A PROJECT REPORT

ON STUDY OF MUTUAL FUND GROTH AND COMPARISION

IN INDIA
SUBMITTED BY
RAMAN TALWAR
ROLL NO 1208029358

University Centre : Neev Education Pvt Ltd.

ADDRESS: 11 HARGOVIND ENCLAVE ,METRO PILLAR NO
118 ,OPPOSITE SHANTI MUKUND HOSPITAL, NEW DELHI
CENTRE CODE 03486

FOR THE PARTIAL FULL FILLMENT OF MBA DEGREE IN FINANCE

LC NAME -

ADDRESS-

Sikkim Manipal University of health, Medical and technological science Distance

Education wing, Syndicate House, Manipal 576104

DECLARATION CERTIFICATE

I RAMAN TALWAR ,ROLL NO 1208029358,student of Masters of Business

Administration from SIKKIM MANIPAL UNIVERSITY As part of the course requirement.
I further declare that the information presented
in this Project is true and original to the best of my knowledge and not submitted to any other institute
for any kind of degree and award

Date: 19th June 2014.

Name: RAMAN TALWAR
Enrolment No -1208029358
Program: MBA 4th Semester Finance

Examiners Certificate)
The Project Report of

NAME Raman Talwar

{Registration No-1208029358 }
{Course: MBA 4TH Semester Finance (2012-2014)}

STUDY OF MUTUAL FUND GROTH AND COMPARISION IN INDIA Is approved and is

acceptable in quality and form.

Internal Examiner

External Examiner

Name:

Name:

Qualification:

Qualification: Designation:

.
3

BONAFIDE CERTIFICATE

It is Certified that this project report titled

STUDY OF MUTUAL FUND GROTH AND COMPARISION
IN INDIA is the bona-fide work of NAME

RAMAN TALWAR,RID 1208029358 who carried

out the project work under my supervision .

SIGNATURE

SIGNATURE

HEAD OF THE DEPARTMENT

FACULTY IN CHARGE

University Centre : Neev Education Pvt Ltd.

Address : 11 Hargobind Encalve, Metro pillar no.118 , opposite Shanti Mukund Hospital , New Delhi
Code no: 03486
4

ACKNOWLEDGEMENT
Firstly I would like to express our immense gratitude towards our institution SIKKIM MANIPAL
UNIVERSITY , which created a great platform to attain profound technical skills in the field of MBA,
thereby fulfilling our most cherished goal I would thank all the FINANCE department of INDIABULLS
SECURITIES LIMITED specially Mr. GVN RAMA RAO Branch Manager , and the employees in the
Finance department for guiding me and helping me in successful completion of the project.
I am very much thankful to our

Anand Bibhor for

extending his cooperation in doing this project. I am also thankful to our project coordinator Mr. RAJAN
Chary for extending His cooperation in completion of Project.. I wish to express sincere gratitude to
our Director for providing the opportunity to pursue my management course in this college.

I convey my thanks to my beloved parents and my faculty who helped me directly or indirectly in bringing
this project.

THANKING YOU

Raman Talwar

INDEX
S.No:

CONTENTS

PAGE NO.

CHAPTER-1

1-4
Introduction
Objectives of the Study
Scope of the Study
Methodology of the Study
Limitations of the Study

CHAPTER-2

5-30
Review of Literature

CHAPTER-3

1-63
Industry Profile
Company Profile

CHAPTER-4

64-75
Data Analysis and Interpretation

CHAPTER-5

76-83
Findings
Suggestions
Conclusions
Bibiliography

CHAPTER-I
INTRODUCTION

INTRODUCTION

A mutual fund is just the connecting bridge or a financial intermediary that allows
a
group of investors to pool their money together with a predetermined investment
objective.
The mutual fund will have a fund manager who is responsible for investing the gathered
money into specific securities (stocks or bonds). When you invest in a mutual fund, you
are
buying units or portions of the mutual fund and thus on investing becomes a shareholder
or
unit holder of the fund.

Mutual funds are considered as one of the best available investments as compare to
others
they are very cost efficient and also easy to invest in, thus by pooling money together in
a
mutual fund, investors can purchase stocks or bonds with much lower trading costs than
if
they tried to do it on their own. But the biggest advantage to mutual funds is
diversification,
by minimizing risk & maximizing returns.

NEED OF THE STUDY

Mutual funds are dynamic financial intuitions which play crucial role in an economy by
mobilizing savings and investing them in the capital market. The activities of mutual
funds
have both short and long term impact on the savings in the capital market and the
national
economy. Mutual funds, trust, assist the process of financial deepening & intermediation.
To
banking at the same time they also compete with banks and other financial intuitions.
India is
one of the few countries to day maintain a study growth rate is domestic
savings.

OBJECTIVES
1. To study the risk and return of growth funds of selected AMCs (SBI Magnum Equity
Fund Growth, Birla Sun life 95 Growth, Kotak 30 Growth, TATA Equity Management
Fund Growth).
2. To study the systematic risk ().
3. To evaluate and compare the performance of growth funds (Treynors Ratio,

Sharpes
Ratio)
4.

To suggest an investor to make a right choice of investment, while considering the inherent
risk
factors.

SCOPE THE STUDY

The study is limited to the analysis made for a Growth scheme offered by selected
AMCs (SBI Magnum Equity Fund Growth, Birla Sun life 95 Growth, Kotak 30 Growth,
TATA Equity Management Fund Growth). Calculated risk and return of growth funds using
different performance measurement theories.

RESEARCH METHODOLOGY & TOOLS

This study is basically depends on Secondary Data. The secondary data collected from
the
different sites, broachers, news papers, company offer documents, different books and
through suggestions from the project guide and from the faculty members of our
college.
TOOLS USED IN THIS PROJECT

The following parameters were considered for analysis:

Beta
Correlation coefficient
Treynors Ratio
Sharpes Ratio

ADVANTAGES OF THE MUTUAL FUNDS

1.

The investors risk is reduced to the minimum.

2.

The funds managers maximize the income of the

funds.
To achieve a similar degree of diversification, an individual investor as to spend

3.

considerable and money.

4.
5.

In a mutual fund, it is possible to reinvest the dividend and capital

gains.
Selection of shares debentures etc and timing is made available to
investors.

LIMITATIONS OF THE STUDY:

1. The study is conducted in short period, due to which the study may not be detailed in
all
aspects.
2. The study is limited only to the analysis of different schemes and its suitability to
different
investors according to their risk-taking ability. 3. The study is based on secondary data
available from monthly fact sheets, web sites; offer documents, magazines and
newspapers
etc., as primary data was not accessible.
4. The study is limited by the detailed study of various
schemes.
5. The NAVS are not uniform.
6. The data collected for this study is not proper because some mutual funds are not
disclosing the correct information.
7. The study is not exempt from limitations of Sharpe Treynor and Jenson
measure.
8. Unique risk is completely ignored in all the measure.

10

CHAPTER-II
REVIEW OF LITERATURE

11

CONCEPT OF MUTUAL FUNDS

A Mutual Fund is a financial intermediary which acts as an instrument of
investment.
It collects the funds from different investors to a common pool of investible funds and
then
invest these funds in a wide variety of investment opportunities in diversified portfolios
of
securities such as Money Markets instrument, corporate and government bonds and
equity
shares of joint stock companies.

The investment may be diversified to spread risk and to ensure good return to the
investors. The Mutual Funds employ professional, experts and investment consultants to
conduct investment analysis and then to select the portfolio of securities where the
funds are
to be invested.

Each investor owns units, which represent a portion of the holdings of the fund. You can
make money from a MF in three ways:-

1. Income is earned from dividends on stocks and interest on bonds. A Fund pays out
nearly
all income it receives over the year to fund owners in the form of a
distribution.
2. If the fund sells securities that have increased in price, the fund has a capital gain.
Most
funds also pass on these gains to investors in the form of
dividends.
3. If fund holdings increase in price but are not sold by the fund manager, the funds
shares
increase in price. You can then sell your Mutual Fund units for a profit. Funds will also
usually give you a choice either to receive a cheque for dividends or to re-invest the
same
and get more units.

12

FIGURE SHOWING THE WORKING OF MUTUAL FUND

STRUCTURE AND CONSTITUENTS OF FUND

MUTUAL
FUND

Sponsor

Trustee

AMC

Custodian

SPONSOR:
Establishes the MUTUAL FUND
Need to have sound financial track record.
Appoints TRUSTEES.
Appoints Asset Management Company.
Must contribute 40% of the net worth of the AMC.
Sometimes this power is given by the sponsor to the trustees through the trust
deed.
At least 50% of directors on the board of Asset Management Company should be
independent of the sponsor.
13

Asset Management Company shall not deal with any broker or firm associated with
sponsor beyond 5% of daily gross business of the Mutual
Fund.
All securities transactions of the Asset Management Company with its associates
should
be disclosed.

TRUSTEE:
Manages the Mutual Fund and look after the operation of the appointed
AMC.
The investments are held by the Trustees, in a fiduciary
responsibility.
Trustees approve each Mutual Fund Scheme floated by AMC.
Furnish report to SEBI on half yearly basis on AMC and Fund Functioning.

ASSET MANAGEMENT COMPANY:

AMC acts as investment manager of the trust under the board supervision and
direction of
the trustees.
AMC floats the different Mutual Fund schemes.
Submits report to the Trustees on quarterly basis, mentioning activity and
compliance
factor.
AMC is responsible to the trustees.
AMC fees have a ceiling, decided by SEBI.
Should have a net worth of at least Rs.10 crores at all the
times.
CUSTODIAN:
Appointed by board of trustees for safekeeping of
securities.
Its an entity independent of sponsors.

SEBI regulates the securities market in India. According to SEBI every Mutual Fund
require
that at least two thirds of the directors of trustee company or board of trustees must be
independent i.e. they should not be associated with the sponsors. Also, 50% of the
directors
of AMC must be independent. All Mutual Fund are required to be registered with SEBI
before they launch any Scheme.

14

ORGANISATION OF MUTUAL FUND:

CHARACTERISTICS OF MUTUAL FUNDS:

A Mutual Fund actually belongs to the investors who have pooled their funds. The
ownership of the Mutual Fund is in the hands of the
investors.
Mutual funds are trusts or registered associations managed by investment
professionals
and other service providers, who earn a fee for their services from the
fund.
The pools of the funds are invested in a portfolio of marketable investments (Shares
and
Securities). The value of the portfolio is updated
everyday.
Mutual funds collect money from small investors and in return, they will issue a
certificate in units.
The investors share in the fund is denoted by UNITS". The value of the units
changes
with the change in the portfolios value every day.
The profits of investments will be distributed to the unit holders. The unit holders can
sell
their units in the open market at Net Asset Value (NAV).

NET ASSET VALUE (NAV):

Mutual Funds invest the money collected from the investors in securities markets.
In
simple words, Net Asset Value is the market value of the securities scheme also varies
on day
to day basis. The NAV per unit is the market value of securities of a scheme divided by
the
total number of units of the scheme on any particular date. The performance of a
particular
scheme of a Mutual Fund is denoted by Net Asset Value.

15

For example; if the market value of securities of a MF Scheme is Rs. 200 lakhs and the
Mutual Fund has issued 10 lakhs units of Rs. 10 each to the investors, then the NAV per
unit
of the fund is Rs. 20. NAV is required to be disclosed by the MF on a regular basis daily
or
weekly depending on the type of scheme.

NAV = Market value of the funds investments + Receivables + Accrued Income

Liabilities
Accrued Expenses

Number of Outstanding units

OBJECTIVES OF MUTUAL FUNDS:

The objectives sought to be achieved by Mutual funds are as
follows:To provide an opportunity for lower income groups to acquire without much difficulty
property in the form of shares.
To cater mainly to the need of individual investors whose means are
small?
To manage investors portfolios in a manner that provides regular income, growth,
safety, liquidity and diversification.

SCHEMES OF MUTUAL FUNDS:

Mutual fund schemes are usually open-ended (Perpetually open for investors and
redemption) or close-ended (with a fixed term). A Mutual Fund scheme issues units that
are
normally priced at Rs.10/- during the initial offer. The number of units you own against
the
total number of units issued by a Mutual Fund scheme determines your share in the
profits or
losses in the scheme.

16

TYPES OF MUTUAL FUND SCHEMES:

The Mutual Funds can be classified under the following types:

ACCORDING TO STRUCTURE:

STRUCTURE

OPEN-ENDED
SCHEME

CLOSED-ENDED
SCHEME

INTERVAL SCHEME

OPEN - ENDED SCHEME

An open-ended scheme is a scheme in which an investor can buy and sell units on
a
daily basis. The scheme has a perpetual existence and flexible, ever changing corpus.
OpenEnded schemes do not have a fixed maturity period. The investors are free to buy and
sell
any number of units, at any point of time, at prices that are linked to the NAV of the
units.
In these schemes the investor can invest and disinvest any amount, any time
after a
short initial lock in period. This scheme gives investors with instant liquidity and fund
announces sale and repurchase price from time to time. The units can be bought from
and
sold to any Mutual Fund.

17

Advantages of Open-ended funds over Close-ended funds:

Any time Entry Option.
This provides ready liquidity to the investors and avoids reliance on transfer deeds,
signature verifications and bad deliveries.
Allows to enter the fund at any time and even to invest at regular
intervals.
Any time Exit Option.

CLOSE ENDED SCHEME

A Close-ended scheme has a stipulated maturity period. E.g. 5-7 years. A Closeended
scheme is one in which the subscription period for the Mutual Fund remains open only
for a
specific period, called the redemption period. At the end of this period, the entire
corpus is
disinvested and the proceeds distributed to unit holders. After final distribution the
scheme
ceases to exist. Such schemes can be rolled over by approval of unit
holders.
Reasons for fluctuations in NAV
Investors doubts about the abilities of the funds
management.
Lack of sales effort (Brokers earn less commission on closed end schemes than on
open
ended schemes).
Riskiness of the fund.
Lack of marketability of the funds units.
INTERVAL SCHEMES
Interval schemes are those that combine both the features of both open-ended and
closeended schemes. The units may be traded on the stock exchange or may be open for sale
redemption during predetermined intervals at NAV related
prices.

18

ACCORDING TO INVESTMENT OBJECTIVE

EQUITY SCHEME

DEBT OR BOND SCHEME

BALANCED SCHEME
INVESTMENT
OBJECTIVE
MONEY MARKETSCHEME

GROWTH & INCOME FUND

OTHER SCHEMES

ADVANTAGES OF MUTUAL FUNDS

The key advantages of both open and close-end Mutual Funds is that they put
professional
managers with experience and access to sophisticated financial research to work for you
this,
and other wide range of key benefits are as follows :-

1) Professional Management
Experienced portfolio managers carefully select a funds holdings according to the
funds
seated investment objective. The portfolio management team continuously monitors
and
evaluates the funds holdings to help make sure it keeps pace with changing market
conditions. The team decides when to buy and sell securities. There is a fee
associated
with this professional management.
19

2) Diversification
A Single diversified Mutual Fund may invest in dozens even hundreds of different
holdings. This approach may reduce the impact on your return if any one investment
held
by the fund declines. Diversification spreads your assets among different types of
holdings and may be one of the best ways to protect yourself amid the complexity
and
uncertainty of the financial markets.

3) Compounding
In a Mutual Fund, you may choose to reinvest your earnings automatically to buy
more
shares. When you reinvest, not only do you have the potential to earn money on your
initial investment, you may also have the opportunity to earn money on the
dividends and
capital gains you accumulate. Compounding may increase the impact of what you
contribute and can help your money grow faster. And the longer you invest, the
greater
the potential growth.

4) Systematic Investing
You can invest in most mutual funds automatically through regular payments directly
from your bank account; you can start building a long-term investment program.
With
systematic investing you invest a fixed amount of money at regular intervals
regardless of
market conditions, helping out market fluctuations.

5) Hassle-free operations
With most Mutual Funds, buying and selling shares, changing distribution options,
and
obtaining information can be accomplished conveniently by telephone, by mail, or
online.
Although a funds shareholder is relieved of the day-to-day tasks involved in
researching,
buying and selling securities, an investor will still need to evaluate a Mutual Fund
based
on investment goals and risk tolerance before making a purchase decision. Investors
should always read the prospectus carefully before investing in any Mutual
Fund.
6) Buying Power
When you invest in a mutual fund, you join the other investors in a pool of
investment
money. The result is that you have a partial stake in each company the fund holds
for a
20

relatively small amount of principal invested, while potentially offsetting some of the
risk
associated with holding individual securities.

7) Choice
There is an incredible array of mutual funds more than 10,000 available to meet
your
specific Investment objective. Funds have different investment objectives and
degrees of
investment risk often indicated through asset classes and sub-classes, such as
money
market funds, fixed income funds, balanced funds, growth and income funds, growth
funds and aggressive growth funds.
8) Liquidity
Mutual fund shares are liquid and orders to buy or sell are placed during market
hours.
However, orders are not executed until the close of business when the NAV (Net
Asset
Value) of the fund can be determined. Fees or commissions may or may not be
applicable. Fees and commissions are determined by the specific fund and the
Institution
that executes the order.

9) Transparency
You get regular information on the value of your investments in addition to disclosure
on
the specific investments made by your scheme, the proportion invested in each class
of
assets and the fund managers investment strategy and
outlook.

DISADVANTAGE OF MUTUAL FUNDS:

1) Over Diversification
Diversification is usually a good thing because it reduces risk, but Mutual Funds
sometimes make small investments in so many securities that they become over
diversified. In other words, the Mutual Funds holdings in each security may be so
small
that it is difficult to realize substantial return from any of those holdings, which in
turn
means that the overall return for each investor is
small.
2) Unused Cash
Your cash may occasionally serve as liquidity insurance rather than work for you as
an
investment. The constant availability of shares is certainly convenient for investors in
a
21

mutual fund, but it can also operate as a disadvantage. A Mutual Fund manager must
always prepare for the possibility than an investor will cash in his or her shares. As a
result Mutual Funds must maintain a ready cash supply at all
times.
3) Fluctuating Returns
Mutual funds are like many other investments without a guaranteed return. There is
always the possibility that the value of your mutual fund will depreciate. Unlike fixedincome products, such as Bonds and Treasury Bills, mutual funds experience price
fluctuations along with stocks that make up the
fund.
4) Costs Despite Negative Returns
Investors must pay sales charges, annual fees, service charges and other expenses
regardless of how the fund performs. In addition, depending on the timing of their
investment, investors may also have to pay taxes on any capital gains distribution
they
receive even if the fund went on to perform poorly after they bought
shares.
5) Misleading Advertisements
The misleading advertisements of different funds can guide investors down the
wrong
path. Some funds may be incorrectly labeled as growth funds, while others are
classified
as small-cap or income.

6) Evaluating Funds
Not offer investors the opportunity to compare the P/E ratio, sales growth, earnings
share,
etc. A Mutual Funds Net Asset Value gives the investors the total value of the
Another
limitation of mutual fund is the difficulty they pose for investors interested in
researching
and evaluating the different funds. Unlike stocks, mutual funds do funds portfolio
less
liabilities.

7) Poor Transparency
Technology used for servicing of investors and for portfolio management and
investment
decision making is poor and general efficiency and timeliness are lacking as a result
of
antiquated methods of operation. Telex, telephone and communication systems are
poor
and antiquated.
22

RISK ASSOCIATED WITH MUTUAL FUND INVESTMENT

The Principal that the greater risk you take, the greater the potential reward.
Typically, risk is defined as short term price variability. But on a long term basis, risk
is
the possibility that your accumulated real capital will be insufficient to meet your
financial
goals. And if you want to reach your financial goals, you must start with an
honest.
At the cornerstone or investing is the basic appraisal of your own personal
comfort
zone with regard to risk. Individual tolerance for risk varies, creating a distinct
investment
personality for each investor. Some investors can accept short-term volatility with ease,
others with near panic. So whether you consider you investment temperament to be
conservative, moderate or aggressive, you need to focus on how comfortable or
uncomfortable you will be as the value of your investment moves up or
down

23

TYPES OF RISK

All investments involve some form of risk. Even an insured band account is subject to
the
possibility that inflation will rise faster than your earnings, leaving you with less real
purchasing power than when you started (Rs.1000 gets you less than it got your father
when
he was your age). Consider these common types of risks and evaluate them against
potential
rewards when you select an investment.
outstanding, highly profitable company and a fledging corporation may be affected. This
change in price is due to Market Risk.

2) Inflation Risk:
Some times referred to as loss of purchasing power. WheneverMarket
inflation sprints forward faster than the earnings on your investment, you run the
risk that
youll actually be able to buy less, not more. Inflation risk also occurs when prices
rise
Inflation
faster than your return.
In short, how stable is the company or entity to which you lend your
3) Credit Risk:
money when you invest. How certain are you that it will be able to
pay the
Credit
interest you
are promised, or repay your principal when the investment matures.
4) Interest Risk:

Interest Rate
TYPE OF
RISKS

Employees

Exchange Rate

Investment

Government Policies

1) Market Risk: At times the prices or yields of the all the securities in a particular market rise
or fall due to broad outside influences. When this happens, the stock prices of both
an

24

Changing interest rates affect both equities and bonds in many ways.
Investors are minded that predicting which way rates Effect of loss rev
professionals
and inability to adapt:
An industries key asset is often the personnel who run the business i.e.
intellectual
properties or the key employees of the respective companies. Given the everchanging
complexion of few industries and the high obsolescence levels, availability of
qualified,
trained and motivated personnel is very critical for the success of industries in
few
sectors. It is, therefore, necessary to attract key personnel and also to retain them
to meet
the changing environment and challenges the sector offers. Failure or inability to
attract/retain such qualified key personnel may impact the prospects of the
companies in
the particular sector in which fund invests.
5) Exchange risk:
A number of companies generate revenues in foreign currencies and
may have investments or expenses also denominated in foreign currencies.
Changes in
exchange rates may, therefore, have a positive negative impact on companies
which in
turn would have an effect on the investment of the fund.
6). Changes in government policy:
Changes in government policy especially in regard to
the tax benefits may impact business prospects of the companies leading to an
impact on
the investments made by the fund.

RISK RETURN GRID

RISK
TOLERANCE/

FOCUS

RETURN

SUITABLE

BENEFITS

PRODUCTS

OFFERED BY

EXPECTED

MFS

Low

Medium

Debt

Partially Debt,
Partially Equity

Bank/company FD, Debt Liquidity, Better

based Funds

Post-Tax return

Balanced Funds, some

Liquidity, Better

Diversified Equity

Post-Tax returns,

Funds are some debt Better Management,

Funds, Mix of share and

Diversification

Fixed Deposits

High

Capital Market, Equity

Diversification,

Funds (Diversified as

Expertise in stock

well as Sector)

picking, Liquidity,

Equity

Tax free dividends

COST INVOLVED IN MUTUAL FUNDS

An investor must know that there are certain costs can be classified into 2 broad
categories:
Operating expenses - Which are paid out of the funds earnings
Sales charges

- That are directly deducted from your investment. It is

not
compulsory that every mutual fund levy sales charges
but
they certainly have operating expenses. No doubt
they
influence returns on investment in a fund.

Operating expenses
These referred to cost incurred to operate a mutual fund. Advisory fees paid to
investment mangers, Audit fees to chartered accountant, custodial fees, register and
transfer
agent fees, trustee fee, agent commission. Operating expenses also known as expenses
ratio
which is annual expenses expressed as a percentage of the funds average daily net
assets
mutual funds. The break up of these expenses is required to be reported in the schemes
offer
document (or) prospectus
25
26

Operating expenses
Expenses Ratio = ----------------------------Average Net Assets

For instant, if funds Rs. 100 Crores and expenses 20 lakhs. Then expenses ratio is
2%
expenses ratio is available in the offer document and from historical per unit statistics
included in the financial results of the fund which are published by annually. UN audited
for
the half year ending Sep30 and audited for the physically year end in March
30.
Depending upon schemes and net asset, operating expenses are determined by
limits
mandated by SEBI Mutual fund regulation Act. Any excess over specified limits as to be
born by Asset Management Company, the trustees or
sponsors.
Sales charges:
These are known commonly sales loads; these are charged directly to investor.
Sales
loads are used by mutual fund for the payment of agents commission, distribution and
marketing expensed. These charges have not effect on the performance of the scheme.
Sales
loads are usually express in percentage and or of two types front-end and back
end.
Front-end load:

It is a one time fixed fee paid by an investor when buying a mutual

fund scheme. It determines public offer price which intern decides how much of your
initial
investment actually get invested the standard practice of arriving a public offer price is
as
follows:
Net Asset Value
Public offer price = --------------------------(1- front end load)

Let us assume, an investor invests Rs.10, 000 in a scheme that charges a 2%front
end
load at a NAV per unit RS. 10 using the formula public offer price =10/ (1-0.02) is Rs.
10.20.
So only 980 units are allotted to the investor

Amount invested
Number of units allotted =

-------------------------Public offer price

10,000/10..20= 980 units at a NAV of Rs. 10

27

This means units worth 9800 are allotted to him on an initial investment of Rs. 10,000.
Front
end loads tent to decrease as initial investment amount
increase.
Back end load:
May be a fixed fee redemption (or) a contingent deferred sales charges-a
redemption
load continues so long as the redeeming or selling of the units of the units of a fund
does not
take place in the event of back end load is applied. The redemption price is arriving at
using
following formula.

Net Asset Value

Redemption price = -----------------------------(1+ back end load)

Let us assume an investor redeems units valued at Rs. 10,000 in a scheme that charges
a 2%
back end load at a NAV per unit of Rs. 10. Using the formula redemption price 10/
(1+0.02)
= Rs. 9.8
So, what the investor gets in hand is 9800(908*1000)

Contingent Deferred Sales Charges (CDSC):

Contingent deferred sales charges are a structured back end load. It is paid when
the
units are redeemed during the initial years of ownership. It is for a pre determined
period only
and reduced over the time youre invested for a fund. The longer the investor remains in
fund
the lower the CDSC.
The SEBI (mutual fund Regulation 1996) stipulate that a CDSC may be
charge only for first 4 years after purchase of units and also stipulate the maximum
CDSC
that can we charge every year. The SEBI Mutual funds Regulation 1996 do not allow
either
the front end load or back end load to any combination is higher that
7%.

28

Transaction cost:
Some funds may also impose a switch over fee which is a charge on transfer of
investment from one scheme to another with in a same mutual fund family and also to
switch
from on plan (short term) to another (long term) within same
scheme.

SYSTEMATIC INVESTING PLANS (SIPs)

It is an investment vehicle, where you need to deposit a fixed amount at regular
intervals (monthly, quarterly, etc.) in a MF scheme; just like you do in a recurring deposit
account with a bank or the post office.

Regular Investing is not easy. Owing to lack of time, most people invest
sporadically.
The result? The returns are rarely optimal. However, there is a foolproof way of investing
a
fixed amount of money at regular intervals: Chola Mutual Funds Systematic Investment
Plan (SIP). SIP uses the concept of rupee cost averaging, ensuring investors buy more
when
prices are low; and fewer units when prices are high.

Benefits of Systematic Investment Plans

Discipline Saving:
Inculcating discipline in your investment has been easier. Your investment is done
on
a regular basis by the mutual fund without any intervention required by you. The best
part is
that you will not feel the pain of having to save since the money will move from your
bank
account automatically.

Rupee Cost Averaging:

The SIP helps you take advantage of the fluctuation in the stocks market by rupee
cost averaging. The investor buys more units when the prices are low and fewer units
cost. Assume you are investing Rs.1000/- each for next four
months.

29

Month

Amount Invested

Purchase Price

No of Units Purchased

1000

10

100

1000 1000

09

111.11

10

100

2
3
4

1000

11
Table 2 (b)

90.9

Total Investment = Rs. 4000; No of units purchased is 402.21. The average cost per
units
work out to be Rs9.95.
As illustrated, over time you have a lower average cost per unit. By investing a
fixed
amount of money at regular intervals, you as an investor stand to gain reasonable
returns and
create significantly wealth-over time.

Lower Cost of Investing:

Getting into SIP program does not required large investment amounts at regular
intervals. Even as small as Rs. 1000 can be invested at regular
intervals.
Builds Investment Kitty:
You have to give Post-Dated cheque (PDCs) to the mutual fund for deposit on
specific dates, for the amount you want to invest. These cheques are presented to your
bank
account on these dates and the funds are withdrawn from your account for investment
in the
mutual fund scheme at the prevailing NAV. Other than making the initial investment and
issuing the cheques at the beginning, no further efforts are required from
you.
Overcoming market volatility:
SIPs help you avoid missing market falls because of lack of time to track the
market.
You dont have the responsibility of actively monitoring market movement to be able to
enter
during falls.

30

Market timing doesnt work:

Trying to time the markets, i.e. entering when the markets fall and exiting when
the
markets rise, usually does not work. It is best to take the systematic investment
approach to
stay above market

Redemption of Units:
The units can be redeemed (i.e. sold back to the mutual fund) or switched-out
subject
to completion of lock in period, on every business day at the redemption price. The
redemption/switch out request can be made by way of a written request, on a pre
printed form
or by using the relevant tear off section of the transaction slip enclosed with the account
statement, which should be submitted at/may be sent by mail to any of the
ISCs.
Redemption price:
Redemption price will be calculated on the basis of the loads of different plans/options.
The
redemption price per unit will be calculated using the following
formula:
Redemption Price = Application NAV * (1 exit Load, if any)

Example for calculation of redemption Price

If the application NAV is Rs.10.00; Exit/redemption load is 2%, then the redemption price
will be calculated as follows:
= Rs.10.00 *(1-0.02)
= Rs.10.00 * (0.98)
= Rs.9.80

PARAMETERS DESCRIPTION
The following parameters were considered for analysis:
Beta
Alpha
Correlation coefficient
Treynors Ratio
Sharpes Ratio
31

 Jensens Ratio

Beta
Beta is a measure of volatility, or systematic risk, of a security or portfolio in comparison
to
the market as a whole. Beta measures a stock's volatility, the degree to which a stock
price
fluctuates in relation to the overall market. Investment analysts use the Greek letter
beta, . It
is calculated using regression analysis. A beta of 1 indicates that the security's price will
move with the market. A beta greater than 1 indicates that the security's price will be
more
volatile than the market, and a beta less than 1 means that it will be less volatile than
the
market.

While standard deviation determines the volatility of a fund according to the disparity of
its
returns over a period of time, beta, another useful statistical measure, determines the
volatility, or risk, of a fund in comparison to that of its index.
Investors expecting the market to be bullish may choose funds exhibiting high betas,
which
increase investors' chances of beating the market. If an investor expects the market to
be
bearish in the near future, the funds that have betas less than 1 are a good choice
because they
would be expected to decline less in value than the index. For example, if a fund had a
beta of
0.5 and the S&P 500 declined 6%, the fund would be expected to decline only 3%. Be
aware
of the fact that beta by itself is limited and can be skewed due to factors of other than
the
market risk affecting the fund's volatility.
Here is a basic guide to various betas:
Negative beta - A beta less than 0 is possible but highly unlikely. People used to think
that
gold and gold stocks should have negative betas because they tended to do better when
the
stock market declined, but this hasn't been true
overall.
Beta = 0 - Basically this is cash (assuming no inflation).
Beta between 0 and 1 - Low-volatility investments, such as utilities, are usually in this
range
Beta = 1 - This is the same as an index, such as the S&P 500 or some other index
fund.
Beta greater than 1 - This denotes anything more volatile than the broad-based index,
like a
sector fund.
Beta greater than 100 - This is impossible because the stock would be expected go to
zero
on any decline in the stock market. The beta never gets higher than two to
three.
32

The beta value for an index itself is taken as one. Equity funds can have beta values,
which
can be above one, less than one or equal to one. By multiplying the beta value of a fund
with
the expected percentage movement of an index, the expected movement in the fund
can be
determined. Thus if a fund has a beta of 1.2 and the market is expected to move up by
ten per
cent, the fund should move by 12 per cent Similarly if the market loses ten per cent, the
fund
should lose 12 per cent.

This shows that a fund with a beta of more than one will rise more than the market and
also
fall more than market. Clearly, if you'd like to beat the market on the upside, it is best to
invest in a high-beta fund. But you must keep in mind that such a fund will also fall more
than the market on the way down. So, over an entire cycle, returns may not be much
higher
than the market.
Similarly, a low-beta fund will rise less than the market on the way up and lose less on
the
way down. When safety of investment is important, a fund with a beta of less than one is
a
better option. Such a fund may not gain much more than the market on the upside; it
will
protect returns better when market falls.

Alpha
A measure of risk, used for mutual funds with regards to their relation and the market. A
positive alpha is the extra return awarded to the investor for taking a risk, instead of
accepting
the market return.
The formula for alpha is:
Alpha = [ (sum of y) - ((b)(sum of x)) ] / n

n =number of observations (36 mos.)

b = beta of the fund
x = rate of return for the market
y = rate of return for the fund

Alpha measures how much if any of this extra risk helped the fund outperform its
corresponding benchmark. Using beta, alpha's computation compares the fund's
performance
to that of the benchmark's risk-adjusted returns and establishes if the fund's returns
outperformed the market's, given the same amount of
risk.
33

For example, if a fund has an alpha of 1, it means that the fund outperformed the
benchmark
by 1%. Negative alphas are bad in that they indicate that the fund under performed for
the
amount of extra, fund-specific risk that the fund's investors
undertook.

STANDARD DEVIATION:
Standard deviation is probably used more than any other measure to describe the risk
of a
security (or portfolio of
securities). If you read an academic study on investment
performance, chances are that standard deviation will be used to gauge risk. It's not just
a
financial tool, though. Standard deviation is one of the most commonly used statistical
tools
in the sciences and social sciences. It provides a precise measure of the amount of
variation in
any group of numbers--the returns of a mutual fund.

Measure of the dispersion of a set of data from its mean. The more spread apart the
data is,
the higher the deviation. Standard deviation is applied to the annual rate of return of an
investment to measure the investment's volatility
(risk).
A volatile stock would have a high standard deviation. In mutual funds, the standard
deviation tells us how much the return on the fund is deviating from the expected
normal
returns. Standard deviation is a statistical measure of the range of a fund's performance.
When a fund has a high standard deviation, its range of performance has been very
wide,
indicating that there is a greater potential for
volatility.
Technically speaking, standard deviation provides a quantification of the variance of the
returns of the security, not its risk. After all, a fund with a high standard deviation of
returns
is not necessarily "riskier" than one with a low-standard deviation of
returns.

Correlation:
Correlation is a useful tool for determining if relationships exist between securities. A
correlation coefficient is the result of a mathematical comparison of how closely related
two
variables are.
The relationship between two variables is said to be highly correlated if a movement in
one
variable results or takes place at the same time as a similar movement in another
variable. A
34

useful feature of correlation analysis is the potential to predict the movement in one
security
when another security moves. Sometimes, there are securities that lead other securities.
In
other words a change in price in one results in a later change in price of the other. A
high
negative correlation means that when a securities price changes, the other security or
indicator or otherwise financial vehicle, will often move in the opposite
direction.
Correlation analysis is a measure of the degree to which a change in the independent
variable
will result in a change in the dependent variable. A low correlation coefficient (e.g.,
0.1)
suggests that the relationship between the two variables is weak or non-existent. A high
correlation coefficient (e.g., 0.80) indicates that the dependent variable will most likely
change when the Independent variable changes. Correlation can also be used for a study
between an indicator and a stock or index to help determine the predictive abilities of
changes
in the indicator. Correlation is not static. In other words, the correlation between two
things
in the markets does change over time and so a careful understanding that what has
happened
in the past may not predict what will happen in the future should be part of any basis in
trading financial instruments in the market.

PORTFOLIO MEASUREMENT METHODS:

We are interested in discovering if the management of a mutual fund is performing well;
that
is, has management done better through its selective buying and selling of securities
than
would have been achieved through merely buying the market picking a large
number of
securities randomly and holding them throughout the
period?
The most popular ways of measuring managements performance
are
1. Sharpes Performance Measure
2. Treynors Performance Measure
3. Jensens Performance Measure

SHARPES RATIO
Sharpes is the summary measure of portfolio performance which properly adjusts
performance for risk. It measures the risk premiums of the portfolio relative to the total
amount of risk in the portfolio.

35

The Sharpes index is given by:

Sharpes Index = (Average return on portfolio Risk less rate of interest)
(Deviation of returns on portfolio)

Graphifically the index measures the slope of the line emanating from the risk less rate
outward to the portfolio in question. Thus, the Sharpe Index summarizes the risk and
return
of a portfolio in a single measure that categorizes the performance of the fund on a riskadjusted basis. The larger the value of Sharpe Index the better the portfolio has
performed.

TREYNORS RATIO
Treynors ratio measures the risk premium of the portfolio, where risk premium equals
the
difference between the return of the portfolio and the risk less rate. The risk premium is
related to the amount of systematic risk assumed in the portfolio. Graphically; the index
measures the slope of the line emanating outward from risk less rate to the portfolio
under
consideration.
Treynors ratio is given as
(Average return of portfolio Risk less rate of interest)

Treynor Index = ------------------------------------------------------Beta coefficient of portfolio

Jensens Performance Measure (Michael)

It refers the actual return earned in portfolio and return expected out of portfolio given
its
level of risk.
CAPM is used to calculate the expected return. The difference between the expected
return
and act retain can be said the return earned out of the mandatory of
systematic risk.
This excess return refers the managers predictive ability and managerial
skills.
CAPM
rp = rf + (rm rf)
Differential return is calculated as follows:
p = rp - rp
p =positive > Superior returns
p=Negative > Unskilled management (worse portfolio)
p = 0 > Neutral performance
Higher alpha represents superior performance of a fund and vice
versa.
36

CHAPTER-III

INDUSTRY PROFILE
&
COMPANY PROFILE

37

INDUSTRY PROFILE

GROWTH AND HISTORY OF MUTUAL FUNDS

The First investment trust (now called Mutual Fund) began in the Netherlands in the
early 1800s. The first in the U.S. was the New York Stock Trust, which started in 1889.
Since
Boston was the economic center of the nation until the turn of the century, the majority
of
funds started thereFidelity, Pioneer and Putnum Fund, to name a few. A Fund that was
comprised of both stocks and bonds (the Wellington Fund) started in 1928 and is still
part of
Vanguard. As the 20's crashed to a close, there were 10 Mutual Funds in the
nation.
Foundation for the Mutual Fund in India was laid by the parliament in 1963. With
the
enactment of Unit Trust of India (UTI) Act the then Finance Minister
Mr.T.T.Krishnamacharya who initiated the act made it clear to the parliament act UTI
would provide an opportunity for the middle and lower income groups to acquire
property in the form of share. Thus UTI came out with the mission of catering to the
needs of individuals investors whose means are small, with its maiden fund, an open
ended
fund in 1964.
The Indian Mutual Fund Industry can be studied in four
phases:FIRST PHASE BETWEEN 1964 1987
The genesis of the Mutual Fund industry in India can be traced back to 1964 with
the
setting up of the Unit Trust of India (UTI) by the Government of India. Since then UTI has
grown to be a dominant player in the industry. UTI is governed by a special legislation,
the
Unit Trust of India Act, 1963. It was setup by the Reserve Bank of India and functioned
under the regulatory and administrative control of RBI. In 1978, UTI was de-linked from
the
RBI and the administrative control in place of RBI. The first scheme launched by UTI was
unit Scheme 1964. At the end of 1988, UTI had Rs. 6700 crores of assets under the
management.

38

SECOND PHASE 1987-1993(Entry of Public Sector Funds)

Till 1986, UTI was the only mutual player in India. The industry was opened up for
wider participation in 1987 when public sector banks and insurance companies were
permitted to setup Mutual Funds.
Since then, many public sector banks have setup Mutual Funds. SBI Mutual Fund
was
the first non-UTI Mutual Funds established in June 1987 followed by can bank Mutual
Funds, Punjab National Bank Mutual Fund, India bank Mutual Funds, Bank of India, Bank
of
Boroda Mutual Funds. Also the two Insurance companies LIC (June 1987) and GIC
(December 1990) have established Mutual Funds. At the end of 1993, the Mutual Fund
industry had assets under management of Rs. 47004 crores. This phase changed the
mind set
of the investors.

THIRD PHASE 1993-2003

With the entry of private sector funds in 1993, a new era started in the Indian
Mutual
Fund Industry, giving the Indian investors a wider choice of fund families. Also, 1993 was
the year in which the first Mutual Funds regulations came into being, under which all
Mutual
Funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer
(now
merged with Franklin Templeton) was the first sector Mutual Fund registered in July
1993.
Securities Exchange Board of India (SEBI) formulated the Mutual Fund
(Regulation)
1993, which for the first time established a comprehensive regulatory framework for the
Mutual Fund Industry. Since then several Mutual Funds have been setup by the private
and
joint sectors.

FOURTH PHASE - Since February 2003

In February 2003, following the repeal of the Unit Trust of India act 1963, UTI was
bifurcated into separate entities. One is the specified undertaking of the UTI with asset
under
management of Rs. 29835 crores as at the end of January 2003, representing broadly,
the
assets of US 64 schemes, assured return and certain other
schemes.
The second is UTI Mutual Fund ltd, sponsored by SBI, PNB, BOB and LIC. It is
registered in SEBI and functions under the Mutual Fund regulations. With the bifurcation
of
the erstwhile UTI which had in March 2000 more than Rs. 76000 crores of assets under
39

management and with the setting up of the UTI Mutual Fund. At the end of October 31,
2006
there were 39 funds which manage assets of Rs. 176726 crores under 426
schemes.
Evolution
Indian Stock Markets are one of the oldest in Asia. Its history dates back to nearly 200
years
ago. The earliest records of security dealings in India are meager and obscure. The East
India
Company was the dominant institution in those days and business in its loan securities
used
to be transacted towards the close of the eighteenth
century.
By 1830's business on corporate stocks and shares in Bank and Cotton presses took
place in
Bombay. Though the trading list was broader in 1839, there were only half a dozen
brokers
recognized by banks and merchants during 1840 and
1850.
The 1850's witnessed a rapid development of commercial enterprise and brokerage
business
attracted many men into the field and by 1860 the number of brokers increased
into 60.
In 1860-61 the American Civil War broke out and cotton supply from United States of
Europe was stopped; thus, the 'Share Mania' in India begun. The number of brokers
increased
to about 200 to 250. However, at the end of the American Civil War, in 1865, a
disastrous
slump began (for example, Bank of Bombay Share which had touched Rs 2850 could
only be
sold at Rs. 87).
At the end of the American Civil War, the brokers who thrived out of Civil War in 1874,
found a place in a street (now appropriately called as Dalal Street) where they would
conveniently assemble and transact business. In 1887, they formally established in
Bombay,
the "Native Share and Stock Brokers' Association" (which is alternatively known as " The
Stock Exchange "). In 1895, the Stock Exchange acquired a premise in the same street
and it
was inaugurated in 1899. Thus, the Stock Exchange at Bombay was
consolidated.
Other leading cities in stock market operations
Ahmadabad gained importance next to Bombay with respect to cotton textile industry.
After
1880, many mills originated from Ahmadabad and rapidly forged ahead. As new mills
were
floated, the need for a Stock Exchange at Ahmadabad was realized and in 1894 the
brokers
formed "The Ahmadabad Share and Stock Brokers'
Association".
40

What the cotton textile industry was to Bombay and Ahmadabad, the jute industry was
to
Calcutta. Also tea and coal industries were the other major industrial groups in Calcutta.
After the Share Mania in 1861-65, in the 1870's there was a sharp boom in jute shares,
which
was followed by a boom in tea shares in the 1880's and 1890's; and a coal boom
between
1904 and 1908. On June 1908, some leading brokers formed "The Calcutta Stock
Exchange
Association".
In the beginning of the twentieth century, the industrial revolution was on the way in
India
with the Swadeshi Movement; and with the inauguration of the Tata Iron and Steel
Company
Limited in 1907, an important stage in industrial advancement under Indian enterprise
was
reached.
Indian cotton and jute textiles, steel, sugar, paper and flour mills and all companies
generally
enjoyed phenomenal prosperity, due to the First World War.
In 1920, the then demure city of Madras had the maiden thrill of a stock exchange
functioning in its midst, under the name and style of "The Madras Stock Exchange" with
100
members. However, when boom faded, the number of members stood reduced from 100
to 3,
by 1923, and so it went out of existence.
In 1935, the stock market activity improved, especially in South India where there was a
rapid increase in the number of textile mills and many plantation companies were
floated. In
1937, a stock exchange was once again organized in Madras - Madras Stock Exchange
Association (Pvt) Limited. (In 1957 the name was changed to Madras Stock Exchange
Limited).
Lahore Stock Exchange was formed in 1934 and it had a brief life. It was merged with
the
Punjab Stock Exchange Limited, which was incorporated in
1936.
Indian Stock Exchanges - An Umbrella Growth
The Second World War broke out in 1939. It gave a sharp boom which was followed by a
slump. But, in 1943, the situation changed radically, when India was fully mobilized as a
supply base.

41

On account of the restrictive controls on cotton, bullion, seeds and other commodities,
those
dealing in them found in the stock market as the only outlet for their activities. They
were
anxious to join the trade and their number was swelled by numerous others. Many new
associations were constituted for the purpose and Stock Exchanges in all parts of the
country
were floated.
The Uttar Pradesh Stock Exchange Limited (1940), Nagpur Stock Exchange Limited
(1940)
and Hyderabad Stock Exchange Limited (1944) were
incorporated.
In Delhi two stock exchanges - Delhi Stock and Share Brokers' Association Limited and
the
Delhi Stocks and Shares Exchange Limited - were floated and later in June 1947,
amalgamated into the Delhi Stock Exchnage Association
Limited.
Post-independence Scenario
Most of the exchanges suffered almost a total eclipse during depression. Lahore
Exchange
was closed during partition of the country and later migrated to Delhi and merged with
Delhi
Stock Exchange.
Bangalore Stock Exchange Limited was registered in 1957 and recognized in
1963.
Most of the other exchanges languished till 1957 when they applied to the Central
Government for recognition under the Securities Contracts (Regulation) Act, 1956. Only
Bombay, Calcutta, Madras, Ahmadabad, Delhi, Hyderabad and Indore, the well
established
exchanges, were recognized under the Act. Some of the members of the other
Associations
were required to be admitted by the recognized stock exchanges on a concessional
basis, but
acting on the principle of unitary control, all these pseudo stock exchanges were refused
recognition by the Government of India and they thereupon ceased to
function.
Thus, during early sixties there were eight recognized stock exchanges in India
(mentioned
above). The number virtually remained unchanged, for nearly two decades. During
eighties,
however, many stock exchanges were established: Cochin Stock Exchange (1980), Uttar
Pradesh Stock Exchange Association Limited (at Kanpur, 1982), and Pune Stock
Exchange
Limited (1982), Ludhiana Stock Exchange Association Limited (1983), Gauhati Stock
Exchange Limited (1984), Kanara Stock Exchange Limited (at Mangalore, 1985), Magadh
Stock Exchange Association (at Patna, 1986), Jaipur Stock Exchange Limited (1989),
42

Bhubaneswar Stock Exchange Association Limited (1989), Saurashtra Kutch Stock

Exchange
Limited (at Rajkot, 1989), Vadodara Stock Exchange Limited (at Baroda, 1990) and
recently
established exchanges - Coimbatore and Meerut. Thus, at present, there are totally
twenty one
recognized stock exchanges in India excluding the Over The Counter Exchange of India
Limited (OTCEI) and the National Stock Exchange of India Limited (NSEIL).
The Table given below portrays the overall growth pattern of Indian stock markets since
independence. It is quite evident from the Table that Indian stock markets have not only
grown just in number of exchanges, but also in number of listed companies and in
capital of
listed companies. The remarkable growth after 1985 can be clearly seen from the Table,
and
this was due to the favouring government policies towards security market
industry.
Trading Pattern of the Indian Stock Market
Trading in Indian stock exchanges are limited to listed securities of public limited
companies.
They are broadly divided into two categories, namely, specified securities (forward list)
and
non-specified securities (cash list). Equity shares of dividend paying, growth-oriented
companies with a paid-up capital of atleast Rs.50 million and a market capitalization of
atleast Rs.100 million and having more than 20,000 shareholders are, normally, put in
the
specified group and the balance in non-specified
group.
Two types of transactions can be carried out on the Indian stock exchanges: (a) spot
delivery
transactions "for delivery and payment within the time or on the date stipulated when
entering
into the contract which shall not be more than 14 days following the date of the
contract" :
and (b) forward transactions "delivery and payment can be extended by further period
of 14
days each so that the overall period does not exceed 90 days from the date of the
contract".
The latter is permitted only in the case of specified shares. The brokers who carry over
the
outstandings pay carry over charges (cantango or backwardation) which are usually
determined by the rates of interest prevailing.
A member broker in an Indian stock exchange can act as an agent, buy and sell
securities for
his clients on a commission basis and also can act as a trader or dealer as a principal,
buy and
sell securities on his own account and risk, in contrast with the practice prevailing on
New
York and London Stock Exchanges, where a member can act as a jobber or a broker
only.
43

The nature of trading on Indian Stock Exchanges are that of age old conventional style
of
face-to-face trading with bids and offers being made by open outcry. However, there is a
great amount of effort to modernize the Indian stock exchanges in the very recent
times.
Over The Counter Exchange of India (OTCEI)
The traditional trading mechanism prevailed in the Indian stock markets gave way to
many
functional inefficiencies, such as, absence of liquidity, lack of transparency, unduly long
settlement periods and benami transactions, which affected the small investors to a
great
extent. To provide improved services to investors, the country's first ringless, scripless,
electronic stock exchange - OTCEI - was created in 1992 by country's premier financial
institutions - Unit Trust of India, Industrial Credit and Investment Corporation of India,
Industrial Development Bank of India, SBI Capital Markets, Industrial Finance Corporation
of India, General Insurance Corporation and its subsidiaries and CanBank Financial
Services.
Trading at OTCEI is done over the centres spread across the country. Securities traded on
the
OTCEI are classified into:

Listed Securities - The shares and debentures of the companies listed on the OTC
can
be bought or sold at any OTC counter all over the country and they should not be
listed anywhere else

Permitted Securities - Certain shares and debentures listed on other exchanges

and
units of mutual funds are allowed to be traded

Initiated debentures - Any equity holding atleast one lakh debentures of a

particular
scrip can offer them for trading on the OTC.

OTC has a unique feature of trading compared to other traditional exchanges. That is,
certificates of listed securities and initiated debentures are not traded at OTC. The
original
certificate will be safely with the custodian. But, a counter receipt is generated out at
the
counter which substitutes the share certificate and is used for all
transactions.
In the case of permitted securities, the system is similar to a traditional stock exchange.
The
difference is that the delivery and payment procedure will be completed within 14
days.
44

Compared to the traditional Exchanges, OTC Exchange network has the following
advantages:

OTCEI has widely dispersed trading mechanism across the country which provides
greater liquidity and lesser risk of intermediary
charges.

Greater transparency and accuracy of prices is obtained due to the screen-based

scripless trading.

Since the exact price of the transaction is shown on the computer screen, the
investor
gets to know the exact price at which s/he is
trading.

Faster settlement and transfer process compared to other

exchanges.

In the case of an OTC issue (new issue), the allotment procedure is completed in a
month and trading commences after a month of the issue closure, whereas it
takes a
longer period for the same with respect to other
exchanges.

Thus, with the superior trading mechanism coupled with information transparency
investors
are gradually becoming aware of the manifold advantages of the
OTCEI.
National Stock Exchange (NSE)
With the liberalization of the Indian economy, it was found inevitable to lift the Indian
stock
market trading system on par with the international standards. On the basis of the
recommendations of high powered Pherwani Committee, the National Stock Exchange
was
incorporated in 1992 by Industrial Development Bank of India, Industrial Credit and
Investment Corporation of India, Industrial Finance Corporation of India, all Insurance
Corporations, selected commercial banks and
others.
Trading at NSE can be classified under two broad
categories:
(a) Wholesale debt market and
(b) Capital market.
Wholesale debt market operations are similar to money market operations - institutions
and
corporate bodies enter into high value transactions in financial instruments such as
45

government securities, treasury bills, public sector unit bonds, commercial paper,
certificate
of deposit, etc.
There are two kinds of players in NSE:
(a) trading members and
(b) participants.
Recognized members of NSE are called trading members who trade on behalf of
themselves
and their clients. Participants include trading members and large players like banks who
take
direct settlement responsibility.
Trading at NSE takes place through a fully automated screen-based trading mechanism
which
adopts the principle of an order-driven market. Trading members can stay at their offices
and
execute the trading, since they are linked through a communication network. The prices
at
which the buyer and seller are willing to transact will appear on the screen. When the
prices
match the transaction will be completed and a confirmation slip will be printed at the
office
of the trading member.
NSE has several advantages over the traditional trading exchanges. They are as
follows:

NSE brings an integrated stock market trading network across the

nation.

Investors can trade at the same price from anywhere in the country since intermarket
operations are streamlined coupled with the countrywide access to the
securities.

Delays in communication, late payments and the malpractices prevailing in the

traditional trading mechanism can be done away with greater operational
efficiency
and informational transparency in the stock market operations, with the support
of
total computerized network.
Unless stock markets provide professionalized service, small investors and foreign
investors
will not be interested in capital market operations. And capital market being one of the
major
source of long-term finance for industrial projects, India cannot afford to damage the
capital
market path. In this regard NSE gains vital importance in the Indian capital market
Preamble
system.

Often, in the economic literature we find the terms development and growth are used
interchangeably. However, there is a difference. Economic growth refers to the sustained
46

increase in per capita or total income, while the term economic development implies
sustained structural change, including all the complex effects of economic growth. In
other
words, growth is associated with free enterprise, where as development requires some
sort of
control and regulation of the forces affecting development. Thus, economic development
is a
process and growth is a phenomenon.
Economic planning is very critical for a nation, especially a developing country like India
to
take the country in the path of economic development to attain economic
growth.
Why Economic Planning for India?
One of the major objective of planning in India is to increase the rate of economic
development, implying that increasing the rate of capital formation by raising the levels
of
income, saving and investment. However, increasing the rate of capital formation in
India is
beset with a number of difficulties. People are poverty ridden. Their capacity to save is
extremely low due to low levels of income and high propensity to consume. Therefor, the
rate
of investment is low which leads to capital deficiency and low productivity. Low
productivity
means low income and the vicious circle continues. Thus, to break this vicious economic
circle, planning is inevitable for India.
The market mechanism works imperfectly in developing nations due to the ignorance
and
unfamiliarity with it. Therefore, to improve and strengthen market mechanism planning
is
very vital. In India, a large portion of the economy is non-monitised; the product, factors
of
production, money and capital markets is not organized properly. Thus the prevailing
price
mechanism fails to bring about adjustments between aggregate demand and supply of
goods
and services. Thus, to improve the economy, market imperfections has to be removed;
available
resources
has toand
be mobilized
and utilized
efficiently;
and structural
In
India, capital
is scarce;
unemployment
and disguised
unemployment
is rigidities
prevalent.
has towhere capital was being scarce and labour being abundant, providing useful
Thus,
be
overcome.opportunities
These can betoattained
only through
employment
an increasing
labour planning.
force is a difficult exercise. Only a
centralized planning model can solve this macro problem of India.
Further, in a country like India where agricultural dependence is very high, one cannot
ignore
this segment in the process of economic development. Therefore, an economic
development
model has to consider a balanced approach to link both agriculture and industry and
lead for a
paralleled growth. Not to mention, both agriculture and industry cannot develop without
47

adequate infrastructural facilities which only the state can provide and this is possible
only
through a well carved out planning strategy. The governments role in providing
infrastructure is unavoidable due to the fact that the role of private sector in
infrastructural
development of India is very minimal since these infrastructure projects are considered
as
unprofitable by the private sector.
Further, India is a clear case of income disparity. Thus, it is the duty of the state to
reduce the
prevailing income inequalities. This is possible only through
planning.

Planning History of India

The development of planning in India began prior to the first Five Year Plan of
independent
India, long before independence even. The idea of central directions of resources to
overcome
persistent poverty gradually, because one of the main policies advocated by nationalists
early
in the century. The Congress Party worked out a program for economic advancement
during
the 1920s, and 1930s and by the 1938 they formed a National Planning Committee
under
the chairmanship of future Prime Minister Nehru. The Committee had little time to do
anything but prepare programs and reports before the Second World War which put an
end to
it. But it was already more than an academic exercise remote from administration.
Provisional government had been elected in 1938, and the Congress Party leaders held
positions of responsibility. After the war, the Interim government of the preindependence
years appointed an Advisory Planning Board. The Board produced a number of
somewhat
disconnected Plans itself. But, more important in the long run, it recommended the
appointment of a Planning Commission.
The Planning Commission did not start work properly until 1950. During the first three
years
of independent India, the state and economy scarcely had a stable structure at all, while
millions of refugees crossed the newly established borders of India and Pakistan, and
while
ex-princely states (over 500 of them) were being merged into India or Pakistan. The
Planning
Commission as it now exists, was not set up until the new India had adopted its
Constitution
in January 1950.

48

Objectives of Indian Planning

The Planning Commission was set up the following Directive
principles :

To make an assessment of the material, capital and human resources of the

country,
including technical personnel, and investigate the possibilities of augmenting
such of
these resources as are found to be deficient in relation to the nations
requirement.

To formulate a plan for the most effective and balanced use of the countrys
resources.

Having determined the priorities, to define the stages in which the plan should be
carried out, and propose the allocation of resources for the completion of each
stage.

To indicate the factors which are tending to retard economic development, and
determine the conditions which, in view of the current social and political
situation,
should be established for the successful execution of the
Plan.

To determine the nature of the machinery this will be necessary for securing the
successful implementation of each stage of Plan in all its
aspects.

To appraise from time to time the progress achieved in the execution of each
stage of
the Plan and recommend the adjustments of policy and measures that such
appraisals
may show to be necessary.

To make such interim or auxiliary recommendations as appear to it to be

appropriate
either for facilitating the discharge of the duties assigned to it or on a
consideration of
the prevailing economic conditions, current policies, measures and development
programs; or on an examination of such specific problems as may be referred to it
for
advice by Central or State Governments.

The long-term general objectives of Indian Planning are as

follows:

Increasing National Income

Reducing inequalities in the distribution of income and

wealth

Elimination of poverty
49

Providing additional employment; and

Alleviating bottlenecks in the areas of : agricultural production, manufacturing

capacity for producers goods and balance of
payments.

Economic growth, as the primary objective has remained in focus in all Five Year Plans.
Approximately, economic growth has been targeted at a rate of five per cent per annum.
High
priority to economic growth in Indian Plans looks very much justified in view of long
period
of stagnation during the British rule

50

COMPANY PROFILE

51

COMPANY PROFILE
Introduction to Indiabulls
Indiabulls Group is one of the top business house in the country with business interests
in
Real Estate, Infrastructure, Financial Services, Retail, Multiplex and Power Sectors.
Indiabulls Group companies are listed in Indian and overseas financial markets. The net
worth of the Group exceeds USD 2 billion.
The companys vision is to be the largest and most profitable financial services
organization
in Indian retail market and become one stop shop for all non banking financial products
and
services for the retail customers.
The companys mission is to rapidly increase the number of client relationships by
providing
a broad array of product offering to emerge as a clear market
leader.
Indiabulls Financial Services Limited was incorporated on January 10, 2000 as M/s
OrbisInfotech Private Limited at New Delhi under the Companies Act, 1956. The name of
company was changed to M/s. Indiabulls Financial Services Private Limited on March 16,
2001. In the year 2004, Indiabulls came up with it own public issue & became a public
limited company on February 27, 2004. The name of company was changed to M/s.
IndiabullsFinancialServiceLimited.

The company was promoted by three engineers from IIT Delhi, and has attracted more
than
Rs.700 million as investments from venture capital, private equity and institutional
investors
and has developed significant relationships with large commercial banks such as
Citibank,
HDFC Bank, Union Bank, ICICI Bank, ABN Amro Bank, Standard Chartered Bank and
IL&FS.

The company headquarters are co-located in Mumbai and Delhi, allowing it to access the
two
most important regions for Indian financial markets, The marketing and sales efforts are
headquartered out of Mumbai, with a regional headquarter in Delhi. Back office, risk

52

management, internal finances etc. are headquartered out of Delhi/NCR allowing the
company to scale these processes efficiently for the nationwide
network.

Company is listed on:

National Stock Exchange

Bombay Stock Exchange

Luxemburg Stock Exchange

Market capitalization:

USD 6,300 million (31st December, 2007)

Net worth

USD 905 million (31st December, 2007)

Broad array of product offering

1. Loans & mortgage
o

Home Loans/Home Equity

Small Medium Enterprises

Commercial Vehicle

Commercial Credit

2. Life Insurance
3. Advisory Services
4. IPO Financing
Top Strategic Updates

Indiabulls Financial Services limited (IBFSL) completed the de-merger of its real
estate business into a separate publicly traded company, (IBREL) unlocked over
Rs.
10000 crore of shareholder wealth.

53

De-merger: De-merger of Indiabulls Securities Limited from Indiabulls financial

services limited. Each shareholder of Indiabulls Financial Services Limited
received a
share of Indiabulls Securities Limited.

SARFAESI Act Notification: Indiabulls Housing Finance Limited, a wholly owned

subsidiary of Indiabulls Financial Services Limited has been notified as a Financial
Institution for the purpose of SARFAESI Act, 2002. This notification is being
effectively used by the Company to yield positive results in speedy recoveries of
delinquent mortgage loans.

New Business Venture Update:

Life Insurance Venture: Indiabulls Financial Services Limited (IBFSL) has entered
into an MOU with Sogecap, the insurance arm of SocieteGenerale (SocGen) for its
upcoming life insurance joint venture. Sogecap will invest Rs 150 crore to
subscribe
to 26% of the paid up capital in the joint venture.

Commodities Exchange: Indiabulls Financial Services Limited has entered into a

MOU with MMTC Limited, the largest commodity trading business in India to
establish a Commodities Exchange with 26% ownership with MMTC. Ministry of
Commerce, Govt. of India has given its in-principle approval and the formal
approval
of the Forward Markets Commission is awaited.

Asset Management Business: Indiabulls Financial Services Limited proposes to set

up an asset management company to manage mutual funds and has applied to
SEBI
for its approval and the same is awaited.

IndiabullsRealEstateLimited
Indiabulls stepped into the real estate market as Indiabulls Real Estate Limited (IREL) in
2005. A joint venture between Indiabulls and a US based investment major Farallon
Capital
Management LLC resulted in bringing FDI (Foreign Direct Investment) for the first time in
the Indian Real Estate Market. Another joint venture amongst Indiabulls and DLF,
Kenneth
Builders and Developers (KBD), has brought up projects for development of residential
apartments.
Projects:
54

Indiabulls is currently evaluating many large-scale projects worth several hundred

million
dollars.
1. Jupiter Mills
2. Elphinstone Mills
3. Sonepat Township
4. Castlewood
5. Raigarh SEZ
6. Gurgaon Housing
7. Goa Luxury Resort
8. Nashik SEZ
9. Chennai Housing
10. Thane SEZ
11. Chennai Township
12. Mumbai Township

Indiabulls Securities Limited

Indiabulls Securities Limited is the jewel in the crown of Indiabulls group.

The products and services offered include securities, credit services, demat account for
share
trading, mutual fund news, commodity and review along with technical analysis of the
market.

Indiabulls also provide commodity brokerage services under Indiabulls Commodities

Limited
(ICL). It deals in research work and formation of reports on agri-commodites and metals.
ICL
has one of the largest retail branch networks in the
country.

55

Products offeredEquities and Derivatives

Offers purchase and sale of securities (stock, bonds, debentures

etc.)

Broker assisted trade execution

Automated online investing

Access to all IPO's

Equity Analysis

Helps to build ideal portfolio

Satisfies need by rating stocks based on facts-based

measures

Free of cost for all securities clients

Depository Services

Depository participant with NSDL and CDSL.

Helps in trading and settlement of dematerialized

shares

Performs clearing services for all securities

transactions

Offers platform to execute trade and settle

transaction

Indiabulls ensure convenience and reliability in all their products and services. Indiabulls
has
over 640 branches all over India. The customers of Indiabulls are more than 4,50,000
which
covers from a wide range of financial services and products from securities, derivatives
trading, depositary services, research & advisory services, consumer secured &
unsecured
credit, loan against shares and mortgage & housing finance. The company employs
around
4000 Relationship managers who help the clients to satisfy their customized financial
goals.
Indiabulls entered the Real Estate business in the year 2005 with its group of companies.
Large scale projects worth several hundred million dollars are evaluated by
them.
Indiabulls and its group companies have attracted USD 500 million of equity capital in
Foreign Direct Investment (FDI) since March 2000. Some of the large shareholders of
56

Indiabulls are the largest financial institutions of the world such as Fidelity Funds,
Goldman
Sachs, Merrill Lynch, Morgan Stanley and Farallon Capital.
In middle of 1999, when e-commerce was just about starting in India, Sameer Gehlaut
and
his close IIT Delhi friend Rajiv Rattan got together and bought a defunct securities
company
with a NSE membership and started offering brokerage services . A Few months later,
their
friend Saurabh Mittal also joined them. By December 1999, the company embarked on
its
journey to build one of the first online platforms in India for offering internet brokerage
services. In January 2000, the 3 founders incorporated Indiabulls Financial Services and
made it as the flagship company.
In mid 2000, Indiabulls Financial Services received venture capital funding from Mr L.N.
Mittal & Mr Harish Fabiani. In late 2000, Indiabulls Securities, a subsidiary of Indiabulls
Financial Services started offering online brokerage services and simultaneously opened
physical offices across India. By 2003, Indiabulls securities had established a strong pan
India presence and client base through its offices and on the
internet.
In September 2004, Indiabulls Financial Services went public with an IPO at Rs 19 a
share.
In late 2004, Indiabulls Financial Services started its financing business with consumer
loans.
In March 2005, Indiabulls Properties Private Ltd, a subsidiary of Indiabulls Financial
Services, participated in government auction of Jupiter Mills, a defunct 11 acre textile
mill
owned by NTC in Lower Parel, Mumbai. Indiabulls Properties private Ltd won the mill in
auction and that purchase started Indiabulls real estate business. A few months later,
Indiabulls Real Estate company pvt. ltd bought Elphinstone mill in Lower Parel, another
textile mill auctioned by NTC.
With real estate business gaining size, Indiabulls Financial Services demerged the real
estate
business under Indiabulls Real Estate and each shareholder of Indiabulls Financial
Services
received additional share of Indiabulls Real Estate through the demerger. Subsequently,
Indiabulls Financial Services also demerged Indiabulls Securities and each shareholder of
Indiabulls Financial Services also received a share of Indiabulls
Securities.
In year 2007, Indiabulls Real Estate incorporated a 100% subsidiary, Indiabulls Power, to
build power plants and started work on building Nashik&Amrawati thermal power plants.
Indiabulls Power went public in September 2009.
57

Today, Indiabulls Group has a networth of Rs 16,796 Crore& has a strong presence in
important sectors like financial services, power & real estate through independently
listed
companies and Indiabulls Group continues its journey of building businesses with strong
cash
flows.

MANAGEMENT TEAM
Indiabulls Group

Mr Rajiv Rattan- Co-Founder &Vice Chairman

Mr. Sameer Gelhaut-Chairman

Mr Saurabh Mittal - Director

Mr GaganBanga - Group Spokesperson

Mr Ashok Kacker - Group President

Mr SaketBahuguna - Group CLO

Mr Ashok Sharma - Group CFO

Mr Ajit Mittal - Group Director

Mr Gurbans Singh - Group Director

Mr Tejinderpal Singh Miglani - Group CIO

Indiabulls Financial Services Limited

Mr GaganBanga - CEO

Mr Ashwini Kumar Hooda - DMD

Indiabulls Real Estate Limited

Mr VipulBansal - CEO

Mr NarendraGehlaut - Joint MD

Indiabulls Power Limited

Mr Ranjit Gupta - CEO

Mr Murali Subramanian - COO

Indiabulls Securities Limited

58

Mr Divyesh Shah - CEO

Mr Vijay Babbar DMD

Indiabulls supports Money life Foundation in Empowering Investors

Moneylife Foundation in collaboration with Indiabulls, recently organized an Investor,
Empower Yourself seminar, which was held at the lush Town & Country Club at New
Gurgaon, in the National Capital Region (NCR), on Saturday, 7th May 2011. This was the
first occasion for Moneylife Foundation to venture into other territories outside
Maharashtra.
Indiabulls played a major role in helping this event happen
successfully.
The event witnessed over 300 attendees not only from Gurgaon but also from other
parts of
National Capital Region (NCR), Delhi, Allahabad, Ludhiana, Chandigarh & other cities
from
northern region of India. The venue was fully packed with eager & curious investors.
Moneylife Foundation expressed its gratitude towards helpful team of Indiabulls led by
Mr.GaganBanga, CEO - Indiabulls Financial Services Ltd, for making this event such a
huge
success.
The event started with introductory remarks & guidance by Mr.GaganBanga, CEO Indiabulls Financial Services Ltd. Mr.Veeresh Malik, Consulting Editor, Moneylife, Delhi
gave a brief introduction about MoneylifeFoundation.Then audience was guided by
SuchetaDalal, Trustee - Moneylife Foundation and Managing Editor- Moneylife, on How to
be Safe with your money &DebashisBasu, Trustee - Moneylife Foundation and EditorMoneylife about How to be smart with your investments. Mr. Sachin Choudhary, Director
&
Business Head - Indiabulls Housing Finance Ltd, talked about Do's and Donts of Housing
Mortgages. Ms.SuchetaDalal also explained the importance & procedure of Wills &
Nominations.
This event helped people in understanding how to become an aware and empowered
investor.
The attendees included both finically literate & new investors. They posted number of
intelligent questions which were adequately answered by all the speakers. Empowering
todays investors by creating awareness and guiding them in taking wise decisions when
it
59

comes to money or investments was the main objective of Investor, Empower Yourself
seminar. During the Panel Discussion with the panel members SuchetaDalal,
DebashisBasu&
Sachin Choudhary, quite a few interesting & informative issues regarding Investments
were
discussed. Mr.MonuRatra, National Sales Manager - Indiabulls housing Finance Ltd gave
Vote of Thanks.
This event received many request and suggestions from audience about continuing with
such
events all over India so that citizens of India will be more empowered investors &
ultimately
nation will benefit from it. There were some requests from audience to telecast further
events
live on television & internet so that those who are unable to attend the event will also
get the
guidance. The knowledge shared about the investments during the event was well
appreciated
by all.
Moneylife Foundation has been instrumental in promoting financial literacy & procustomer
advocacy in India. Moneylife Foundation has been organizing such events at the
Moneylife
Knowledge Centre in Mumbai, and also in various cities across Maharashtra. The
Foundation
has completed 15 months of spreading financial literacy & has hosted around 49
speakers and
61 events. Currently, more than 5,000 people are members of the
Foundation.
After the seminar, Indiabulls received feedbacks from some attendees congratulating
Indiabulls team about the success of seminar. Many of the attendees mentioned that
they are
looking forward to such seminars in future.
Indiabulls has been participating in such Corporate Social Activities with many other
socially
aware groups and trusts &Indiabulls is committed to continue in doing so in
future.

THE HUB
The Hub at One Indiabulls Centre at Lower Parel is an intelligently designed business
centre
in Mumbai
In the past few years serviced office industry has been maturing in India and today is a
mainstream occupancy option for businesses of all sizes. Whether a start-up, SME or a
multinational, companies are now opting for viable alternative to leasing or the outright
purchase
of commercial workspace.

60

Thus managed business centers have emerged as an innovative solution to these

workspace
requirements. The Hub at One Indiabulls Centre at Lower Parel is one such intelligently
designed business centre in Mumbai that offers 25,000sqft of fully equipped, serviced
workspace not only suitable for large corporations but also for small businesses and lean
team
set ups due to the option of small customized
spaces.
The real advantage of The Hub is not just that it is more cost effective but also it offers
best
possible working environment by offering conveniences such as advanced security,
pantry
and maintenance services including IT and utility bills for electricity, water &
HVAC.
Whats more, those moving into The Hub serviced offices enjoy the added benefit of
cutting
edge IT and telecom infrastructure, reception and secretarial support, hi-tech meeting
rooms
and video conferencing suites as well as business lounge, food courts and state of the
art
fitness centre.
Not to forget among various factors that can affect a business and its success and
growth, is
the address or the location of the office especially those of newly established
enterprises. The
Hub within a world class contemporary business complex located between Nariman
Point
and BandraKurla Complex and in close proximity to BandraWorli Sea Link is undeniably
in
the finest commercial location in Mumbais upcoming central business district- Lower
Parel.
Undeniably, The Hub is a new age business centre that provides a very attractive
proposition
to businesses of all sizes to help their own business grow and
prosper.
Indiabulls CSR Initiative - Drug Access Program for cancer patients in partnership
with Novartis
As part of our deep commitment to social causes, Indiabulls has taken up this noble
project
named Novartis Oncology Access in partnership with Novartis (manufacturer of drugs)
&
Max foundation (NGO). We as the financial partner are helping them assess actual
income of
patient & family & based on assessed income; recommend the drugs donation slab as
per
approved guidelines & SOP.
Novartis are the developers & makers of Glivec (Imatinib) - a medication for the
treatment
of Ph+ chronic myeloid leukemia (CML) in chronic phase, accelerated phase and blast
crisis
for both pediatric and adult patients. This drug is also indicated for adult patients with
61

adjuvant, unresectable and/or metastatic c-kit / cd-117 gastrointestinal stromal tumors

(GIST). Tasigna (nilotinib) a drug recently launched by Novartis is used as medication for
the
treatment of Ph+ chronic myeloid leukemia (CML) in chronic phase, accelerated phase
and
blast crisis for only adult patients.
NOA program:
The NOA program is a drug access program for to help patients who have been
prescribed
Glivec and Tasigna but cannot afford to pay for the entire treatment cost. This program
is run
by Novartis along with its partner Physicians- enrolls patient under this program after
diagnosis, The MAX Foundation- independent NGO Assist patient throughout the
program in completing formalities & procurement of medicines, Indiabulls Financial
Services - independent body for financial evaluation of patient, collection & safekeeping
the
submitted documents with confidentiality and C&F outlets Independent pharmacist,
dispenses drugs to patients & manage drug
inventory.
Indiabulls Financial Services: As a NOA partner we are performing task of the local credit
evaluation agency which works as an independent and unbiased body for the financial
analysis and assessment of the patient and family members earning capacity to afford
medical expenses on critical disease. The analysis bases on income levels assessment
by way
of financial evaluation ,field verification, living standard, personal discussion with
patient/
care taker & guidelines as per standard operating procedure (SOP) which is prepared by
Novartis based on the WHO guidelines for drug donation programs using Business for
Social
Responsibilitys (BSR) cost of living index, a well-established international guide often
used
as eligibility criteria for determining access to drug assistance programs. Based on the
family
composite Income a suitable donation decision is
given.
Contractibility
Indiabulls has designated a dedicated Help-Line Number: 022 30491720 that will receive
patient calls during office hours (9:00 a.m. to 6.00 p.m.) so it may handle in-bound calls
in
response only to queries regarding the submission of requirements for the NOA. For any
medical or clinical queries, Indiabulls Financial Services refer patients to their treating
physician.

62

Businesses
Indiabulls Group is one of the country's leading business houses with business interests
in
Power, Financial Services, Real Estate and Infrastructure . Indiabulls Group companies
are
listed in Indian and overseas financial markets. The Net worth of the Group is Rs 16,796
Crore and the total planned capital expenditure of the Group by 2013-14 is Rs 35,000
Crore.

Indiabulls Power is currently developing Thermal Power Projects with an aggregate

capacity of 5400 MW. The first unit is expected to go on stream in May 2012. The net
worth
of Indiabulls Power is Rs 3,917 Crore. The company has a total capital expenditure of Rs
27,500 Crore. The company has been assigned 'BBB'
rating.
Indiabulls Financial Services is one of Indias leading non-banking finance companies
providing Home Loans, Commercial Vehicle Loans and Secured SME Loans. The company
has a net worth of Rs 4,680 crore with an asset book of over Rs 18,500 Crore. The
company
has disbursed loans over Rs 45,000 Crore to over 3,00,000 customers till date. Amongst
its
financial services and banking peers, Indiabulls Financial Services ranks amongst the top
few
companies both in terms of net worth and capital adequacy. Indiabulls Financial Services
has
been assigned AA+ rating and has presence in over 90 cities and towns with a total
branch
network of 140 branches.
Indiabulls Real Estate is among India's top Real Estate companies with development
projects spread across residential complexes, integrated townships, commercial office
complexes, hotels, malls, Special Economic Zones (SEZs) and infrastructure
development.
Indiabulls Real Estate partnered with Farallon Capital Management LLC of USA to bring
the
first FDI into real estate in the country. The company has a networth of Rs 7,953 Crore
and
has purchased prime land, mostly in the metros and other Tier 1 cities worth Rs 4,000
Crore
in government auctions alone. Indiabulls Real Estate is currently developing 57 million
sqft
into premium quality, high-end commercial, residential and retail spaces. The company
has
been assigned 'A+' rating.
Indiabulls Securities is one of India's leading capital markets companies providing
securities
broking and advisory services. Indiabulls Securities also provides depository services,
equity
63

research services and IPO distribution to its clients and offers commodities trading
through a
separate company. These services are provided both through on-line and off-line
distribution
channels. Indiabulls Securities is a pioneer of on-line securities trading in India.
Indiabulls
Securities in-house trading platform is one of the fastest and most efficient trading
platforms
in the country. Indiabulls Securities has been assigned the highest rating BQ-1 by
CRISIL.

Indiabulls foundation
India has witnessed an economic transformation over the past two decades, translating
into
higher incomes, better educational opportunities, improved infrastructure, a dynamic
private
sector, and leadership in the global community. We have much to be proud
of.
But we also recognize that we have a long way to go. Over 700 million people live under
$2 a
day. Learning levels in schools remain abysmally low, most of our rural population do not
have access to basic health care, regular electricity, clean water, and sanitation. India
has
some of the worlds worst statistics on basic development indicators such as
malnutrition,
infant mortality, and gender discrimination.
As a society, we are at the confluence of accelerated economic progress and extreme
deprivation, all in the same country, at the same
time.
As corporate citizens, we at Indiabulls are conscious of the opportunities and the
responsibility that this confluence presents.
Investments to increase income levels of our poorest people will expand business
opportunities manifold. Investments to improve education, health and skills training will
improve the efficiency of the economy. Protecting our environment will actually lower
our
costs of doing business. Providing our youth with gainful employment and a chance to
improve their lives will ensure societal and political stability- setting a strong foundation
for
economic sustainability. All of these investments will help create an inclusive society,
ensuring a sustainable return to our
shareholders.
The Indiabulls Group is keen to help in building an inclusive and prosperous society and
we
are beginning our efforts in this direction through Indiabulls
Foundation.

64

One of the first initiatives of the Foundation is to support the development of rural
districts.
Our aim is to support development across multiple domains in a district based approach.
Some of the areas where we want to help are in economic development and skills
training,
access to drinking water, school education, public health, agriculture and support to the
local
government.
Commercial Vehicle Loans
Indiabulls Commercial Vehicle Loans offers commercial auto loans to a variety of
business
owners. We are a preferred financer with first time buyers as well as fleet operators
providing
commercial vehicle loans with simple documentation and quick
results.
The Commercial Vehicle Finance provided by us helps the small and medium operators
to
acquire vehicles with minimum hassle and documentation. We provide customized
finance
option
Our strength lies in the quick completion of transactions, long association with
transporters
andtheintimateknowledgeofthemarketanditsnuances.
Our finance schemes are easy to understand with no hidden costs.
We assure you a quick, transparent and hassle-free
deal.
1. Product Offering

Finance for new commercial vehicles

Finance for used vehicles

Tractor Loans

2. Proposed Finance

Tyre Funding

Accidental Funding

Engine Funding

Take over loans

Top up loan on existing loan with us

65

3. Features of Loan Offering

Loan for up to 15 years old vehicles.

The best loan offering in the market up to 95% for used vehicles & 100% for new
commercial vehicle chassis

Max tenure of upto 48 months for used vehicles 60 months for new commercial
vehicle chassis

Max tenure of upto 48 months for used vehicles 60 months for new commercial
vehicle chassis

Customized loan to suit your needs

Door Step Services

Easy Documentation

Quick & Hassle free services

Attractive Rate of Interest

No

intermediary or

Senior Vice President

Direct

Regional Manager

Marketing Agent

for loan processing

Branch Manager
Senior Sales Manager

Sales
Functio

Support System

Back Office
Executive

RM/SR
M

Local
Compliance
Officer

ARM

Dealer
66

Trading Products of Indiabulls Securities

Indiabulls Securities
Trading Products

Cash Account

Intraday Account

Margin Trading

Indiabulls Securities provide three products for trading. They

are
Cash Account
Intraday Account
Margin Trading (Mantra)

Cash Account: It provides the client to buy 4 times of cash balance in his trading
account.
Intraday Product: It provides the client to buy 8 times of his cash balance in the trading
account.

Mantra Account: Also called as margin trading, is a special account to buy on leverage
for
a longer duration

67

Indiabulls Financial Services Ltd

Indiabulls Financial Services Ltd. was incorporated in the year 2005.The Auditors of
Indiabulls Financial Services Ltd. are Deloitte, Haskins & Sells. The main activity of this
company is in relation to securities and stock brokerage. It was also responsible for
setting up
one of Indias first trading platforms.

The subsidiaries of Indiabulls Financial Services Ltd. include:

Indiabulls Capital Services Ltd.
Indiabulls Commodities Pvt. Ltd.
Indiabulls Credit Services Ltd.
Indiabulls Finance Co. Pvt. Ltd
Indiabulls Housing Finance Ltd.
Indiabulls Insurance Advisors Pvt. Ltd.
Indiabulls Resources Ltd.
Indiabulls Securities Ltd.

The Bankers of Indiabulls Financial Services Ltd. are as follows:

ABN-Amro Bank
Andhra Bank
Bank of Maharashtra
Bank of Rajasthan Ltd.
Canara Bank
Centurion Bank of Punjab Ltd.
Citibank
Corporation Bank
Dena Bank
HDFC Bank Ltd
HSBC Ltd.
ICICI Bank Ltd.
IDBI Ltd
Industrial Bank Ltd.
68

ING Vysya Bank Ltd

Karnataka Bank
Punjab National Bank
State Bank Of India
Syndicate Bank
Union Bank Of India
UTI Bank Ltd.
Yes Bank Ltd.

Milestones Achieved

Developed one of the first Internet trading platforms in

India

Amongst the first to develop in-house real-time CTCL (computer to computer link)
with NSE

Introduction of integrated accounts with automatic gateways to client bank

accounts

Development of Products such as Power Indiabulls for high volume

traders

Indiabulls Signature Account for self-directed investors

Indiabulls Group

Professional Network for

69

information and trading service.

CHAPTER-IV
DATA ANALYSIS & INTERPRETATION

70

Data Analysis & Interpretation

For the purpose of data analysis and interpretation the following mutual funds have
been
chosen;

a)

SBI Magnum Equity Fund Growth

b)

Birla Sun life 95 Growth

c)

Kotak 30 Growth

d)

TATA Equity Management Fund Growth

Each product has been analyzed using the following tools and the results tabulated,
presented
graphically and the evaluation of the same has been given under the caption
'Interpretation'
below the graph.

The fund NAVs are compared with the bench mark of nifty for the
analysis.

71

For analysis Net Asset Value ( NAV) of the Four AMCS

have been taken for 18 months from August-12 to March-14

Market
Level
( NIFTY)

SBI
Magnum
Equity
fund Growth

Birla Sun
life 95 Growth

Kotak 30
Growth

TATAEquity
ManageMent
Fund
Growth

3033.45

21.08

159.95

57.62

7.94

Sep-10

3046.75

21.22

162.21

57.94

7.98

Oct-10

3121.45

21.69

163.7

59.18

8.1

Nov-10

3112.8

21.86

163.84

59.22

8.12

Dec-10

2920.4

20.7

154.38

56.44

7.7

Jan-11

2873

20.18

154.48

55.55

7.57

Feb-11

2773.1

19.75

152.69

53.99

7.42

Mar-11

2744.95

19.64

152.59

53.55

7.39

Apr-11

2835.3

20

155.28

54.64

7.53

May-11

2736.7

19.56

152.9

53.31

7.33

June-11

2828.45

19.87

154.27

54.56

7.46

July-11

2846.2

19.98

156.12

54.73

7.49

Aug-11

2796.6

19.63

155.72

53.92

7.38

Sep-11

2706.15

19.18

153.08

52.47

7.25

Oct-11

2713.8

19.11

151.88

52.5

7.24

Month
Aug-10

Nov-11

2678.55

18.71

150.67

51.76

7.14

Dec-11

2771.35

19.24

151.51

53.03

7.24

Jan-12

2849.5

19.62

152.33

54.04

7.35

Feb-12

2823.95

19.47

151.76

53.86

7.34

March-12

2874.8

19.71

152.91

54.54

7.42

Average

2854.36

20.01

155.11

54.84

7.52

72

Calculations of Risk of SBI Magnum Equity fund Growth

for the period of 18 months from August-12 to March-14

Month

Market Level ( Market

NIFTY)Return

SBI Magnum Equity

fund Growth

Aug-10

3033.45

21.08

Sep-10

3046.75

0.44

21.22

0.66

Oct-10

3121.45

2.45

21.69

2.21

Nov-10

3112.8

-0.28

21.86

0.78

Dec-10

2920.4

-6.18

20.7

-5.31

Jan-11

2873

-1.62

20.18

-2.51

Feb-11

2773.1

-3.48

19.75

-2.13

Mar-11

2744.95

-1.02

19.64

-0.56

Apr-11

2835.3

3.29

20

1.83

May-11

2736.7

-3.48

19.56

-2.20

Jun-11

2828.45

3.35

19.87

1.58

July-11

2846.2

0.63

19.98

0.55

Aug-11

2796.6

-1.74

19.63

-1.75

Sep-11

2706.15

-3.23

19.18

-2.29

Oct-11

2713.8

0.28

19.11

-0.36

Nov-11

2678.55

-1.30

18.71

-2.09

Dec-11

2771.35

3.46

19.24

2.83

Jan-12

2849.5

2.82

19.62

1.98

Feb-12

2823.95

-0.90

19.47

-0.76

Mar-12

2874.8

1.80
-0.36

19.71

1.23
-0.42

Average Return
Standard deviation (Risk)
Beta

2.75

Return

2.15
0.75

73

Graphical Presentation of SBI Magnum Equity Fund-Growth For the

period of 18 months from August-12 to March-14

8
6
4
2
0
-2

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

-4

Series2
Series1

-6
-8
-10
-12
-14

Series 1 : Market returns

Series 2 : SBI (NAV) returns

Interpretation:
SBI Magnum Equity Fund-Growth has been analyzed and it is found that there is a
negative
growth. How ever on the basis of the avg returns of SBI there is a negative growth 0.42
as
against the index avg of negative 0.36 the beta being less than 1 the stock is not highly
volatile.

74

Calculation of Risk of Birla Sun Life 95 Growth

for the period of 18 months from August-12 to March-14

Month

Market Level
NIFTY)

Market
Return

Birla Sun life 95

Growth

Aug-10

3033.45

Sep-10

3046.75

0.44

162.21

1.41

Oct-10

3121.45

2.45

163.7

0.92

Nov-10

3112.8

-0.28

163.84

0.09

Dec-10

2920.4

-6.18

154.38

-5.77

Jan-11

2873

-1.62

154.48

0.06

Feb-11

2773.1

-3.48

152.69

-1.16

Mar-11

2744.95

-1.02

152.59

-0.07

Apr-11

2835.3

3.29

155.28

1.76

May-11

2736.7

-3.48

152.9

-1.53

Jun-11

2828.45

3.35

154.27

0.90

Jul-11

2846.2

0.63

156.12

1.20

Aug-11

2796.6

-1.74

155.72

-0.26

Sep-11

2706.15

-3.23

153.08

-1.70

Oct-11

2713.8

0.28

151.88

-0.78

Nov-11

2678.55

-1.30

150.67

-0.80

Dec-11

2771.35

3.46

151.51

0.56

Jan-12

2849.5

2.82

152.33

0.54

Feb-12

2823.95

-0.90

151.76

-0.37

Mar-12

2874.8

1.80

152.91

0.76

Return

159.95

-0.28
Average Return

-0.36

Standard deviation

2.75

Beta

1.69
0.51

75

Graphical Presentation of Birla Sun life 95 Growth For the

period of 18 months from August-12 to March-14
6
4
2
0
-2

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
Series2

-4

Series1

-6
-8
-10
-12
-14

Series 1 : Market return

Series 2 : Birla sun life (NAV) Returns
Interpretation:
Birla Sun life 95 Growth have been analysed and it is found that there is a
negative growth. How ever on the basis of the avg returns of Birla Sun life
there
is a negative growth 0.28as against the index avg of negative 0.36 the beta
being
less than 1 the stock is not highly volatile.

76

Calculations of Risk of Kotak 30 Growth

for the period of 18 months from August-12 to March-14

Month

Market Level Market

( NIFTY)Return (x)

Kotak 30 Growth

Aug-12

3033.45

57.62

Sep-12

3046.75

0.44

57.94

0.56

Oct-12

3121.45

2.45

59.18

2.14

Nov-12

3112.8

-0.28

59.22

0.07

Dec-12

2920.4

-6.18

56.44

-4.69

Jan-13

2873

-1.62

55.55

-1.58

Feb-13

2773.1

-3.48

53.99

-2.81

Mar-13

2744.95

-1.02

53.55

-0.81

Apr-13

2835.3

3.29

54.64

2.04

May-13

2736.7

-3.48

53.31

-2.43

Jun-13

2828.45

3.35

54.56

2.34

Jul-13

2846.2

0.63

54.73

0.31

Aug-13

2796.6

-1.74

53.92

-1.48

Sep-13

2706.15

-3.23

52.47

-2.69

Oct-13

2713.8

0.28

52.5

0.06

Nov-13

2678.55

-1.30

7.14

-1.38

Dec-13

2771.35

3.46

7.24

1.40

Jan-14

2849.5

2.82

7.35

1.52

Feb-14

2823.95

-0.90

7.34

-0.14

Mar-14

2874.8

1.80

7.42

1.09

Return(y)

Average Return

-0.36

-0.42

Standard deviation

2.75

1.86

Beta

0.65

77

Graphical presentation of TATA Equity Management Fund Growth For

the period of 18 months from August-12 to March-14

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
-2

Series1
Series2

-4

-6

-8

Series 1 : Market returns

Series 2 : Tata Equity management (NAV) Returns

Interpretation:
TATA Equity Management Fund Growth has been analyzed and it is found that there is a
negative growth. How ever on the basis of the avg returns of TATA Equity there is a
negative
growth 0.42 as against the index avg of negative 0.36 the beta being less than 1 the
stock is
not highly volatile.

78

Comparative Study of the performance of the Selected

AMCs
Sharp index and Treynor index are calculated
For 18 months from August-12 to March-14

Name of the Fund

SBI Magnum Equity

Fund Growth

Birla

Sun

life

95

Growth

Kotak 30 Growth

TATA
Management

Return

Risk(stdde

(Rm)

v)

Bet
a

2.15

0.75

-0.28

1.69

0.51

-0.35

2.07

0.75

1.86

0.65

Equity
Fund -0.42

Growth

79

Treyno

(Rm-

(Rm-

Rf)/

Rf)/

-0.22

-0.64

-0.20

-0.67

-0.20

-0.55

-0.26

-0.73

Rf

()

-0.42

Sharp'

0.0
6
0.0
6
0.0
6

0.0
6

The graphical representation of Sharp Index:

Sharpe's Index
0.00

- 0.05

SBI Magnum Birla Sunlife 95 Kotak 30

Equity FundGrowth
Growth
Growth

TATA Equity
Management
Fund Growth

- 0.10

- 0.15

- 0.20
- 0.25

- 0.30

Name of the Fund

Interpretation:

From the above table and graph we can know that Birla sunlife and kotak are giving
good
returns and they are in first position,
And the second position is SBI

80

The graphical representation of TREYNER Index:

Trenyor's Ratio
0.00
-0.10
-0.20

SBI Magnum Birla Sunlife 95 Kotak 30

Equity FundGrowth
Growth
Growth

TATA Equity
Management
Fund Growth

-0.30
-0.40
-0.50
-0.60
-0.70
-0.80

Name of the Fund

Interpretation:

From the above table and graph we can know Kotak is performing well and it is in first
position
And the second position is SBI
The general trend in the reduction of the market price for various mutual funds studied
is not
encouraging the stock market index has also been falling continuously because of
general
economic slow downhow ever the funds are ranked considering sharp and trenyors in
the
order of performances

81

CHAPTER-V

FINDINGS
SUGGESTIONS
CONCLUSIONS
BIBILIOGRAPHY

82

FINDINGS
SHARPES: As per Sharpe performance measure, a high Sharpe ratio is preferable as it
indicates a superior risk adjusted performance of a fund. From the above table Birla
sunlife
and kotakshow a better risk-adjusted performance out of top4
AMCS.

TREYNORs: As per TREYNORS ratio the Treynors reward to volatility - having high
positive index is favorable. Therefore, as per this ratio also KotakMUTUAL FUND is
preferable.

83

SUGGESTIONS TO INVESTORS:
Investing Checklist
Financial goals & Time frame
(Are you investing for retirement? A childs education? Or for current
income? )
Risk Taking Capacity
Identify funds that fall into your Buy List
Obtain and read the offer
Documents match your objectives
In terms of equity share and bond weightings, downside
risk
protection, tax benefits offered, dividend payout policy, sector
focus
Performance of various funds with similar objectives for at least 3-5
years
Think hard about investing in sector funds For relatively aggressive
investors
Close touch with developments in sector, review portfolio regularly Look for `load'
costs
Management fees, annual expenses of the fund and sales
loads
Look for size and credentials
Asset size less than Rs. 25 Crores
Diversify, but not too much
Invest regularly, choose the S-I-P
MF- an integral part of your savings and wealth building
plans.

84

Portfolio Decision
The right asset allocation
i. Age = % in debt instruments
ii. Reality= different financial position, different allocation
iii. Younger= Riskier
2. Selecting the right fund/s
i. Based on schemes investment philosophy
ii. Long-term, appetite for risk, beat inflation equity funds best
3. TRAPS TO AVOID
4. IPO Blur
5. Begin with existing schemes (proven track record) and then
new
6. schemes
i. Avoid Market Timing
7. MF Comparison
8. Absolute returns
9. % Difference of NAV
i. Diversified Equity with Sector Funds NO
10. Benchmark returns
i. SEBI directs
ii. Fund's returns compared to its benchmark
11. Time period Equal to time for which you plan to invest
i. Equity- compare for 5 years, Debt- for 6 months
12. Market conditions
85

Recommendations and Suggestions to AMCS:

1) Brand building:
Brand building is an exercise, which every business enterprise will have. Brand is
the
soul of an institution; it survives on it, lives with it and cherishes it. Example: BIRLA
SUNLIFE MUTUAL FUND has a brand, every bank, insurance companies; mutual fund
companies have got their own brands.
2) Strength full Strategies:
Every AMC should try to turn into a more modern, a more vibrant, a more
transparent
and regulatory compliance institution. It is with this in mind, every institution should try
to
come up with verity of different type of products to fill different investment
objectives
3) Marketing tools for total quality achievement:
a) Large Network.
b) Effective Man power
c) Distribution across the Market
d) Customer relations(Building better relationships)
e) Value added service
f) Better transparency level
g) Building brand name as a disciplined player

4) Innovation:
MF industry can be classified morely into three categories like equity, debt and
balanced. And there is also complexive in nature. Fund managers are not able to reach
niche
market. The products are should be innovative that can meet niche market. Here MF
should
follow the FMCG industry innovative strategy.
86

The Ground rules of Mutual Fund Investing

Assess yourself
1) Try to understand where the money is going
2) Don't rush in picking funds, think first
3) Invest. Dont speculate
4) Dont put all the eggs in one basket
5) Be regular
6) Do your homework
7) Find the right funds
8) Keep track of your investments
9) Know when to sell your mutual funds

87

CONCLUSIONS

From the study analysis conducted it is clear that in EQUITY FUNDS-BIRLA SUNLIFE
MUTUAL FUND is performing very well.

Investing in the KOTAK MUTUAL FUND (GROWTH) will leads to profits.

By seeing the overall performance KOTAK MUTUAL FUND is performing very well.

The prospective investors are needed to be made aware of the investment in mutual
funds.

The Industry should keep consistency and transparency in its management and
investors
objectives.

There is 100% growth of mutual fund as foreign AMCS are in queue to enter the Indian
markets.

Mutual funds can also perctrate in to rural areas.

88

BIBILIOGRAPHY

I. TEXT BOOKS
Donald E Fischer

Security Analysis Portfolio Management

Ronald J Jordan
H.Sadhak

Mutual Fund in India

II. WEB SITES

www.amfiindia.com
www.hdfc.com
www.bseindia.com
www.nseinda.com
www.bluechipinda.co.in
III. MAGAZINES
Business India
Business World
IV. NEWS PAPERS
Economic Times
Business Standard.

89