), brokers, referral & direct channels. As per AMFI, mutual fund distribution
channels are classified as corporate agents (including banks) and individual agents. As far as direct
channels are concerned, mutual fund companies are exploring various ways to reach directly. Direct
channels like mutual fund companys offices, websites, telephone, mobile, ATM kiosks are evolved in the
recent past. All these channels and channel intermediaries are common for both insurance (ULIPs) and
mutual funds. Again distribution structure is changing and embracing newer and newer ideas increasingly.
Both the industries are observing emergence of innovative distribution channels. A prominent channel
has emerged in the form of banks. Both AMFI and IRDA do not report data separately for the bank. They
have included banks as a corporate channel.
As researcher has already discussed how bank as a distribution channel is evolving worldwide. This
phenomenon is gaining its importance in India also. Karunagaran concludes that going by the present
pace, banc assurance would turn out to be a norm rather than an exception in future in India and it would
be a win-win situation for all the parties involved - the customer, the insurance companies and the banks.
Syed Shahabuddin bank channel has slowly realized its own potential and is now emerging as a big
player for mutual fund industry. Considering this, one should accord bank as a separate distribution
channel.
In a nutshell, need for multiple distribution channels is obvious for both Mutual funds and ULIPs as low
level of penetration of both the products, diverse needs of customers, low level of awareness amongst
the customers, increasing number customers emphasizing service. But the way Distribution
intermediaries as classified by the regulators are increasingly becoming obsolete as newer and newer
distribution channels are emerging.

In this dynamic set up, Mutual Fund distribution intermediaries for SUNDARAM MUTUAL
are as follows: -
Independent financial advisor.
Institutional or Corporate Agents (Group of people working together as a
company or partnership firm, Mutual fund branch offices, National or regional level
organizations operating through branches, Distribution houses, etc.)

Banks.
 1-Independent financial advisor

Independent Financial Advisers or IFAs are professionals who offer

independent advice on financial matters to their clients and recommend suitable financial products from
the whole of the market. The term was developed to reflect a United Kingdom (UK) regulatory position
and has a specific UK meaning, although it has been adopted in other parts of the world, such as Hong
Kong, India etc.
The term "Independent Financial Adviser" was coined to describe the advisers working independently for
their clients rather than representing an insurance company, bank or bancassurer. At the time (1988)
the UK government was introducing the polarization regime which forced advisers to either be tied to a
single insurer or product provider or to be an independent practitioner. The term is commonly used in
the United Kingdom where IFAs are regulated by the Financial Conduct Authority (FCA) and must meet
strict qualification and competence requirements.
Typically an Independent Financial Adviser will conduct a detailed survey of a clients financial position,
preferences and objectives; this is sometimes known as a factfind. The adviser will then recommend
appropriate action to meet the client's objectives; and if necessary recommend a suitable financial product
to match the clients needs.
Individuals and businesses consult IFAs on many matters including investment, retirement
planning, insurance, protection and mortgages (or other loans). IFAs also advise on
some tax and legal matters.

In Sundaram Mutual, they carry out their distribution function through IFA as one of their channels
where the IFAs do business independently without reporting to anyone. They have to find their
own clients and take care of all the aspects of their clients. They mainly focus on client satisfaction
as they strive for achieving more clients with their client oriented approach all of the time.
They are the friendly neighborhood guys who is very effective in selling the product. However, he
has to manage his costs from the commission he gets. Advisory services are today given graits.
The scenario is changing and the space in advisory services will undergo a rapid change in the
next few years.

2- National and regional distributors

Organised distributors are the backbone of MF distribution. They have infrastructure and flexibility
to adapt to the need of the hour. They too have realized the importance of going to smaller centres
and are establishing offices in urban and semi-urban locations. This is the sector which needs to
be nurtured to expand.
National distributors are present nationally and have their own offices across India. They recruit
relationship managers who find clients and do have the access to use database of the organisation.
By using that database, they confirm about what to sell and what not to sell to the investors.
They speak about the scheme performance in a magnificent way to sell the schemes at one go.
Regional distributors are same the afore mentioned and perform the same job but are present
across different zones of India rather than being present at every locations of the country.
3- Banks
Mutual fund distribution by banks is emerging as a key element. Banks have huge potential to build
And improve the retail segment, which needs to become as strong as its institutional counterpart.

Even among banks there are two major types of distributors. There are those that handle wealth
management of their clients and, on their behalf, manage portfolios wherein investment in mutual
funds is one asset class. Such banks have sophisticated wealth management practices with
qualified staff and well-heeled clients. MNC banks, private banks and a few niche players (like
HSBC, Citi, ICICI, HDFC, Kotak etc.) are examples.
Then there are banks that use their networks to sell MFs as just another financial service. Most of
the PSBs and other commercial banks including large cooperative banks fall under this category.
For the banks the existing customer base serves as a captive prospective investor base for
marketing mutual funds. They have the advantage of having already won the trust of the customer.
There is no other distribution channel that can have a more effective retail penetration across Tier-
II and Tier-III cities as well as across rural India. This channel has slowly realized its own potential
and is now emerging as a big player. Abroad banks are among the leading fund supermarkets.
The Post Office too has been emerging as an effective channel. For all practical purposes, it can
be clubbed with PSBs. Banks with post offices are likely to emerge as a very crucial channel for
financial inclusion in the MF arena. This combination along with the online variants in the near
future will dominate the distribution of mutual funds.

In Sundaram they too recruit relationship managers as the national and regional distributors who have
mainly access to the database of banking channels. Banks take care of investment and savings and they
are more aware about the savings and account types of people so they approach different clients with
respect to that which makes Banks as the best and most efficient distribution channel of Sundaram
mutual. The do have target to achieve with respect to certain revenue within each financial year.

HUMAN RESOURCE PRACTICES

With the growth of an organization comes the evolving needs of the team members. Companies
are faced with the challenge of finding & attracting expert and mature HR talent. Companies often find
themselves in need of experts to design and implement relevant Human Capital Management Solutions.
The HR Practice provides solutions as per the client's requirements, business context, and the unique
structure of their organizations.
Human resources transactional functions include benefits administration, record keeping and new
employee and payroll processing. The extent to which HR department staff handle these transactional
functions depends on their expertise, size of the workforce and the departmental budget. In many cases,
the department's budget can support outsourcing these transactional functions, thus leaving time for HR
staff to devote its attention to HR strategic management instead of focusing on personnel administration-
type duties.
 All practices like Training and Development, Compensation, Work life balance etc. takes place similar to
all mutual fund companies except recruitment and selection which mainly occurs through
CONSULTANCY rather than following any other method of recruitment because of following factors:

-Recruitment Consultancies may be differ in their approach but the common criteria they work on is as
follows:
The Recruitment Consultant is sent a job description from the firm or organization that has a vacant
position to be filled.
The consultancy shortlist the applicants from their database CVs.
Then they hold the interviews on individual level and then send the selected candidates profile to the
firm.
The organization selects the candidates from the CV selection and asks the agency to arrange and
coordinate an interview.

Advantages:-

Proficiency

Recruitment Consultants have proficiency in their work that is far wide than the Human Resources
Departments if the Firms. Recruitment Consultants provide services with the qualified recruiters and
employment specialists, and even at a lower cost. Employees of Recruitment Consultancies usually have
a higher level of proficiency in job knowledge, employment trends and recruitment practices as they works
on placement of employees continuously with different firms, and thus have knowledge of the market and
new trends.

Cost

Recruitment Consultants usually works on lower costs in comparison with hiring proper staff to recruit the
candidates. Employers thus, save money related to the payroll processing and benefits administration
expenses.

Network

Consultants have a huge database for related jobs than the employers or the Firms do have. These
consultancies use their network and tap potential employees for the vacancy at a pace speed.

Potential candidates not always stay active on internet and even not read the job pages and visit online
job boards regularly. It is this enthusiastic approach that a Leading Recruitment Consultant can deliver
that will make the difference in finding the best candidates.
 MARKETING STRATEGY
Marketing strategy has the fundamental goal of increasing sales and achieving a sustainable competitive
advantage. Marketing strategy includes all basic, short-term, and long-term activities in the field
of marketing that deal with the analysis of the strategic initial situation of a company and the formulation,
evaluation and selection of market-oriented strategies and therefore contribute to the goals of the
company and its marketing objectives.

SUNDARAM MUTUAL markets its products mainly through word of mouth promotion and focuses less
on advertisements. It has its hoardings across every street trying to attract the customers at every go
because every time a consumer passes through, he/she remembers it, gets to know about company,
discusses with relatives about investing and finally calls on the provided contact number.

They have short films regarding SIP (Systematic Investment Plan) shared via You Tube which is great
with its content and is attractive with the stories. This helps them in promotion via social media platform
without consumption of higher costs in television ads.

https://www.youtube.com/watch?v=Jgx0j2WuQ_g

The afore-mentioned link is an example of one of its video stories regarding SIP promotions.

MOST IMPORTANT OBSERVATION

Client Service and peaceful Customer Handling under work pressure was the most important
observation I had during my visit to Sundaram Mutual office.
When most business publications talk about customer service skills, things like "being a people person"
tend to take the spotlight. That was the best thing about Sundaram Mutual staffs who managed efficiently
all the doubts and grievances related to their products with ease.
Skills that I observed in them during client service are as follows:
Patience
Ability to use Positive language
Ability to read customers
A calming presence
Very good knowledge about product
Which I think are quite effective in handling any type of customer at any point of time.

LEARNING OUTCOME
Will be able to serve clients and handle customers without losing temper.
Understanding the benefits and risks associated with mutual funds to a great extent.
Will be able to learn and grasp faster about distribution channels of AMCs if would get a chance
to work with any.