BHARTI VIDYAPEETH UNIVERSITY, PUNE

INSTITUTE OF MANAGEMENT AND ENTREPRENUERSHIP DEVELOPMENT, PAUD ROAD, ERANDWANE PUNE-38

A SUMMER INTERNSHIP REPORT ON PREFERENCE OF ADVISORS TOWARDS MUTUAL FUNDS SUBMITTED IN PARTIAL FULLFILMENT OF INSTITUTEOF MANAGEMENT AND ENTREPRENEOURSHIP DEVELOPMENT, PUNE FOR THE AWARD OF DEGREE OF MASTER OF BUSINESS ADMINISTRATION BY Ankita Mandal ROLL NO. 28 2009-2011

GUIDED BY

PROF. PRABHAT KUMAR

BHARTI VIDYAPEETH UNIVERSITY, PUNE

INSTITUTE OF MANAGEMENT AND ENTREPRENUERSHIP DEVELOPMENT, PAUD ROAD, ERANDWANE PUNE-38

CERTIFICATE OF COMPLETION

This is to certify that Mr. ANKITA MANDAL is a bonafide student of MBA program of the university in this institute for the year 2009-2011 . As a part of the University curriculum, the student has completed the project report titled PREFERENCE OF ADVISORS TOWARDS MUTUAL FUNDS The project report is prepared by the student under the guidance of Prof. PRABHAT KUMAR

(Teacher Guide) Director Date: Place:

Program Co-ordinator

DECLARATION

I Apurva Omar, hereby declare that the work titled ADVISORS PERCEPTION ABOUT MUTUAL FUNDS is my original work study carried out after completing my 2nd Semester of M.B.A. under the guidance of Prof. PRABHAT KUMAR and submitted in partial fulfillment for the requirement of award of Master of Business Administration degree of Bharti Vidyapeeth University from Institute of Management and Entrepreneurship Development , Erandwane, Kothrud Pune.

Yours sincerely

(Ankita Mandal)

Place :

Date :

PREFACE

THE CORPORATE PROGRAM of MBA course is a well structured and integrated programme. The course of management gives a practical knowledge in our study course. Industries give us much information about the different product and services we use in our day to day life. It is highly said that practice makes a man perfect the summer project training which is a part of M.B.A to get a practical understanding and training of the business management. Thus the industrial training which is a part of M.B.A course helps the student to get the knowledge about the actual environment of an organization. Karvy Stock Broking ltd. is one of such company dealing in Share market Derivatives, Commodities, Mutual fund IPO distribution with almost branches in overall India. It involved the study of Marketing activities of the organization. I have under taken industrial training in Karvy Stock Broking ltd. at Kanpur crossing from 19-may-2010 to 6-july-2010 as a part of my MBA course curriculum and I thus, present a project report on it at the best of my ability knowledge and work done.

ACKNOWLEDGEMENT

The making of any project requires contribution from many people, right from inception till its completion. In my case also, there had been a few people who have made this happen. It was not only learning but also an enriching experience. I feel indebted and place my special thanks to Mr. PRASHANT SHRIVASTAV (Area Manager) KARVY Stock Broking Limited Kanpur for his active guidance and support from time to time during the training and project and in the final understanding of the investment behavior of investors towards mutual funds. I feel immense pleasure in expressing my sincere and deep sense of gratitude and high obligation to Mr. SHARAD SHUKLA (Regional Department Head), Mr. Fateh Bahadur Singh (D.P. Head), Ms. Ruchi Dubey (Registrar Department Head), Mr. Satpaal Singh (Mutual Fund Department Head), for their valuable guidance and constant encouragement right from the selection of project work to final preparation of the project report and in the final understanding of the investment behavior of investors towards mutual funds. I would like to thank my faculty guide Prof. PRABHAT KUMAR for explaining the concepts of Marketing Research and Financial Concepts to me, for being a source of inspiration and for the valuable suggestions provided throughout. Finally,I would also like to thank Dr. NITIN NAYAK Director of Institute of management and Enterpreneurship Development (Bharti Vidyapeeth University) and all Faculty Members and colleagues of the institute deserve the praise for their role in shaping this summer training project. I am grateful to my family for their moral support and understanding . Ankita Mandal

EXECUTIVE SUMMARY

Indias 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. I have observed that approximately 40% of the people are unaware of Trading but most of them are interested to know about trading and ready to attend seminar arranged by KARVY. They are also interested to work with KARVY if sufficient information is provided to them about Trading 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 Stock Market Industry, the misconception regarding Share Market should be removed & the awareness for the same should be made.

CONTENTS OF THE REPORT

S.NO. 1. 2. 3.

TOPICS OBJECTIVES OF SUMMER INTERNSHIP SCOPE OF THE WORK COMPANY PROFILE a.) HISTORY OF KARVY b.) TYPE OF ORGANISATION c.) PROMOTORS OF THE COMPANY d.) SECVICES OF KARVY e.) ORGANIZATION STRUCTURE OF KARVY
NATIONAL LEVEL ORGANIZATION STRUCTURE BRANCH LEVEL ORGANIZATIONAL STRUCTURE

PAGE NO. 10 10 11 12 15

17 22

23

24

4.

WORKING ENVIRONMENT a.) Marketing Strategy b.) H R Policy Of Karvy c.) Quality Policy of Karvy

29 29 31 31

d.) SWOT Analysis

33

5.

PRINCIPLES OF PRACTICE OF MANAGEMENT a.) Introduction Of Mutual Funds b.) Development Of Mutual Funds c.) Types Of mutual Funds d.) Structure Of Indian Mutual

34

6. 7. 8.

RESEARCH OBJECTIVES RESEARCH METHODOLOGY DATA ANALYSIS AND INTERPRETATION FINDINGS CONCLUSTIONS RECOMMENDATION BIBLIOGRAPHY QUESTIONNAIRE GLOSSARY

48 50 53 58 59 60 61 62 65

9.
10. 11. 12. 13. 14.

1.

OBJECTIVES OF THE SUMMER INTERNSHIP

1. To study the investment pattern of the investors. 2. To know the factors considered by investors for making investments in Mutual Funds. 3. To know investors attitude towards Mutual Funds. 4. To know their expectation and level of satisfaction from the mutual funds. 5. To know their future plans towards mutual funds.

2. SCOPE OF THE WORK

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 companys skill in leveraging technology. Being one of the most technosavvy organizations around helps company to deliver even more cost effective financial solutions in the shortest possible time.

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

3. COMPANY PROFILE OF KARVY

US The Karvy group was formed in 1983 at Hyderabad, India. Karvy ranks among the top player in almost all the fields it operates. Karvy Computershare Limited is Indias largest Registrar and Transfer Agent with a client base of nearly 500 blue chip corporate, managing over 2 crore accounts. Karvy Stock Brokers Limited, member of National Stock Exchange of India and the Bombay Stock Exchange, ranks among the top 5 stock brokers in India. With over 6,00,000 active accounts, it ranks among the top 5 Depositary Participant in India, registered with NSDL and CDSL. Karvy Comtrade, Member of NCDEX and MCX ranks among the top 3 commodity brokers in the country. Karvy Insurance Brokers is registered as a Broker with IRDA and ranks among the top 5 insurance agent in the country. Registered with AMFI as a corporate Agent, Karvy is also among the top Mutual Fund mobilizer with over Rs. 5,000 crores

under management. Karvy Realty Services, which started in 2006, has quickly established itself as a broker who adds value, in the realty sector. Karvy Global offers niche off shoring services to clients in the US. Karvy has 575 offices over 375 locations across India and overseas at Dubai and New York. Over 9,000 highly qualified people staff Karvy.

3(a). HISTORY OF KARVY

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, Karvys 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, Karvys 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 companys 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.

B a c k g ro u n d

K a rv, yth e le a d in

3(b). KARVY - TYPE OF ORGANISATION

Member - National Stock Exchange (NSE), The Bombay Stock Exchange (BSE), and The Hyderabad Stock Exchange (HSE). Karvy Stock Broking Limited, one of the cornerstones of the Karvy edifice, flows freely towards attaining diverse goals of the customer through varied services. Creating a plethora of opportunities for the customer by opening up investment vistas backed by research-based advisory services. Here, growth knows no limits and success recognizes no boundaries. Helping the customer create waves in his portfolio and empowering the investor completely is the ultimate goal. It is an undisputed fact that the stock market is unpredictable and yet enjoys a high success rate as a wealth management and wealth accumulation option. The difference between unpredictability and a safety anchor in the market is provided by in-depth knowledge of market functioning and changing trends, planning with foresight and choosing one & rescues options with care. This is what we provide in our Stock Broking services. We offer services that are beyond just a medium for buying and selling stocks and shares. Instead we provide services which are multi dimensional and multi-focused in their scope. There are several advantages in utilizing our Stock Broking services, which are the reasons why it is one of the best in the country.

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.

Karvys mission statement is To Bring Industry, Finance and People together.

Vision statement of Karvy

Companys 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. Companys 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.

3(d). SERVICES OF KARVY STOCK BROKING LIMITED

1. STOCK BROKING SERVICES :

It is an undisputed fact that the stock market is unpredictable and yet enjoys a high success rate as a wealth management and wealth accumulation option. The difference between unpredictability and a safety anchor in the market is provided by in-depth knowledge of market functioning and changing trends, planning with foresight and choosing one's options with care. This is what we provide in our Stock Broking services. We offer services that are beyond just a medium for buying and selling stocks and shares. Instead we provide services which are multi dimensional and multifocused in their scope. There are several advantages in utilizing our Stock Broking services, which are the reasons why it is one of the best in the country. We offer trading on a vast platform; National Stock Exchange, Bombay Stock Exchange and Hyderabad Stock Exchange. More importantly, we make trading safe to the maximum possible extent, by accounting for several risk factors and planning accordingly. We are assisted in this task by our in-depth research, constant feedback and sound advisory facilities. Our highly skilled research team, comprising of technical analysts as well as fundamental specialists, secure result-oriented information on market trends, market analysis and market predictions. This crucial information is given as a constant feedback to our customers, through the following daily reports which are delivered to them thrice a day; The Pre-session Report, where market scenario for the day is predicted The Mid-session Report, timed to arrive during lunch break , where the market forecast for the rest of the day is given and The Post-session Report, the final report for the day, where the market and the report itself is reviewed.

1.

Depository Participants Services :

The onset of the technology revolution in financial services Industry saw the emergence of Karvy as an electronic custodian registered with National

Securities Depository Ltd (NSDL) and Central Securities Depository Ltd (CSDL) in 1998. Karvy set standards enabling further comfort to the investor by promoting paperless trading across the country and emerged as the top 3 Depository Participants in the country in terms of customer serviced. Offering a wide trading platform with a dual membership at both NSDL and CDSL, we are a powerful medium for trading and settlement of dematerialized shares. We have established live DPMs, Internet access to accounts and an easier transaction process in order to offer more convenience to individual and corporate investors. A team of professional and the latest technological expertise allocated exclusively to our demat division including technological enhancements like SPEED-e, make our response time quick and our delivery impeccable. A wide national network makes our efficiencies accessible to all.

3.Financial Products Distribution services :

The paradigm shift from pure selling to knowledge based selling drives the business today. With our wide portfolio offerings, we occupy all segments in the retail financial services industry. A 1600 team of highly qualified and dedicated professionals drawn from the best of academic and professional backgrounds are committed to maintaining high levels of client service delivery. This has propelled us to a position among the top distributors for equity and debt issues with an estimated market share of 15% in terms of applications mobilized, besides being established as the leading procurer in all public issues. To further tap the immense growth potential in the capital markets we enhanced the scope of our retail brand, Karvy the Finapolis , thereby providing planning and advisory services to the mass affluent. Here we understand the customer needs and lifestyle in the context of present earnings and provide adequate advisory services that will necessarily help in creating wealth. Judicious planning that is customized to meet the future needs of the customer deliver a service that is exemplary.

The market-savvy and the ignorant investors, both find this service very satisfactory. The edge that we have over competition is our portfolio of offerings and our professional expertise. The investment planning for each

customer is done with an unbiased attitude so that the service is truly customized. Our monthly magazine, Finapolis, provides up-dated market information on market trends, investment options, opinions etc. Thus empowering the investor to base every financial move on rational thought and prudent analysis and embark on the path to wealth creation.

2. Advisory Services :
Under our retail brand Karvy the Finapolis', we deliver advisory services to a cross-section of customers. The service is backed by a team of dedicated and expert professionals with varied experience and background in handling investment portfolios. They are continually engaged in designing the right investment portfolio for each customer according to individual needs and budget considerations with a comprehensive support system that focuses on trading customers' portfolios and providing valuable inputs, monitoring and managing the portfolio through varied technological initiatives. This is made possible by the expertise we have gained in the business over the years. Another venture towards being investor-friendly is the circulation of a monthly magazine called Karvy - the Finapolis'. Covering the latest of market news, trends, investment schemes and research-based opinions from experts in various financial fields.

5. Private Client Group services :

This specialized division was set up to cater to the high net worth individuals and institutional clients keeping in mind that they require a different kind of financial planning and management that will augment not just existing finances but their life-style as well. Here we follow a hard-nosed business approach with the soft touch of dedicated customer care and personalized attention.

For this purpose we offer a comprehensive and personalized service that encompasses planning and protection of finances, planning of business needs and retirement needs and a host of other services, all provided on a one-to-one basis. Our research reports have been widely appreciated by this segment. The delivery and support modules have been fine tuned by giving our clients access to online portfolio information, constant updates on their portfolios as well as value-added advice on portfolio churning, sector switches etc. The investment recommendations given by our research team in the cash market has enjoyed a high success rate.

6. Currency Derivatives :
Karvy Forex & Currency Private Limited (KFCL) is another business enterprise of the prestigious Karvy group. Having laid a strong foundation in Indian financial services, it is indeed a pleasure for the Karvy group to venture into the currency derivatives segment. This enables us to provide extended services to our esteemed customers, thereby making the group a single window for all financial-services. KFCL offers advisory and brokerage services for the Indian currency derivative markets. We provide online trading platforms to our clients that enable them to trade whenever they choose while receiving instant professional support.

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.

3(e). ORGANIZATION STRUCTURE OF KARVY

Karvy Fortune a business opportunity for individuals in similar business from Karvy, it gives the opportunity to associate with Karvy Family as Franchisee, Remisser, or as an Independent Financial Advisors. Karvy ranks among 5 stock brokers and Depositary Participants in India, with the enormous net work of over 500+ branches in 375 locations across India and overseas at Dubai, executes 150,000+ trades in NSE/BSE per day. Karvy has a top notch research team, advisory team, technology support team to serve its customers in 24/7 manner.

Associate with Karvy Fortune, a correlate opportunity from Indias foremost financial services provider, Karvy Stock Broking Ltd. It offers complete Karvys spectrum of financial products. Karvy fortune gives the opportunity to associate with Karvy Family as Franchisee, Remisser or as an Independent Financial Advisors please enroll your details.

Remisser of Karvy stock Broking Ltd.

Karvy is an established stock broking firm with a strong customer base all over India, Karvy would like to reach out to more investors across the country, building a good distribution channel through Business Partner/Associates. Who is Business Partner/Associate?

Karvy is looking for like-minded people who wish to serve the customers with utmost reliability and fervor. As a Business Associate of Karvy, you will actively promote and market our services and products and keep our customers updated of the forthcoming new products and schemes. Karvy offers you to join our family as Franchisee/Business partners, Remisser or as an Independent Financial Advisor.

NATIONAL LEVEL ORGANIZATION CHART

CM & MD (Hyderabad)

GM (Marketing) (HRM)

GM (Finance)

GM

Zonal Manager (Lucknow)

Regional Manager (Kanpur)

Branch Mgr.

Branch Mgr.

Accountant

Sr. Executives

Executives

[ National Level Organization Chart of Karvy]

BRANCH LEVEL ORGANIZATION STRUCTURE CHART

Sr. Executive Peon Accountant Executives Marketing Executive Branch Manager Clerk Executives-3 (Investment) (Demat) (SB-4) (IT)

PROMOTERS OF THE KARVY

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

Karvy Stock Broking Limited

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

C Parthasarathy, Chairman & Managing Director Mr. C Parthasarathy, a leader in the financial services industry in India is responsible for building KARVY as one of India's truly integrated Financial Services Provider; he is a fellow member of the Institute of Company Secretaries of India, a Fellow Member of the Institute of Chartered Accountants of India and a graduate in law.As Chairman and Managing Director, he oversees the group's operations and renders vision and business direction.

M Yugandhar, Managing Director Mr. M Yugandhar, Managing Director, founder member of KARVY Consultants Limited, has varied experience in the field of financial services spanning over 20 years. He is a Fellow Member of the Institute of Chartered Accountants of India and was involved in the statutory and branch audit of banks for 26 years.

M S Ramakrishna, Executive Director

Mr. M S Ramakrishna, Director, founder member of KARVY Consultants Limited is the orchestrator of technology initiatives such as the call centre in the service of the customer.

Achivements
Among the top 5 stock brokers in India (4% of NSE volumes) India's No. 1 Registrar & Securities Transfer Agents Among the top 3 Depository Participants Largest Network of Branches & Business Associates ISO 9002 certified operations by DNV Among top 10 Investment bankers Largest Distributor of Financial Products Adjudged as one of the top 50 IT uses in India by MIS Asia Full Fledged IT driven operations

About Kanpur Branch:

Kanpur branch comes under Lucknow branch which is a regional office of Karvy for Uttar Pradesh region. It was established on Jan. 1999. In Uttar Pradesh there are four Branch Offices of Karvy: Lucknow Kanpur Jhansi Allahabad In Kanpur Karvy has started Demat Services on 21 June 2000. DP ID of Karvy is IN300394.

In Kanpur Karvy has started IT enabled services on Mar. 2004.

1. WORKING ENVIRONMENT OF KARVY

4(a). 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 subbrokers.

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 doesnt give advertisement in media like TV, Newspapers, and Magazines etc. Karvys 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.

4(b). HR POLICY OF KARVY

Karvys 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.

4(c). QUALITY POLICY OF KARVY

To achieve and retain leadership, Karvy shall aim for complete customer satisfaction, by combining its human and technological resources, to provide superior quality financial services. In the process, Karvy will strive to exceed Customers expectations.

Quality Objectives of Karvy

Build in-house processes that will ensure transparent and 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.

4(d). 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.

1. PRINCIPLES AND PRACTICE OF MANAGEMENT 5(a). INTRODUCTION

CONCEPT OF MUTUAL FUNDS

[Source: amfiindia.com]

Mutual Fund Cycle

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.

5(b). 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 delinked 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. 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),

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 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.

[ Growth in Assets Under Management] [Source: www.amfiindia.com]

5(c). Types of Mutual Fund

Mutual funds are financial intermediaries

Financial Market

Investm ents

Earnings and Appreciation

Professional fund M anagem ent M anagem ent Fee

Mutual Funds

Sa v in gs

Po

ol i

ng

Small Investors
Returns

Mutual Funds Organisation

There are many entities involved and the diagram below illustrates the organizational set up of a mutual fund:

[Fig. 6: Assets Under Management By Fund Type] [Source: www.amfiindia.com]

[Fig. 7 Assets Under Management By AMC] [Source: www.amfiindia.com]

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 Stock Brokers R & T Agent Mutual Fund

RBI Commercial Banks NBF Co.

[Fig.8: Regulatory bodies]

Dept. of IT PAN TAN e-TDS

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 funds 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).

5(d).STRUCTURE OF INDIAN MUTUAL FUNDS

Mutual fund industry is highly regulated by the government keeping in view of the protection of investors interest as well as to maintain operational transparency. In India SEBI Regulations Act, 1996, guides the formation and operation of Mutual Funds. A Mutual Fund comprises of 4 separate entities. 1. 2. 3. 4. 5. Sponsor Board of Trusties Asset Management Company Custodian and Depositories 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.

ASSETS UNDER MANAGEMENT:

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 Funds 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.

Mutual funds are subject to many government regulations that protect investors from fraud.

Regulatory oversight:

9.

Convenience:

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

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.

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 todays 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 its sub-brokers who can work as intermediary between company and the investors.

6. 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:
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.

1. RESEARCH METHODOLOGY
1. Research Design:

A research design is a pattern or an outline of a research projects 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:
Advisors knowledge about Mutual Fund Advisors knowledge about Karvy Advisors interest in getting knowledge of Mutual Fund Advisors willingness to deal in Mutual Fund with Karvy Advisors preference in selecting tax saving instrument of investment Advisors preference in selecting dealer

3. a.

Sources of Data: 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.

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

[Fig. 18 Advisors gets invested IT payers in]

[Fig.20: Advisors who are interested in dealing of Mutual Funds]

[Fig.22: Advisor know about MF services provided by Karvy]

[Fig.23: Advisor who are interested to attend seminar on MF]

[Fig.24 Reason for not attending Seminar]

[Fig.25: Advisors who are interested to work with KARVY]

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

2. 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 dont 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 Insurance is widely used as tax-saving instrument. PPF.

10. CONCLUSTIONS
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.

11. 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 dont 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

12. BIBLIOGRAPHY

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

www.mutualfundsindia.com www.amfiindia.com www.themanagementor.com www.dewb-vc.com www.karvy.com www.indiacorporateadvisor.com www.nsdl.co.in www.incometaxdelhi.nic.in www.incometaxindia.gov.in 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)

13. 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 Insurance Tax Bond Other Mutual Fund Fixed Deposit PPF

2.

Please indicate reason for choosing above. Returns Safety Timely Brokerage Other Risk Tax Benefits

3. 4. 5.

Approximately how many customers you have? What is the brokerage Payment Period? 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 Karvys 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) Mobile : Email :

(R)

14. 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 clients 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.