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Tuesday, January 26, 2010

karvy stock broking ltd

Table of Contents

Particulars Page no.

ACKNOWLEGEDMENT 4INTRODUCTION AND COMPANY PROFILE 5HISTORY OF MUTUAL FUND IN INDIA 46OBJECTIVES 76RESEARCH METHODOLOGY 79RESEARCH ANALYSIS 7 INTERPITATION 80FINDINGS 90LIMITATIONS 93

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CONCLUSIONS 94RECOMMENDATIONS 95QUESTIONAIRE 97GLOSSARY 100BIBLIOGRAPHY

ACKNOWLEDGEMENT

Several people have been extremely helpful in completing this particular project.“PREFERENCE OF ADVISORS TOWARDS FINANCIAL SERVICES- special emphasis on

Mutual funds.” Going through this project was not easy but it was the efforts of others also thathelped me out on my way. First of all I would like to thank my course Director , who provide methis opportunity. I particularly want to acknowledge Mr. , Industrial guide.I am thankful to him for his timely guidance, support, advice and co-operation. It was hisinvaluable guidance in the project that made the work happen according to the needed format. Ialso want to thank Mr. my faculty guide for providing me with the techniques and precautions to be taken in the project.

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

In starting it was only offering auditing and taxation services. Later, it acts into the Registrar andShare transfer activities and subsequently into financial services and other services like Financial



Product Distribution, Investment Advisory Services, Demat Services, Corporate Finance,Insurance etc.

All along, Karvy’s strong work ethics and professional background leveraged with InformationTechnology enabled it to deliver quality to the individual. A decade of commitment, professional

integrity and vision helped Karvy achieving a leadership position in its field when it handledlargest number of corporate and retail that proved to be a sound business synergy.

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

In January 1998, Karvy became first Depository Participant in Andhra Pradesh. An ISO 9002Company, Karvy’s commitment to quality and retail reach has made it an Integrated FinancialServices Company.

Today, company has 230 branch offices in 164 cities all over the India. The company adds 5 newoffices every month to the company’s ever growing national network in every nook and corner of the country. The company service over 16 million individual investors, 180 corporate andhandle corporate disbursements that exceed Rs.2500 Crores.

WHERE KARVY STAND IN THE MARKET?

KARVY is a legendary name in financial services, Karvy’s credit is defined by its mission tosucceed, passion for professionalism, excellent work ethics and customer centric values.

Today KARVY is well known as a premier financial services enterprise, offering a broadspectrum of customized services to its clients, both corporate and retail. Services that KARVYconstantly upgrade and improve are because of company’s skill in leveraging technology. Beingone of the most techno-savvy organizations around helps company to deliver even more costeffective financial solutions in the shortest possible time.

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

KARVY GROUPKarvy Consultants LimitedKarvy Investor Services LimitedKarvy Stock broking LimitedKarvy Computer Shares Pvt. Ltd.Karvy realty (India) Pvt Ltd



Karvy globle services LtdKarvy data base management servicesKarvy comtrade LtdKarvy Consultants LimitedAs the flagship company of the KARVY Group, KARVY Consultants Limited has always

remained at the helm of organizational affairs, pioneering business policies, work ethic andchannels of progress. Having emerged as a leader in the registry business, the first of the businesses that we ventured into, we have now transferred this business into a joint venture withComputershare Limited of Australia, the world’s largest registrar. With the advent of depositories in the Indian capital market and the relationships that we have created in the registry business, we believe that we were best positioned to venture into this activity as a DepositoryParticipant. We were one of the early entrants registered as Depository Participant with NSDL(National Securities Depository Limited), the first Depository in the country and then with CDSL(Central Depository Services Limited). Today, we service over seven lakh customer accounts inthis business spread across over 540 cities/towns in India and are ranked amongst the largestDepository Participants in the country. With a growing secondary market presence, we have

transferred this business to KARVY Stock Broking Limited (KSBL), our associate and amember of NSE, BSE and HSE.KARVY Stock Broking LimitedKARVY Stock Broking Limited, one of the cornerstones of the KARVY edifice, flows freelytowards attaining diverse goals of the customer through varied services. It creates a plethora of opportunities for the customer by opening up investment vistas backed by research-basedadvisory services. Here, growth knows no limits and success recognizes no boundaries. Helpingthe customer create waves in his portfolio and empowering the investor completely is theultimate goal. KARVY Stock Broking Limited is a member of: National Stock Exchange (NSE)Bombay Stock Exchange (BSE)Hyderabad Stock Exchange (HSE)Karvy Investor Services LimitedDeepening of the Financial Markets and an ever-increasing sophistication in corporatetransactions, has made the role of Investment Bankers indispensable to organizations seeking professional expertise and counselling, in raising financial resources through capital market apartfrom Capital and Corporate Restructuring, Mergers & Acquisitions, Project Advisory and theentire gamut of Financial Market activities.Karvy Investor Services Limited (‘KISL’), a SEBI registered Merchant Banker has emerged as aleading Investment Banking entity in the country with over a decade of experience. KISL has built its reputation by capitalizing on its qualified professionals, who have successfully executeda large number of complex and unique transactions.Our quality professional team and our work-oriented dedication have propelled us to offer value-added corporate financial services and act as a professional navigator for long term growth of our clients, who include leading corporates, State Governments, Foreign Institutional Investors, public and private sector companies and banks, in Indian and global markets.

We have also emerged as a trailblazer in the arena of relationships, both at the customer andtrade levels because of our unshakable integrity, seamless service and innovative solutions thatare tuned to meet varied needs. Our team of committed industry specialists, having extensive



experience in capital markets, further nurtures this relationship.Credentials• Emerging as a leading Investment Banker with a strong support from its Group entities inResearch, Stock Broking, Institutional Sales and Retail Distribution.• Strong team of more than 25 qualified professionals operating from six cities; Hyderabad,

Mumbai, Delhi, Kolkata, Chennai, and Bangalore apart from two overseas offices at New York (USA) and Dubai.• One of the largest retail distribution networks with over 584 branches in over 389 cities/towns.• Excellent Institutional Sales DKarvy Computer Shares Pvt. Ltd.Karvy Computershare Private Limited is a joint venture between Computershare, Australia andKarvy Consultants Limited, India in the registry management services industry.Computershare, Australia is the world’s largest and only global share registry providing financialmarket services and technology to the global securities industry.

Karvy realty (india) pvt ltdKarvy Realty (India) Limited (KRIL) is promoted by the Karvy Group, India’s largest financialservices group. The group carries forward its legacy of trust and excellence in investor andcustomer services delivered with passion and the highest level of quality that align with globalstandards.Karvy Realty (India) Limited is engaged in the business of real estate and property servicesoffering:• Buying/ selling/ renting of properties• Identifying valuable investments opportunities in the real estate sector • Facilitating financial support for real estate and investments in properties• Real estate portfolio advisory services.KRIL is your personal real estate advisor guiding and hand holding you through real estatetransactions and offering valuable investment opportunities.Building on the KARVY brand as a leading industry benchmark for world class customer servicing and quality standards, KRIL brings to investors a reputation of reliability,dependability and honesty. Our understanding of the needs and preferences of our clients and our teams of qualified realty professionals help us to establish fruitful relationships with buyers andsellers of properties alike.A single stop shop for realty services offering:• Transacting Options: Choose to buy, sell or rent properties (residential and commercial)• Investing Options: Give your investments a good opportunity with properties marketed byKRIL.• Financing Options: Get unmatched deals for financing your investment• Research Options: We undertake valuation and feasibility studies, area analysis and customizedanalysis on behalf of clients.KRIL has ongoing relations with builders and developers across the country which will help you place your investments in the most genuine properties for a good value appreciation at the right place and at the right price.



KRIL is committed to the guiding principles of quality, timely service delivery, fair pricing,transparency and integrity.

Karvy globle servieses LtdKarvy Global is pioneering the creative business solutions approach to transform information

into insight aimed to address the business, marketing and operational intelligence needs of globalcompaniesKarvy data base management servicesKDMSL is emerging as a leading service provider in the areas of E-governance processing,insurance back office processing, record keeping, back office for BFSI clientele and is in pursuitto establish credentials in the areas of Telecom processing, Data management requirements of large corporates. KDMSL is striving to achieve leadership position by tapping the Indian retailsector boom, through a combination of our extensive branch network and proprietary IT backbone. Needless to say, KDMSL is run as an independent outfit with seasoned professionalson board, who have decades of expertise in the industry.KDMSL is a fully owned subsidiary of Karvy Stock Broking Limited (KSBL), incorporated in April 2008 and is head quartered at

Hyderabad.Karvy comtrade LtdCommodities market, contrary to the beliefs of many people, has been in existence in Indiathrough the ages. However the recent attempt by the Government to permit Multi-commodity National levels exchanges has indeed given it, a shot in the arm. As a result two exchanges MultiCommodity Exchange (MCX) and National Commodity and derivatives Exchange (NCDEX)have come into being. These exchanges, by virtue of their high profile promoters andstakeholders, bundle in themselves, online trading facilities, robust surveillance measures and ahassle-free settlement system. The futures contracts available on a wide spectrum of commodities like Gold, Silver, Cotton, Steel, Soya oil, Soya beans, Wheat, Sugar, Chana etc., provide excellent opportunities for hedging the risks of the farmers, importers, exporters, tradersand large scale consumers. They also make open an avenue for quality investments in preciousmetals. The commodities market, as it is not affected by the movements of the stock market or debt market provides tremendous opportunities for better diversification of risk. Realizing thisfact, even mutual funds are contemplating of entering into this market.Karvy Comtrade Limited is another venture of the prestigious Karvy group. With our wellestablished presence in the multifarious facets of the modern Financial services industry fromstock broking to registry services, it is indeed a pleasure for us to make foray into thecommodities derivatives market which opens yet another door for us to deliver our service to our beloved customers and the investor public at large.With the high quality infrastructure already in place and a committed Government providingcontinuous impetus, it is the responsibility of us, the intermediaries to deliver these benefits atthe door-steps of our esteemed customers. With our expertise in financial services, existenceacross the lengths and breadths of the country and an enviable technological edge, we are all setto bring to you, the pleasure of investing in this burgeoning market, which can touch upon thelives of a vast majority of the population from the farmer to the corporate alike. We are confidentthat the commodity futures can be a good value addition to your portfolio.The company provides investment, advisory and brokerage services in Indian CommoditiesMarkets. And most importantly, we offer a wide reach through our branch network of over 225 branches located across 180 cities.



Board of DirectorsParthasarathy C

Yugandhar MRamakrishna M SPrasad V PotluriRobert GibsonSanjay Kumar Dhir R Shyamsunder

Karvy Investor Services LimitedParthasarathy CYugandhar MRamakrishna M S

Karvy Securities LimitedParthasarathy CYugandhar MRamakrishna M SAjay Kumar K William Samuel Nicholas TullyKarvy Stock Broking LimitedParthasarathy CYugandhar MRamakrishna M SAjay Kumar K Kutumba Rao VWilliam Samuel Nicholas Tully

Mission Statement of ‘Karvy’

An organization exists to accomplish something or achieve something. The mission statementindicates what an organization wants to achieve. The mission statement may be changed periodically to take advantage of new opportunities or respond to new market conditions.Karvy’s mission statement is “To Bring Industry, Finance and People together.”Karvy is work as intermediary between industry and people. Karvy work as investment advisor and helps people to invest their money same way Karvy helps industry in achieving finance from people by issuing shares, debentures, bonds, mutual funds, fixed deposits etc.



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

Vision of KarvyCompany’s vision is crystal clear and mind frame very directed. “To be pioneering financial

services company. And continue to grow at a healthy pace, year after year, decade after decade.”Company’s foray into IT-enabled services and internet business has provided an opportunity toexplore new frontiers and business solutions. To build a corporate that sets benchmarks for others to follow.

Behind the Picture: What Customers matter for KARVY?

The underlying picture forming answer for above question is given below.

Market Brand Customer Power Preference Value

RELATIONSHIPSOUR COMPETITIVE ADVANTAGE

Every year with this picture keeping in mind ‘Karvy accelerate with Recovery, Revival andReappearance.’Karvy has started 2004 on a strong note with the realization to signal some of the challenges itfaced previous year. In a competitive market and a branded business, Karvy need to carefullymanage itself to avoid down trading or brand shifts by consumers.



For Karvy, Aligarh branch was truly exhilarating because of:

Successful implementation of a carefully crafted strategy.Excellence in execution.Immense learning enabling to set up a launch pad for revitalizing itself.

Some competitive advantages are long lasting. These are intangible, difficult to replicate andthus more sustainable. Karvy has focused on some of these to gain competitive advantages.There are:

Winning culture and a desire to excel in everything Karvy do.Strong meaningful relationships with Customers along with Strategic Partners in which Karvyoperate and above all, its own staff.

Karvy value and carefully nurture relationships with customers. Karvy truly believe that morethan technological prowess and business process innovations, it is the ‘focus on relationships’

which has been the corner stone of satisfying and successful presence in India over many years.

This has been possible with deep insight of consumer behavior as well as market demand drivers,understanding of the arena where to operate and quality execution – all thanks to a ‘greater team’that makes this happen.

Karvy’s customers consider themselves part of Karvy family and share their experiences anddreams with other customers and thus Karvy becomes successful not only in relating customers but also gains new customers from satisfied prevailing customers.

Karvy want to create a strong emotional bond with new customers promoted by prevailingcustomers.

Karvy Values:

IntegrityResponsibilityReliabilityUnityUnderstandingExcellenceConfidentiality

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



KARVY SERVICES – AN OVERVIEW ________________________________________

1. Stock broking2. Demat services

3. Investment product distribution4. Investment advisory services5. Corporate finance & Merchant banking6. Insurance7. Mutual fund services8. IT enabled services9. Registrars & Transfer agents10. Loans

1. Stock Broking:

KARVY is working as Capital Market Intermediaries. Stockbrokers are regulated by SEBI[Stock-brokers and Sub-brokers] Regulations, 1992. The stockbroker is a member of the stock exchange. Stockbrokers are the intermediaries who are allowed to trade in securities on theexchange of which they are members. They buy and sell on their own behalf as well as on behalf of their clients.Stockbrokers expand their business by engaging sub-broker. Sub-brokers mean “any person not being a member of a stock exchange who acts on behalf of a stock broker as an agent or otherwise for assisting the investors in buying, selling or dealing in securities through suchstock-brokers.”

2. Demat Services:

Karvy is a depository participant with the National Securities Depository Limited (NSDL) for trading and settlement of dematerialized shares.Depository Participants (DPs) are described as an agent of the depository. They areintermediaries between the depository and the investors. The relationship between the DPs andthe depository is governed by an agreement made between the two under Depositories Act.A DP can offer depository-related services only after obtaining a certificate of registration fromSEBI.Since Karvy is also in the broking business, investors who use Karvy’s depository services get adual benefit. They can use Karvy’s brokerageservices to execute transactions and Karvy’s depository services to settle them.

3. Investment Products Distribution:Company is also concern with the distribution of investment products like

(a). Fixed Deposit(b). Bonds



(c). IPO(a). Fixed Deposit:

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

Companies.

Company is dealer of following Fixed DepositsPUBLIC SECTOR Sl. No. Company Name1 HUDCO2 Sardar Sarovar Narmada Nigam Ltd.3 Tamilnadu Power Finance Corporation Ltd.

4 NTPC[Table5: Public Sector FD with which Karvy deals] NON BANKING FINANCE COMPANIESSl. No. Company Name1 Ashok Leyland Finance Ltd.2 Bajaj Auto Finance Ltd.3 Birla Home Finance Ltd.4 Cholamandalam Investment & Finance Co. Ltd.5 Escorts Finance Ltd.6 First Leasing Company of India Ltd.7 IDBI Suvidha8 Nicco Uco Alliance Credit Ltd.[Table6: FD of Non Banking Finance Companies with which Karvy deals]

HOUSING FINANCE COMPANIESSl. No. Company Name1 Can Fin Homes Ltd.2 Dewan Housing Finance Corporation Ltd.3 Gruh Finance Ltd.4 HDFC Ltd.5 PNB Housing Finance Ltd.6 Sundaram Home Finance Ltd.[Table7: FD of Housing Finance Companies with which Karvy deals]MANUFACTURING COMPANIES



Sl. No. Company Name1 A P Paper Mills Ltd.2 Amtek India Ltd.3 Atul Ltd.4 Ballarpur Industries Ltd.

5 Chambal Fertilizers & Chemicals Ltd.6 Escort Ltd.7 Greaves Ltd.8 Gujarat Alkalies & Chemicals Ltd.9 Indian Express10 Ind-Swift Ltd.11 JK Industries Ltd.12 Jindal Steel & Power Ltd.13 Sound Craft Industries Ltd.14 Supreme Industries Ltd.15 Zuari Industries Ltd.

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

(b). Bonds:

Karvy is dealer of following bonds

RBI Saving Bonds NHBREC

(c). IPO:

Company is also provides services related to Initial Public Offer of company. Company providesstationary at the time of IPO as well as provides information to investors regarding IPO andsolves their queries.4. Investment Advisory Services:This division provides portfolio management services to high net-worth individuals andcorporate. The expertise of Karvy in research and stock broking gives it the right perspective to provide investment advisory services. Company provides advisory services to its clients.

Financial goal of each individual investor varies according to his dream, ambition and familysize and future financial planning for the children & old age pension for self and wife so does the pathway to achieve it. Karvy apply the principles of Financial Planning as both science & art, itunderstands the time horizon, risk bearing capacity and investment goals of investors keeping inmind their psyche and financial needs. Based upon this Karvy helps individual investors to plantheir entire life up to retirement, Taxes, Insurance needs and other important personal financialgoals. It designs portfolio for investor to invest their saving in various financial products likeshares, bonds, debentures, mutual funds, fixed deposits, insurance etc., Company design portfolio by considering following factors.



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

5. Corporate finance & Merchant banking:

Corporate finance is the financial activity of corporation. It deals with the firm's operations withregard to investing and financing. It concerned with how firms raise capital and theconsequences of alternative methods of raising capital. Firm’s capital can be raised by raisingloans, issuing shares, and acquiring or merging with other businesses by public or privatecompanies.Merchant banking is a financial intermediation that matches entities that need capital and thosethat have capital. Hence they facilitate the flow of capital in the market.Karvy enjoys SEBI category (I) authorization for Merchant Banking. Karvy offers the fullspectrum of Merchant Banking Services, beginning from identifying the best time for an issue tofinal stage of marketing it, to harvest unparalleled success.As a merchant banker Karvy offer following services:

Issue managementInstrument designingPricing of the issueRegistration process for the issue of sharesMarketing effortsFinal allotment to investorsListing details on stock exchangesLoan syndicationLease financingCorporate advisory servicesUnderwritingPortfolio management

6. Insurance:Karvy is also dealer of many private life insurance companies. At Jamnagar branch, company isassociated with dealing of following companies.ICICI Prudential Life InsuranceHDFC Life InsuranceTATA AIG Life Insurance

7. Mutual Fund Services:Since its inception in 1982, Karvy has demonstrated a dedication coupled with dynamism thathas inspired trust from various segments – corporate, government bodies and individuals. Karvyhas since been performing a pivotal role as the intermediary – the interface – between these players.With Mutual Funds emerging as a distinct asset class, Karvy has made a strategic choice toleverage the power of latest technology to provide a cutting edge to its services. Karvy, today,service nearly 80% of the asset management companies (AMCs) across an extensive network of service centers with assets under service in excess of Rs.10,000 crores.Karvy's ability to mass customize and offer a diverse range of products for a diverse range of



customers has helped mutual fund companies to uniquely position themselves in the market place. These diverse range of services cut across multiple delivery channels – service centers,web, mobile phones, call center – has brought home the benefits of technology to investors,distributors, and the mutual funds.Going forward, Karvy shall strive to create new products and services, which would address the

needs of the end customer. Company’s single minded focus in delivering products for customershas given it the distinguished position of being the preferred provider of financial services in thecountry.

List of Mutual Fund Clients of KARVY:1 Alliance Mutual Fund2 Birla Mutual Fund3 Bank of Baroda Mutual Fund4 Can Bank Mutual Fund5 Chola Mutual Fund

6 Deutsche Mutual Fund7 DSP Merrill Lynch Mutual Fund8 Franklin Templeton Investments9 GIC Mutual Fund10 HDFC Mutual Fund11 HSBC Mutual Fund12 IL & FS Mutual Fund13 JM Mutual Fund14 Kotak Mutual Fund15 LIC Mutual Fund16 Punjab National Bank Mutual Fund17 Prudential ICICI Mutual Fund18 Principal Mutual Fund19 Reliance Mutual Fund20 State Bank of India Mutual Fund21 Standard Chartered Mutual Fund



22 Sundaram Mutual Fund23 SUN F&C Mutual Fund

24 Tata Mutual Fund

8. Income Tax enabled services:Karvy has been started this service since March, 2004. Karvy is work as TIN Facilitation Centreit provides following IT enabled services.a. Distribution of PAN Card. b. Distribution of TAN Card.c. Services related to e-TDS.Karvy work as an intermediary between NSDL and IT payers. Karvy provides various form for different IT enabled services and guide people to fill that forms. It also solves queries of the tax payers. It also distributes PAN and TAN card to the tax payers.

9. Registrars & Transfer agents:

In 1985, Karvy entered the Registrar and Share Transfer Business to create a market niche in thecompetitive field of financial services. In 1994-95, it reached a milestone when it processed 104Public Issues constituting 46 per cent market share. Now in its second decade of existence,Karvy is the leader in the industry: In an opinion poll conducted by an independent marketresearch agency - MARG, Karvy has been rated as India’s Most Admired Registrar on various parameters: -Overall Excellence.Handling of VolumesTimely DispatchQuality Management and Technological Up gradation.A SEBI Category 1 Registrar, So far, Karvy has handled over 675 ISSUES as Registrars to public issues processed over 52 million applications and is servicing over 16 million investorsfrom various locations spread over 205 clients.10. Loan:Karvy has recently started this service at selected branches of metro cities. This service has not been started in Saurashtra-Kucch region. Karvy provides loans for following.

Vehicle LoanHome LoanPersonal Loan

MARKETING STRATEGY OF KARVY ________________________________________ Market Positioning:Market positioning statements of Karvy are “At Karvy we give you single window service” and“We also ensure your comfort”.So, Karvy focus on the consumers who prefer almost all investment activities at same place by providing number of various financial services. At Karvy a person can purchase or sell shares,debentures etc. and at the same place also demat it. Karvy also provides other investment option



to the same person at same place like Mutual Fund, Insurance, Fixed Deposit, and Bonds etc. andhelp the person in designing his portfolio. By this way Karvy provides comfort to its customers.Karvy is also positioned according to Ries and Trout. Karvy is promoted as a no. 1 investment product distributor and R & T agent of India.Target Market:

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

Marketing channel System:

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

Training Channel Members:

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

Advertising and Promotion:

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

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

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

HR POLICY OF KARVY ________________________________________



Karvy’s HR Department is located at Hyderabad.

Recruitment and Selection Policy:

The upper level members like zonal managers, regional managers, branch managers and senior

executives are recruited by publishing recruitment advertisement in leading national levelnewspaper. The qualified applicant are then called for interview and selected.

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

Training and Development:

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

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

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

Employee Motivation:

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

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

NATIONAL LEVEL ORGANIZATION CHART ________________________________________

CM & MD(Hyderabad)

GM GM GM



(Marketing) (Finance) (HRM)

Zonal Manager

Regional Manager

Branch Mgr. Branch Mgr. Branch Mgr.

Accountant Sr. Executives

Executives

[Fig.3 National Level Organization Chart of Karvy]

BRANCH LEVEL ORGANIZATION CHART ________________________________________

Branch Manager

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

Marketing Clerk Executives-3

Executive(Demat) Accountant



Quality Policy Of Karvy:To achieve and retain leadership, Karvy shall aim for complete customer satisfaction, bycombining its human and technological resources, to provide superior quality financial services.In the process, Karvy will strive to exceed Customer’s expectations.Quality Objectives of Karvy

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

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

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

Continue to uphold the values of honesty & integrity and strive to establish unparalleled

standards in business ethics.

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

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

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

Achievements of Karvy:

Largest mobilizer of funds as per PRIME DATABASEFirst ISO - 9002 Certified Registrar in IndiaA Category- I Merchant banker A Category- I Registrar to Public IssuesRanked as "The Most Admired Registrar” by MARGHandled the largest- ever Public Issue - IDBIStrategic tie-up with Jardine Fleming India Securities LtdHandled over 500 Public issues as RegistrarsHandling the Reliance Account which accounts for nearly 10 million account holdersFirst Depository Participant from Andhra Pradesh

INDUSTRY DETAILS ________________________________________

Sr. No. Mutual Fund Name No. of Schemes



1 Alliance Mutual Fund 362 Benchmark Mutual Fund53 Birla Mutual Fund 744 Bank of Baroda Mutual Fund 17

5 Can Bank Mutual Fund 256 Chola Mutual Fund457 Deutsche Mutual Fund 408 DSP Merrill Lynch Mutual Fund 409 Escorts Mutual Fund1510 Franklin Templeton Investments 13011 GIC Mutual Fund 512 HDFC Mutual Fund 7913 HSBC Mutual Fund 32

14 IL & FS Mutual Fund 4315 ING Vysya Mutual Fund5516 JM Mutual Fund 5517 Kotak Mutual Fund 5618 LIC Mutual Fund 3519 Morgan Stanley Mutual Fund120 Punjab National Bank Mutual Fund 421 Prudential ICICI Mutual Fund 12422 Principal Mutual Fund 6823 Reliance Mutual Fund 7424 Sahara Mutual Fund1225 State Bank of India Mutual Fund 5926 Standard Chartered Mutual Fund 10027 Sundaram Mutual Fund 5228 SUN F&C Mutual Fund129 Tata TD Mutual Fund10030 Taurus Mutual Fund931 Unit Trust of India4232 UTI Mutual Fund 66



HISTORY OF MUTUAL FUNDDevelopment of Mutual Funds in India

The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the

initiative of the Government of India and Reserve Bank the. The history of mutual funds in Indiacan be broadly divided into four distinct phases

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

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

Third Phase – 1993-2003 (Entry of Private Sector Funds)With the entry of private sector funds in 1993, a new era started in the Indian mutual fundindustry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year inwhich the first Mutual Fund Regulations came into being, under which all mutual funds, exceptUTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged withFranklin Templeton) was the first private sector mutual fund registered in July 1993.The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive andrevised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (MutualFund) Regulations 1996.



The number of mutual fund houses went on increasing, with many foreign mutual funds settingup funds in India and also the industry has witnessed several mergers and acquisitions. As at theend of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores. TheUnit Trust of India with Rs.44,541 crores of assets under management was way ahead of other mutual funds.

Fourth Phase – since February 2003In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcatedinto two separate entities. One is the Specified Undertaking of the Unit Trust of India with assetsunder management of Rs.29,835 crores as at the end of January 2003, representing broadly, theassets of US 64 scheme, assured return and certain other schemes. The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed byGovernment of India and does not come under the purview of the Mutual Fund Regulations.The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registeredwith SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the

erstwhile UTI which had in March 2000 more than Rs.76,000 crores of assets under managementand with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual FundRegulations, and with recent mergers taking place among different private sector funds, themutual fund industry has entered its current phase of consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421schemes.The graph indicates

REGULATORY BODIES ________________________________________

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

Ministry of Finance

SEBI RBI Dept. of IT

Stock Brokers Commercial PANR & T Agent Banks TANMutual Fund NBF Co. E-TDS



[Fig.8: Regulatory bodies]

COMPETITORS DETAILS

________________________________________

1. Bajaj Capital

It was established in 1964 at Delhi. In 1965 it innovates a new financial instrument ‘CompaniesFixed Deposits’ and becomes the first company to raise Fixed Deposits. The objective of company is to provide professional guidance to investors on where, when and how to invest andto assist the corporate sector in its resource raising activities. Bajaj Capital became the firstcompany to set up ‘Investment Centers’ all over India for this purpose. Today, Bajaj Capital has90 offices in over 40 important Indian Cities and has a team of around 500 employeesnationwide.

Services provided

Merchant bankingBuying and Selling of Money Market InvestmentsDistribution of financial productsInvestment Advisory Service

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

Financial Planning

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



2. MCS Ltd.

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

MCS Ltd. has 8 branches all over India.

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

Services Offered:Registrars and Transfer AgentsRegistrars to IPO’s /Right Issues

Registrars to Open OffersRegistrars to Mutual FundsData Processing for AirlinesPrint Shop ServicesMCS is a major player in these activities in the Country with a market share of about 25%. MCStoday provides these services to over 140 Corporate and Mutual Funds for a total investor base of 15 million.

3. N.J.India Investments Pvt. Ltd. NJ India Invest (formerly known as NJ Capital stocks) was started in 1994 to cater to thegrowing financial services sector. NJ India Invest evolved out as a client focused need basedinvestment advisory firm. NJ regards mutual fund as one of the best investment avenue availableto satisfy any kind of investment need.4. ICICI Securities Ltd.

ICICI Securities Limited (i-SEC) is a wholly owned investment-banking subsidiary of ICICILimited. ICICI is the only non-Japanese Asian financial institution to be listed on the New York Stock Exchange (NYSE). ICICI Securities was formed on 22nd Feb. 1993, when ICICI'sMerchant Banking Division was spun off into a new company, ICICI Securities today is India'sleading Investment Bank and one of the most significant players in the Indian capital markets.ICICI Brokerage Services Limited (IBSL) set up in March 1995, IBSL is a 100% subsidiary of i-SEC. It commenced its securities brokerage activities in February 1996 and is registered with the National Stock Exchange of India Limited and The Stock Exchange, Mumbai.ICICI has started a website ICICIdirect.com which is the most comprehensive website, whichallows you to invest in Shares, Mutual funds, Derivatives (Futures and Options) and other financial products.ICICI has a large network of branches all over India.Services offered:

Merchant Banking



Demat ServiceStock Broking

5. HDFC

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

Demat ServiceLife InsuranceBanking ServiceHousing FinanceVehicle FinanceEducation LoanPersonal Loan

Mutual Fund

6. Kotak Securities Ltd.

Kotak Securities needs no introduction as one of the largest stock broking houses in the countryand a leading distributor of primary market offerings. Kotak Securities limited is a joint venture between Kotak Mahindra Bank and Goldman Sachs, the international investment banking and brokerage firm.Kotak Securities is a corporate member of both the BSE and the NSE. It is also a depository participant with the National Securities Depository Limited (NSDL) for trading and settlement of dematerialized shares.

Services offered:

Stock BrokingFinancial Product DistributionDemat ServicesInvestment Advisory Services

7. Motilal Oswal Securities Ltd.

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

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



158 branches all over India.

Services Offered:

Demat Services

Stock BrokingInvestment Advisory Service

PRODUCT DETAILS ________________________________________

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

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

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

STRUCTURE OF INDIAN MUTUAL FUNDS ________________________________________

Mutual fund industry is highly regulated by the government keeping in view of the protection of investor’s interest as well as to maintain operational transparency.

In India SEBI Regulations Act, 1996, guides the formation and operation of Mutual Funds. AMutual Fund comprises of 4 separate entities.

1. Sponsor 2. Board of Trusties3. Asset Management Company4. Custodian and Depositories5. Distributors

1. Sponsor:

“Sponsor” is defined under SEBI regulation as any person who, acting alone or in combination



with another body corporate, establishes a mutual fund. The sponsor gets the fund registered withSEBI. The sponsors form a trust and appoint a Board of Trustees.

The sponsor must contribute at least 40% of the net worth of the AMC.The sponsor must posses a sound financial track record over 5 years prior to registration.

2. Board of Trustees:

Mutual funds are managed by Board of Trustees. Trust is created by a document called the TrustDeed that is executed by fund sponsor in favour of trustees.

The trustees appoint the AMC and custodian with the prior approval of SEBI.They also approve all the schemes floated by the AMC.They have right to dismiss the AMC, with the approval of SEBI.

Half of the trustees should be independent persons. Neither the AMC, nor its employees can actas trustee.A trustee can not be appointed as a trustee of two or more mutual funds until and unless he is anindependent person or has permission from the Mutual Fund where he is trustee.Trustees can be removed only by prior approval of SEBI.

3. Asset Management Company:

The role of an AMC is to act as the investment manager of the Trust under the Board supervisionand direction of the Trustees.The AMC is required to be approved and registered with SEBI.

The AMC of a Mutual Fund must have a net worth of at least Rs. 10 crore at all time.The AMC can not act as a trustee of any other Mutual Fund.They will float schemes only after obtaining the prior approval of the Trustees and SEBI.The director of AMC should be a person of reputed of high standing and at least have five yearsexperience in relevant field.AMC can be terminated with 75% unit holders or majority of trustees.

4. Custodian and Depositories:

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

As Indian capital markets are moving away from having physical certificates to ownership of



these securities in “dematerialized” form with Depository. Mutual Fund’s “dematerialized”securities are hold by depository participant.

5. Distributors:

For a fund to sell units across a wide retail base of individual investors, an established network of distribution agents is essential. AMCs usually appoint Distributors or Brokers, who sell units on behalf of the fund. A broker usually acts on behalf of several mutual funds simultaneously andmay have several sub-brokers under him for the purpose of distribution of units.

MUTUAL FUND – A GLOBALLY PROVEN INVESTMENT ________________________________________

Worldwide, the mutual fund has a long and successful history. The popularity of mutual fund has

increased manifold. In developed financial market, like US mutual funds have almost overtaken bank deposits and total assets of over US $ 3 trillion.

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

WHAT IS MUTUAL FUND?

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

Critical View About Mutual Fund

Advantage

1. Portfolio Diversification:

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



require big capital.

2. Professional Management:

Mutual Funds provide the services of experienced and skilled professionals, backed by adedicated investment research team that analyze the performance and prospect of companies andselects suitable investments to achieve the objectives of the scheme.

3. Diversification:

Mutual Fund invests in a number of companies across a broad cross-section of industries andsectors. This diversification reduces the risk because all stock can not go through a downtrend atthe same time and in the same proportion. You achieve this diversification through a mutual fundwith powerless money that you can do on your own.

4. Reduction of Transaction Cost:

The investors bear all the cost of investing such as brokerage or custody of securities. Whengoing through the fund investor has the benefit of economies of scale; the funds pay lesser cost because of larger volumes, a benefit passed on to its investors.

5. Liquidity:

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

6. Convenience & Flexibility:

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

7. Tax Benefits:

The investors are totally exempt from paying any tax on the income they receive from theMutual Funds.Investment up to 10000 in ELSS qualifies for tax rebate of 20%.

8. Regulatory oversight:

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

9. Convenience:



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

10. Well regulated

Limitations:

1. No Control over Costs:

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

2. No Tailor made Portfolios:

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

3. Managing a Portfolio of Funds:

Availability of a large number of funds can actually mean too much choice for the investor.He/she may again need advice on how to select a fund to achieve his/her objectives, quite similar to the situation when he/she has to select individual shares or bonds to invest in.

4. Entry and Exit Cost:

When large bodies like a fund invest in shares, the concentrated buying or selling often result inadverse price movements i.e. at the time of buying, fund has to pay high and vise-versa.

5. No Guarantees:

No investment is risk free. If the entire stock market declines in value, the value of mutual fundshares will go down as well, no matter how balanced the portfolio. Investors encounter fewer risks when they invest in mutual funds than when they buy and sell stocks on their own.However, anyone who invests through a mutual fund runs the risk of losing money.

MUTUAL FUND CYCLE ________________________________________

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

After studying the market, the fund manager invests money of the investors in various securitieslike shares, bonds, debentures, government securities etc. to achieve goal of the investors.



With ups and downs in the market returns are generated and they are passed on to the investorsin form of dividend or capital gain or lost. The above cycle is very clear and also very effective.

The fund manager while investing on behalf of investors takes into consideration various factors

like time, risk; amount etc. so that he/she can make proper investment decision.

Types of Mutual Fund ________________________________________

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



(a). Equity Fund:

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

invested for long term.The leading example of such funds arePrudential ICICI Growth Plan,Tata Pure Equity Fund,Reliance Vision,Franklin India Prima Fund etc.

(b). Debt Fund:

Debt funds invest in debt instruments debt instruments issued by governments, privatecompanies, banks and financial institutions. By investing in debt, these funds target low risk and

stable income investors. These funds are low risk low return funds.

The leading examples are

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

(c). Balanced Fund:

A balanced fund is one that has a portfolio comprising debt instruments as well as preference andequity shares. The idea is to reduce volatility of funds, while providing some upside for capitalappreciation. They are best suitable for the people looking for a combination for capitalappreciation and regular income and best time spend for such investment is more than 3 years.The leading examples arePrudential ICICI Balanced Fund,Birla Balance Fund,Franklin India Balance Fund,Sundaram Balance Fund etc.

(d). Money Market Fund:

Money market funds invest in securities of a short-term nature, which generally means securitiesof less than one-year maturity such as Treasury Bills issued by governments, Certificates of deposit issued by banks and Commercial paper issued by companies.

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



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

(e). Gilt Fund:

These funds are sort of government funds wherein the investments are made in debt instrumentof government, which carry no risk of non payment of interest as the RBI manages the paymentof interest and principal on the investments. These funds are best suited for regular income andlong term investment objectives.The leading examples arePrudential ICICI Gilt Fund,Tata Gilt Securities Fund,Templton India Government Securities Fund etc.

2. By Duration:

(a). Open-ended Fund:

An open ended fund is one that is available for subscription and repurchase on a continuous basis. These schemes do not have a fixed maturity period. Investors can conveniently buy andsell units at NAV related prices which are declared daily basis. The key feature of this fund isliquidity.

(b). Close-ended Fund:

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

(c). Interval Fund:

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

Risk Return Grid

Risk Tolerance/Return Expected Focus Suitable Products Benefits offered by MFsLow Debt Bank/ Company FD, Debt based Funds Liquidity, Better Post-Tax returnsMedium Partially Debt, Partially Equity Balanced Funds, Some Diversified Equity Funds andsome debt Funds, Mix of shares and Fixed Deposits Liquidity, Better Post-Tax returns, Better Management, Diversification



High Equity Capital Market, Equity Funds (Diversified as well as Sector) Diversification,Expertise in stock picking, Liquidity, Tax free dividends

3. By Load:

(a). Load Fund:

Marketing of new mutual fund scheme involves initial expenses. These initial expenses may berecovered from the investors by entry or exit load.

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

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

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

If initial expenses recovered at the time of the investor’s exit from the scheme, by deducting aspecified amount from the redemption proceeds payable to the investor it is called exit load.

(iii). Deferred Load:

The load amount charged to the scheme over a period of time is called a deferred load.

(b). No Load Fund:

Funds that don’t charge entry, exit, or deferred load or any other charges for sales expenses arecalled no load funds.

Now, generally all Mutual Fund companies charge 2 to 2.5% entry load on equity fund.

Generally there is no exit load on equity and sectoral funds to maintain liquidity of that funds.

Generally there is no entry load on gilt scheme and income fund.

There is 0.25 to 1% exit load on gilt and income fund if investors exit from fund before specifiedtime which is generally 3 to 6 months.

4. Other types of fund:

(a). Tax Saving Funds:



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


Prudential ICICI Tax Plan,Templeton India Pension Plan,Franklin India Taxshield etc.

(b). Index Funds:

Index Funds replicate the portfolio of a particular index such as the BSE Sensitive index, S&P NSE 50 index (Nifty), etc. These schemes invest in the securities in the same weightagecomprising of an index. NAV of such funds are changed accordance with the change in theindex.


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

(C). Sector Funds:

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


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

(d). Commodity Funds:

Commodity funds invest into the different commodities directly or through shares of commoditycompanies. E.g. Commodity fund invest in gold or shares of gold mines. Commodity funds havenot yet developed in India.

(e). Off Shore Funds:



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

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

In today’s competitive world companies can not afford to reactive, instead the trend is toward

proactive. It is due to the increasing competition that the companies can not afford to undertakeresearch until something goes wrong. This can curtail the future growth or even affect the veryexistence of the organization seeing to the trend of being proactive in the future; companies areallocating more resources to the disciplines of research. In such case it becomes a duty of researcher to ensure that the organization gets an optimum return on the resources it has invested.Thus, Problem Formulation assumes great importance in Marketing Research.

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

OBJECTIVES ________________________________________

Any activity done without an objective in a mind cannot turn fruitful. An objective provides aspecific direction to an activity. Objectives may range from very general to very specific, butthey should be clear enough to point out with reasonable accuracy what researcher wants toachieve through the study and how it will be helpful to the decision maker in solving the problem.

The objective of any research is basically divided into two categories.

Primary Objective:

To map market potential of Karvy Investor Service Ltd.



Secondary Objectives:

Following are secondary objectives.

To assess an awareness of mutual funds in Aligarh City.To find out level of awareness of mutual funds in Aligarh City.To find out how many investment advisors are interested in dealing of mutual fund.To find out how many investment advisors are willing to work with Karvy.To do SWOT analysis.

RESEARCH METHODOLOGY ________________________________________

1. Research Design:

A research design is a pattern or an outline of a research project’s working. It is astatement of only the essential elements of a study, those that provide the basic guidelines for thedetails of the project. It comprises a series of prior decision that taken together provide master plans for executing a research projects.

A research design serves as a bridge between what has been established i.e., the researchobjectives and what is to be done, in conduct of the study to relish those objectives. If there wereno research design, the research would have only foggy notions as about what is to be done.

I have used ‘Cross-Sectional Research ’ of ‘Exploratory Research ’. The research is of bothqualitative as well as quantitative type.

2. Unit of Analysis:

Mutual Fund Advisors.

Characteristics of interest:

Advisor’s knowledge about Mutual FundAdvisor’s knowledge about KarvyAdvisor’s interest in getting knowledge of Mutual FundAdvisor’s willingness to deal in Mutual Fund with KarvyAdvisor’s preference in selecting tax saving instrument of investmentAdvisor’s preference in selecting dealer

3. Sources of Data:

a. Primary Source:



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

b. Secondary Source:

Secondary data includes information regarding present market scenario, Information regarding

Mutual Funds and competitors are collected by Internet, Magazines and News papers and books.

4. Sample Planning:

Sample Size: 50 unitsSample Extent: Aligarh City

Sampling Design:

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

I have used both ‘Convenience Sampling Method’

5. Data Collection Method:

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

Questionnaire Plan

I have used ‘Structured Questionnaire’ for gathering the required data through contactingrespondent personally.

Type of Information:

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

Type of Questions:

‘Close-ended questions’ or ‘Dichotomous’ and ‘Multiple Choice’ type are asked in thequestionnaire for data collection.

6. Data Analysis & Interpretation:

Data Analysis is based on the data collected by way of Questionnaires. From the collected datafindings are extracted. The data is tabulated and frequency distribution chart is prepared.



RESEARCH ANALYSIS AND INTERPRETATION ________________________________________ 1. As a financial investment adviser which investment options you suggest to your customers?

Shares Mutual Fund

Insurance Fixed DepositTax Bond PPF

2. Please indicate reason for choosing above.

Returns Risk Safety Tax BenefitsTimely Brokerage

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

InsuranceMutual FundsFixed Deposits



Tax Bond

7. Are you interested to deal in MF?

Yes No

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

Yes No



9. Are you interested in attending a seminar arranged by Karvy to guide investors about MF?

Interested Not Interested.

11. Would you like to work with Karvy Securities Ltd for dealing in mutual fund?Yes No

11.1 If no, then the reason would be:

Not answered No timeLack of knowledge No expansion plans



FINDINGS ________________________________________

After getting in depth research study of Karvy, I came to know that Karvy is not much popular asother brands operating in Aligarh city. Bajaj Allianz, HDFC, ICICI are having much higher tapped market in respect to mutual funds.• Karvy as an investment option in Mutual Fund does not posses much proficiency and potentialcustomers in Aligarh city. Though the financial advisors advise their clients to go for MutualFund as a investment option. About 42% of advisors advise their clients to invest in MutualFunds, followed by investing in Insurance sector.

• The advisors after having a deep thought says that it is the Returns that make them convincetheir clients to go for investment in mutual funds. 36% of advisors said that it is the Returnswhich make a person to invest in Mutual Fund. Followed by Risk which is quite lesser in other investment options.

• A huge lott of advisors showed a positive response in dealing of for Mutual Fund. About 60%of them said that they are interested in dealing for Mutual Funds, because that results in higher brokerage.

• As far as Karvy is concerned about 91% of the advisors said that they are not aware of theservices provided by Karvy, including Mutual Fund.

• When asked, 53% of advisors said that they are not interested to work with Karvy Securities, tothe contrary with they don’t have any such expansion plans and they have little knowledge anoutKarvy.

• In Aligarh city advisors don’t have an appropriate knowledge about Karvy as a Investment hub.



SWOT ANALYSIS OF KARVY ________________________________________

Strengths:

Employees are highly empowered.Strong Communication Network.Good co-operation between employees. Number 1 Registrar and Transfer agent in India.

Number 1 dealer of Investment Products in India.

Weaknesses:

High Employee Turnover.

Opportunity:

Growth rate of mutual fund industry is 40 to 50% during last year and it expected that this ratewill be maintained in future also.Marketing at rural and semi-urban areas.

Threats:

Increasing number of local players.Past image of Mutual Fund.

LIMITATIONS ________________________________________

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

Data Analysis and interpretation done may not be that strong due to small sample and‘Convenience Sampling Method’.

The sample extent for research is only Aligarh City.



Some of the respondents may be biased in giving responses.

My inexperience in research area might have affected results.

CONCLUSION ________________________________________

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

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

Karvy is not able to provide sufficient services to the investors due to unawareness amongadvisors regarding services.

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

Very less advisors are knowing about services provided by karvy.

RECOMMENDATIONS ________________________________________

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

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



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

Most of advisors are not interested in dealing of Mutual Funds because they don’t want to

expand their services due to lack of time, so company should provide them knowledge aboutsingle window services by which investor can get all financial services from one place.

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

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

The interface among the investors and the Mutual Fund Companies is the agents, so the agentsshould have proper knowledge about Mutual Funds as well as market so that they can help

investors in their investment decisions. The quality of agents performance and investors trust onthem can be improved only if they are permanent in nature.

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

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

Shares Mutual FundInsurance Fixed DepositTax Bond PPF

2. Please indicate reason for choosing above.

Returns Risk Safety Tax BenefitsTimely Brokerage

3. Approximately how many customers you have?4. What is the brokerage Payment Period?5. Expected Brokerage Payment Period6. If a service person who pays Income Tax wants to invest, generally which option do yousuggest for investment?

InsuranceMutual FundsPPF



Tax BondFixed Deposits

8. Are you interested to deal in MF?

Yes NoIf No Why?

9. Do you know about MF services provided by Karvy’s Aligarh Branch?

Yes No

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

Yes No

11. Would you like to work with Karvy Securities Ltd for dealing in mutual fund?Yes No11.1 If no, then the reason would be:

Not answered No timeLack of knowledge No expansion plans

Name :Address :



Thank You

GLOSSARY ________________________________________

Corporate advisory services

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

Loan syndication

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

Portfolio

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

NAV

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

Depository

The principal function of a depository is to dematerialize securities and enable their transactionsin book-entry form. A depository established under the Depositories Act can provide any serviceconnected with recording of allotment of securities or transfer of ownership of securities in therecord of a depository.Capital gainThe profit made from selling shares, mutual funds etc.IPOAbbreviation for initial public offering. Generally associated with admission to listing of theshare capital on the stock exchange.

BIBLIOGRAPHY ________________________________________



1. www.mutualfundsindia.com2. www.amfiindia.com3. www.themanagementor.com4. www.dewb-vc.com

5. www.karvy.com6. www.indiacorporateadvisor.com7. www.nsdl.co.in8. www.incometaxdelhi.nic.in9. www.incometaxindia.gov.in10. David J. Luck & Ronald S. Rubin, “Marketing Research”,Ed. – 7 (ISBN)11. D.C.Anjaria & Dhaivat Anjaria, “AMFI Workbook”, Ed. – 2 (Association of Mutual Fundsin India)

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August 5, 2010 1:58 AM

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November 11, 2010 10:56 PM

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