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A project report on
“INVESTMENT PRODUCTS AT KOTAK”
IN
SUBMITTED IN THE PARTIAL FULFILMENT FOR THE AWARD OF THE DEGREE OF BACHELOR OF BUSINESS ADMINISTRATION 2010-2013
UNDER THE GUIDANCE OF: SUBMITTED BY:
MRS. MONA KAWATRA NITIN HOODA
FACULTY, MAIMS BBA (B&I) III SEM
03414701810
MAHARAJA AGRASEN INSTITUTE OF MANAGEMENT STUDIES
1
Affiliated to Guru Gobind Singh Indraprastha Univers Delhi PSP Area, Plot No. 1, Sector 22, Rohini Delhi 110041.
DECLARATION CERTIFICATE
I hereby declare that the project on “Investment Products at Kotak” in Kotak Mahindra Bank
Limited submitted to Maharaja Agrasen Institute Of Management Studies under the guidance of
Mrs. Mona Kawatra towards the partial fulfillment for the award of the degree of Bachelor of
Business Administration is my original work and is not copied or meant for any other degree/
diploma courses.
I hereby declare that all the information provided in the project is valid and is based on immense
research work done.
All the data provided is factual and based on the information provided as per the website and the
brochures of the organization.
NITIN HOODA
2
CERTIFICATE
This is to certify that the project titled “INVESTMENT PRODUCTS AT KOTAK”
is an academic work done by “NITIN HOODA” submitted in the Partial fulfillment
of the requirement for the award of the degree of Bachelor of Business Administration
from Maharaja Agrasen Institute of Management Studies, Delhi, under my guidance &
direction.
To the best of my knowledge and belief the data & information presented by him in
the project has not been submitted earlier.
Mrs. Mona Kawatra
Project Guide
3
ACKNOWLEDGEMENT
I take due pleasure to thank all those who have helped & supported me for the completion of this
project. At the outset I express my profound and sincere gratitude to Maharaja Agrasen Institute Of
management Studies , New Delhi for providing me with the opportunity to explore the corridors of
the corporate world and gather invaluable information and practical experience in the field of
Finance and banking.
I express my indebtness and deepest gratitude to Mrs. Mona Kawatra (project guide), who took
great pains in going through each step of my project and made valuable comments and suggestions,
which has helped me to prepare this project on time.
My thanks to the entire unit of Kotak Mahindra including the bank and the life insurance, for their
valuable guidance and the help given directly or indirectly due to which I have been able to make
optimum utilization of my learning and knowledge into practice successfully.
I express my sincere gratitude to my parents for their invaluable support and continuous
encouragement for the successful completion of my project.
Last but not the least, I would like to thank “GOD” without whose grace; I wouldn’t have been able
to complete this project.
A project of this nature calls for intellectual nourishment, professional help & encouragement from
various quarters. This report has naturally gained a number of ideas and theory from the books of this
subject. I express our thanks to all these authors, too numerous to acknowledge.
NITIN HOODA
4
EXECUTIVE SUMMARY
The project report is to acquaint the study with the real life situation of the organization.
The report contains the corporate profile of Kotak Mahindra Bank, Kotak Mahindra Asset
Management Company, Kotak mahindra life insurance Company. It also contains the list of all the
products sold by Kotak mahindra bank. Further, mutual funds and unit linked insurance plans have
been explained in details. The features of all the MF and ULIP products at Kotak have been
mentioned. The best plans among these have been dealt in details. Then an analysis has been done
about the best plans. At last a conclusion has been drawn on the basis of the whole study.
The project makes aware of various things about mutual funds and ULIPs their types, features,
procedure of issuance, parameters on which they are compared, customer preferences, etc. Besides
this, it also makes familiar with the organization culture, the generally accepted behaviors in an
organisation, and the internal environment.
5
CHAPTER SCHEME
CHAPTER-1: INTRODUCTION: - chapter 1 includes details of the banking business in India. It
makes aware about how the whole banking business is carried in India. The central bank of the
Indian Banking Business is RBI (Reserve bank of India).It controls all the banking business in India.
It also includes a small description of Kotak Mahindra Bank.
CHAPTER-2 COMPANY PROFILE:- chapter 2 consists of details of the Kotak Mahindra Bank
Limited. Besides it also consists of the details of all the products sold by the bank under its name.
There is a small picture of the company’s financial results also.
CHAPTER-3 RESEARCH METHODOLOGY:- chapter 3 contains details of the type of data
which have been used while making the entire project. Basically the type of data which has been
used in the project is secondary.
CHAPTER-4 FINDINGS & ANALYSIS: - chapter 4 has the broad details of the findings and
analysis of the entire project. There is a detailed analysis of the entire company on the basis of the
products it offers in various sectors and also the company’s financial results are kept in mind.
CHAPTER-5 CONCLUSION: - finally the last chapter-5 has the conclusion of the detailed study
of the project. The conclusion is drawn on the basis of the detailed study of the entire project.
Various points have bee kept in mind while drawing the conclusion.
CHAPTER-6 RECOMMENDATIONS: - this chapter has suggestions on how Kotak Mahindra
enhance its business and compete in the corporate sector
CHAPTER-7 LIMITATIONS OF THE STUDY: -this chapter states the limits of this project.
6
CONTENTS
CHAPTER-1 INTRODUCTION
BANKING OVERVIEW
COMMERCIAL & CO-OPERATIVE BANKS
KMBL
CHAPTER-2 COMPANY PROFILE
INTRODUCTION TO KMBL
MILESTONES OF KMBL
CORPORATE IDENTITY OF KMBL
KOTAK MAHINDRA BANK LIMITED AND ITS SUBSIDIARIES
THE JOURNEY SO FAR
GROUP STRUCTURE
VISION STATEMENT
PRODUCT PROFILE
MUTUAL FUND PRODUCTS AT KOTAK
INTRODUCTION TO INSURANCE
INTRODUCTION TO ULIP
FEATURES OF ULIP
CORPORATE PROFILE OF KLI
ULIP PRODUCTS AT KOTAK LIFE INSURANCE
FINANCIAL RESULTS
CHAPTER-3 RESEARCH METHODOLOGY
RESEARCH METHODOLOGY OF STUDY
PURPOSE OF STUDY
CHAPTER-4 FINDINGS
CHAPTER-5 CONCLUSION
7
CHAPTER-6 RECOMMENDATIONS
CHAPTER-7 LIMITATIONS OF THE STUDY
BIBLIOGRAPHY
GLOSSARY
INTRODUCTION
8
CHAPTER-1 INTRODUCTION
Banking Overview
The major participants of the Indian financial system are the commercial banks, the financial institutions (FIs), encompassing term-lending institutions, investment institutions, specialized financial institutions and the state-level development banks, Non-Bank Financial Companies (NBFCs) and other market intermediaries such as the stock brokers and money-lenders. The commercial banks and certain variants of NBFCs are among the oldest of the market participants. The FIs, on the other hand, are relatively new entities in the financial market place.
Historical perspective
Bank of Hindustan, set up in 1870, was the earliest Indian Bank . Banking in India on modern lines started with the establishment of three presidency banks under Presidency Bank's act 1876 i.e. Bank of Calcutta, Bank of Bombay and Bank of Madras. In 1921, all presidency banks were amalgamated to form the Imperial Bank of India. Imperial bank carried out limited central banking functions also prior to establishment of RBI. It engaged in all types of commercial banking business except dealing in foreign exchange.
Reserve Bank of India Act was passed in 1934 & Reserve Bank of India (RBI) was constituted as an apex bank without major government ownership. Banking Regulations Act was passed in 1949. This regulation brought Reserve Bank of India under government control. Under the act, RBI got wide ranging powers for supervision & control of banks. The Act also vested licensing powers & the authority to conduct inspections in RBI.
In 1955, RBI acquired control of the Imperial Bank of India, which was renamed as State Bank of India. In 1959, SBI took over control of eight private banks floated in the erstwhile princely states, making them as its 100% subsidiaries.
RBI was empowered in 1960, to force compulsory merger of weak banks with the strong ones. The total number of banks was thus reduced from 566 in 1951 to 85 in 1969. In July 1969, government nationalized 14 banks having deposits of Rs.50 crores & above. In 1980, government acquired 6 more banks with deposits of more than Rs.200 crores. Nationalisation of banks was to make them play the role of catalytic agents for economic growth. The Narsimham Committee report suggested wide ranging reforms for the banking sector in 1992 to introduce internationally accepted banking practices.
The amendment of Banking Regulation Act in 1993 saw the entry of new private sector banks.
9
COMMERCIAL & CO-OPERATIVE BANKS
The commercial banking structure in India consists of:
Scheduled Commercial Banks
Unscheduled Banks
Scheduled commercial Banks constitute those banks which have been included in the Second
Schedule of Reserve Bank of India(RBI) Act, 1934.
RBI in turn includes only those banks in this schedule which satisfy the criteria laid down
vide section 42 (60 of the Act. Some co-operative banks are scheduled commercial banks
albeit not all co-operative banks are. Being a part of the second schedule confers some
benefits to the bank in terms of access to accommodation by RBI during the times of liquidity
constraints. At the same time, however, this status also subjects the bank certain conditions
and obligation towards the reserve regulations of RBI.
For the purpose of assessment of performance of banks, the Reserve Bank of India categorize
them as public sector banks, old private sector banks, new private sector banks and foreign
banks.
This sub sector can broadly be classified into:
1. Public sector
2. Private sector
3. Foreign banks
Public sector banks have either the Government of India or Reserve Bank of India as the
majority shareholder. This segment comprises of:
State Bank of India (SBI)and its Subsidiaries
Other Nationalized Banks
10
CO-OPERATIVE BANKS
There are two main categories of the co-operative banks.
(a) Short term lending oriented co-operative Banks - within this category there are three sub
categories of banks viz state co-operative banks, District co-operative banks and Primary
Agricultural co-operative societies.
(b) Long term lending oriented co-operative Banks - within the second category there are land
development banks at three levels state level, district level and village level.
The co-operative banking structure in India is divided into following main 5 categories :
1. Primary Urban Co-op Banks
2. Primary Agricultural Credit Societies
3. District Central Co-op Banks
4, State Co-operative Banks
5. Land Development Banks
11
KMBL
Kotak Mahindra is one of India's leading financial conglomerates, offering complete financial
solutions that encompass every sphere of life. From commercial banking, to stock broking, to mutual
funds, to life insurance, to investment banking, the group caters to the diverse financial needs of
individuals and corporate
As on 31st March , 2007, the group had a net worth of over Rs. 3,200 crore, employing around
10,800 people in its various businesses and had a distribution network of branches, franchisees,
representative offices and satellite offices across 300 cities and towns in India and offices in New
York, London, Dubai, Mauritius and Singapore. The Group services around 2.6 million customer
accounts
12
COMPANY PROFILE
13
CHAPTER-2 COMPANY PROFILE
INTRODUCTION TO KMBL
Kotak Mahindra is one of India’s leading institutions, offering complete financial solutions that
encompass every sphere of life. From commercial banking, , to stock broking to mutual funds, to life
insurance, to investment banking, the group caters to the financial needs of individuals and corporate.
The group has a net worth of around Rs. 5,600 crore, employs around 17,100 people in its various
businesses and has a distribution network of branches, franchisees, representative offices and satellite
offices across 300 cities and towns in India and offices in New York, London, Dubai and Mauritius.
The group services over 3.6 million customer accounts.
CREATING BANKING HISTORY
Established in 1985, the kotak Mahindra group has long been one of India’s most reputed financial
organizations. In February 2003, kotak Mahindra finance ltd, the group’ flagship company was given
the license to carry on banking business by the reserve bank of India (RBI). This approval creates
banking history since kotak Mahindra finance ltd. It is the first company in India to convert to a
bank.
14
THE COMPLETE BANK
At kotak Mahindra bank, they address the entire spectrum of financial needs for individuals and
corporate. They have the products, the experience, the infrastructure and most importantly the
commitment to deliver pragmatic, end -to –end solutions that really work.
A license authorizing the bank to carry on banking business has been obtained from the Reserve
Bank of India in terms of Section 22 if the Banking Regulation Act, 1949. It must be distinctly
understood, however, that in issuing the license, the Reserve Bank of India does not undertake any
responsibility for the financial soundness of the bank or the correctness of any of the statements
made or opinion expressed in this connection.
MILESTONES OF KMBL
The Kotak Mahindra Group was born in 1985 as Kotak Capital Management Finance Limited. This
company was promoted by Uday Kotak, Sidney A. A. Pinto and Kotak & Company. Industrialists
Harish Mahindra and Anand Mahindra took a stake in 1986, and that's when the company changed
its name to Kotak Mahindra Finance Limited.
Since then it's been a steady and confident journey to growth and success.
1986 Kotak Mahindra Finance Limited starts the activity of Bill Discounting
1987 Kotak Mahindra Finance Limited enters the Lease and Hire Purchase market
1990 The Auto Finance division is started
1991 The Investment Banking Division is started. Takes over FICOM, one of India’s largest
financial retail marketing networks
1992 Enters the Funds Syndication sector
1995 Brokerage and Distribution businesses incorporated into a separate company - Kotak
Securities. Investment Banking division incorporated into a separate company - Kotak
Mahindra Capital Company
1996 The Auto Finance Business is hived off into a separate company - Kotak Mahindra
15
Prime Limited (formerly known as Kotak Mahindra Primus Limited). Kotak Mahindra
takes a significant stake in Ford Credit Kotak Mahindra Limited, for financing Ford
vehicles. The launch of Matrix Information Services Limited marks the Group’s entry
into information distribution.
1998 Enters the mutual fund market with the launch of Kotak Mahindra Asset Management
Company.
2000 Kotak Mahindra ties up with Old Mutual plc. For the Life Insurance business.
Kotak Securities launches its on-line broking site (now www.kotaksecurities.com).
Commencement of private equity activity through setting up of Kotak Mahindra
Venture Capital Fund.
2001 Matrix sold to Friday Corporation
Launches Insurance Services
2003 Kotak Mahindra Finance Ltd. converts to a commercial bank – the first Indian
company to do so.
2004 Launches India Growth Fund, a private equity fund.
2005
2006
Kotak Group realigns joint venture in Ford Credit; Buys Kotak Mahindra Prime
(formerly known as Kotak Mahindra Primus Limited) and sells Ford credit Kotak
Mahindra.
Launches a real estate fund
Bought the 25% stake held by Goldman Sachs in Kotak Mahindra Capital Company
and Kotak Securities
CORPORATE IDENTITY OF KMBL
16
The symbol of the infinite Ka reflects its global Indian personality. The Ka is uniquely Indian, while
its curve forms the infinity sign which is universal. One of the basic tenets of economists is that
men’s needs are unlimited. The infinite Ka symbolizes that it has infinite number of ways to meet
those needs.
KOTAK MAHINDRA BANK LIMITED AND ITS
SUBSIDIARIES
17
Kotak Mahindra Bank Ltd
Kotak Mahindra is one of India's leading financial conglomerates, offering complete financial
solutions that encompass every sphere of life. From commercial banking, to stock broking, to mutual
funds, to life insurance, to investment banking, the group caters to the diverse financial needs of
individuals and corporate
As on 31st March , 2007, the group had a net worth of over Rs. 3,200 crore, employing around
10,800 people in its various businesses and had a distribution network of branches, franchisees,
representative offices and satellite offices across 300 cities and towns in India and offices in New
York, London, Dubai, Mauritius and Singapore. The Group services around 2.6 million customer
accounts.
Subsidiaries of Kotak Mahindra Bank Ltd
Kotak Mahindra capital company ltd.
Kotak securities ltd.
Kotak Mahindra old mutual life insurance ltd.
Kotak Mahindra prime ltd.
Kotak Mahindra asset management ltd & kotak Mahindra trustee company ltd.
Kotak Mahindra investments ltd.
International subsidiaries of Kotak Mahindra Bank Ltd
Kotak Mahindra securities ltd.
Kotak Mahindra Trusteeship Services Ltd.
Kotak Forex Brokerage Ltd.
THE JOURNEY SO FAR
18
In October 2007, Kotak Group acquired the 40% stake in Kotak Prime held by Ford Credit
International (FCI) and FCI acquired the stake in Ford Credit Kotak Mahindra (FCKM) held by
kotak group.
In May 2006, Kotak Group bought 25% stake held by Goldman Sachs in Kotak Capital and Kotak
Securities.
GROUP STRUCTURE
19
VISION STATEMENT
THE GLOBAL INDIAN FINANCIAL SERVICES BRAND
20
Our customers will enjoy the benefits of dealing with a global Indian brand that best understands
their needs and delivers customized pragmatic solutions across multiple platforms. We will be a
world class Indian financial services group. Our technology and best practices will be benchmarked
along international lines while our understanding of customers will be uniquely Indian. We will be
more than a repository of our customers’ savings. We, the group, will be a single window to every
financial service in a customer’s universe.
THE MOST PREFERED EMPLOYER IN FINANCIAL SERVICES
A culture of empowerment and a spirit of enterprise attracts bright mind with an entrepreneurial
streak to join us and stay with us. Working with a home- grown professionally managed company,
which has partnership with international leaders gives our people a perspective that is universal as
well as unique.
THE MOST TRUSTED FINANCIAL SERVICES COMPANY
We will create an ethos of trust across all our constituents. Adhering to high standards of compliance
and corporate governance will be an integral part of building trust.
VALUE CREATION
Value creation rather than size alone will be our business driver.
PRODUCT PROFILE
personal products and services deposit accounts
savings account current account
21
term account loans
personal loans home loans loan against property
investment services demat mutual fund insurance kotak gold eternity
convenience banking net banking mobile banking kotak payment gateway phone banking ATM network SMS banking Alerts
NRI products and services Deposits
NRE savings account NRO savings account NRE term deposits NRO term deposits FCNR deposits Rupee advantage plan
Investments Demat Mutual funds Portfolio investment scheme MF on the net and call
Remittances Funds to home Wire transfer Mail Remittances from the middle east
Loans Home finance
Convenience banking Net banking Phone banking Global debit card Access India debit card(NRO card)
Small businesses products and services Current accounts
Edge current accounts Pro current accounts Ace current accounts
Personal loans
22
Jaldi loans Corporate products and services
Funded products Working capital Structured products
Treasury products Foreign exchange Money market Benchmark PLR
Investments products Term deposits Mutual funds Bancassurance
Fixed income products Sales and distributions Research Case studies
Current account Transaction group on banking Corporate advisory services Custody services Retail assets
MUTUAL FUND PRODUCTS AT KOTAK
23
MUTUAL FUND
INVESTMENT
OBJECTIVE
AVAILABLE OPTIONS
CORPUS
(IN CRORES)
MINIMUM INITIAL INVESTMENT
TOTAL EXPENSE RATIO
TYPE OF SCHEME
KOTAK
30
To generate capital appreciation from a portfolio of predominantly equity related securities. The portfolio will generally compromise of equity and equity related instruments of around 30 companies which may go up to 39.
DP, DR & G 705.67 5000 2.19% Open ended equity scheme
KOTAK
MID-CAP
To generate capital appreciation from a diversified portfolio of equity and equity related securities.
DP, DR & G 167.26 5000 2.39% Open ended equity growth scheme
KOTAK OPPORTUNITIES
To generate capital appreciation from a diversified portfolio of equity and equity related securities.
DP, DR & G 859.61 5000 2.13% Open ended equity growth scheme
KOTAK LIFESTYE
To generate long term capital appreciation from a portfolio of equity and equity related securities, generally diversified across companies, which are likely to benefit by changing lifestyle and rising consumerism in India.
DP, DR & G 172.19 5000 2.31% Open ended equity growth scheme
KOTAK CONTRA
To generate long term capital appreciation from a portfolio of equity and equity related securities
DP, DR & G 98.96 5000 2.49% Open ended equity growth scheme
KOTAK EQUITY ARBITRAGE
to generate capital appreciation and income by predominantly investing in arbitrage opportunities in the cash and derivatives segment of the equity market, and by investing the balance in debt and money market instruments.
DP, DR & G 404.88 5000 1.10% Open ended equity growth scheme
KOTAK TAX SAVER
To generate long term capital appreciation from a portfolio of equity and equity related securities and enable investors to avail the income tax rebate, as permitted from time to
DP, DR & G 452.71 500 2.28% Open ended equity linked saving scheme
24
time.
KOTAK GLOBAL INDIA
To generate capital appreciation from a portfolio of equity and equity related securities issued by globally competitive Indian companies.
DP, DR & G 84.53 5000 2.46% Open ended equity growth scheme
KOTAK MNC
To generate capital appreciation from a portfolio of equity and equity related securities issued by multinational companies
DP, DR & G 30.46 5000 2.50% Open ended equity growth scheme
KOTAK TECH
To generate capital appreciation from a portfolio of equity and equity related securities in technology, other technology enabled companies and related sectors as given in the investment strategy.
DP, DR & G 25.95 5000 2.25% Open ended equity growth scheme
KOTAK EQUITY FOF
To generate long term capital appreciation from a portfolio created by investing predominantly in open-ended diversified equity schemes of mutual funds registered with SEBI
DP, DR & G 58.74 5000 .75% Open ended equity Funds of Funds scheme
KOTAK BALANCE
To achieve growth by investing in equity and equity related instruments, balanced with income generation by investing in debt and money market instruments.
DP & DR 78.00 5000 2.50% Open ended balance scheme
KOTAK INCOME PLUS
To enhance returns over a portfolio of debt instruments with a moderate exposure in equity and equity related I instruments
DP, DR & G 28.00 5000 2.23% Open ended income scheme
KOTAK BOND SHORT TERM PLAN
To provide reasonable returns and high level of liquidity by investing in debt and money market instruments of different maturities, so as to spread the risk across different kinds of issuers in the debt market
DR & G 246.35 5000 .60% Open ended debt scheme
KOTAK BOND
To create a portfolio of debt and money market instruments of different maturities so as to spread the risk across a wide maturity horizon and different kinds of issuers in the debt market.
DP, DR & G 123.39 5000 2.25% Open ended debt scheme
25
KOTAK GILT SAVING
To generate risk free returns through investments in sovereign securities issued by the Central Govt and/or State Govts and/or reverse repos in such securities
DP, DR & G 6.05 5000 1.00% Open ended dedicated gilt scheme
KOTAK FLEXI DEBT
To maximise returns through an active management of a portfolio of debt and money market securities.
DP, DR & G 7268.32 5000 .40% Open ended debt scheme
KOTAK FLOATER LONG TERM
To reduce the interest rate risk associated with investments in fixed rate instruments by investing predominantly in floating rate securities, money market instruments and using appropriate derivatives.
DR & G 65.93 5000 1.00% Open ended debt scheme
KOTAK FLOATER SHORT TERM
To reduce the interest rate risk associated with investments in fixed rate instruments by investing predominantly in floating rate securities, money market instruments and using appropriate derivatives.
DR & G 329.88 5000 .40% Open ended debt scheme
Presently, there are three best working Mutual Funds at Kotak Mahindra Bank:
KOTAK 3
KOTAK OPPORTUNITIES
KOTAK TAXSAVER
INTRODUCTION TO INSURANCE
What is Insurance?
The business of insurance is related to the protection of the economic value of assets. Every asset has
a value. The assets would have been created through the effort of the owner. The assets are valuable
26
to the owner, because he expects to get some benefit from it. The benefit may be an income or some
thing else. It is a benefit because it meets some of his needs. In the case of factory or a cow, the
product generated by them is sold and income is generated. In the case of the motorcar, it provides
comfort and convenience in transportation. There is no direct income.
Every asset is expected to last for a certain period of time during which it will perform. After that the
benefit may not be available. There is a lifetime for a machine in a factory or a cow or a motorcar.
None of them will last forever. The owner is aware of this and he can so manage his affairs that by
the end of that period or life time, a substitute is made available Thus, he make sure that the value or
income is not lost. However the assets may get lost earlier. An accident or some other unfortunate
event may destroy it or make it nonfunctional. In that case the owner and those driving benefit and
the planned substitute there from, would be deprived of the benefit and the planned substitute would
not have been ready. There is an adverse or unpleasant situation. Insurance is a mechanism that helps
to reduce the effect of such adverse situation.
INTRODUCTION TO ULIP
Unit linked insurance plans, ULIPs, are distinct from the more familiar ‘with profits’ policies sold for
decades. ‘With profits’ policies are called so because investment gains (profits) are distributed to
policyholder in the form of a bonus announced every year. ULIPs also serve the same function of
providing insurance protection against death and provision of long term savings, but they are
structured differently. In ‘with profits’ policies, the insurance company credits the premium to a
27
common pool called the ‘life fund’, after setting aside funds for risk premium on life insurance and
management expenses.
Every year, the insurer calculates how much has to be paid to settle death and maturity claims. The
surplus in the life fund left after meeting these liabilities is credited to policyholders’ accounts in the
form of a bonus. In a ULIP too, the insurer deducts charges towards life insurance (mortality
charges), administration charges and fund management charges. The rest of the premium is used to
invest in the fund that invests money in stocks and bonds. The number of units represents the share
of the policyholder in the fund.
The value of the unit is determined by the total value of all investments made by the fund divided by
the number of units. If the insurance company offers the range of funds, the insured can direct the
company to invest in the fund of his choice. Insurers usually offer three choices-an equity (growth)
fund, debt fund and a balanced fund, which invests in both.
In both ‘with profits’ policies as well as unit-linked policies, a large part of the first year premium
goes towards paying the agents’ commissions.
FEATURES OF UNIT LINKED INSURANCE PLAN
1) Unit linked policies are unbundled i.e. separate identification of parts is there like, Investment
element, expenses, administration charges and benefits and charges etc.
2) Unit Linked Policies make use of linked funds
3) Client has choice of funds
28
4) Unit Linked Policies are linked i.e. value of property is linked to net assets.
5) Investment risk and rewards are transferred from insurer to the client.
6) Unit Linked Policies have explicit charges
CORPORATE PROFILE OF KLI
Kotak Mahindra Old Mutual Life Insurance Limited was established in 2000 as a joint
venture between Kotak Mahindra Bank Ltd. - KMBL (74%) and Old Mutual plc, London
(26%)
A total asset managed by the Kotak Mahindra Group is around USD 9.4 billion. It is amongst
the few banks in India to have a non-profitable asset level of just 0.33%
29
KMBL was the first non-banking financial company (NBFC) to receive a retail bank license
in 2003
In the life insurance market, Kotak Life Insurance registered an adjusted premium (single
premium: 1/10) growth of over 53% from financial year 2005-06 to financial year 2006-07
Kotak Life Insurance, with 100 branches in over 68 cities, and a work force of over 4,100
employees, is a company with a high level of brand awareness
Kotak Life Insurance aspires to a spiraling growth with a strong focus on the customer,
products, mapping of geographic distribution channels and fund performance
Member of the Swiss Life Network since 2003
Website:
www.kotaklifeinsurance.com
Management of KLI
Mr. Gaurang Shah (Managing Director)
Mr. G Murlidhar (Chief Financial Officer)
Mr. Arun Patil (Vice President - Sales & Management Development)
Registered office
Kotak Mahindra old mutual life insurance ltd.
9th floor, Godrej Coliseum,
Behind Everard Nagar,
Sion (E), Mumbai-400 022
Tel: (022) 6621 5999
Fax: (02) 66215757, 66215858
30
Customer service centre
Kotak Mahindra old mutual life insurance ltd.
8th floor, Godrej Coliseum,
Behind Everard Nagar,
Sion (E), Mumbai-400 022
Tel: (022) 6050 5000
Toll free number: 1800-22-8081
Fax: (022) 6621 5353, 6621 5454
Email id: [email protected]
SPECIAL ADVANTAGES
Market leader in brokerage, car finance & investment banking
Dedicated to developing unique products with a special focus on product and service quality
Among the first to offer group insurance products in the Indian market
Extensive nationwide coverage through a direct sales force, brokers, spotters and frontline
sales managers in more than 68 cities
Kotak Life Insurance's value proposition is based on strong corporate relationships, superior
products, extensive marketing skills and quality of service
The objective of Kotak Life Insurance is to build long-term sustainable business under
regular premium and sustain fund performance in the capital guaranteed segment
ULIP Products at Kotak Life Insurance
31
Kotak Safe Investment Plan II
Kotak Flexi Plan
Kotak Smart Advantage Plan
Kotak Retirement Income Plan
Kotak Headstart Child Plans (Future Protect)
Kotak Headstart Child Plans (Assure Wealth)
Kotak Easy Growth Plan
Kotak Platinum Advantage
32
Kotak safe investment plan II
Name of the product KOTAK SAFE INVESTMENT II PLAN
Brief Product
Description
Regular or limited pay market linked plan with guaranteed maturity
value and higher allocation rates.
Features Guaranteed Maturity Value
Investment Portfolio Guaranteed Growth, Guaranteed Balanced, Guaranteed Bond,
Guaranteed Floating Rate, Guaranteed Gilt, Guaranteed Money
Market
Max equity exposure Maximum Equity Exposure - 40% to 80%
Death Benefit Higher of Sum Assured or Fund Value.
Maturity Benefit Guaranteed Maturity Value or market value of units in Main
account, whichever is higher
Top Up Premiums Min - Rs. 10,000
Partial Withdrawal Investment accessible after completion of 3 years, with no penalty
charges from year 7 onwards (subject to retaining a minimum
balance of one annualized basic premium)
Complete Surrender No surrender allowed in the first 3 policy years. Thereafter
surrender involves a charge till year 7
Riders Term benefit; Preferred term Benefit; Critical illness; Accidental
death; Permanent Disability; Life Guardian; Accidental Death
Guardian.
Switching Option 4 free switches per year. Rs 500 additional charge per switch.
Revival period 2 yrs
Kotak flexi plan
33
Name of the product KOTAK FLEXI PLAN
Brief Product
Description
Regular or limited pay market linked plan with guaranteed maturity
value.
Features Guaranteed Maturity Value
Investment Portfolio Guaranteed Growth, Guaranteed Balanced, Guaranteed Bond,
Guaranteed Floating Rate, Guaranteed Gilt, Guaranteed Money
Market
Max equity exposure Maximum Equity Exposure - 40% to 80%
Death Benefit Sum Assured
Maturity Benefit Guaranteed Maturity Value or market value of units in Main
account, whichever is higher
Top Up Premiums Min - Rs. 10,000
Partial Withdrawal Investment accessible after completion of 3 years, with no penalty
charges from year 7 onwards (subject to retaining a minimum
balance of one annualized basic premium)
Complete Surrender No surrender allowed in the first 3 policy years. Thereafter surrender
involves a charge till year 7
Riders Term benefit; Preferred term Benefit; Critical illness; Accidental
death; Permanent Disability; Life Guardian; Accidental Death
Guardian.
Switching Option 4 free switches per year. Rs 500 additional charge per switch.
Revival period 2 yrs
Kotak smart advantage plan
34
Name of the product KSAP
Brief Product
Description
Capital guarantee market linked plan with limited premium paying
term.
Features Limited premium paying term with capital guarantee with maximum
exposure to equity
Investment Portfolio Advantage Multiplier Fund, Advantage Plus Fund
Max equity exposure Maximum Equity exposure - 0% to 100%
Death Benefit An amount equal to life cover plus the value of units in the Main &
and Supplementary Accounts.
Maturity Benefit Fund Value or sum of premiums paid whichever is higher
Top Up Premiums Min -Rs 25,000 /- .Max ( 25% of the total basic premiums paid to
date)
Partial Withdrawal In multiples of Rs 25,000/- subject to a maximum of 2 withdrawals
per year (Withdrawals from the Supplementary account)
Charges applicable after yr 3.
Complete Surrender No surrender in the last 2 years of the term of the contract .Charges
applicable after yr 3.
Riders NA
Switching Option 4 switches free per year. Every additional switch would be charged
Rs 500 /-
Revival period 2 years
Kotak retirement income plan
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Name of the product KOTAK RETIREMENT INCOME PLAN
Brief Product
Description
regular or single premium market linked pension plan with
guaranteed maturity value; with and without cover options
Features Guaranteed Maturity Value for the regular premium mode
Investment Portfolio Pension Balanced; Pension Bond; Pension Floating Rate; Pension
Gilt; and Pension Money Market
Max equity exposure Maximum Equity Exposure - 30% to 60%
Death Benefit In case life cover has been opted, sum assured or market value of
units, whichever is higher. Otherwise Fund Value. Can be taken as
lump sum or pension.
Maturity Benefit In case of life cover option, Basic Sum Assured or market value of
units, whichever is higher? Otherwise Guaranteed Maturity Value or
market value of units in Main account, whichever is higher.
Top Up Premiums Min - Rs. 10,000
Partial Withdrawal NA
Complete Surrender No surrender allowed in the first 3 policy years. Thereafter surrender
involves a charge till year 6
Riders Term benefit; Preferred term Benefit; Critical illness; Accidental
death; Permanent Disability; Accidental Death Guardian.
Switching Option 4 free switches per year. Rs 500 additional charge per switch.
Revival period 2 yrs
Kotak Head start Child Plans (Future Protect)
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Name of the product KOTAK HEADSTART CHILD PLANS(FUTURE PROTECT)
Brief Product
Description
Regular and Limited Pay unit linked plan, maximizes protection
Investment Portfolio Kotak Aggressive Growth, Kotak Dynamic Growth, Kotak Dynamic
Balanced, Kotak Dynamic Floor, Kotak Dynamic Bond, Kotak
Dynamic Floating Rate, Kotak Dynamic Gilt, Kotak Dynamic
Money Market
Max equity exposure Maximum Equity Exposure - 40% to 100%
Death Benefit 100% of sum assured on death of life insured (on the second death,
in case of joint life)
Maturity Benefit Fund Value paid (Withdrawal option, 5 years after maturity)
Top Up Premiums 25% of cumulative premiums paid up to that date
Partial Withdrawal Allowed from year 4 onwards, No withdrawal charges after year 7.
Withdrawal subject to a minimum fund balance of Rs. 25,000
Complete Surrender Allowed only after completion of 3 years. No surrender charge from
year 7 onwards.
Riders Critical Illness Benefit, Permanent Disability Benefit, Accidental
Death Benefit, Accidental Disability Guardian Benefit
Switching Option 4 switches free per year
Revival period 2 yrs
Kotak Headstart Child Plans (Assure Wealth)
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Name of the product KOTAK HEADSTART CHILD PLANS(ASSURE WEALTH)
Brief Product
Description
Regular and Limited Pay unit linked, maximizes wealth
Investment Portfolio Kotak Aggressive Growth, Kotak Dynamic Growth, Kotak Dynamic
Balanced, Kotak Dynamic Floor, Kotak Dynamic Bond, Kotak
Dynamic Floating Rate, Kotak Dynamic Gilt, Kotak Dynamic Money
Market
Max equity exposure Maximum Equity Exposure - 30% to 100%
Death Benefit Sum Assured (Life Cover) = Higher of (5 X Total Annual Premium)
and (0.5 X Policy Term X Total Annual Premium). On death, higher of
sum assured or fund value payable
Maturity Benefit Fund Value paid (Withdrawal option, 5 years after maturity)
Top Up Premiums 25% of cumulative premiums paid up to that date
Partial Withdrawal Allowed from year 4 onwards, No withdrawal charges after year 7.
Withdrawal subject to a minimum fund balance of Rs. 25,000
Complete Surrender Allowed only after completion of 3 years. No surrender charge from
year 7 onwards.
Riders Critical Illness Benefit, Permanent Disability Benefit, Accidental Death
Benefit
Switching Option 4 switches free per year
Revival period 2 yrs
KOTAK SAFE INVESTMENT PLAN II
Kotak safe investment plan II is a unit linked plan that combines the benefits of the insurance and the
capital market returns into one. This plan from the stable of kotak life insurance is a true reflection of
the company’s essence; innovation that will benefit the investor.
38
What makes investing in kotak safe investment plan II truly unique is that investor enjoys a
guaranteed maturity value, with varying degrees of equity exposure depending on investor’s risk
appetite. So, if the market value of investor’s units is higher, he/she will reap the benefits with the
peace of mind that whilst in the bear market his/her investment is under-pinned by the guaranteed
maturity value. And the added feature is that the returns are totally tax-free.
KEY FEATURES
Fund options
The capital market offers a spectrum of investment options. Similarly kotak safe investment II has an
entire range of fund options. For the risk averse it has the Guaranteed Gilt Fund and for aggressive
investors, it offers the Guaranteed Growth Fund. With the expertise of kotak backing your
investment, it ensures that your risk profile and investment objectives are matched.
INVESTMENT OPTIONS
EQUITY (HIGH RISK)
DEBT (MEDIUM RISK)
CASH AND MONEY MARKET
RISK-RETURN PROFILE
OBJECTIVES
Aggressive growth 60%-100%
0%-40% 0% Aggressive Aims for a high level of capital growth by holding a significant portion in equities
Guaranteed/dynamic growth
40%-80% 20%-60% 0%-20% Aggressive May experience high level of
39
shorter term volatility
Guaranteed/dynamic balanced
30%-60% 20%-70% 0%-20% Moderate Aims for moderate growth by holding a diversified mix of equities and fixed interest instrumentsMay experience moderate levels of shorter term volatility
Guaranteed/dynamic bondGuaranteed/dynamic floating rate
_ 0%-100% 0%-20% Safe Returns will be in line with those of fixed interest instrument, and may provide little protection against unexpected inflation increases.
Guaranteed/dynamic gilt
_ 80%-100% 0%-20% Safe Will preserve capital and minimize downside risk, with investment in debt and government instruments.
Guaranteed/dynamic money market
_ _ 100% Conservative Will protect capital and not have downside risk.
Guaranteed maturity value
Most investors who stay away from equity do so not because they do not want to earn higher equity
linked returns but because they fear loss of capital. To protect their money from losses they invest in
low return debt instruments. Kotak life insurance, having understood this concern of their investors
and have developed a unique proposition of a guaranteed maturity value, underpinning their
investment in equity.
40
When the markets are in the bull phase, investors will enjoy the market linked returns delivered on
their portfolio. However in a bear market, their investment is still safe as they are sure of getting the
guaranteed maturity value. In a nutshell, “Bulls You Win and Bears You Win”.
The Guaranteed Maturity Value applies where all premiums have been paid up-to-date at maturity
and will fall away, where partial withdrawals have been made from the Main Account.
Death benefit
Life is uncertain and you would not want to take a chance when it comes to your loved ones.
Depending on your existing life cover and the need you have, this plan allows you to choose your life
cover-the sum assured on death.
Top-up premiums
Besides regular premiums, whenever you have excess money, you can invest it by way of top-up
premiums, without any commitment to bring them in the coming year (subject to a maximum of 25%
of the cumulative premiums paid till that date).
Partial withdrawals/surrender
Kotak safe investment plan II allows you early exit option through partial withdrawal of funds or
complete surrender of the policy. With this plan, you can access the investment after completion of
the 3rd policy year, with no surrender or partial withdrawal charges from year 7 onwards (subject to
retaining a minimum balance of one annualized basic premium).
Limited premium payment
If any investor wishes to pay off all premiums over short period of time, instead of the full term, this
plan has the limited premium payment option for him. This option allows you to pay off your
premiums over tenure shorter than your policy term. Under this option, you can pay off your
premiums over 3, 5, 6,7,10 or 15 years.
Advantages
o Enjoy unlimited upside from capital market with a downside protection guarantee on your
maturity value.
o Flexibility in premium payment: limited premium payment option and full term payment
option.
o Tax free switching across fund categories.
41
o Increase contribution at will by way of top up premiums
o Easy exit option.
Tax benefit
Section 80(c), 10(10D) of the income tax act, 1961 would apply.
Eligibility
Entry age to the life to be ensured Min-0years, max-65years
Term Min-10years or 18 minus age at entry for
minors; whichever is higher, max-30years
Maturity age Max-75years
Regular premium Min-Rs 18,000 annually
Limited premium payment Min-Rs 50,000 annually
Top-up premiums/partial withdrawals Min- Rs 10,000, max 25% of the cumulative
annualized premiums paid
KOTAK HEADSTART FUTURE PROTECTYour children are your joy, your pride and your world. And you strive to give your little one(s) the
very best in life. You would like to provide your children with all the opportunities that could give
them the extra edge over others. For this, you would require an investment and protection package
42
that is specially designed to help you plan wisely for a financially secure and comfortable tomorrow,
no matter what the uncertainty of life.
Kotak headstart future protect is a unit-linked dual benefit plan to help secure your children’s future
financial needs and ensure that plans do not go awry, given you may not always be there to help.
How does this plan benefit?
Double benefit on death
In the event of the death of a parent, grandparent or a legal guardian, there would be an irreplaceable
void in the life of their children, but headstart future protect can ensure that the financial loss is
minimized.
Under this plan, a lump sum amount of 100% of the sum assured would be paid out immediately on
the life insured’s death(on the second death in case of joint life), to assist in meeting unanticipated
financial obligations.
At the same time, it provides an additional boost (on death of the life insured) via a lump sum benefit
which reduces over the term of the plan to compensate beneficiaries for the outstanding premiums
that would have been payable had the policyholder survived the full term of the poll.
Protection boosters
You can opt for additional rider benefit payments should accidental death bring on your demise or,
unfortunate events render you disabled or incapacitated. Should a critical illness befall you along the
way, a portion of sum assured is immediately made available. Premiums waiver protection is also
available on disability. These benefits will be charged for by way of additional unit deductions from
the fund.
Fund options
INVESTMENT OPTIONS
EQUITY (HIGH
DEBT (MEDIUM RISK)
CASH$ MONEY MARKE
RISK-RETURN
OBJECTIVES
43
RISK) T PROFILE
Kotak Aggressive growth
60%-100%
0%-40% 0% Aggressive
Aims for a high level of capital growth by holding a significant portion in equities
Kotak dynamic growth
40%-80%
20%-60% 0%-20% Aggressive
May experience high level of shorter term volatility
Kotak dynamic balanced
30%-60%
20%-70% 0%-20% Moderate Aims for moderate growth by holding a diversified mix of equities and fixed interest instrumentsMay experience moderate levels of shorter term volatility
Kotak dynamic floor
0%-75%
0%-100% 0%-20% Cautious Aims to provide stable long term inflation beating growth over the medium to longer term and defend capital against short term capital shocks.Is likely to out perform traditional balanced or equity funds during sideways or falling markets and shadow the rising equity market.
Kotak dynamic bondKotak dynamic floating rate
_ 0%-100% 0%-20% Conservative
Returns will be in line with those of fixed interest instrument, and may provide little protection against unexpected inflation increases.
Kotak dynamic gilt
_ 80%-100%
0%-20% Conservative
Will preserve capital and minimize downside risk, with investment in debt and government instruments.
Kotak dynamic money market
_ _ 100% Secure Will protect capital and not have downside risk.
In short, you can select over time which funds you would like to be in, based on your time horizon
and views on market.
Some suggestions on how you might allocate your savings are illustrated in the chart below:
Investment time horizon Recommended fund
44
options and allocations
If your child is below the age of 7, you will probably not require the money for another 15-20 years
If your child is between the age of 8 and 12, you are likely to save for the next 10-15 years
If your child is between the age of 13 and 15, you may require the amount within 7-10 years.
75% in aggressive growth fund or dynamic growth fund and 25% in dynamic floor fund
50% dynamic growth fund 50% dynamic floor fund
100% in dynamic floor fund
When there are about 2 or 3 years before you actually require he money, it is advisable to switch
your money to the debt funds, dynamic bond funds, dynamic floating rate fund or the dynamic gilt
fund, so that it is safe and accessible.
Flexible withdrawals
With costs being different for every need, the financial requirements for your children would change
from time to time and you require a child savings plan that is flexible. With this plan you can access
the investment after completion of 3rd policy year, with no penalty charges from year 7 onwards.
Alternatively, you can just let the amount multiply if the need is not immediate. You can also elect to
receive a percentage at maturity proceeds in cash and the balance by way of pre-specified
installments, for up to 5 years after maturity.
FINANCIAL RESULTS
AUDITED FINANCIAL RESULTS FOR
Rs in lakhs Nine Months Ended
45
THE YEAR ENDED 31ST
MARCH, 2009Sr Quarter Ended Year Ended
No Particulars Dec-08 (Unaudited) Mar-09
(Unaudited) Mar-08 (Unaudited) Mar-09 (Audited)Mar-08 (Audited) 1 Interest earned
(a+b+c+d) 326,211.15 110,445.19 110,424.39 436,656.34 364,838.80
(a) Interest/discount on advances/bills 261,221.99 89,323.91 78,631.39 350,545.90 260,768.46
(b) Income on investments 56,027.59 19,930.14 26,191.93 75,957.73 85,879.03
(c) Interest on balances with RBI & other
banks 5,265.70 355.98 2,409.32 5,621.68 9,037.14
(d) Others 3,695.87 835.16 3,191.75 4,531.03 9,154.17
2 Other income (a+b) 174,939.75 113,321.67 75,826.44 288,261.42 390,100.32
a) Profit/(Loss) on sale of investments
including revaluation (insurance
business) (47,983.30) (3,829.36) (43,072.14) (51,812.66) 15,348.79
b) Other income (see Notes 2 and 5) 222,923.05 117,151.03 118,898.58 340,074.08 374,751.53
3 Total income (1+2) 501,150.90 223,766.86 186,250.83 724,917.76 754,939.12
4 Interest expended 151,557.05 47,682.42 46,800.87 199,239.47 181,647.70
5 Operating expenses (a+b+c) 261,494.78 129,583.86 90,965.20 391,078.64 396,197.50
(a) Payments to and Provisions for
employees 93,174.03 26,077.02 32,380.88 119,251.05 119,789.20
(b) Policy holders’ reserves, surrender
expense and claims 46,853.30 67,093.60 17,334.12 113,946.90 142,438.11
(c) Other operating expenses (see Note 3
and 5) 121,467.45 36,413.24 41,250.20 157,880.69 133,970.19
6 Total expenditure (4+5) (excluding
provisions and contingencies) 413,051.83 177,266.28 137,766.07 590,318.11 577,845.20
7 Operating Profit before Provisions and
Contingencies (3-6) 88,099.07 46,500.58 48,484.76 134,599.65 177,093.92
8 Provisions (other than tax) and
Contingencies (see Note 1) 19,508.61 13,470.85 14,090.24 32,979.46 36,302.67
9 Exceptional Items - - - - -
10 Profit from Ordinary Activities before
tax (7-8-9) 68,590.46 33,029.73 34,394.52 101,620.19 140,791.25
11 Tax expense (see Note 7) 25,410.82 10,942.16 10,307.14 36,352.98 44,918.61
12 Profit from Ordinary activities after tax
before Minority Interest (10 – 11) 43,179.64 22,087.57 24,087.38 65,267.21 95,872.64
13 Extraordinary items (net of tax expense) - - - - -
14 Profit from Ordinary activities after tax
before Minority Interest (12 – 13) 43,179.64 22,087.57 24,087.38 65,267.21
15 Less: Share of Minority Interest (658.52) 1,031.35 70.46 372.83 (1,868.75)
16 Add: Share in Profit of associates 334.00 10.25 (6.88) 344.25 1,381.27
17 Profit after tax (14-15+16) 44,172.16 21,066.47 24,010.04 65,238.63
46
95,872.64 99,122.6618 Paid Up Equity Capital - (Face Value of
Rs. 10 per share) 34,547.35 34,566.89 34,467.28 34,566.89 34,467.28
19 Group Reserves (excluding Minority
Interest) 617,687.52 547,923.35
20 Minority Interest 6,286.02 5,123.34
21 Analytical Ratios
(i) Earnings per Share (before and
after extraordinary items)
(a) Basic (not annualized) Rs. 12.74 6.10 6.97 18.90 29.62
(b) Diluted (not annualized) Rs. 12.66 6.09 6.86 18.87 29.18
(ii) NPA Ratios (a) Gross NPA 89,139.91 83,208.43 56,719.36 83,208.43 56,719.36
(b) Net NPA 56,141.11 45,430.59 36,266.58 45,430.59 36,266.58
(c) % of Gross NPA/ Gross Advances 3.68 3.64 2.56 3.64 2.56
(d) % of Net NPA/ Net Advances 2.35 2.02 1.65 2.02 1.65
(e) % of Gross NPA/ Gross Advances
(excluding NPAs acquired from other
banks/ NBFCs) 1.91 2.44 0.85 2.44 0.85
(f) % of Net NPA/ Net Advances
(excluding NPAs acquired from other
banks/ NBFCs) 1.01 1.18 0.33 1.18 0.33
(iii) Return on Assets (average) (not
annualised) 1.09
0.52 0.59 1.61 2.87
47
RESEARCH
METHODOLOGY
48
CHAPTER-3 RESEARCH METHODOLOGY
Managers need information in order to introduce products and services that create value in the
mind of the customer. But the perception of value is a subjective one, and what customer’s value this
year may be quite different from what they value next year. As such, the attributes that create value
cannot simply be deduced from common knowledge. Rather, data (information) must be collected
and analyzed. The goal of Marketing Research (analysis) is to provide the facts and direction that
managers need to make their more important marketing decisions.
The analysis involves the following steps:
Define the problem.
Determine research design.
Identify data types and sources.
Determine sample plan and size.
Collect the data.
Analyze and interpret the data.
Prepare the research report.
For the purpose of study, data from the in-house survey conducted by the marketing
Department (secondary data) has been used and also for coming out with the recommendation. It was
also felt that mere secondary data would not provide in-depth information for the analysis, hence it
was decided that interactive discussions with the managers and the head of every department would
help in an in-depth and true understanding of challenges faced by the department. The methodology
adopted was to gather relevant information from the appropriate department, correlate the
information obtained and to present the information in a logical and systematic manner.
49
PURPOSE OF STUDY
1: To identify the services offered by KOTAK MAHINDRA BANK.
2: To study and analyze the customer perception and preference about KOTAK MAHINDRA BANK.
3: Finally to draw the various conclusion and recommendation on the basis of study conducted.
50
FINDINGS
51
CHAPTER-4 FINDINGS
Kotak Mahindra bank sells around 20 mutual funds. After analyzing these funds on the basis of their
risk, return, NAVs, expenses etc., it was found that its three products i.e., Kotak 30, Kotak
opportunities, and Kotak taxsaver are the most popular ones. These three funds give the highest
returns. This is because they invest around 80% in equity and very less in debt instruments.
Kotak 30 is an open-ended scheme which invests predominantly in large cap blue chip stocks which
lend stability to the portfolio. It has a flexibility to take some exposure to some mid caps to
potentially enhance returns.
Kotak opportunities are an open-ended equity growth scheme. As market evolve and grow, new
opportunities of growth keep emerging. Kotak opportunities are an aggressive scheme that endeavors
to capture these opportunities to create wealth. Since inception, the scheme has been able to generate
‘alpha” by spotting opportunities from time to time.
Kotak taxsaver is an equity linked saving scheme (ELSS) which allows investors twin advantage of
capital appreciation and tax saving. It has a portfolio diversified across sectors.
52
KOTAK TAXSAVER
ABOUT THE SCHEME
Kotak Tax saver offers the investor the dual advantage of potential capital appreciation as well as tax
savings (as applicable). The portfolio offers a diversified mix across various sectors. As it is a close
ended architecture, the investor has to compulsorily lock in ones fund for 3 years.
ALLOTMENT DATE
22 NOVEMBER, 2008
CORPUS: - 452.71 Crore
FUND MANAGER’S VIEW
Indian economy is expected to sustain its growth momentum in the coming years on the back of
growing consumption, demand for infrastructure and an increasing trend towards outsourcing. We
expect the Indian economy to be resilient against any shocks in the global economy due to huge base
of domestic consumption. The improving demographic profile of the country and growing
urbanization are likely growth drivers. Focus of the fund is to capitalize on the investment
opportunities in the economy with long-term perspective. The investors in this fund has to invest
with a minimum of 3 years horizon, hence investment of the fund is made in companies which can
create greater performance over longer period of time. The fund focuses on a bottom up style of
investing.
INVESTMENT OBJECTIVE
To generate capital appreciation from a diversified portfolio of equity & equity related securities and
enable investors to avail the income tax rebate, as permitted from time to time.
INVESTMENT PATTERN
Equity & Equity related securities: 80% - 100%
Debt & Money Market instruments: 0% - 20%
INVESTMENT HORIZON
53
3 years & above
INVESTMENT OPTIONS
Growth, Dividend Payout, Dividend Re-Investment.
MINIMUM INVESTMENT
Initial: Rs 500 and in multiples of 500.
Additional: Rs 500 and in multiples of 500.
Systematic: Rs 500 and in multiples of 500.
BENCHMARK INDEX
S&P CNX 500
ESTIMATED RECURRING EXPENSES
2.50%.
54
CONCLUSION
CHAPTER-5 CONCLUSION
55
Kotak Mahindra Finance Ltd is the first company in India to convert to a bank. In February 2003, the
company was given the license to carry on banking business by the RBI. Since, then the company
has achieved a very important place in the financial sector of the nation. The bank caters to different
groups of customers by providing a variety of investment products. The bank brings a full range of
mutual fund and ULIP products. The Kotak group caters to the financial needs of individuals and
corporate. Kotak Mahindra bank has won many awards since its formation. The bank has achieved
“The Best Investment Bank in India” award by Finance Asia continually each year since its
inception.
There has been a 100% growth in mutual fund industry in 6 years. Now, customers are more aware
than earlier and different investment avenues are available to the investors. Mutual funds also offer
good investment opportunities to the investors. Investments in securities are spread across a wide
cross-section of industries and sectors and thus the risk is reduced in the MFs. Diversification
reduces the risk because all stocks may not move in the same direction in the same proportion at the
same time. Thus, Mutual funds spread the risk among many different securities, limiting the potential
of one company’s performance from impacting the entire portfolio. It also reduces the emotion
associated with watching individual equities rise and fall.
During our summer training we made an analysis of mutual funds and unit linked products available
at the bank. After making an analysis it is concluded that its three MF products i.e. Kotak 30, Kotak
opportunities, and Kotak Taxsaver are the most popular ones and best selling products. These three
MF schemes give high returns to the investors.
In the traditional plans, high risk and fewer returns are there because they invest more in debt market
and less in equity market, which yield less returns and these plans are not flexible. Investors do not
have choice to invest according to their need and risk appetite in the traditional investment plans. But
the modern MF schemes and unit linked plans give more returns and less risk is associated with
them. The companies disclose the performance of their ULIPs and MFs on daily basis in NAVs. The
investment strategy, outlooks of the market and scheme related details are disclosed with reasonable
frequency to ensure that transparency exist in the system. In this way the policyholder gets the entire
upside on the performance of his fund. Thus, ULIP investors have the opportunity to 'manage' their
monies.
56
ULIPs provide all the benefits of that of a mutual fund and top it up with an insurance cover.
ULIP is a product which takes care of multiple needs. It offers flexibility, has a risk cover and
provides long-term investment opportunity. Thus, it saves the hassle of investing in multiple products
to take care of different needs. According to Vijay Sinha, asst director - agency, Tata AIG Life
Insurance, "ULIP is ideal for someone who is looking for a long-term investment product, is under-
insured and is averse to taking a traditional life insurance product. ULIP should be looked at from
both an investment as well as insurance point of view and not in isolation."
After making an analysis it is concluded that the two ULIP plans of Kotak are the high returns
yielding plans. These two plans are Kotak safe investment plans II and Kotak headstart future
protect.
Kotak Mahindra bank’s USP is that it invests the investors’ money, more in equity and less in debt.
This gives high returns but at the same time high risk is also associated with it. But, for
compensating this high risk, the bank provides the Guaranteed Maturity Value on investment
schemes to its customers.
Unit linked insurance plans (ULIP) are all set to pose serious competition to mutual funds. In case of
a mutual fund if one has to change the asset allocation, the scheme or a fund by itself has to be
changed whereas a single ULIP might have five options in one and the investor sticks to the same
life insurance. Also most insurance companies do not charge the investor for shifting plans. In case
of ULIP there is no upper limit regarding expenses and are decided by the insurance company but in
case of mutual fund there exists an upper limit to the expenses chargeable to investors and are set by
the regulatory authority.
Though, ULIP as an investment avenue are closest to mutual funds in terms of their structurse
and functioning, since both the avenues meet different needs, comparing the products offered
by them would be inappropriate.
57
RECOMMENDATIONS
CHAPTER-6 RECOMMENDATIONS
All categories of loans (other than the exceptions permitted by RBI) will henceforth be priced with reference to the revised Base Rate .
58
The committee of Kotak Mahindra Bank in its meeting on 22 September 2010 has
allotted 3,82,040 equity shares of Rs 5 each
The Reserve Bank of India (RBI) guidelines on Base Rate system requires banks to review the respective Base Rates at least once in a quarter. The ALCO of Kotak Mahindra Bank in its review on September 30, 2010 (in accordance with the Board approved ‘Base Rate and Loan Pricing methodology’) has revised the Base Rate upwards from 7.25% p.a. to 7.50% p.a. All categories of loans (other than the exceptions permitted by RBI) will henceforth be priced with reference to the revised Base Rate. Changes in the Base Rate from the current level of 7.50% p.a. will be conveyed from time to time. The Bank has also revised its Benchmark Prime Lending Rate [BPLR] upwards by 25 basis points
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LIMITATION OF THE
STUDY
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CHAPTER-7 LIMITATIONS OF THE STUDY
The limitations of this study is that it is secondary in nature that is it is obtained from
secondary data present in magazines,newspapers,journals and on internet and is not
100%authentic
No first hand research is done to determine the facts, figures and data. The facts, figures and
performance are not of current year that is till last year and the study is not up to date. It may
be possible that some changes or improvisation is missed out
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BIBLIOGRAPHY
BOOKS
Retail Banking( Publisher: Macmillan Publishers India (2010)
Tannans Banking Law and Practice in India(ML Tannan 2008)
Banking Law and Practices(PN varshney 201)
WEBSITES
www.kotakmahindra.com
www.kotaklifeinsurance.com
www.kotakmutual.com
www.google.com
www.amfiindia.com
NEWS PAPERS:
Economic Times
Times of India
MAGAZINES:
Business India
Business Today
Bank’s Brochures and Manual
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GLOSSARY
KMBL- Kotak mahindra bank limited
KMMF- Kotak mahindra mutual fund
KMAMC- Kotak mahindra Asset Management Company
KMLI- Kotak mahindra life insurance
NAV- Net asset value
AUM- Asset under management
MF- Mutual fund
ULIP- Unit linked insurance products
AMC- Asset Management Company
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