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Motilal Oswal Asset Management Company Limited
Portfolio Management Services
D I S C LO S U R E D O C U M E N T
Asset Management
Asset Management
Form CSecurities & Exchange Board of India
(Portfolio Managers) Regulations 1993,Regulation 14
Name of the Portfolio Manager: Motilal Oswal Asset Management Company LimitedRegd. Office Address:
Phone No.: Fax No:Email id:
10th Floor, Motilal Oswal Tower, Rahimtullah Sayani Road, OppositeParel ST Depot, Mumbai - 400025
91-22-39804278 [email protected]
I) The Disclosure Document forwarded to the Securities & Exchange Board of India(SEBI) is in accordance with the SEBI (Portfolio Managers) Regulations, 1993 and theguidelines and directives issued by SEBI from time to time;
ii) The disclosures made in the document are true, fair and adequate to enable theinvestors to make a well informed decision regarding entrusting the management ofthe portfolio to us/ investment in the Portfolio Management Services;
iii) The Disclosure Document has been duly certified by an independent CharteredAccountant, Mr. Aneel Lasod, a Partner of M/s. Aneel Lasod And Associates,Chartered Accountants, having membership no. 40117 and office at A-801-802,Corporate Avenue, 8th Floor, Sonawala Road, Goregaon (East), Mumbai – 400 063on November 3, 2014.
We confirm that:
For and on behalf of
Principal Officer
Date: November 3, 2014
Motilal Oswal Asset Management Company Limited
Sd/-
Aashish Somaiyaa
Motilal Oswal Asset Management Company Ltd.Corp. & Regd. Office: 10th Floor, Motilal Oswal Tower,
Rahimtullah Sayani Road, Opposite Parel ST Depot,Prabhadevi, Mumbai - 400025
Board: +91 22 3980 4263 / 3982 5500Fax: +91 22 3089 6884
CIN: U67120MH2008PLC188186
For Aneel Lasod And AssociatesC h a r t e r e d A c c o u n t a n t s.
Aneel Lasod
M.No.40117Partner
Place:- MumbaiDate :- 3rd November, 2014
CERTIFICATE
We hereby certify that the disclosures made in the enclosed Disclosure Documentdated 3rd November, 2014, prepared and forwarded by Motilal Oswal AssetManagement Company Ltd. in terms of the Fifth Schedule of Regulation 14 of theSecurities and Exchange Board of India (Portfolio Managers) Regulations 1993 andthe guidelines and directives issued by the Board from time to time, are true, fair andadequate to enable the investors to make a well informed decision.
This certificate is issued on the basis of the information and documentsgiven/produced before us and on the basis of representations made by Motilal OswalAsset Management Company Ltd.
ANEEL LASOD AND ASSOCIATESC H A R T E R E D A C C O U N T A N T S
A-801-802 Corporate Avenue 8th Floor, Sonawala Road, Near Udyog Bhavan, Goregaon (E), Mumbai - 400063.Tel. : 022-26865408 / 26860878 M : 9820141771 Website : www.aneellasod.comEmail: [email protected], [email protected], [email protected]
DISCLOSURE DOCUMENT
(As per the requirement of Fifth Schedule of Regulation 14 of Securities and ExchangeBoard of India (Portfolio Managers) Regulation 1993)
i) The Disclosure Document has been filed with the Securities & Exchange Board ofIndia along with the certificate in the prescribed format in terms of Regulation 14 ofthe SEBI (Portfolio Managers) Regulations, 1993.
ii) The purpose of the Document is to provide essential information about the portfoliomanagement services in a manner to assist and enable the investors in makinginformed decision for engaging Motilal Oswal Asset Management Company Ltd. as aPortfolio Manager.
iii) The Disclosure Document contains the necessary information about the PortfolioManager, required by an investor before investing, and the investor may also beadvised to retain the document for future reference.
iv) This Document supersedes the Disclosure Document dated May 5, 2014 filed withSEBI
v) The following are the Details of the Portfolio Manager:
vi) The name, phone number, e-mail address of the Principal Officer so designated bythe Portfolio Manager is:
Date: November 3, 2014
Name of the Portfolio Manager
SEBI Registration Number
Registered Office Address
Phone
Fax
Website
Motilal Oswal Asset Management Company limited
INP 000000670
022 3089 4263
022 3089 6884
10th Floor, Motilal Oswal Tower, Rahimtullah Sayani Road,Opposite Parel ST Depot, Prabhadevi, Mumbai - 400025
www.mostshares.com andwww.motilaloswal.com/Asset-Management
Name of the Principal Officer
Phone
Registered Office Address
Mr. Aashish P Somaiyaa
91-22-39804278
10th Floor, Motilal Oswal Tower, Rahimtullah Sayani Road,Opposite Parel ST Depot, Prabhadevi, Mumbai - 400025
Index of contents
1 Disclaimer clause 1
2 Definitions 1
3 Description 2
4
5
5 Services offered 5
6 Risk Factors 10
7 Client Representation 11
8 The Financial Performance of Portfolio Manager 13
9 Portfolio Management Performance of the
10 Nature of Expenses 14
11 Taxation 15
12 Accounting Policies 16
13 Investor Services 17
Penalties, pending litigations or proceedings, findingsof inspections or investigations for which actions mayhave been taken or initiated by any regulatory
authority.
Portfolio Manager 13
ItemNo.
Contents PageNo.
Asset Management
1) Disclaimer clause :
The particulars given in this Document havebeen prepared in accordance with the SEBI(Portfolio Managers) Regulations, 1993 andfiled with SEBI. This Document has neither beenapproved nor disapproved by SEBI nor has SEBIcertified the accuracy or adequacy of thecontents of the document. This document is notfor public distribution and has been furnished toyou solely for your information and may not bereproduced or redistributed to any other person.
2) Definitions :
“Act”
“Agreement”
“Application”
“Assets”
“Body Corporate”
“Bank Account”
“Board”
“Client”
“Custodian”
“Depository Account”
“Discretionary Portfolio ManagementServices”
“Discretionary Portfolio Manager”
“Document”
“Financial Year”
“Funds”
“Non-discretionary Portfolio ManagementServices”
Unless the context or meaning thereof otherwiserequires, the following expressions shall have themeaning assigned to them hereunder respectively:
(a) means the Securities and ExchangeBoard of India, Act 1992 (15 of 1992).
(b) means agreement betweenPortfolio Manager and its Client and shallinclude all Schedules and Annexures attachedthereto.
(c) means the application made bythe Client to the Portfolio Manager to place itsfunds and/or securities with the PortfolioManager for Portfolio Management Services.Upon execution of the Agreement by thePortfolio Manager, the Application shall bedeemed to form an integral part of theAgreement. Provided that in case of anyconflict between the contents of theApplication and the provisions of theAgreement, the provisions of the Agreementshall prevail.
(d) means (i) the Portfolio and/or (ii) theFunds.
(e) shall have the meaningassigned to it in or under clause (11) of section2 of the Companies Act, 2013.
(f) means one or more accountsopened, maintained and operated by thePortfolio Manager with any of the ScheduledCommercial Banks in accordance with theagreement entered into with the Client.
(g) means the Securities and ExchangeBoard of India established under sub-section(1) of Section 3 of the Securities and ExchangeBoard of India Act.
(h) means the person who enters into an
Agreement with the Portfolio Manager formanaging its portfolio and /or funds.
(I) means any person who carries onor proposes to carry on the business ofproviding custodial services in accordance withthe regulations issued by SEBI from time totime.
(j) means one or moreaccount or accounts opened, maintained andoperated by the Portfolio Manager with anydepository or depository participant registeredunder the SEBI (Depositories and Participants)Regulations, 1996 in accordance with theagreement entered into with the Client.
(k)means the portfolio management
services rendered to the Client by the PortfolioManager on the terms and conditionscontained in the agreement, whereunder thePortfolio Manager exercises any degree ofdiscretion in the investments or managementof assets of the Client.
(l) means aPortfolio Manager who exercises or may, undera contract relating to portfolio management,exercise any degree of discretion as to theinvestments or management of the portfolio ofsecurities or the funds of the Client, as the casemay be.
(m) means this Disc losureDocument.
(n) means the year starting fromApril 1 and ending on March 31 of thefollowing year.
(o) means the monies managed by thePortfolio Manager on behalf of the Clientpursuant to Portfolio Investment ManagementAgreement and includes the moniesmentioned in the Application, any furthermonies placed by the Client with the PortfolioManager for being managed pursuant toPortfolio Investment Management Agreement,the proceeds of the sale or other realization ofthe Portfolio and interest, dividend or othermonies arising from the Assets, so long as thesame is managed by the Portfolio Manager.
(p)means a portfolio management
services under which the Portfolio Manager,
1
2
subject to express prior instructions issued bythe Client from time to time in writing, for anagreed fee structure and for a definitedescribed period, invests in respect of theClient's account in any type of security entirelyat the Client's risk and ensure that all benefitsaccrue to the Client's Portfolio.
(q) means the Portfolio Manager andthe Client; and “Party” shall be construedaccordingly.
® includes any individual, partners inpartnership, central or state government,company, body corporate, cooperative society,corporation, trust, society, Hindu UndividedFamily or any other body of persons, whetherincorporated or not.
(s) means the Securities managed bythe Portfolio Manager on behalf of the Clientpursuant to the Portfolio InvestmentManagement Agreement and includes anySecurities mentioned in the Application, anyfurther Securities placed by the Client with thePortfolio Manager for being managedpursuant to the Portfolio InvestmentManagement Agreement, Securities acquiredby the Portfolio Manager through investmentof Funds and bonus and rights shares orotherwise in respect of Securities forming partof the Portfolio, so long as the same ismanaged by the Portfolio Manager.
(t) shall have the samemeaning as given in regulation 2(cb) of theSEBI (Portfolio Managers) Regulations, 1993 asamended from time to time.
(u) means an employee of thePortfolio Manager who has been designated assuch by the Portfolio Manager.
(v) means the Securities andExchange Board of India (Portfolio Managers)Regulations, 1993, as may be amended fromtime to time.
(w) means anybank included in the second Schedule to theReserve Bank of India Act, 1934 (2 of 1934).
(x) means the Securities and ExchangeBoard of India established under sub-section(1) of Section 3 of the SEBI Act.
(y) includes: “Securities” as definedunder the Securities Contracts (Regulation)Act, 1956 as amended from time to time andincludes:
(i) Shares, scrips, stocks, bonds, debentures,
“Parties”
“Person”
“Portfolio”
“Portfolio Manager”
“Principal Officer”
“Regulations”
“Scheduled Commercial Bank”
“SEBI”
“Securities”
debenture stock or other marketablesecurities of a like nature in or of anyincorporated company or other bodycorporate;
(ii) derivative;
(iii) units or any other instrument issued byany collective investment scheme to theinvestors in such schemes;
(iv) security receipt as defined in clause (zg) ofsection 2 of the Securitisation andReconstruction of Financial Assets andEnforcement of Security Interest Act,2002;
(v) units or any other such instrument issuedto the investors under any mutual fundscheme;
(vi) Government securities;
(vii) such other instruments as may bedeclared by the Central Government to besecurities;
(viii) rights or interest in securities;
(ix) Exchange Traded Funds; and
(x) Liquid Funds.
Words and expressions used in this disclosuredocument and not expressly defined shall beinterpreted according to their general meaningand usage. The definitions are not exhaustive. Theyhave been included only for the purpose of clarityand shall in addition be interpreted according totheir general meaning and usage and shall alsocarry meanings assigned to them in regulationsgoverning Portfolio Management Services.
Motilal Oswal Asset Management Company Ltd.(“MOAMC”) is a company incorporated under theCompanies Act, 1956 on November 14, 2008,having its Registered Office at 10th Floor, MotilalOswal Tower, Rahimtullah Sayani Road, OppositeParel ST Depot, Prabhadevi - 400025. MOAMC is awholly owned subsidiary of Motilal OswalSecurities Ltd. (“MOSL”), which in turn is whollyowned subsidiary of Motilal Oswal FinancialServices Ltd. (“MOFSL”).
Motilal Oswal Securities Ltd. was registered withSEBI as a Portfolio Manager vide registration no.INP 000000670 under SEBI (Portfolio Managers)Regulations 1993. In order to consolidate all itsasset management business under one entity,MOSL made an application to SEBI for transfer of
3) Description :
I) History, Present Business and Backgroundof the Portfolio Manager :
3
Portfolio Management Services (PMS) businessalong with SEBI registration certificate to its whollyowned subsidiary, MOAMC. SEBI vide its letterh a v i n g r e f e r e n c e n u m b e r I M D / D O F -I/SKS/10449/2010 dated June 30, 2010 granted itsapproval for transfer of PMS business from MOSLto MOAMC subject to compliance of therequirements specified by SEBI.
MOSL entered into an agreement with MOAMC fortransferring its PMS business. Pursuant to thetransfer, MOSL assigned to MOAMC all its rightsand obligations under the Portfolio InvestmentManagement Agreement executed with its Clientsand other documents executed pursuant theretoand Power of Attorney (“POA”) conferred by Clientsin favour of MOSL.
Thus, MOAMC is entitled to exercise all powers andfunctions conferred or contained in the POA, whichwere originally exercised or performed by MOSL.On confirmation to SEBI that MOAMC hascomplied with the requirements specified by SEBIin respect of transfer of PMS business, SEBI hasendorsed the original certificate of registration ofPortfolio Management Services in favour ofMOAMC w.e.f. October 21, 2010.
MOAMC holds Certificate of Registration No.INP000000670 dated October 17, 2014 issuedunder SEBI (Portfolio Managers) Regulations, 1993to act as a Portfolio Manager. The certificate ofregistration is valid till September 15, 2017. Inaddition to acting as a Portfolio Manager, MOAMCis also an Asset Management Company to MotilalOswal Mutual Fund under an InvestmentManagement Agreement dated May 21, 2009.Motilal Oswal Mutual Fund is registered with SEBIas a Mutual Fund under SEBI (Mutual Funds)Regulations, 1996 vide registration no.MF/063/09/04 dated December 29, 2009.
Motilal Oswal Asset Management Company Ltd. ispromoted by Motilal Oswal Securities Ltd. (MOSL).MOSL is a wholly owned subsidiary of MotilalOswal Financial Services Ltd. (MOFSL).
MOSL has its origin in a small partnership formedbetween two chartered accountants, Mr. MotilalOswal & Mr. Raamdeo Agrawal in 1987. Theyacquired membership at the Bombay StockExchange (BSE) in the year 1990 in the name of“Motilal Oswal”. Right from this stage of venture,approach was Research Based Broking.Subsequently, few more memberships of BSE were
ii) Promoters of the Portfolio Manager,Directors and their background :
Promoter :
acquired. In the year 1994, membership of NSEwas also acquired.
In the year 1994, “Motilal Oswal” wasincorporated into a company, which is now knownas Motilal Oswal Securities Ltd. Subsequently,Wealth Creation Study was initiated to identify thebiggest wealth creating companies in Indian StockExchanges. This was also coupled with a formalequity research known as “Inquire”. The companybecame Depository Participant of CentralDepository Services (India) Ltd. in the year 1999and National Securities Depository Ltd. in the year2000.
The Company is one of the leading Broking Housesin the Retail as well as Institutional segment of theCapital Market. The major activities and offeringsof MOSL are Equity Broking, Depository ParticipantServices, Investment Advisory, Fund ManagementServices, Institutional Broking and ResearchServices.
Mr. Raamdeo Agrawal is a Director on theBoard of the Company. He is B.com and ACAby qualification. He is Co-Author for the book“Corporate Numbers Game” in 1986. He hasextensive experience in Capital Markets andparticularly in Equity Research / InvestmentManagement.
Mr. Kanu Doshi was inducted as anIndependent Director on the Board of theCompany with effect from April 8, 2009. He isChartered Accountant by qualification. Hespecialises in corporate taxation and has gotinsight into financial matters of corporateparticularly companies setting up new projectsand seeking financial assistances fromfinancial institutions.
Mr. Ashok Jain was inducted as anIndependent Director on the Board of theCompany with effect from August 3, 2012. Heis B.Com, FCA, and ACS by qualification. Mr.Jain has a diverse experience of more than twodecades in the field of Corporate Managementand finance related area.
Mr. Aashish P Somaiyaa is a Managing Directorand Chief Executive Officer of the Company, Heis B. E (Polymers) and MMS (Finance) byqualification. He is also the Principal Officer for
Directors and their background:
a) Mr. Raamdeo Agrawal
b) Mr. Kanu Doshi
c) Mr. Ashok Jain
d) Mr. Aashish P Somaiyaa
the ground of fraud, malafide, conflict ofinterest or gross negligence. This right of thePortfolio Manager shall be exercised strictly inaccordance with the relevant Acts,Regulations, guidelines and notifications inforce from time to time. Periodical statementsin respect to Client's Portfolio shall be sent tothe respective Client.
Based on the Client's profile, overall investmentobjective and other relevant factors, thePortfolio of the Clients are at present managedunder one or more of the following InvestmentStrategies,:
1) Value Strategy
2) Bulls Eye Strategy
3) Discover Value Strategy
4) Discover Dynamic Strategy
5) Next Trillion Dollar Opportunity Strategy
6) Focused (Series III) – A Target Returns Strategy
7) Focused (Series IV) – A Flexi Cap Strategy
8) Focused (Series V) – A Contra Strategy
9) Optima Strategy
10) Liquid Strategy
11) Structured Products Investments Strategy
12) Prodigy Investment Strategy
13) Invest India Strategy
14) Bluechip Prodigy Strategy
15) PLUS strategy - Portfolio of Less recognized orUndervalued Stocks
16) Deep Value Portfolio
17) Motilal Oswal MOSt Fund ETF Assets andSecurities Portfolio Strategy (FEATS)
18) Motilal Oswal MOSt Allocation PortfolioStrategy (MAPS)
19) Emergence Portfolio Strategy
20) Focused Opportunities Strategy
Under the Non-Discretionary PortfolioManagement Services, the portfolio of theClient shall be managed in consultation withthe Client. Under this service, the Assets will bemanaged as per express prior instructionsissued by the Client from time to time. TheClient will have complete discretion to decideon the investment (Stock Quantity and Price oramount). The Portfolio Manager inter aliamanages transaction execution, accounting,recording or corporate benefits, valuation and
b) Non - Discretionary Services :
the PMS business of the Company.
Key Management Personnel (PortfolioManagement Services) :
4
Mr. Aashish P. Somaiyaa
Ms. Sarika Shah
Mr. Rajesh Patil
Mr. Manish Sonthalia
Mr. Kunal Jadhwani
Mr. Vaibhav Agrawal
Managing Director &CEO and Principal Officer
Company Secretary &Compliance Officer
Associate Vice President-PMS Operations
Senior Vice President andFund Manager
Associate Vice President -Fund Manager
Fund Manager
iii) Group company information ( i .e.information related to top 10 GroupCompanies / firms of the Portfolio Manageron turnover basis) (as per the auditedfinancial statements for the year endedMarch 2014) :
iv) Details of the services being offered :
a) Discretionary Services :
1. Motilal Oswal Securities Ltd.
2. Motilal Oswal Financial Services Limited
3. MOPE Investment Advisors Private Limited
4. Motilal Oswal Asset Management CompanyLimited
5. Motilal Oswal Commodities Broker Pvt. Ltd.
6. Motilal Oswal Wealth Management Limited
7. Motilal Oswal Investment Advisors PrivateLimited
8. Motilal Oswal Real Estate Investment AdvisorsII Private Limited
9. Motilal Oswal Securities International PrivateLimited
10. Motilal Oswal Capital Markets (Singapore) Pte.Limited
Under these services, the choice as well as thetimings of the investment decisions rest solelywith the Portfolio Manager and the PortfolioManager can exercise any degree of discretionin the investments or management of assets ofthe Client. The Securities invested / disinvestedby the Portfolio Manager for Clients may differfrom Client to Client. The Portfolio Manager'sdecision (taken in good faith) in deployment ofthe Client's fund's is absolute and final and cannever be called in question or be open toreview at any time during the currency of theagreement or at any time thereafter except on
5
reporting aspects on behalf of the Cliententirely at the Client's risk.
Under these services, the Portfolio Manageradvises the Client on investments in general orany specific advice required by the Clients andagreed upon in the Client agreement. ThePortfolio Manger will render the best possibleadvice to the client having regard to the client'sneeds and the environment, and his ownprofessional skills. The same can be binding ornon - binding in nature or in such terms asmentioned in the Client agreement. For suchservices, the Portfolio Manager charges theClient a fee for services rendered mentioned inthe Client agreement. The advice may be eithergeneral or specific in nature and may pertain toa particular portfolio. Entry / exit timing,execution and settlement are solely the Client'sresponsibility.
1. All cases of penalties imposed by the Boardor the directions issued by the Board underthe Act or Regulations made there underrelating to Portfolio Management Services.
2. The nature of the penalty/direction.
3. Penalties imposed for any economicoffence and/or for violation of anysecurities laws relating to PortfolioManagement Services.
4. Any pending material litigation/legalproceedings against the PortfolioManager/key personnel with separatedisclosure regarding pending criminalcases, if any.
5. Any deficiency in the systems andoperations of the Portfolio Managerobserved by the Board or any regulatoryagency in re lat ion to Port fo l ioManagement Services for which actionmay have been taken or initiated.
c) Advisory Services :
4) Penalties, pending litigation or proceedings,findings of inspection or investigations forwhich action may have been taken orinitiated by any regulatory authority:
None
None
None
Details as on October 31, 2014 areprovided below in the table as AnnexureA.
None
6. Any enquiry/adjudication proceedingsinitiated by the Board against the PortfolioManager or its directors, principal officeror employee or any person directly orindirectly connected with the PortfolioManager or its directors, principal officeror employee, under the Act or Regulationsmade thereunder relating to PortfolioManagement Services.
The Portfolio Manager manages the Assets ofthe Client using the following Strategies:
The Strategy aims to benefit from the longterm compounding effect on investmentsdone in good businesses, run by great businessmanagers for superior wealth creation.
Features:
• Follows a value based stock selection strategy
• Investment Approach : “Buy & Hold”
• Investment Horizon: Medium to Long term
• Maximize post tax return due to Low Churn\
Mr. Kunal Jadhwani
The Strategy aims to deliver returns in the shortto medium term by investing in fundamentallysound stocks coupled with active profitbooking.
Features :
• Actively managed multi cap strategy.
• Investment Approach: Capitalizing on short tomedium-term market opportunities
• Regular Profit booking based on stock andmarket movements
The Strategy aims to deliver returns over a longterm by investing in large-cap stocks across 6-8 sectors. The focus is to identify largeunpopular businesses with dominant marketshare and potential for growth.
Features:
• Follows a value based stock selection strategy
• Investment Approach : Buying undervalued
Details as on October 31, 2014 areprovided below in the table as AnnexureB.
5) Services offered:
a) Value Strategy :
Fund Manager: Mr. Manish Sonthalia
b) Bulls Eye Strategy:
Fund Manager:
c) Discover Value Strategy :
Fund Manager : Mr. Manish Sonthalia
6
stocks and selling overvalued stocksirrespective of market behaviour whilemaintaining purchase price discipline
• Investment Horizon: Medium to Long term
• Follow a focused strategy construct
• Maintaining a low churn thereby enhancingthe strategy returns
The strategy aims to deliver returns in the shortto medium term by investing in stocks acrossmarket capitalization.
Features:
• Actively managed multi cap strategy.
• Investment Horizon : Short to Medium term
• Investment Approach: Capitalizing on positivecorporate developments , corporaterestructuring and other events
• Active Profit booking based on marketconditions.
The strategy aims to deliver superior returns byinvesting in focused themes which are part ofthe next Trillion Dollar GDP growthopportunity. It aims to predominantly invest inSmall & Mid Cap stocks with a focus onIdentifying Emerging Stocks/Sectors.
Features:
• Investment Horizon: Medium to Long term
• Investment Approach: “Buy & Hold” strategy
• Focus on Sectors and Companies whichpromise a higher than average growth
• Concentration on emerging Themes
The Strategy aims to invest in the fundmanagers top 10 stock ideas from the Nifty,which are expected to do better than Nifty for a12-18 month period.
Features :
• Actively managed strategy focusing on 8-10stocks.
• Investment Horizon: Medium Term.
• Investment Approach: Fundamental Stockselection approach.
• Regular Profit booking based on predefinedprice targets.
d) Discover Dynamic Strategy:Fund Manager : Mr. Kunal Jadhwani
e) Next Trillion Dollar Opportunity Strategy
Fund Manager: Mr. Manish Sonthalia
f) Focused (Series III) – A Target Return StrategyFund Manager: Mr. Manish Sonthalia
• active asset allocation call between cash &equity
• Cash Out Strategy: Automatic payout ofappreciation amount when the Client's AUMappreciates by 20%
The Strategy aims to generate superior returnsover a medium to long term by investing inonly 8-10 companies across marketcapitalization. The Fund Manager will takeactive asset allocation calls between cash &equity. The strategy will also take active equityallocation calls between investments in largecaps & mid caps & it will follow a policy ofprofit booking with predefined price targets.
Features:
• Actively managed multi cap strategy.
• Investment Horizon: Medium to Long term
• Investment Approach: Capitalize on Top Down& Bottom Up strategies of investing.
• Cash Out Strategy: Automatic payout ofappreciation amount when the Client's AUMappreciates by 15%
The strategy aims to invest in fundamentallysound companies that can benefit fromchanges in a company's valuation whichreflects a significant change in the marketsview of the company over a horizon of threeyears. The Strategy focuses on investing instocks that can benefit from growth inearnings, re-rating of business or highervaluation of assets. Objective is to increasereturn rather than reduce risk for Investors.
Features:
• Follows the principle to pick best ideas ratherthan diversification
• Concentrated Strategy Structure of less than10 stocks
• Investment Horizon: Medium to Long term
• Investment Approach: Follows a “Buy andhold” philosophy with low to medium churn
The Strategy aims to generate superior returnsover the long period by investing in companieswith growth potential and which are availableat reasonable market price.
g) Focused (Series IV) – A Flexi Cap StrategyFund Manager: Mr. Kunal Jadhwani
h) Focused (Series V) – A Contra StrategyFund Manager: Mr. Manish Sonthalia
i) Optima StrategyFund Manager: Mr. Kunal Jadhwani
7
Features:
• Situation based Multi Cap Approach
• Investment Horizon: Medium to Long term
• Investment Approach: Active PortfolioRebalancing with Top Down & Bottom UpStock Selection Approach
• Active asset allocation calls between Cash &Equity
To predominantly make investments in LiquidMutual Funds, short-term debt funds, moneymarket mutual funds, and other debt funds tofacilitate investors to take Asset Allocation callsbetween Cash and Equity
The investment objective of the PortfolioManager shall be preservation and growth ofcapital and at the same time endeavour toreduce the risk of capital loss. The PortfolioManager may design and develop variousseries keeping in mind market conditions andmay be customised for client's specific need /profile.
Features:
• The Portfolio Manager will invest in NonConvertible Debentures (NCDs) issued by NonBanking Financial Companies.
• These Non Convertible Debentures may havepayoffs, which may be based on stand aloneor combination of all or some of the financialinstruments such as equity, debentures,derivative instruments, swaps, swaptions abasket of securities, options, indices,commodities, debt issuances and/or foreigncurrencies, Secured Premium Notes, moneymarket instruments, etc. to cater to specificClients requirements.
The Strategy will aim to predominantly invest ina universe of stocks which are in a secularuptrend based on Relative StrengthComparative Indicator. The strategy also aimsto invest in asset classes other than equity thatmay be in a secular uptrend, based on RelativeStrength Comparative Indicator versus themain equity indices. However, this will only bedone through the use of listed ExchangeTraded Funds.
j) Liquid StrategyFund Manager: Mr. Manish Sonthalia
k) Structured Products Investments StrategyFund Manager: Mr. Manish Sonthalia
l) Prodigy Investment StrategyFund Manager: Mr. Manish Sonthalia
Features:
• The Strategy aims to deliver returns byinvesting in such companies based on bothearnings momentum and price momentum.
• Basically for Investors with a medium termhorizon who are looking for a proactiveapproach to investing.
The Strategy aims to generate long termcapital appreciation by creating a focusedportfolio of high growth stocks having thepotential to grow more than the nominal GDPfor next 5-7 years across market capitalizationand which are available at reasonable marketprices.
Features:
• Investment Approach: BUY & HOLD strategy
• Investment Horizon: Long Term
• Low to medium churn resulting in enhancedpost-tax returns
• Basically for Investors keen to generate wealthby participating in India's growth story over aperiod of time.
The strategy aims to generate steady returnsover the long term by investing in wellestablished, large size, large cap companies.The strategy also aims to invest in listedExchange Traded Funds of asset classes otherthan equity that may be in a secular uptrendcompared to the main equity indices, based onRelative Strength Comparative Indicator.
Features:
• The strategy would invest in companies basedon price momentum (using Relative StrengthComparative indicator)
• Investment Horizon – medium to long term
The strategy aims to deliver superior returns byinvesting in less recognized and/orundervalued stocks which are part of the Indiagrowth opportunity. The strategy also aims topredominantly invest in Mid-cap stocks withpotential to grow faster than nominal GDPgrowth and which are available at reasonableprices.
m) Invest India StrategyFund Manager: Mr. Kunal Jadhwani
n) Bluechip Prodigy StrategyFund Manager: Mr. Manish Sonthalia
o) PLUS strategy - Portfolio of Less recognizedor Undervalued StocksFund Manager: Mr. Manish Sonthalia
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Features:
• Investment Approach: Fundamental stockselection and Buy & Hold philosophy
• Investment Philosophy : Value + GARP
• Investment Horizon: Medium to Long term
The strategy aims to invest in fundamentallysound companies with a view to capitalize onthe difference between the market value andthe intrinsic value of the business.
Features:
• Investment Strategy:
– Out of favor, beaten-down large caps or qualitymidcaps growing at slower than theirdemonstrated potential
– Where price movements are decoupled fromunderlying fundamentals resulting from over-reaction to news-flow
– Dominant business undergoing growthdeceleration or a cyclical downturn.
– Revenue slowdown due to direct/indirectimpact of high interest rates and/or capex cycle(order flows) which can potentially reversewith rate cycle.
– Profitability compression due to marginerosion from higher RM/forex impact.
– Asset Valuation plays: Good quality businessestrading at discount to book or replacementvalue.
– Valuation Parameters: Low P/E v/s long-termaverage/peers, high dividend yield.
• Investment Approach: Bottom up stockselection approach
• Investment horizon: long term i.e. 3-5 years
• Risk Return Profile: Medium to High Risk
• Market Capitalization : Flexi Cap
The strategy aims to offer a bouquet ofdiversified asset allocation portfolios varyingby risk profile and returns expectations ofunderlying investors. The strategy will aim touse low cost ETFs, Funds and Securities asbuilding blocks wherever available andpossible in order to complete the assetallocation for investors with lowest possiblecost as compared to alternate investment
p) Deep Value PortfolioFund Manager: Mr. Manish Sonthalia
q) Motilal Oswal MOSt Fund ETF Assets andSecurities Portfolio Strategy (FEATS)Fund Manager: Mr. Kunal Jadhwani
vehicles. The portfolio may invest overall in acombination of various Securities, ETF andmutual fund schemes including equity, debt,gilt across Indian Equity, International Equity,Bonds and Gold.
Features:
• Investment Strategy:
– The Portfolio Manager will invest in variousSecurities, ETF and mutual fund schemesincluding schemes offered by Motilal OswalMutual Fund and other mutual funds fromtime to time.
– Mutual fund schemes shall include equity,debt, gilt and exchange traded funds acrossIndian Equity, International Equity, IndianBonds and Gold.
– The objective of the strategy will be to achievebetter risk adjusted returns for investors bydiversification across various asset classes atlowest possible cost.
• The portfolio is a function of its components.While active funds may be used for populatingdifferent asset classes, ETF portfolios benefitasset allocation investing because they:
– increase diversification,
– provide the ability to target specific investmentsegments, and,
– through ETFs, allow an investor to hedge theirportfolio with relatively low risk.
Additionally, lower cost, live pricing andtransparency allow the allocator to improvereturns while allowing for nimble adjustmentsin inclement market conditions or to takeadvantage of short term opportunities.
The strategy aims to to offer optimizing assetallocation portfolios by investing in variousasset classes like equity, bonds, derivatives, allcategory mutual fund schemes includingOptions available for methodologies todetermine asset allocation broadly fall under 3categories. The portfolio manager mayconstruct PMS portfolios for investors basedon any one of the following determinants.
Features:
• Investment Strategy:
– Determinant 1 – Asset allocation determinedbased on Fundamental readings of parameters
r) Motilal Oswal MOSt Allocation PortfolioStrategy (MAPS)Fund Manager: Mr. Kunal Jadhwani
9
like P/E, P/BV, Dividend Yield, Earning Yield,Interest Rates, Inflation, and Money Supply etc.
– Determinant 2 – Asset allocation determinedbased on quantitative techniques basedalgorithms
– Determinant 3 – Long term fixed assetallocation based on risk profile of clientsdetermined by their investment advisor /distributor.
The Strategy aims to generate long term capitalappreciation by creating a focused portfolio ofhigh growth stocks having the potential togrow more than the nominal GDP for next 3-5years and which are available at reasonablemarket prices. It aims to predominantly investin stocks with a market cap of less than Rs.6300 crores (at the time of investing) and witha focus on Identifying Emerging Stocks /Sectors.
Features:
– Investment Horizon: Medium to Long term
– Investment Approach: “Buy & Hold” strategy
– Focus on Sectors and Companies whichpromise a higher than average growth
– Concentration on emerging Themes
The strategy aims to deliver superior returnsthrough focused investment in themes whichare a potential growth opportunity. It aims topredominantly invest bottom up by identifyinghigh quality companies, having superiorgrowth and sustainable competit iveadvantage.
Features:
– Investment Horizon: Medium to Long term
– Investment Approach: “Buy & Hold” strategy
– Focus on Companies which have potential todeliver higher than average sector growth
– Concentration on good businesses and wouldbe market capitalization agnostic
The Portfolio Manager may design and developvarious series keeping in mind marketconditions and may be customised for Client'sspecific need / profile. The Portfolio in all caseswill be guided strictly by the relevantguidelines, Acts, Rules, Regulations, and
s) Emergence Portfolio Strategy (EPS)Fund Manager: Mr. Kunal Jadhwani & Mr.Vaibhav Agrawal
t) Focused Opportunities StrategyFund Manager: Mr. Manish Sonthalia
notifications prevailing in force from time totime. The instrument may be principalprotected or non-principal protected, whichmay have fixed or variable pay-offs. Theinvestment objective of the Portfolio Managershall be preservation and growth of capital andat the same time endeavour to reduce the riskof capital loss. However, while the aforesaid isthe objective, it needs to be reiterated thatthere can be no assurance and/or guarantee ofsuch growth or even as regards preservation ofcapital or of there being no capital loss. Theamount invested by the Clients under thisstrategy may be subject to a lock in period asdetailed in the Schedule to the agreementbetween the Client and the Portfolio Manager.
All the above mentioned strategies are usedunder the discretionary portfolio managementservices as per the Regulations specified bySEBI.
The main features under Discretionary PortfolioManagement Services are:
Minimum Portfolio Size: Rs. 25 Lakhs or anyamount not less than the statutory minimumas may be specified by the SEBI from time totime.
Periodic valuation Report (if, any).
Periodic transaction Statement (if, any).
Investment under Portfolio ManagementServices will be only as per the SEBI Regulationson PMS
The uninvested amounts forming part of theClient's Assets may be at the discretion of thePortfolio Manager be held in cash or deployedin Liquid fund schemes, Exchange Traded IndexFunds, debt oriented schemes of Mutual funds,Gilt schemes, Bank deposits and other shortterm avenues for Investment.
The Portfolio Manager, with the consent of theClient, may lend the securities through anApproved Intermediary, for interest.
The Portfolio Manager will not invest any of thefunds of the Client in the shares, mutual funds,debt, deposits and other financial instrumentsof group companies of the Portfolio Manager.
Apar t f rom Disc re t ionary Por t fo l ioManagement Services, the Portfolio Manageralso offers Non-Discretionary PortfolioManagement Services wherein the choice aswell as the timings of the investment decisionsrest solely with the Client. The Portfolio
NOTE:
•
•
•
•
•
•
•
10
Manager manages the Assets of the Client inaccordance with the directions given by theClient. Further the Portfolio Manager alsooffers Advisory Portfolio Management Serviceswherein the Portfolio Manager only rendersinvestment advice to the Client in respect ofsecurities. Discretion to execute thetransactions and responsibility for execution/settlement of the transactions lies solely withthe Client.
The investments made in securities are subjectto market risk and there is no assurance orguarantee that the objectives of investmentswill be achieved. Following are the risk factorsas perceived by management:
Investment in equities, derivatives and mutualfunds and Exchange Traded Index Funds aresubject to market risks and there is noassurance or guarantee that the objective ofinvestments will be achieved.
As with any investment in securities, the NetAsset Value of the portfolio can go up or downdepending upon the factors and forcesaffecting the capital markets.
The performance of the portfolio may beaffected by changes in Government policies,general levels of interest rates and risksassociated with trading volumes, liquidity andsettlement systems in equity and debt markets.
The past performance of the Portfolio Managerdoes not indicate its future performance.Investors are not being offered any guaranteedreturns.
The performance of the Assets of the Clientmay be adversely affected by the performanceof individual securities, changes in the marketplace and industry specific and macroeconomic factors. The investment strategiesare given different names for conveniencepurpose and the names of the Strategies donot in any manner indicate their prospects orreturns.
Investments in debt instruments and otherfixed income securities are subject to defaultrisk, liquidity risk and interest rate risk. Interestrate risk results from changes in demand andsupply for money and other macroeconomicfactors and creates price changes in the valueof the debt instruments. Consequently, the NetAsset Value of the portfolio may be subject tofluctuation.
6) Risk Factors:
•
•
•
•
•
•
•
•
•
•
•
•
Investments in debt instruments are subject toreinvestment risks as interest rates prevailingon interest amount or maturity due dates maydiffer from the original coupon of the bond,which might result in the proceeds beinginvested at a lower rate.
The Portfolio Manager may invest in non-publicly offered debt securities and unlistedequities. This may expose the Client's portfolioto liquidity risks.
Engaging in securities lending is subject to risksrelated to fluctuations in collateral value /settlement / liquidity / counter party.
The Portfolio Manager may use derivativesinstruments like index futures, stock futuresand options contracts, warrants, convertiblesecurities, swap agreements or any otherderivative instruments for the purpose ofhedging and portfolio balancing, as permittedunder the Regulations and guidelines. Usageof derivatives will expose the Portfolio tocertain risks inherent to such derivatives. Asand when the Portfolio Manager deals in thederivatives market on behalf of the Client, thereare risk factors and issues concerning the use ofderivatives that investors should understand.
Derivative products are specialized instrumentsthat require investment techniques and riskanalyses different from those associated withstocks and bonds. The use of a derivativerequires an understanding not only of theunderlying instrument but of the derivativeitself. Derivatives require the maintenance ofadequate controls to monitor the transactionsentered into, the ability to assess the risk that aderivative adds to the portfolio and the abilityto forecast price or interest rate movementscorrectly. There is the possibility that a loss maybe sustained by the portfolio as a result of thefailure of another party (usually referred to asthe “counter party”) to comply with the termsof the derivatives contract. Other risks in usingderivatives include the risk of mispricing orimproper valuation of derivatives and theinability of derivatives to correlate perfectlywith underlying assets, rates and indices. Thus,derivatives are highly leveraged instruments.Even a small price movement in the underlyingsecurity could have a large impact on theirvalue.
There are inherent risks arising out ofinvestment objectives, investment strategy,asset allocation and non-diversification ofportfolio.
• The Net Asset Value may be affected by changes in settlement periods and transferprocedures.
SN Category of clientsTotal
No. ofclients
Funds managed(Rs. Crores)
Discretionary /Non Discretionary
(if available)
i.
ii.
Associates /group companies(Last 3 years)
NIL NIL
Others: (Last 3 years)
2012-13
Discretionary4915 1241.37
Discretionary
31103991
1397.881214.64
Discretionary
7) Client Representation:
i) Details of client's accounts activated:
NA
2011-12
2013-14
“Funds Managed” indicates market value of Assetsunder Management.
The above figures are given in compliance withamendment to the SEBI (Portfolio Managers)Regulations, 1993 dated August 11, 2008.
• The Portfolio Manager uses the brokingservices of Motilal Oswal Securities Ltd. who ismember of BSE and NSE in cash and derivativesegment.
• Names of related parties and nature ofrelationship (as on March 31, 2014) are asunder:
Motilal Oswal Securities Ltd. – HoldingCompany
Motilal Oswal Financial Services Ltd. – HoldingCompany of Motilal Oswal Securities Ltd.
Ultimate Holding Company - PassionateInvestment Management Pvt. Ltd. (FromOctober 5, 2012)
1. Motilal Oswal Capital Markets Pvt. Ltd.
2. Motilal Oswal Trustee Company Ltd.
3. Motilal Oswal Insurance Brokers Pvt. Ltd.
4. Motilal Oswal Commodities Broker Pvt. Ltd.
5. Motilal Oswal Investment Advisors Pvt. Ltd.
6. MOPE Investment Advisors Private Limited(MOPE)
(Formerly known as Motilal Oswal PrivateEquity Advisors Private Limited)
ii) Transactions with related parties are asunder:
A) Enterprises where control exists:
B) Fellow Subsidiaries:
7. Motilal Oswal Wealth Management Limited(Formerly known as Motilal Oswal WealthManagement Private Limited)
8. Motilal Oswal Securities International Pvt. Ltd.
9. Motilal Oswal Capital Market (Hongkong) Pvt.Ltd.
10. Motilal Oswal Capital Markets (Singapore) Pte.Ltd.
11. Motilal Oswal Real Estate Investment AdvisorsPrivate Limited
12. Motilal Oswal Real Estate Investment AdvisorsII Private Limited (MORE II)
13. India Business Excellence ManagementCompany
14. Aspire Home Finance Corporation Limited
1. Mr. Raamdeo Agrawal – Director
2. Mr. Nitin Rakesh – Managing Director andChief Executive Officer (from April 1, 2012 toJuly 31, 2012)
3. Ms. Trupti Vyas – Manager (with effect fromAugust 1, 2012 to September 18, 2013)
4. Mr. Aashish P Somaiyaa – Managing Directorand Chief Executive Officer
VISU Associates - Partnership firm
OSAG Enterprises LLP
Motilal Oswal Foundation
C) Key management personnel:
D) Enterprises in which Key ManagerialPersonnel exercise Significant Influence
11
Transaction Name of therelated Party
Key ManagerialPersonnel ( B )
Total (A+B)
For theYear
EndedMarch
31, 2014
For theYear
EndedMarch
31, 2013
For theYear
EndedMarch 31,
2014
For theYear
EndedMarch 31 ,
2013
For the YearEnded
March 31,2014
For the YearEnded
March 31 ,2013
Interest
Rent
22,240 22,240
9,203,760
10,634,743
82,140,712
9,021,143
70,960
1,694,786
- -
-
766,518
10,500,000
(10,500,000)
5,000,000 5,000,000
(10,500,000)
9,021,143
82,140,712
10,634,743
9,203,760
4,357,746
63,003,842
10,063,228
-
572,119
-
-
30,100,000
(30,100,000)
13,600,000 13,600,000
(30,100,000)
30,100,000
-
-
6,994,674
(3,020,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
13,100,230
-
766,518
10,500,000
-
-
6,994,674
(3,020,000)
-
10,063,228
63,003,842
4,357,746
32,666 32,666-
-
-
-
-
-
-
-
-
-
9,203,760 9,203,760
Enterprises in whichKey Managerial
Personnel exerciseSignificant Influence
( B )
Note: 'Income/receipts figures are shown in brackets.
Brokerage ondistribution ofmutual fund
Brokerage ondistribution ofportfoliomanagement services
Brokerage ondistribution ofportfoliomanagement services
Brokerage ondistribution ofmutual fund
Sharing of advisoryfees
Managerialremuneration
Employee's StockOption issued/(lapsed)(Numbers of options)
Sale of Fixed Asset
Loans taken duringthe year
Loan repaid duringthe year
Loans(Maximum balance)
Motilal Oswal FinancialServices Limited
Motilal Oswal FinancialServices Limited
Motilal Oswal SecuritiesLimited
Motilal Oswal SecuritiesLimited
Motilal Oswal WealthManagement Private Limited
Motilal Oswal WealthManagement Private Limited
Motilal Oswal WealthManagement Private Limited
Aashish Somaiyaa/NitinRakesh//Trupti Vyas
Nitin Rakesh
Motilal Oswal Private EquityAdvisors Pvt. Ltd.
Motilal Oswal FinancialServices Limited
Motilal Oswal FinancialServices Limited
Motilal Oswal FinancialServices Limited
Outstanding Balances:
(804,810)
(2,937,279)
(34,510,153) (34,510,153)
(804,810)
(2,937,279)
(1,184,632)
(2,245,004)
(10,113,055) (10,113,055)
(1,184,632)
(2,245,004)
-
-
-
-
-
-
Other payables Motilal Oswal FinancialServices Limited
Motilal Oswal WealthManagement Private Limited
Motilal Oswal Securities Limited
12
Transactions with related parties for the year-ended 31.3.2014 (amount in Rupees):•
13,100,230
Strategy Wise Returns (in %)
From April 1, 2014 toOctober 31, 2014 FY 14
Strategy NameBenchmark
IndexPortfolio Benchmark
Value Strategy
Bulls Eye Strategy
Discover Value Strategy
Discover Dynamic Strategy
Next Trillion Dollar
Opportunity Strategy
Focused (Series III) Strategy
Focused (Series IV) Strategy
Optima Strategy
Invest India Strategy
Liquid Strategy
Prodigy Investment Strategy
Blue Chip Prodigy InvestmentStrategy
Focused (Series V) -A Contra Strategy
PLUSstrategy
Motilal Oswal MOSt Fund ETFAssets and Securities PortfolioStrategy
Deep ValueStrategy
Portfolio
37.03
32.67
37.31
32.36
36.15
36.77
30.99
33.54
25.83
4.26
41.03
NA
31.21
35.12
26.21
47.18
24.13
26.52
24.13
26.52
37.49
24.13
26.52
26.52
26.52
NA
24.48
NA
26.52
37.49
NA
37.49
19.70
22.81
18.07
22.44
40.38
26.41
30.54
22.13
20.71
6.69
33.00
NA
27.49
37.30
23.98
-
17.98
17.19
17.98
17.19
16.36
17.98
17.19
17.19
17.19
NA
18.85
NA
17.19
16.36
NA
-
-1.45
9.09
-1.45
9.15
11.30
-0.16
12.34
6.07
-0.17
6.57
11.59
-2.62
10.95
6.47
NA
-
7.31
6.03
7.31
6.03
-4.02
7.31
6.03
6.03
6.03
NA
8.23
8.23
6.03
-4.02
NA
-
PortfolioBenchmark Benchmark Portfolio Benchmark
1.75
-0.03
1.12
-0.64
11.81
-9.65
-5.99
-4.76
-0.47
8.03
-0.84
-1.17
-6.76
14.93
NA
-
-9.22
-9.29
-9.22
-9.29
-4.09
-9.22
-9.29
-9.29
-9.29
NA
-10.50
-10.50
-9.29
-4.09
NA
-
Nifty
BSE-200
Nifty
BSE-200
CNX
MIDCAP
Nifty
BSE-200
BSE - 200
BSE - 200
NA
Sensex
Sensex
BSE-200
CNXMidcap
None
CNXMidcap
FY 13 FY 12
8) The Financial Performance of Portfolio Manager (Based on audited financial Statements)
Financial highlights of Motilal Oswal Asset Management Company Ltd. for the last 2 years isgiven as under:
Profit/(Loss) before depreciation & tax & After Exceptional& Extraordinary Items (Net of Tax)
(16) 576
Less: Depreciation 48 47
Less: Provision for tax - 82
Less: MAT credit entitlement -
Less/(Add): Deferred Tax - -
Less: Fringe Benefit Tax - -
Less: Wealth Tax - -
Less: Provision for Tax (for previous year) - -
Profit/(Loss) for the year after tax (64)
Add/(Less): Balance B/F from Previous year (1,084)
(1,149)
(82)
528
(1,613)
Balance carried to Balance Sheet (1,084)
ParticularsYear ended
31st March, 2014(Rs. In Lakhs)
Year ended31st March, 2013
(Rs. In Lakhs)
9) Portfolio Management performance of the Portfolio Manager for the last 3 years and incase of discretionary Portfolio Manager disclosure of performance indicators calculatedusing weighted average method in terms of regulation 14 of the SEBI (PortfolioManagers) Regulation 1993
13
In case of Structured Products Investments Strategy, performance returns are not shown, since the
valuations are not available for the given Portfolio Product.
1. Portfolio Returns and Benchmark Indices returns are calculated on weighted average basis.
2. None of the Portfolio Account exists under Blue Chip Prodigy Investment Strategy, Emergence Portfolio
Strategy and Focused Opportunities Strategy as on October 31, 2014.
Note:
10) Nature of expenses:
i) Investment Management & Advisory Fees:
ii) Custodian Fees:
iii) Registrar & Transfer Agent Fees:
iv) Brokerage & Transaction Cost:
Investment Management and Advisory feescharged may be a fixed fee or a return basedfee or a combination of both as detailed in theSchedule to the Portfolio ManagementServices agreement. The Fees may be chargedupfront and/or at the end of a specified tenureas agreed between the Client and the PortfolioManager.
As may be decided betweenthe Client and the Portfolio Manager
NIL
The investments under Portfolio Managementwould be done through registered members ofthe Stock Exchange(s) who charge brokerageup to a maximum of 2.5% of contract value. Inaddition to the brokerage, transaction cost likenetwork charges, turnover charges, stampduty, transaction costs, turnover tax, Securitiestransaction tax or any other tax levied bystatutory authority (ies), foreign transactioncharges (if any) and other charges on thepurchase and sale of shares, stocks, bonds,debt, deposits, other financial instrumentswould also be levied by the broker (includingMotilal Oswal Securities Ltd.) Entry or exitloads (if any) on units of Mutual Funds will alsobe charged from Clients.
v) Service Tax:
vi) Depository Charges:
vii) Entry Load /Exit Load
viii) Certification and professional charges:
ix) Incidental expenses:
As applicable from time to time.
As may be applicable from time to time.
As may be mutually agreed to between theClient and the Portfolio Manager
Charges payable for out sourced professionalservices like accounting, auditing, taxation andlegal services etc. for documentation,notarisations, certifications, attestationsrequired by bankers or regulatory authoritiesincluding legal fees etc.
Charges in connection with day-to-dayoperations like courier expenses, stamp duty,service tax, postal, telegraphic, opening andoperation of bank account, distributioncharges or any other out of pocket expenses asmay be incurred by the Portfolio Manager.
Investors may note that, the fees/ expensesthat may be charged to Clients mentionedbelow are indicative only. The same will varydepending upon the exact nature of theservices to be provided to investors.
I. Investment Management and Advisory fee**
1) Fixed Fee Up to 10% p.a.
2) Fixed Upfront fee Up to 10%
3) Performance Linked Fee as permitted under the Regulations. Up to 50% of the Returns
4) Exit Loads Up to 20%
II. Custodian Fee** Up to 1% p.a.
III. Brokerage and transaction costs Maximum of 2.5% of contract value
IV. Fund Accounting Charges** Up to 1% p.a.
**Basis of Charge – Indicative (any one or a combination of the below)
1 On Average Daily Assets Under Management
2 On Capital Invested
3 On Capital Committed
4 On Average Daily Equity portion of the Portfolio
Nature of Expenses (Indicative) Maximum Indicative Rate of Fee (%)
14
Note:
a. Average daily portfolio value means the value of the portfolio of each client determined in accordancewith the relevant provisions of the agreement executed with the client and includes both realized andunrealized gains/losses.
b. The Portfolio Manager may also be entitled to recover transaction fee, brokerage charges, demat fees,and/or disbursement made in respect of the investments (and/or disbursements) and/or any incidentalsin the form of stamp duties, registration charges, professional fees, legal fees, consultancy charges,service charges etc. and such other expenses, duties, charges incurred on behalf of the Client onaccount of the Service provided to him/her/it.
The following information is based on the law in force in India at the date hereof. The information setforth below is based on the Portfolio Manager's understanding of the Tax Laws as of this date ofDisclosure Document. The client should seek advice from his/her/its own professional advisor if he/she/itis in any doubt regarding the taxation consequences of investing in the Products offered under PortfolioManagement Services.
The maximum tax rates applicable to different categories of assessees are as follows:
Resident individual & HUF 30% + surcharge & cess
Partnership Firms & Indian Companies 30% + surcharge & cess
Non-resident Indians 30% + surcharge & cess
Foreign companies 40% + surcharge & cess
11) Taxation
Income Tax:
Assessee
Individuals (including NRIs/PIOs), HUFs, Non-
Corporate FIIs
Companies where the taxable income more thanRs. 1crores and upto Rs. 10 Crore
Companies where the taxable income is more thanRs. 10 Crore
Rate of surcharge & cess applicable
A surcharge of 10 % on income tax (on incomeabove 1 crore) and education cess of 2 % andHigher Education Cess of 1% is payable on the totalamount of tax including surcharge.
A surcharge of 5 % on income tax and educationcess of 2 % and higher education cess of 1% ispayable on the total amount of tax includingsurcharge. (a surcharge of 2 % in case of foreigncompanies).
A surcharge of 10 % on income tax (on incomeabove 10 crores) and education cess of 2 % andhigher education cess of 1 percent is payable onthe total amount of tax including surcharge. (asurcharge of 5 % in case of foreign companies).
The Dividend received in respect of the shares andincome received in respect of units of Mutual Fundheld in the Products offered under the PortfolioManagement Services is exempt from tax in thehands of investor.
However, the dividend/income distribution onsecurities and units received by Products offeredunder the Portfolio Management Services will beafter distribution tax on the amount ofdividend/income distribution declared.
15
# +Surcharge+ Education Cess+ Higher education cess as applicable
Capital Gains Tax
(a) Long Term
For Individuals, HUF, Partnerships Firmand Indian Companies
(b) Short Term
For Individuals, HUF, Partnerships Firmand Indian Companies
Provisions regarding Dividend incomeand Bonus
From October 1, 2004 in case of shares andsecurities and units of equity orientedschemes sold on a recognized stockexchange, which are subject to SecuritiesTransaction Tax (currently 0.001% for unitsof equity oriented scheme and 0.1% onequity shares), the tax on Long TermCapital Gain would be Nil. Long termcapital gains in respect of other listedsecurities or units would be subject to taxat the lower of 20% (plus surcharge andeducation cess) of the gains computedafter cost indexation, or 10% (plussurcharge and education cess) of the gainscomputed without cost indexation.
Short-term Capital Gains is added to thetotal income. Total income including short-term capital gain is chargeable to tax as perthe relevant slab rates. However, tax onshort term capital gains on sale of sharesand units of equity oriented funds on arecognized stock exchange, which aresubject to Securities Transaction Tax, wouldbe @ 15% (plus applicable surcharge andan education cess).
According to the provisions of Section94(7) of the Act, losses arising from thesale/redemption of units purchased within
3 months prior to the record date (forentitlement of dividends) and sold within 9months after such date, is disallowed tothe extent of income on such units (otherthan on sale/redemption) claimed as taxexempt.
According to the provisions of Section94(8) of the Act, if an investor purchasesunits within 3 months before the recorddate (for entitlement of bonus) andsells/redeems the units within 9 monthsafter that date, and by virtue of holding theoriginal units, he becomes entitled tobonus units, then the loss arising ontransfer of original units shall be ignoredfor the purpose of computing his incomechargeable to tax. In fact, the loss soignored will be treated as cost ofacquisition of such bonus units.
Dividend income distribution on securitiesand units is not taxable in the hands ofreceiver. TDS is deductable on interestincome and would be deducted by theissuer of such security.
The following Accounting policy will beapplied for the investments of Clients:
a) Investments in Equities, Mutual funds,Exchange Traded Funds and Debtinstruments will be valued at closingmarket prices of the exchanges (BSE or NSEas the case may be) or the Repurchase NetAsset Value declared for the relevantscheme on the date of the report or any cutoff date or the market value of the debtinstrument at the cut off date.Alternatively, the last available prices on
Tax Deduction at Source
12) Accounting Policies:
16
The rates of tax on the dividend / income distribution on units would be as under:
Rate of Tax (%) #
Type of Payer
Company
Mutual Funds
Money Market Liquid Fund Others
Individuals / H.U.F. (uptoSeptember, 2014) 15%
17.647%
15%
25% *
33.33% *
30% *
25%
33.33%
30%
Individuals / H.U.F. (From October, 2014)Individuals / H.U.F. (From October, 2014)Others (From October1,2014)
17.647% 42.86% * 42.86%
the exchange or the most recent NAV willbe reckoned. In case of structuredproducts, the portfolio will be valued at theface value of the product until the expiry ofthe tenure.
b) Realized gains/ losses will be calculated byapplying the first in / first out principle. ThePortfolio Manager and the Client canadopt any specific norms or methodologyfor valuation of investments or accountingthe same as may be mutually agreedbetween them on a case specific basis.
c) For derivatives and futures and options,unrealised gains and losses will becalculated by marking to market the openpositions.
d) Unrealised gains/losses are the differencesin between the current market values/NAVand the historical cost of the securities.
e) Dividend on equity shares and interest ondebt instruments shall be accounted on
accrual basis. Further Mutual Funddividend shall be accounted on receiptbasis. Other income like bank interest,interest on FD etc shall also be accountedon receipt basis.
f) Bonus shares shall be recognised onlywhen the original shares on which thebonus entitlement accrues are traded onthe stock exchange on an ex-bonus basis.
g) Right entitlement shall be recognised onlywhen the original shares on which theright entitlement accrues are traded on thestock exchange on an ex-rights basis.
h) The cost of investment acquired orpurchased shall include brokerage, stampduty and any charge customarily includedin the brokers cost note/bought note.
The Accounting Policies and Standards asoutlined above are subject to changesmade from time to time by PortfolioManager. However, such changes wouldbe in conformity with the Regulations.
13) Investors Services :
(i) Details of investor relation officer who shall attend to the investor queries and complaints ismentioned herein below:
Name of the person: Ms. Sarika Shah
Designation: Company Secretary & Compliance Officer
Address:10th Floor, Motilal Oswal Tower, Rahimtullah Sayani Road,Opposite Parel ST Depot, Prabhadevi - 400025
Email: [email protected]
Telephone: 91-22- 39804130
(ii) Grievance redressal and disputesettlement mechanism:
a) The Investment Relation Officer(s) will bethe interface between the PortfolioManager and the Client. In case the Clientis not satisfied with the redressal by thePortfolio Manager or otherwise, the Clientmay lodge the complaint on SEBI's webbased complaints redress system(SCORES).
b) Grievances, if any, that may arise pursuantto the Portfolio Investment ManagementAgreement entered into shall as far aspossible be redressed through theadministrative mechanism by the PortfolioManager and are subject to SEBI (Portfolio
Managers) Regulations 1993 and anyamendments made thereto from time totime. However, all the legal actions andproceedings are subject to the jurisdictionof court in Mumbai only and are governedby Indian laws.
The Portfolio Manager will endeavour toaddress all complaints regarding servicedeficiencies or causes for grievance, forwhatever reason, in a reasonable mannerand time. If the Investor remainsdissatisfied with the remedies offered orthe stand taken by the Portfolio Manager,the investor and the Portfolio Managershall abide by the following mechanisms:-
17
For Motilal Oswal Asset Management Company Limited:
Raamdeo Agarwal
Kanu DoshiDirector
Director
Place: Mumbai
Date: November 3, 2014
Sd/-
Sd/-
All disputes, differences, claims andquestions whatsoever arising between theClient and the Portfolio Manager and/ortheir respective representatives shall be
settled through Arbitration process asdescribed in the Portfolio InvestmentManagement Agreement or anySupplemental Agreement thereto.
18
19
Annexure A
Name of the Party Nature of Dispute Pending / Settled
Madhu Aggarwal Pending with District ConsumerForum, Delhi for Order.
K.C Aggarwal Pending with District ConsumerForum, Delhi for Order.
Anjana Aggarwal The client has alleged thathe has not received thereturns as expected.
Pending with District ConsumerForum, Delhi for Order.
Sr.
No.
1
2
3
The client has alleged thatshe has not received thereturns as expected.
The client has alleged thathe has not received thereturns as expected.
Annexure B
Following are the actions taken or initiated
by the SEBI against Portfolio Manager in its
capacity as Asset Management Company
(MOAMC) to Motilal Oswal Mutual Fund:
• MOAMC had received a letter from SEBI datedJuly 26, 2013 with reference to one complaintfiled with SEBI wherein the complainant hasalleged that disclosure of historical datapertaining to Index in NFO advertisement ofthe Scheme, Motilal Oswal MOSt SharesMidcap 100 ETF (MOSt Shares Midcap 100)was misleading. On that basis SEBI had issued aletter directing the Management to avoidrecurrence of such instance in future and toplace its letter before the Trustee and AMCBoard.
In this regard, the Company clarified to SEBIthat the historical data used in theadvertisement material of the MOSt SharesMidcap 100 was provided by India IndexServices Ltd. (IISL). As, you are aware it isgeneral practice for index providers to launchan index on a particular date and make pastdata available in time series form at going backyears. The purpose is purely analytical in naturefor getting an understanding of how suchindex has behaved over time. The historicaldata pertaining to Midcap 100 Index wasmade available by IISL under a licensingarrangement and making available index datafor various historical purposes is normalpractice with all indices and index providers.Further, in the advertisement material hadclearly mentioned the source of that data asIISL whereby informing the prospectiveinvestor that the Company had relied on thehistorical data published and maintained by a
third party. Hence, the Company had notviolated any provisions of the advertisementguidelines issued by SEBI.
Therefore SEBI was requested to take note ofabovementioned clarification.
MOAMC had reported to SEBI regarding non-compliance of clause 1B of seventh schedule tosub-regulation 1 of regulation 44 under theScheme, Motilal Oswal MOSt Ultra Short TermBond Fund, in the Compliance Test Reports forthe Bi-month period ended September 2013and November 2013. The same was informedto the Board at its meeting held on December26, 2013.
Pursuant to above reporting, SEBI issued aletter having reference no. OW/4941/2014dated February 13, 2014, advising MOAMC toimprove compliance standards, strengthen thesystems and have proper checks and balancesin place to avoid such instances in future.
During the period May 2010 to April 2014, theNSE has levied penalties/fines on Motilal OswalSecurities Ltd. (MOSL), aggregating to Rs37427456/- on account of various reasons viz:non-submission of UCC details, delayedreporting of computer to computer link data,short collection of margins & violation ofmarket wide position limit in F&O segment,observations made during the course ofinspections.
•
•
Following are the cases pertaining to Motilal
Oswal Securities Ltd., holding company of
Motilal Oswal Asset Management Company
Ltd.
•
•
•
•
•
During the period May 2010 to April 2014, theBSE has levied penalties/fines aggregating toRs. 779818/-on account of various reasons viz:non-submission of UCC details, settlement oftransactions through delivery versus payment,observations made during the course ofinspections, etc.
During the period June 2009 to April 2014, theCDSL has levied penalties/fines aggregating toRs. 13439 on account of reasons viz: non-collection of proof of identity of clients,deviation in following of transmissionprocedure etc; whereas penalty of Rs. 28,534were levied by NSDL during the course ofMOSL operations.
In 2002 SEBI has investigated MOSL in the caseof Amaraja Batteries Limited and the enquiryofficer had warned the company to becautious in future. Subsequently, SEBI'sChairman, in his final order, has agreed to theobservations of enquiry officer.
During the period from 1999 to 2001, SEBI hasinvestigated MOSL for dealing in shares of M/sCyberspace Limited. MOSL had purchased andsold shares on behalf of their clients during theinvestigation period. Scrutiny of the ledgeraccounts revealed that MOSL had not takenany upfront payment from the clients beforethe clients had started to deal with MOSL.Hence because of MOSL's failure to exercisedue diligence, skill and care while dealing onbehalf of their clients, it has been warned bySEBI to be careful in future.
SEBI has served a Show Cause Notice datedJanuary 19, 2005, on MOSL, under Section 6(1) of the SEBI (Procedure for Holding Enquiryby Enquiry Officer and Imposing Penalty)Regulations, 2002, ("Enquiry Notice"), toenquire into dealings by clients of MOSL duringMay 2004. The Notice alleges that the sale ofshares by MOSL on behalf of its clientsdepressed share prices, and consequently, theEnquiry Notice required MOSL to show causeas to why action should not be taken foralleged violation of various SEBI regulationsgoverning stock brokers and regulationsprohibiting price manipulation, 'Know YourClient' norms and certain SEBI circulars. SEBIhas also served a notice dated November 17,2006, on MOSL, under Rule 4 of the SEBI(Procedure for Holding Inquiry and Imposing
Penalties by Adjudicating Officer), Rules, 1995,("Adjudication Notice"), with allegationsprimarily relating to the same facts covered inthe Enquiry Notice and alleged violation of SEBIcirculars in relation to trading by MOSL,requiring MOSL to show cause as to whyproceedings to impose monetary penaltiesshould not be initiated. MOSL had tendered adetailed factual response dated February 28,2005 and had also responded to theAdjudication Notice placing reliance on theresponse to the Enquiry Notice. SEBI vide itsorder dated March 28, 2008 has disposed offall proceedings against MOSL in the saidmatter and no penalty has been levied in thisregard.
SEBI had passed a general ad interim ex-parteorder dated April 27, 2006 in connection with21 IPOs and had directed some depositoryparticipants, including MOSL, not to openfresh demat accounts pending investigations.The said ad interim ex-parte order was treatedas a show cause notice by SEBI. Upon MOSLshowing cause and making representations,SEBI after hearing all relevant facts, passedanother interim order dated August 31, 2006removing the restriction on MOSL in relation toopening of fresh demat accounts. An enquiryofficer appointed by SEBI had served a noticedated February 9, 2007, on MOSL underRegulation 6 of the SEBI (Procedure for HoldingEnquiry and Imposing Penalties), Regulations,2002, ("DP Enquiry Notice"), in connection withthe MOSL's depository participant operationsin relation to some of the 21 IPOs referred to inthe ad interim ex-parte order dated April 27,2006. The DP Enquiry Notice required MOSL toshow cause as to why action ought not to betaken for (i) allegedly aiding and abettingvarious allottees who opened fictitious demataccounts, and, (ii) alleged breach of "KnowYour Client" norms, and a consequent breachof securities laws including the SEBI DIPGuidelines. MOSL responded to the DP Enquirynotice vide their letter dated April 3, 2007,wherein it, (i) demonstrated in detail as to howit has complied with applicable SEBIGuidelines, instructions and directions, both inletter and in spirit; and, (ii) presented detailedfindings of an independent auditorempanelled with SEBI. Subsequently, SEBI videtheir letter dated November 3, 2009 hasforwarded the Enquiry Report dated October
•
20
23, 2009 and has asked MOSL to file its reply orapply for consent order. Accordingly, MOSL hasexpressed its intention to apply for ConsentTerms vide letter dated November 26, 2009.
The high powered advisory committee of SEBIrecommended the case for settlement onpayment of Rs. 5,00,000/- towards settlementcharges. MOSL paid the above amount andaccordingly SEBI has disposed off the pendinginquiring proceedings against MOSL.
SEBI had pursuant to its investigations in thescrips Pyramid Saimira Theatre Ltd. hadrestrained Mr. Shailesh Jayantilal Shah, Mr.Rajesh Jayantilal Shah and Ms. RitabenRohitkumar Shah from buying, selling ordealing in the securities market. SEBI hadobserved that MOSL and some other brokershave executed trades on behalf of above threeclients after debarment order and SEBI throughits notice has called upon to show cause as towhy further action under SEBI (Intermediaries)Regulations, 2008 should not be taken againstMOSL for alleged violation of the provisions ofRegulation 27 (xv) and 27 (xvii) r/w Regulations26 (xv) of the Broker Regulations and clauses A(1), A (2) and A (5) of the Code of Conduct forBrokers as specified in Schedule II underRegulation 7 of the Broker Regulations. MOSLhas explained to SEBI the reasons for suchoccurrence and requested SEBI to drop further
•
proceedings in the matter. The order of SEBI isawaited in this regard.
SEBI had pursuant to its investigation in theInitial Public Offering (IPO) of VaswaniIndustries Ltd. (VIL) had observed that therewere large scale of bids withdrawals andcheques were not banked along with bidsapplications or cheques returned or paymentwere stopped in the RII and NII categories.SEBI, for the purpose of further analysis hasshortlisted Motilal Oswal Securities Limited("MOSL") along with other sub-syndicatemembers and called upon to show cause as towhy action should not be taken underRegulation 25 and 27 of SEBI (Intermediaries)Regulation, 2008.. The said Show Cause Noticehas been issued alleging that MOSL haveviolated the provisions of Section 12 A (a), (b)and (c) of the Securities and Exchange Board ofIndia Act, 1992, Regulation 3 (b) and (d), 4 (1),4 (2) (a) and (b) of the Securities and ExchangeBoard of India (Prohibition of Fraudulent andUnfair Trade Practices Relating to SecuritiesMarket) Regulations, 2003 and Clause 6 (a) ofSchedule XI of the Securities and ExchangeBoard of India (Issue of Capital and DisclosureRequirements) Regulations, 2009. MOSL hasreplied to the above said show cause notice.Awaiting for the communication from SEBI inthe matter.
•
21
Corp. & Regd. Office: 10th Floor, Motilal Oswal Tower,Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai - 400025
Email: @motilaloswal.comSEBI PMS Regn. No. - INP000000670
Tel.: 91-22-3980 4263 Fax : 91-22-3089 6884 pms
www.motilaloswal.com/Asset-Management
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Asset Management
Addendum No. 1 dated
The following change has been made to the Disclosure Document dated Novem
• On Page No. 9, under the heading
made:
� The name of the Fund Manager of
to Mr. Kunal Jadhwani
All other contents of the Disclosure Document remain unchanged.
This addendum forms an integral part of the Disclosure Document of Portfolio Management
Services of Motilal Oswal Asset Management Company Limited.
dated December 3, 2014 to the Disclosure Document
has been made to the Disclosure Document dated November 3
, under the heading ‘Services Offered’, the following change
name of the Fund Manager of Focused Opportunities Strategy has been changed
Mr. Kunal Jadhwani.
All other contents of the Disclosure Document remain unchanged.
This addendum forms an integral part of the Disclosure Document of Portfolio Management
vices of Motilal Oswal Asset Management Company Limited.
, 2014 to the Disclosure Document
ber 3, 2014:
, the following change has been
has been changed
This addendum forms an integral part of the Disclosure Document of Portfolio Management
Addendum No. 2 dated March 5, 2015 to the Disclosure Document
The following change has been made to the Disclosure Document dated November 3, 2014:
• On Page No. 7, under the heading ‘Services Offered’, the following change has been
made:
� The name of the Fund Manager of Invest India Strategy has been changed to
Mr. Varun Goel with effect from March 9, 2015.
• On Page No. 12, under the heading ‘Key Managerial Personnel’, the following change
has been made:
Mr. Aashish P Somaiyaa Managing Director and CEO and Principal Officer
Ms. Sarika Shah Company Secretary and Compliance Officer
Mr. Rajesh Patil Associate Vice President-PMS Operations
Mr. Manish Sonthalia Senior Vice President and Fund Manager
Mr. Kunal Jadhwani Associate Vice President - Fund Manager
Mr. Vaibhav Agrawal Fund Manager
Mr. Varun Goel Fund Manager
All other contents of the Disclosure Document remain unchanged.
This addendum forms an integral part of the Disclosure Document of Portfolio Management
Services of Motilal Oswal Asset Management Company Limited.
