INVESTMENT IN SYSTEMATIC INVESTMENT PLAN IN

SATNA CITY

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 TABLE OF CONTENTS

Page
\ Content No.

1 Industry Analysis……………………………………….. 8

2 Company Analysis………………………………………… 16

3 SWOT Analysis……………………………………… 33

4 Discussion on Training………………………….. 34

5 Introduction………………………………………….…….. 37

6 Classification of Mutual Funds……………………….. 40

7 Systematic Investment Plan………………………….. 49

8 Research Methodology………………………………… 56

Title of the study

Duration of the project

Objective of the study

Simple size &method

Scope of the study

Limitation of the study

9 Analysis and Interpretation ……………………………….… 61

10 Facts and Findings …………………………….. 71

11 Conclusion ………………….………………...………… 72

12 Suggestion……………………………………………… 73

13 Annexure ……………..……………………………………… 74

14 Bibliography……………………………………………. 76

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CHAPTER 1
Industry Analysis

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INTRODUCTION
The financial system is a set of institutional arrangements through which financial surpluses
available in the economy are mobilized. A financial system, which is inherently strong,
functionally diverse and displays efficiency and flexibility, is critical in creating a market-driven,
productive and competitive economy. A mature financial system has to gear up and undergo
varied and comprehensive changes in order to achieve rapid economic development.
The financial sector reforms in India in the early nineties has resulted in explosive growth of the
economy, opening up of the Indian financial market to foreign and private Indian players, large
inflow of Foreign Ninth AIMS International Conference on Management Institutional Investors,
increased competition and better product offerings to consumers. One of the major developments
of this decade has been the take-off of mutual funds. Mutual funds have emerged as a strong
financial intermediary and are the fastest growing segment of the financial services sector in
India. It aims at promoting a diversified, efficient and competitive financial sector increasing the
return on investment and promoting and accelerating the growth of the economy. It is a medium
of investment suitable to the small investors, who are not able to invest in stock market directly.
Mutual funds now play a very significant role in channelizing the savings of millions of
individuals. The mutual fund industry in India over the years has seen dramatic improvements in
terms of quantity as well as quality of product and service offerings in recent years. The
tremendous growth of Indian Mutual Funds industry is an indicator of India’s efficient financial
market and the trust which investors have on the regulatory
Environment. Millions of investors rely on mutual funds as their primary investments because
they offer a convenient, cost-effective and easy way to invest in the financial markets. The
Securities Exchange Board of India (SEBI) regulates this fast growing industry and it is the
representative body of all mutual funds in thecountry.
Every mutual fund has a goal - either growing its assets (capital gains) and/or generating income
(dividends) for its investors. Distribution in the form of capital gains (short-term and long-term)
and dividends may be passed on (paid) to the shareholders as income or reinvested to purchase
more shares. A mutual fund is valued daily and reports a price known as a Net Asset Value
(NAV) per share. In its simplest form, a NAV is the total value of all the securities held in a fund
divided by the total number of shares owned by its shareholders. As the price of the NAV
increases or decreases, the shareholder's value will increase or decrease.

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Current Scenario of Mutual Funds
The global economic environment was conducive and this led to the explosive growth of mutual
funds in most countries particularly since 1980’s. This growth can be attributed to the strong
emergence of the market economy which depends more on the growth led by the stock market.
Mutual funds found increasing acceptance in the developed countries when compared to the
developing countries in the early and mid 90’s but gradually it found its place even in the
developing countries because of its advantages. Gradually the number of mutual funds increased
significantly worldwide and many developed countries started designing country specific funds
to match the trend prevailing in other developed countries.

Evolution of Mutual Fund Industry in India

The mutual fund revolution that was sweeping the other countries bypassed India also. The
formation of Unit Trust of India marked the evolution of the Indian mutual fund industry in the
year 1963. The primary objective at that time was to attract the small investors and it was made
possible through the collective efforts of the Government of India and the Reserve Bank of India.
UTI commenced its operations from July 1964 and different provisions of the UTI Act laid down
the structure of management, scope of business, powers and functions of the trust as well as
accounting, disclosures and regulatory requirements for the trust. Even though the growth of the
mutual fund industry was very slow in the beginning, it accelerated when the public sector and
private sector mutual funds entered the market after the year 1987. The mobilization of funds and
the number of players operating in the industry reached new heights as investors started showing
more interest in mutual funds. Investors' interests were safeguarded by SEBI and the
Government offers tax benefits to the investors in order to encourage them. SEBI also introduced
SEBI (Mutual Funds) Regulations, 1996 and set uniform standards for all mutual funds in India.

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History of the Indian Mutual Fund Industry

The mutual fund industry in India started in 1963 with the formation of Unit Trust of
India, at the initiative of the Government of India and Reserve Bank. Though the
Growth was slow, but it accelerated from the year 1987 when non-UTI players entered
the Industry.
In the past decade, Indian mutual fund industry had seen a dramatic improvement, both qualities
wise as well as quantity wise. Before, the monopoly of the market had seen an ending phase; the
Assets Under Management (AUM) was Rs67 billion. The private sector entry to the fund family
raised the AUM to Rs. 470 billion in March 1993 and till April 2004; it reached the height if Rs.
1540 billion.
The Mutual Fund Industry is obviously growing at a tremendous space with the mutual
fund industry can be broadly put into four phases according to the development of the
sector. Each phase is briefly described as under.

First Phase – 1964-87

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

Second Phase – 1987-1993 (Entry of Public Sector Funds)

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

Third Phase – 1993-2003 (Entry of Private Sector Funds)

1993 was the year in which the first Mutual Fund Regulations came into being, under which all
mutual funds, except UTI were to be registered and governed. The erstwhile
Kothari Pioneer (now merged with Franklin Templeton) was the first private sector
Mutual fund registered in July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive
And revised Mutual Fund Regulations in 1996. The industry now functions under the
SEBI (Mutual Fund) Regulations 1996. As at the end of January 2003, there were 33
Mutual funds with total assets of Rs. 1,21,805 crores.

Fourth Phase – since February 2003: In February 2003, following the repeal of the Unit
Trust of India Act 1963 UTI was
Bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust
Of India with assets under management of Rs.29,835 crores as at the end of January
2003, representing broadly, the assets of US 64 scheme, assured return and certain
Other schemes.
The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is
Registered with SEBI and functions under the Mutual Fund Regulations. Consolidation
And growth. As at the end of September, 2004, there were 29 funds, which manage
Assets of Rs.153108 crores under 421 schemes.

Major Mutual Fund Companies in India:

Axis Asset Management Company

Birla Sun Life Mutual Fund

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Bank of Baroda Mutual fund

DBS Chola Mutual Fund

Franklin Templeton India Mutual Fund

HDFC Mutual fund

ICICI Prudential Mutual fund

ING Mutual fund

JM Financial Mutual fund

JP Morgan Mutual fund

Kotak Mahindra Mutual fund

LIC Mutual fund

Reliance Mutual fund

Sahara Mutual fund

State Bank of India Mutual fund

Standard Charted Mutual fund

Sundaram BNP Paribas Mutual fund

Tata Mutual fund

Unit Trust of India Mutual fund

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ASSOCIATION OF MUTUAL FUNDS IN INDIA (AMFI):

With the increase in mutual fund players in India, a need for mutual fund association in India
was generated to function as a non-profit organization. Association of Mutual Funds in India
(AMFI) was incorporated on 22nd August, 1995. AMFI is an apex body of all Asset
Management Companies (AMC) which has been registered with SEBI. Till date all the AMCs
are that have launched mutual fund schemes are its members. It functions under the supervision
and guidelines of its Board of Directors.
Association of Mutual Funds India has brought down the Indian Mutual Fund Industry to a
professional and healthy market with ethical lines enhancing and maintaining standards. It
follows the principle of both protecting and promoting the interests of mutual funds as well as
their unit holders.

The objectives of Association of Mutual Funds in India:

The Association of Mutual Funds of India works with 30 registered AMCs of the country. It has
certain defined objectives which supports the guidelines of its Board of Directors. The objectives
are as follows:
This mutual fund association of India maintains high professional and ethical standards in all
areas of operation of the industry.

It also recommends and promotes the top class business practices and code of conduct which
is followed by members and related people engaged in the activities of mutual fund and asset
management. The agencies who are by any means connected or involved in the field of capital
markets and financial services also involved in this code of conduct of the association.

AMFI interacts with SEBI and works according to SEBIs guidelines in the mutual fund industry.

Association of Mutual Fund of India does represent the Government of India, the Reserve Bank of
India and other related bodies on matters relating to the Mutual Fund Industry.

It develops a team of well qualified and trained Agent distributors. It implements a programme of
training and certification for all intermediaries and other engaged in the mutual fund industry.

AMFI undertakes all India awareness programme for investor’s in order to promote proper
understanding of the concept and working of mutual funds.

At last but not the least association of mutual fund of India also disseminate information’s on
Mutual Fund Industry and undertakes studies and research either directly or in association with other
bodies.

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STRUCTURE OF THE INDIAN MUTUAL FUND INDUSTRY:

Structure wise mutual fund industry can be classified into three categories;
Unit trust of India:
The Indian mutual fund industry is dominated by the unit trust of India, which has a total corpus of
51000 crore collected from over 20 million investors. The UTI has many fund/ schemes in all
categories in equity, balanced, debt, money market etc. With some being open ended and some being
closed ended. The unit scheme 1964 commonly referred to as US64,which is a balanced fund, is the
biggest scheme with a corpus of about 10000 crore.

Public sector mutual fund:

The second largest categories of mutual funds are the ones floated by nationalized banks .can bank
asset management floated by Canara bank and SBI funds. Management floated by State Bank Of
India is the largest. Online trading is a great idea to reduce management expenses from the current
2% of total assets to about 0.75% of the total asset.
72% of the crore-customer base of mutual fund in the top 50-broking firms in the US is expected to
trade on line by 2003

Private Sector Mutual fund:

The third largest categories of mutual funds are the ones floated by the private sector domestic
mutual funds and the private sector foreign mutual funds. The largest of these in private sector
domestic mutual funds are Reliance mutual fund, JM capital management company ltd. Tata mutual,
Axis mutual fund, Birla sun life asset management pvt. Ltd. and in private foreign mutual funds these
are alliance capital asset management private ltd, Franklin Templeton Investments, Sun F&C asset

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 Chapter 2
Company Analysis

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ABOUT THE COMPANY

EDELWEISS GROUPstarted its journey in Mumbai in the year 1995, by two IIM
graduates, Mr. Rashesh Shah and Mr. Venkat Ramaswami.

“Ideas create, values protect”

is the slogan and depict the mission statement of Edelweiss group.

“Our Reputation and Image is more important than any financial reward. Reputation is hard
to build and even harder to rebuild. Reputation will be impacted by our ability to think for
our clients, maintain confidentiality and by our adherence to our value system.”

Mr.Rashesh Shah

Mr. Venkat Ramaswami

The Logo: Edelweiss, a rare flower found in Switzerland. A graphic flower that represents
ideas! Around it, the protective arms of the letter ‘E’:

Edelweiss believes ideas create wealth, but values protect it.

It is the practice of this core thought that has led to Edelweiss becoming one of theleading
financial servicescompany in India.

Its current businesses include:

 Investment Banking,
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  Securities Broking, and
 Investment Management.

Edelweiss also provides a wide range of services to:

 Corporations,
 Institutional Investors and
 High Net-Worth Individuals.

Headquarter based in Mumbai, India.

Key People: Chairman & Founder: Mr. Rashesh Shah (IIM Graduate 1995 batch) and
Venkat Ramaswami.

Designated director: Naresh Kothari.

Directors: Rashesh Shah, Venkat Ramaswami and Hiralal Chopra.

Type of industry: investment banking, brokerage and asset management firm.

Total market capitalization: About Rs. 22,877 cr.

Total number of employees: 3,900

Edelweiss was previously into niche marketing only, dealing with the High Net worth
Individuals (HNIs) clients only. Looking at the current market scenario, company is targeting the
Retail Segment with its newOnline Trading Portal.

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The company sights the need for entering into the retail segment by seeing the saturation of the
niche market and the exploration of the areas which was left untouched by the organization. The
idea behind this is toRepositionthe company from niche marketer to mass marketer. The brand
repositioning of the company is done in order to withstand the current market scenario (Global
Economic Crisis).

The product or the service that the company has come up with is thePrepaid BrokingPlanfor
both the retail as well as HNI customers. Basically every broking firm offers dematerialization
and the trading account with some charges associated to it and the main source of income is the
brokerage that is collected on every transaction made by the customer, which is a continues
source of income.

The prepaid account is like mobile cash card which has to be recharge first and then can be used
for a year. The client has to pay the brokerage in advance which will be deducted on every
transaction. The client can recharge the account as the balance gets over before the validity
expires.

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Product and Services
Investment Banking

Overview
Our Investment Banking business is dedicated to providing corporations, entrepreneurs and
investors, the highest quality independent financial advice and transaction execution. Our
professionals offer a full range of services and transaction expertise, including private
placements of equity, capital raising services in public markets, mezzanine and convertible debt,
mergers and acquisition and restructuring advisory services. We have a track record of
successfully closing more than 100 transactions to date.

Offerings
Private Equity Advisory - We have been a leading Private Equity advisor for over a decade and
have developed a strong expertise across industries which enable us to recognize emerging
industry themes and position transactions within the context.
Structured Finance Advisory - Over the years, we have built up significant expertise in
Structuring appropriate financing solutions for client specific situations and identifying and
Placing the transaction with institutional investors. Our portfolio of solutions comprises the following
Promoters Funding and Acquisition Financing.

Mergers and Acquisitions Advisory - Edelweiss’ M&A team provides insights into how
companies can grow and enhance their value. The M&A team are engaged in turnkey
transaction management and advise a diverse range of clients in medium to large transactions.
Our key strengths include independent advice, deep sector knowledge backed by professionals
with a range of training and experience that spans across multiple cross-border deals and our
relationships with large corporate.

Real Estate Advisory - Our advisory solutions are primarily focused on capital rising and
coverthe optimal financing mix, project valuation, investment structuring and accomplishing
capitalraising at either the enterprise level or the asset level. We manage Real Estate IPOs, QIPs,
adviseenterprise level private equity financings, and enterprise level mezzanine financing and
structured debt. We have completed over $ 700 million in capital rising in the last 18 months
across multiple formats.

Equity Capital Markets - We are in the vanguard of equity capital markets having brought to
themarket a large number of successful and path breaking transactions. We advise leading
Indiancompanies, banks, institutions and businesses which are seeking to mobilize capital from
investors in India and overseas. Within the practice, we provide opportunities for clients to
raise funds through the following – Initial Public Offering (IPOs) Follow-on Public
Offerings(POs)Qualified Institutional Placements(QIP) Rights Issues Preferential Allotments
Foreign CurrencyConvertible Bonds(FCCBs) Global Depository Receipts(GDRs)

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 Infrastructure Advisory - A critical ingredient for sustainable development in India is the
pressing need for Infrastructure creation on a commercially viable basis. This signifies immense
opportunities and challenges for the sector. Recognizing this, Edelweiss’ new Infrastructure
practice has been formed to provide innovative solutions tailored to the unique financing and
advisory requirements of Indian infrastructure projects and developers. Our team has a
dedicated focus on the infrastructure sector, with considerable experience, a deep
understanding and a vast network of key relationships. We provide Infrastructure project
companies and developers the full range of capital and advisory services.

Debt Restructuring Advisory - At Edelweiss we have a very competent team offering

comprehensive debt restructuring solutions, both under the formal Corporate Debt
Restructuring (CDR) mechanism as well as negotiations with lender/consortium of lenders. Our
team of senior ex-bankers and restructuring specialists have unparalleled experience of
restructuring debts worth over Rs. 75,000 crores, and an ability to provide complete solutions
and support to the Corporate.

Institutional Equities

Edelweiss Capital’s Institutional Equities Business (IE) has become one of the top five domestic
Brokerage houses and top three derivatives desks. It is the only brokerage on the Street with a
quantdesk that provides a wide product range, servicing all investor categories. The innovative
mind set,unparalleled research, agile sales teams, and intensive execution systems have enabled
us to relentlesslyservice our clients in different ways. It caters to a wide clientele comprising
leading domestic andinternational institutional investors, including Pension Funds, Hedge Funds,
and Mutual Funds, insurance
Companies and banks.

Asset Management

Overview
Edelweiss Asset Management offers a range of investment products and advisory services across
the riskreturn spectrum to individual and institutional investors. Our close focus on client
requirements is ourinspiration in designing products which offer the best opportunity for asset
growth with a constant focuson risk and preservation of capital.

Offerings
Portfolio Management - Edelweiss offers the discerning investor an opportunity to access its
asset management expertise through its portfolio management service (PMS). The basic
objective of this product is to provide unbiased investment management strategy based on
rigorous fundamental analysis while taking cognizance of market conditions and movements.
Mutual Funds - Edelweiss Asset Management Limited follows a research based and process
oriented investment approach. Edelweiss Asset Management Limited is committed to observe
the highest ethical standards while deploying investors’ monies, servicing investors and dealing
with business partners.

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Wealth Management

Overview
It is a specialized profession where our experts combine their efforts to meet the wealth planning,
investment, and financial management needs of individuals, families, family offices, or
corporate.Edelweiss Wealth Management takes one step closer to you, by providing an "all-in-
one approach”.Advice on asset allocation and thereby creating customized financial solutions for
HNWIs, NRIs, Trustsand Corporate. We offer advisory services on Structured Products,
Portfolio Management, MutualFunds, Insurance, Derivative Strategies, Direct Equity, IPOs, Real
Estate Funds and Art Funds.
Private Client Brokerage

Overview
The Private Client Services Group at Edelweiss is focused on providing products, strategies and
servicesto High Net worth Individuals and Corporate Clients. We have geographic reach through
our Branches,Channel Partners & Investment Consultants in over 19 locations in India. The PCG
team has highlytrained equity professionals, who act as your Equity Advisor. Our ESL Equity
Advisor proactively helpsyou take informed investment decisions and build a healthy portfolio.
We draw on our strong presenceand industry leadership to develop a portfolio of offerings
designed to serve the spectrum of financial
needs. Our main objective is to provide clients with all the tools and services they need to reduce
theadministrative burdens of managing money and focus on what you do best - maximizing your
tradingperformance, building your business, and attracting new sources of capital.

Offerings
Cash Equity - Providing research based advice on select stocks from across sectors to meet
client’s investment requirement ranging from positional trading to long term investment goals.
For our clients I provide ongoing portfolio consultation with a dedicated relationship manager as
one point contact for all day-to-day execution of trades and other service requirements such as
advisory on investments.
Derivatives - Edelweiss being a pioneer in Quantitative & Alternative Research, I leverage
this
strength for our derivatives strategies focused towards short-term / medium investments of
clients in PCG. Derivative Strategy group, through its dedicated research team provides seamless
execution for its clients with trading view. The stock ideas generated are enhanced by
combination of technical view and derivative strategy along with the statistical data. Based on
the Quantitative Research products such as Pair Trades & Alpha Trades are also initiated
whenever I identify the opportunity.
Financing - I offer various products and services to individuals and corporates with a close
focus
on client requirements while designing our products. Over a period of time I have been offering
short term loans against securities and/or to buy new securities. I also provide finance for
investment in primary market issues. I help promoters by financing against their share holding
to meet their business requirements, expansion of businesses and diversification of the lines of
business. I possess expertise in financing short and long term loan facility, risk analysis, transfer
and assessment besides a broad spectrum of services.

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Financing

Overview
Edelweiss Housing Finance Limited (EHFL) is a Housing Finance Company incorporated under
the aegis of the National Housing Bank (NHB). It is part of the Edelweiss Group of Companies.
EHFL has an array of loan solutions which can be tailored to your requirements. If you’re
looking for a Home Loan, do apply to EHFL for the highest loan amount in the shortest time.
Offerings
Home Loans
Loan against property
25 year loan - The Newly launched 25 year Home loans help you purchase a property and
repay in lower / easily manageable installments
Refinancing - If you have already purchased a property and used your own funds or borrowed
from friends or relatives for the same, I could re-finance the same.
Balance transfer & top up - If you already have a Home loan or a Loan against Property
running with any Bank or other financier, you could move the same to EHFL a better rate of
interest and a longer tenor, giving you the advantage of a lower EMI. You can also avail of an
additional ("Top-Up") loan against same property.
1.

Position of the Edelweiss broking ltd

CORPORATE STRUCTURE

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Board of Directors

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Financial Performance at a Glance:

Financial Highlights

I. Consolidated Financial Information:

(Rs in million)

2011-12 2010-11

Total Income 16,706.87 14,290.12

Total Expenditure 14,719.90 10,790.00

Profit BeforeTax 1,986.97 3,500.12

Provision for Tax 680.86 1,030.97

Profit After Tax 1,306.11 2,469.15

Less: Share of Minority Interest 28.68 138.99

Profit for the year after 1,277.43 2,330.16

Minority interest

Add: Surplus brought forward

from previous year 7,716.86 6,407.19

Profit available for appropriation: 8,994.29 8,737.35

Less: Appropriations

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Interim Dividend 226.99 187.98

Proposed Dividend 227.34 263.24

Transfer to Reserves 272.22 493.69

Dividend Distribution Tax 85.24 75.58

Surplus carried to the 8,182.50 7,716.86

Balance Sheet

Earnings per equity share

(Face Value - Rs 1/-)

(Rs in million)

2011-12 2010-11

Basic (Rs) 1.69 3.10

Diluted (Rs) 1.66 3.00

Total Income 2,072.91 4,395.55

Total Expenditure 1,313.13 3,771.84

Profit Before Tax 759.78 623.71

Provision for Tax 73.44 36.46

Profit After Tax 686.34 587.25

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Add: Surplus brought
forward from previous year 106.23 42.76

Profit available for appropriation: 792.57 630.01

Less: Appropriations

Interim Dividend 226.99 187.98

Proposed Dividend 227.34 263.24

Transfer to Reserves 68.63 58.73

Dividend Distribution Tax (13.83) 13.83

Surplus carried to the Balance Sheet 283.44 106.23

Earnings per equity share

(Face Value - Rs 1/-)

Basic (Rs) 0.91 0.78

Diluted (Rs) 0.89 0.76

Dividend

Edelweiss over the past years has delivered strong operating and financial performance since its
inception. It has consistently demonstrated a strong track record of high growth and profitability.
Its Revenues and PAT have grown at an 11-year CAGR of 80% and 75% respectively till FY10.

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As on 30th September 2010 Edelweiss Group’sNet worth after minority interest stood at over `
23.35 billion (` 28.09 billion including minority interest), indicating a strong balance sheet.
Equity capital is the primary source of funding for the group besides debt. The leverage as on
30th September „10 is 2.17 times including the Minority Interest indicating a healthy position
whereby the balance sheet can be further levered easily.

Consolidated Financial Performance of Edelweiss Capital Limited:

Edelweiss benefits from a strong and liquid balance sheet with a low leverage. A strong capital
base and adequate profitability year after year allows Edelweiss to constantly invest in new
businesses with an eye on future growth while scaling up the existing businesses. A large capital
base also allows it to transact larger volumes of broking and trading in the markets giving it a
leadership position in Institutional Equities business. It also enables the group to add debt capital
as and when required at reasonable rates. Its market capitalization as on 30th September ‟10 was
over ` 41 billion and places the company among top 5 brokerage houses in the country by market
cap.

Highest Short–Term Credit Ratings

Edelweiss Capital Limited and three other group companies enjoy highest short term rating as
under:
(As on 30th September „10) Rating Agency Rating
Entity
Edelweiss Capital Limited
Long-Term Debt Programme ICRA LAA-/LAA- pn/ LAA-
pp/Stable
Short-Term Debt Programme CRISIL P1+
Edelweiss Securities Limited
Short-Term Debt Programme CRISIL P1+
ECL Finance Limited
Short-Term Debt Programme ICRA A1+
Long Term Debt Programme ICRA LAA- pp (SO)/Stable
Long Term Debt Programme CRISIL AA-/Stable
Short-Term Debt Programme CRISIL P1+
Edelweiss Commodities Ltd. (formerly ECAL Advisors Ltd.)
Short Term Debt Programme CRISIL P1+

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Edelweiss Strengths

1. Brand: Edelweiss – the brand, today is a strong franchise in the capital markets backed by a
consistent focus on execution and innovation. It constantly emphasizes innovation which is
reflected in leadership in new products and asset classes and new client segments.

2. Edelweiss‟ Core Strategic Approach to business is founded on growth with profitability

backed by synergistic diversification across the businesses; Control and flexibility of cost, capital
and balance sheet, diversified revenue streams, strong risk management and organization build
up by developing leadership in bench and investing in culture which rewards thinking about
long-term in a partnership cohesive approach. It believes in growth through adjacent markets,
adjacent asset classes, adjacent product classes and adjacent client segments.

3. Integrated & Diversified Business Model: Edelweiss derives its strength from a distinct but
complementary set of diversified businesses which also protect the Group from any downward
cyclical pressures. To this end, Edelweiss continues to look to invest in long term business
opportunities in financial services. Its core business diversification approach is based on growth
through adjacent markets and through widening the product mix in existing businesses. The
synergistic diversification ensures three broad streams of revenue, viz. Agency fee &
commission, Treasury operations income and Interest income contribute approximately one-third
each of the total revenues.

4. Balance Sheet: Edelweiss benefits from a strong and liquid balance sheet with a low leverage.
Its focus while managing the Balance Sheet is on strong risk management and capital
preservation. A strong capital base of ` 28.09 billion and adequate profitability year after year
allows Edelweiss to constantly invest in new businesses with an eye on future growth while
scaling up the existing businesses. Edelweiss is also shielded from any adverse asset liability
mismatch as its asset-side duration is less than 9 months whereas its liabilities have duration of
about 120 months. Low leverage on the balance sheet and highest short term credit ratings allow
it ample leeway to lever the balance sheet further. The flexibility in the cost structure enables it
to protect the margins, strong risk management focuses on preservation of capital and the group
maintains adequate liquidity cushion to ensure smooth business operations across cycles.

5. Edelweiss Business Model is to be able to adjust to downturn in markets with inherent cost
flexibility and be able to quickly convert growth opportunities into business when they reappear.
Our business growth perspective is aligned to the medium term of 3 to 5 years.

6. Board level Commitment: A board comprising of three independent and one non-independent
non-executive director out of a total of six directors, all of whom play a governing role and
provide expertise and insight into building Edelweiss into one of the most reputable
organizations with an admirable compliance and corporate governance ethos.

7. Management: Edelweiss has an experienced and stable senior management team. We also
have a strong middle management team, which comprises of a 50 member Senior Leadership
Group and an 80 member Leadership Group forming the bench strength. The four tier leadership
pool thus covers over 5% of the total employee strength of the group. Edelweiss constantly

24
emphasizes training and developing leadership and its 100 seater Training Centre at Alibaug
(near Mumbai) is now operational.

8. Employee Ownership: Edelweiss has a widely distributed employee ownership and was
among the pioneers in the financial services industry in instituting an employee stock option
scheme. It now has one of the largest ESOP pool in the financial services space in India and over
600 employees are covered through ESOPs. The employees including key management own
over 50% of the company.

9. ISO Certification: Edelweiss has now been certified as ISO 9001:2000 compliant. This is an
organisation wide certification, which covers all lines of businesses and support functions. It
ensures that Quality Management System (QMS) of Edelweiss complies with International
Standards.

25
COMPETITORS

26
Edelweiss VS Competitor’s

27
SWOT ANALYSIS

STRENGTH WEAKNESS

 No access to rural market.

 No direct link between investors
 A well-known name in
and AMC.
financial companies.
 Wide experience in this field.
 Dedicated employees.
 Ever growing distribution
network.
 Good Research team.
 Easy access to branch.

Opportunities THREATS

 Positive outlook of People  Highly volatile and uncertain

toward mutual funds. market.
 Untapped market.  Large number of financial giants
present in this market

28
CHAPTER 3
Discussion on Training

29
Roles and Responsibilities

My scope of work during internship was to generate business for the company by way of
opening demats account and persuading peoples to invest in mutual funds. I was given intensive
training during the starting of our internship about the product and the details about it like the
different brokerage plans, various value added services provided by the company, extensive
research done by the company to provide the customers with accurate information and provide
the customers with opportunities to earn handsome returns on their investments.

During my internship I was given the task of calling customers and trying to convince, them to
open demat account and investing in the stock market and mutual funds. I also have the task of
convince the customers that investing in the stock market and mutual funds is a better option
than investing money in FD, Post office schemes etc. The average return from the stock market
during the past five years is about 15% p.a. Once I had convinced the client over the phone then
the next task was to ask for a meeting where I would clear any remaining doubts that the client
may have and do the necessary paper work that is required to open an demat account.

Apart from tele calling other ways of generating leads for the company was by way of talking to
people in the market and getting them to invest in the stock market. Taking to them about ways
by which they could start investment in the stock market.

Our task was to interact with people and provide them with basic knowledge about investment
opportunities in the stock market. Our primary goal was to generate leads for the company and
getting people to invest in the mutual funds and clear there misconception that investment in the
mutual funds is risky and they would suffer losses.

30
Challenges Faced:
The challenges that I faced during our SIP was from two different sets of people, first sets of
peoplewhere those who have very little or no knowledge of the stock markets and how it works,
the second set of people where those who are already active in the stock markets and are not
ready to switch to a different company. I had to tackle these two different sets of people very
differently; our approach would have to very different in these two cases.

The main challenge that I faced was to convince new people to invest and get involved in the
stock market. In India only a very small percentage of the population invest in the stock markets.
There is very little awareness about investment opportunities that exists. I had to start from the
scratch in order forthem to understand how the stock markets works and that there investment
are absolutely safe andsecure. People also have the preconceived opinion that investment in the
stock markets is a risky business, they are happy to invest in various other sources like banks,
property, jewelry etc. They are of the opinion that once you have invested your money in the
stock markets it will never come back.

Also they are not ready to trust a private company that would manage their investments. They
prefer to invest in public sector banks and other govt. companies. They are not at all comfortable
with the idea of investment in the stock markets even if it could earn them better returns. They
are comfortable with whatever they are earnings are not ready to explore new areas.

To get people who are already active in the stock markets to switch to a new company was
equally challenging if not more. Here the problem was to convince people to try out our
company and how I would offer products and services to them than they are already getting form
their existing broking company. It would take a lot of persuasion and convincing, many round of
meeting where I would present our products and let them compare with their existing products.
Also there would be lots of negotiation about the different brokerage plans and brokerage rates. I
would have to offer the clients very low brokerage rates and multiple benefits to get them to
switch. They would demand very low brokerage rates and various other facilities some of those
would not be possible for us to give.

My seniors provided me with guidance and motivation that helped me in my interaction with the
clients and clearing their doubts. They explained to me in detail the various benefits of the
product and how the customer would benefit from it.

31
INTRODUCTION
Mutual Fund

A mutual fund is an instrument that brings together money from many people and invests it in
stocks, bonds or other assets. The combined holdings of stocks, bonds or other assets the fund
owns are known as its portfolio. Each investor in the fund owns shares, which represent a part of
these holdings A mutual fund is a professionally managed investment product that sells shares to
investors and pools the capital it raises to purchase investments A fund typically buys a
diversified portfolio of stock, bonds, and money market securities, or a combination of stock and
bonds, depending on the investment objectives of the fund. Mutual funds may also hold other
investments, such as derivatives. A fund that makes a continuous offering of its shares to the
public and will buy any shares an investor wishes to redeem, or sell back, is known as an open-
end fund. An open-end fund trades at net asset value (NAV).
An investment vehicle that is made up of a pool of funds collected from many investors for the
purpose of investing in securities such as stocks, bonds, money market instruments and similar
assets. Mutual funds are operated by money managers, who invest the fund's capital and attempt
to produce capital gains and income for the fund's investors. A mutual fund's portfolio is
structured and maintained to match the investment objectives stated in its prospectus.

32
Advantages of Mut1ual Funds

- Diversification

- Professional Management

- Regulatory oversight

- Liquidity

- Convenience

- Low cost

- Transparency

- Flexibility

- Choice of schemes

- Tax benefits

- Well regulated

Working of Mutual Funds:

The following figure explains the working of Mutual funds

33
 Theimportant terms ofthe figure are explained as follows:

Fund Sponsor:
The sponsor is the company which sets up the mutual fund. It means anybody corporate acting
alone or in combination with another body corporate established a mutual fund after initiating
and completing the formalities

Trust:
MF or trust can either be managed by the Board of Trustees, which is a body of
individuals,orby aTrustCompany,whichisacorporatebody.MostofthefundsinIndiaare managedby
Board of Trustees.Thetrusteebeing theprimary guardianoftheunitholders‟ funds
andassetshastobe a person of highreputeandintegrity.The trustees,however, donot directly
managetheportfoliosecurities.Theportfolioismanagedby theAMCasperthe defined
objectives,accordancewith Trust Deed and SEBI(MutualFunds)Regulations.

AssetManagement Company
(AMC):
TheAMC,whichisappointed by thesponsor orthetrusteesandapproved by SEBI,actslike
theinvestmentmanagerofthetrust.TheAMCfunctionsunderthesupervisionofitsown Board of
Directors,and alsounder thedirectionofthetrusteesand SEBI.AMC,inthenameof
thetrust,floatsandmanagesthedifferentinvestment‟schemes‟asperthe SEBI Regulations and as
pertheInvestmentManagement Agreement signed with theTrustees.
Other
Apart from these, the MF has some other fund constituents, such as custodians and depositories,
banks, transfer agents and distributors.
Thecustodianisappointedforsafekeepingofsecuritiesandparticipatingintheclearing
systemthroughapproveddepository.The bankershandlethefinancialdealingsofthefund. Transfer
agents are responsible for issue and redemption of units of MF.

34
RiskReturnMatrix:
The riskreturntrade-off indicatesthatifinvestoriswilling totakehigherriskthen
correspondinglyhecan expect higherreturns and viceversaif hepertains to lowerrisk
instruments,whichwouldbesatisfied by lowerreturns. Forexample,ifaninvestoroptsfor bank
FD,whichprovidemoderatereturnwithminimalrisk.Butashe movesaheadtoinvestin
capitalprotectedfundsandtheprofit-bondsthatgiveoutmorereturnwhichisslightlyhigher as
compared to thebankdeposits butthe risk involved alsoincreases.
Thusinvestorschoosemutualfundsastheirprimary meansofinvesting,asMutualfunds provide
professionalmanagement, diversification, convenience and liquidity. That doesn’t
meanmutualfundinvestmentsareriskfree.Thisisbecausethemoneythatispooledinarenot
investedonly indebtsfundswhicharelessriskierbutarealsoinvestedinthestockmarkets which
involves a higher risk but can expect higherreturns.
Mutual funds can be classified as follow:

35
  Based on their structure:
 Open-ended funds: Investors can buy and sell the units from the fund, at any point of
time.
 Close-ended funds: These funds raise money from investors only once. Therefore, after
the offer period, fresh investments cannot be made into the fund. If the fund is listed on a
stocks exchange the units can be traded like stocks (E.g., Morgan Stanley Growth Fund).
Recently, most of the New Fund Offers of close-ended funds provided liquidity window
on a periodic basis such as monthly or weekly. Redemption of units can be made during
specified intervals. Therefore, such funds have relatively low liquidity.

 Based on their investment objective:

 Equity funds: These funds invest in equities and equity related instruments. With
fluctuating share prices, such funds show volatile performance, even losses. However,
short term fluctuations in the market, generally smoothens out in the long term, thereby
offering higher returns at relatively lower volatility. At the same time, such funds can
yield great capital appreciation as, historically, equities have outperformed all asset
classes in the long term. Hence, investment in equity funds should be considered for a
period of at least 3-5 years. It can be further classified as:
i) Index funds- In this case a key stock market index, like BSE Sensex or Nifty is
tracked. Their portfolio mirrors the benchmark index both in terms of composition
and individual stock weight ages.

ii) Equity diversified funds- 100% of the capital is invested in equities spreading
across different sectors and stocks.

iii|) Dividend yield funds- it is similar to the equity diversified funds except that they invest
in companies offering high dividend yields.

36
iv) Thematic funds-Invest 100% of the assets in sectors which are related through
some theme.
e.g. -An infrastructure fund invests in power, construction, cements sectors etc.

v) Sector funds- Invest 100% of the capital in a specific sector. e.g. - A banking sector
fund will invest in banking stocks.

vi) ELSS- Equity Linked Saving Scheme provides tax benefit to the investors.

 Balanced fund:Their investment portfolio includes both debt and equity. As a result,
on the risk-return ladder, they fall between equity and debt funds. Balanced funds are the
ideal mutual funds vehicle for investors who prefer spreading their risk across various
instruments. Following are balanced funds classes.

i.)Debt-oriented funds -Investment below 65% in equities.

ii.)Equity-oriented funds -Invest at least 65% in equities, remaining in debt.

 Debt fund: They invest only in debt instruments, and are a good option for investors
averse to idea of taking risk associated with equities. Therefore, they invest exclusively in
fixed-income instruments like bonds, debentures, Government of India securities; and
money market instruments such as certificates of deposit (CD), commercial paper (CP)
and call money. Put your money into any of these debt funds depending on your
investment horizon and needs.
i) Liquid funds- These funds invest 100% in money market instruments, a large portion being
invested in call money market.

ii) Gilt funds ST- They invest 100% of their portfolio in government securities of and
T-bills.

37
iii) Floating rate funds - Invest in short-term debt papers. Floaters invest in debt
instruments which have variable coupon rate.

IV) Arbitrage fund- They generate income through arbitrage opportunities due to mispricing
between cash market and derivatives market. Funds are allocated to equities, derivatives and
money markets. Higher proportion (around 75%) is put in money markets, in the absence of
arbitrage opportunities.

v) Gilt funds LT- They invest 100% of their portfolio in long-term government
Securities.

vi) Income funds LT- Typically, such funds invest a major portion of the portfolio in
long-term debt papers.

vii) MIPs- Monthly Income Plans have an exposure of 70%-90% to debt and an
exposure of 10%-30% to equities.

viii) FMPs- fixed monthly plans invest in debt papers whose maturity is in line with
that of the fund.

Investment Strategies:

1. Systematic Investment Plan: under this a fixed sum is invested each month on a fixed
date of a month. Payment is made through postdated cheques or direct debit facilities. The
investor gets fewer units when the NAV is high and more units when the NAV is low. This is
called as the benefit of Rupee Cost Averaging (RCA)

38
2. Systematic Transfer Plan: under this an investor invest in debt oriented fund and give
instructions to transfer a fixed sum, at a fixed interval, to an equity scheme of the same mutual
fund.

3. Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual fund then
he can withdraw a fixed amount each month.

Options Available To Investors:

Each plan of every mutual fund has three options – Growth, Dividend and dividend
reinvestment. Separate NAV are calculated for each scheme.

- Dividend Option

Under the dividend plan dividend are usually declared on quarterly or annual basis. Mutual fund
reserves the right to change the frequency of dividend declared.

- Dividend reinvestment option

Instead of remittances of units through payouts, Units holder may choose to invest the entire
dividend in additional units of the scheme at NAV related prices of the next working day after
the record date. No sales or entry load is levied on dividend reinvest.

- Growth Option

Under this, plan returns accrue to the investor in the form of capital appreciation as reflected in
the NAV. The scheme will not declare the dividend under the Growth plan and investors who opt
for this plan will not receive any income from the scheme. Instead of income earned on their
units will remain invested within the scheme and will be reflected in the NAV.

39
 Risk Return Hierarchy of Different Funds

BANKS V/S MUTUAL FUNDS:

Mutual Funds are now also competing with commercial banks in the race for retail investor’s
savings and corporate float money. The power shift towards mutual funds has become obvious.
The coming few years will show that the traditional saving avenues are losing out in the current
scenario. Many investors are realizing that investments in savings accounts are as good as
locking up their deposits in a closet. The fund mobilization trend by mutual funds indicates that
money is going to mutual fund in a big way.

40
CATEGORY BANKS MUTUAL FUNDS

Returns Low High

Administrative exp. High Low

Risk Low Moderate

Investment options Less More

Network High penetration Low but improving

Liquidity At a cost Better

Quality of assets Not transparent Transparent

Minimum balance between

Interest calculation Everyday
10th& 30th of every month

Maximum Rs.1 lakh on

Guarantee None
deposits

MUTUAL F U N D S STRUCTURE

The SEBI(MutualFunds)Regulations1993defineamutualfund(MF)asafundestablished
intheformofa trustbya sponsortoraisemoniesbytheTrusteesthroughthesaleofunitsto
thepublicunderone ormoreschemesforinvestinginsecuritiesinaccordancewiththese regulations.
Theseregulationshavesincebeenreplacedby theSEBI(MutualFunds)Regulations,1996. The
structure indicated by the new regulations is indicated as under. A mutualfund
comprisesfourseparateentities,namelysponsor,mutualfund trust,AMCand custodian.The sponsor
establishesthemutualfund and getsitregisteredwithSEBI.

Themutualfundneedstobe constitutedintheformofa trust andtheinstrumentofthetrust shouldbein

theformofadeedregisteredundertheprovisionsoftheIndianRegistrationAct, 1908.

41
TheCustodianmaintainsthecustodyof thesecuritiesinwhichtheschemeinvests. Italso keepsatab on
corporateactionssuch asrights, bonusand dividendsdeclaredby the companiesinwhichthefund
hasinvested.TheCustodianisappointedbytheBoard of Trustees. The Custodian also participates in
a clearing and settlement system through approved depository companies on behalf of mutual
funds, in case of dematerialized securities.

Thesponsorisrequiredtocontributeatleast40%oftheminimumnetworth(Rs.10crore)
oftheassetmanagementcompany.TheboardoftrusteesmanagestheMFandthesponsor
executesthetrust deedsinfavorofthetrustees.It isthejoboftheMFtrusteesto see that
schemesfloatedandmanagedbythe AMCappointedbythe trusteesare inaccordancewith
thetrustdeedand SEBI guidelines

42
Taxation of Mutual Funds and Investor

 Finance Act 1999 radically changed taxation of Dividends received by investors in

Mutual Funds.
 Mutual Fund as an entity is not taxed since it is a Pass through entity. Section 10(23d)
of the IT Act.
 Finance Act 1999 made income (dividend) from UNITS totally exempt from tax u/s
10(33) in the hands of investors.
 Income (dividends) distributed by a debt fund was made liable to Dividend
Distribution Tax at applicable rate.
 Open ended funds with more than 50% invested in equity do not pay any DDT (since
changed to 65% in FY 06-07.
 Individuals 14.02% , Companies 22.44%.
 Security Transaction Tax (STT) is charged as applicable.
 80 C benefits under ELSS up to Rs 1 lack.

Types of Investment in Mutual Fund

 Lump Sum
 Systematic Investment Plan

43
Lump Sum Payment

A lump sum is a single payment of money, as opposed to a series of payments made over time
(such as an annuity) This means investing the entire sum of money at one go. For instance, if you
have Rs 1 lakh which you are willing to fully invest in stocks or MFs, it is a lump-sum
investment.

Systematic Investment Plan

A Systematic Investment Plan (SIP) is a vehicle offered by mutual funds to help investors save
regularly. It is just like a recurring deposit with the post office or bank where you put in a small
amount every month, except the amount is invested in a mutual fund. The minimum amount to
be invested can be as small as 100 (100 Indian Rupees) and the frequency of investment is
usually monthly or quarterly.

44
What is Systematic Investment Plan?

Systematic Investment Plan (SIP) is a smart financial planning tool that helps you to create
wealth, by investing small sums of money every month, over a period of time. Systematic
Investment Plan (SIP) is a planned approach to investments and an investment technique that
allows you to provide for the future by investing small amounts of money in Mutual Fund
schemes of your choice.

A SIP is a method of investing in mutual funds, by investing a fixed sum at a regular frequency,
to buy units of a mutual fund schemes. It is quite similar to a recurring deposit of a bank or post
office. For the convenience, an investor could start a SIP with as low as Rs 500; however this
amount may differ from one fund house to other. The SIP provides them a way to invest in the
fund of their choice in installments.

How to invest in SIP?

 The SIP option is available with all types of funds like equity, income or gift.
 An investor can avail the SIP option by giving post-dated cheques of Rs.500 or Rs.1000
according to the funds’ policy.
 If an investor wants to put more than Rs.500 or Rs.1000 in any given month he will have
to fill in a new form for SIP intimating the fund that he is changing his SIP structure. Also
he will be allowed to change the SIP structure only in the multiples of the SIP amount.
 If an investor is investing in two different schemes of the same fund he can fill in a
common SIP form for all the schemes. However, if the first holders in those schemes are
different then they will have to fill different SIP forms, as the first holder has to sign on
the form.
 The investor can get out of the fund i.e. redeem his units any time irrespective of
whether he has completed his minimum investment in that scheme. In that case, his
post-dated cheques will be returned back to him.

45
Here is an illustration using hypothetical figures indicating how the SIP can work
for investors:

SupposeaninvestorwouldliketoinvestRs.4, 000undertheSystematicInvestment
Plan on quarterly basis.

Invested Premium NAV of Maxi miser Units allocated

Fund (Rs per unit)
(Rs)

7th April’10 4000 11.34 352.73

7th May’10 4000 11.01 363.31

7th June’10 4000 12.05 331.95

7th July’10 4000 13.13 304.65

7th 4000 13.67 292.61

August’10

7th Sept’10 4000 15.81 253.00

7th Oct’10 4000 16.78 238.38

7th Nov’10 4000 18.28 218.82

7th Dec’10 4000 18.71 213.79

7th Jan’11 4000 21.48 186.22

7th Feb’11 4000 21.49 186.13

7th 4000 21.98 181.98

March’11

Total 48000

46
 Actual average NAV=
(11.34+11.01+12.05+13.13+13.67+15.81+16.78+18.28+18.71+21.48+21.49+21.98) / 12
= 16.29
NAV for Mr. X (4,000 * 12) / (352.73+ 363.31 + 331.95 + 304.65 + 292.61 + 253.00+
238.38 + 218.82 + 213.79 + 186.22 + 186.13+ 183.74) = Rs.15.36

Based on the historical analysis for BSE Sensex for last 10 to 12 years (i.e.1-Jan-1998 to 1-Jan-
have 2010) we find that if an individual had invested Rs. 1000 ever year (SIP) he would by
earned a return of 9% vis-à-vis 5% earned an individual who had invested Rs. 1000 at the
beginning of 10 year period. Similarly over a five-year period (1-Jan-1994 to 1-Jan-1999) SIP
investment return would have been 16.52% compared to 14.09% for a one-time investment at the
beginning of the period.

Using theSIP strategythe investorcanreduce hisaveragecostper unit. Theinvestorgetsthe

advantageof gettingmore unitswhenthe marketisturneddown.

47
Benefits of SIP

Benefit 1

Become a Disciplined Investor

Being disciplined - It’s the key to investing success. With the Systematic Investment Plan you
commit an amount of your choice (minimum of Rs. 500 and in multiples of Rs. 100 thereof*) to
be invested every month in one of our schemes.

Think of each SIP payment as laying a brick. One by one, you’ll see them transform into a
building. You’ll see your investments accrue month after month. It’s as simple as giving at least
6 postdated monthly cheques to us for a fixed amount in a scheme of your choice. It’s the perfect
solution for irregular investors.

Benefit 2

Reach Your Financial Goal

Imagine you want to buy a car a year from now, but you don’t know where the down-payment
will come from. SIP is a perfect tool for people who have a specific, future financial
requirement. By investing an amount of your choice every month, you can plan for and meet

48
financial goals, like funds for a child’s education, a marriage in the family or a comfortable
postretirement life.

Benefit 3

Take Advantage of Rupee Cost Averaging

Most investors want to buy stocks when the prices are low and sell them when prices are high.
But timing the market is time-consuming and risky. A more successful investment strategy is to
adopt the method called Rupee Cost Averaging. We can reap this benefit by investing the
amounts through a SIP.

Benefit 4

Grow Your Investment with Compounded Benefits

It is far better to invest a small amount of money regularly, rather than save up to make one large
investment.

This is because while you are saving the lump sum, your savings may not earn much interest.
With HDFC MF SIP, each amount you invest grows through compounding benefits as well. That
is, the interest earned on your investment also earns interest. The following example illustrates
this.

Imagine Neha is 20 years old when she starts working. Every month she saves and invests Rs.
5,000 till she is 25 years old. The total investment made by her over 5 years is Rs. 3 lakhs. Arjun
also starts working when he is 20 years old. But he doesn’t invest monthly. He gets a large bonus
of Rs. 3 lakhs at 25 and decides to invest the entire amount.

Both of them decide not to withdraw these investments till they turn 50. At 50, Neha’s
Investments have grown to Rs. 46, 68,273* whereas Arjun’s investments have grown to Rs. 36,

49
17,084*. Neha’s small contributions to a SIP and her decision to start investing earlier than
Arjun have made her wealthier by over Rs. 10 lakhs.
*Figures based on 10% p.a. interest compounded monthly.

Benefit 5

Do All This Effortlessly

Investing with SIP is easy. Simply give us post-dated cheques or opt for an Auto Debit from your
bank account for an amount of your choice (minimum of Rs. 500 and in multiples of Rs. 100
thereof*) and we’ll invest the money every month in a fund of your choice. The plans are
completely flexible. You can invest for a minimum of six months, or for as long as you want.
You can also decide to invest quarterly and will need to invest for a minimum of two quarters.

OTHER BENEFITS

1. SIP can be started with a minimum investment of Rs. 500/- per month or Rs. 1000/- per
month.
2. It is good and effective way of creating wealth for long term.
3. ECS facility is available in case of Investment through SIP.
4. A small withdrawal from the account doesn’t affect the bank balance of an individual as
compared to a hefty withdrawal.
5. It can be for a year, two years, three years etc. if a person at any point of time couldn’t be able
to continue its SIP, he may give instructions at least 25 days before to the fund house. His SIP is
discontinued.
6. All type of funds except Liquid funds, cash funds and other funds who invest in very short
fixed return investments offers the facility of SIP.
7. Capital gains, if applicable, are taxed on a first-in first-out basis.
8. As the investment made through SIP are not at one time. Some units bought at high price and
some at low price, so chances of making gain through SIP is higher than the one time
investment.

In short, SIP is a simple and effective way to create wealth but to create such wealth, one should
think about the investment in SIP for a period of at least for time frame of three years because it
pays to invest in a longer run.

50
 Chapter 4
Research Methodology

51
Research Methodology

 Title of the study

‘Systematic Investment Plan

(The Better Way to Invest In Mutual Funds)’

 Duration of the Project

The duration of the project is 60 days

 Objective of the study

The purpose of choosing the project is to know:
 Investor’s option for entry into mutual fund

LUMPSUM or SIP

 Comparative analysis between Lump Sum and SIP

 Investors Delight when investment is through SIP

 Research Type

Conclusive and explorative approach has been adopted in the study. As here the topic of
research problem has been explored so that hidden facts can come into the light and then the
maximum allocation criteria in SIP are Rs. 1000-3000 i.e. the final conclusion is given 45%

SAMPLE SIZE
A sample size of 50 investors was chosen to meet the earlier mentioned objectives. The selection
of sample was based on the following criteria: -

 People belonging to different state of society.

 Servicemen working in government organization & private organization.
 Professionals who includes doctors, lawyers, teachers etc

52
  Research Design

This research is Explorative and conclusive in nature because it aims to collect the data about
the behavior of investors in which way they invest in Mutual Funds. The research approach used
is survey based and the analysis is largely based on the primary data.

 Research Instrument

Structured questionnaire: open- ended and close- ended.

 Contact Method

Personal interview

Research Approach

Any methodology includes the overall research design, the sampling procedure and data
collection method. The methodology adopted by me for purpose of finding the investment
behavior of investors was DIRECT SURVEY METHOD

 Population

SATNA CITY

 Study scope
SATNA

This project will help existing/prospective investor to understand what the various mode of
investment in Mutual Fund are and why Systematic Investment Plan gives better returns than
Lump sum. So that investors can do better use of their hard earned money to earn more profit.

Types of data

1. Primary Data

2. Secondary Data

53
Primary Data is that data which is collected by the researcher as per his/her needs

Secondary Data is that data which is collected through references as websites, journals, books,
magazines, etc.

 LIMITATIONS TO THE SURVEY

Though research based decision-making is now considered but still there is a gap between the
understanding of researcher and users.

Research is there to help in decision-making, not a substitute of decision-making. Some of the

following limitations have restricts the scope of survey to some extent :

 Some respondents gave vague information and were not serious while responding.

 Some respondents were hesitant to reveal information about their finances because
of income tax queries.

 It was difficult to find whether respondents actually participate in their financial

planning.

 Research can provide number of facts but it does not provide actionable results.

 It cannot provide answer to any problem but can only provide a set of guidelines.

 Management rely more on the intuitions and judgments rather than research.

 Area of research was restricted to some location of the city and state.

54
Analysis and Interpretation
Q 1: In which Financial Instrument do you invest into?

Ans:

Financial Instruments Investment in %

Mutual 76

Bond 15

Online Trading 07

Derivatives 02

Interpretation: From above pie chart, it has been analyzed that 76% of investors invest in the
analysis is done on the basis of the response of respondents, which is collected through the
questions present in questionnaire.

55
Q 2: By structure in which type of schemes have you invested?

Ans:

Types of schemes on the basis of structure Investment in %

Open ended funds 66

Close ended funds 22

Intervals funds 12

Interpretation:The above pie chart depicts that 66% investors invest in Open-ended funds,
22% in Close-ended funds and 12% in Interval funds.

56
Q. 3: By investment objective In which type of schemes have you invested?

Ans:

Types of Investment on the basis of objective Investment in %

Growth Schemes 55

Income Schemes 13

Balances Schemes 32

Interpretation:From the above pie chart, I conclude that there are 55 % investors who invest
in Growth Schemes, 13% investor invest in Income Schemes, and 32% investors invest in
Balanced Funds.

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Q.4. In which type of fund you want to invest?

Ans:
TYPES OF FUNDS INVESTMENT IN
%

Index Fund 41

Tax Saver Fund 15

Sectorial fund 44

Interpretation: The above chart depicts that the maximum numbers of investor.i.e.41%
investors invest in SectorialFunds, 44% in Index Funds and 15% in Tax Saver Funds.

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Q.5 Do you repeat your investment after initial investment?

Ans :

Repetition of Investors in %
investment

Yes 68

No 32

Interpretation: The above pie chart depicts that 68% of investors invest again after the initial
investment

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Q.6 what percentage of your earnings do you invest in Mutual Funds?

Ans:

% of earnings Investors in %

Upto 10% 43

Upto 25% 32

Upto 50% 15

Above 50% 10

Interpretation: The above chart depicts that 43% investor invest that up to 10% of their earning
in Mutual Fund.

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Q.7 :How many investors invested in SIP , Lump sum or both?

Ans :

Type of investment Investment in %

SIP 55
Lump sum 10
Both 35

Interpretation: From above chart it has been analyzed that 55% investors have invested SIP,
10% in lump sum and 35% in both the category.

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Q.8 what is an allocation criteria of an investor in SIP?

Ans :

Allocation criteria (in Rs) Investment in %

Less than 1000 9
1000-3000 45
3000-5000 36
More than 5000 10

50
Allocation criteria (in Rs)
45
40
35
30
25
20
investment in %
15
10
5
0
less than 1000 1000-3000 3000-5000 more than 5000

Interpretation: From above chart it has been analyzed that the allocation criteria of investment
is 45% in the range Rs1000 to Rs 3000.

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Q.9 what is the time duration of investment?

Ans :

Time duration Investment in %

Less than or equal to 5 years 25
Less than or equal to 4 years 8
Less than or equal to 3 years 34
Less than or equal to 2 years 25
Less than or equal to 1 year 8

Interpretation: The above bar chart depicts that most of the investors (i.e. 33.33%) invest in less
than 3 years.

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Q.10 which has given more profit to investors?

Ans :

Investment in Profit in %
Lump sum 16
SIP 84

Interpretation: The above Pie chart depicts that 84% of investors have got more profit in
Systematic Investment Plan.

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Facts and Findings

The analysis is done based on the structured questions and we got following points:

- People still invest less part of their income in mutual funds i.e. about 10%

- 55% investor invests in SIP mode.

- 84% got more profit in SIP

- The maximum duration of investment in SIP is 3 years i.e. 34%.

Less than or equal to 5 years 25

Less than or equal to 4 years 8
Less than or equal to 3 years 34
Less than or equal to 2 years 25
Less than or equal to 1 year 8

- The maximum allocation criteria in SIP are 1000-3000 i.e. 45%

Less than 1000 9

1000-3000 45
3000-5000 36
More than 5000 10

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Conclusion:

Findings:

Our findings during the training with Edelweiss Broking Limited, Satna was good on the
following grounds:-

 Edelweiss is a high ranked company listed with NSDL and CDSL; provide trading
through both NSE and BSE.
 Provides excellent research base to its customers.
 Provides fast and easy to use trading platform.
 SIP provides a better platform for investments in Mutual Funds as it attracts a large
number of small investors as well.

There are some more points:-

 Mutual fund advisors give emphasis on mutual funds than other investment options.

 The awareness level of investor is low as advisors are interested in dealing in mutual
funds.

 Very less advisors are knowing about services provided by Edelweiss (Mutual Fund)

 Mutual funds have given a new direction to the flow of personal saving and enable small
and medium investors in remote rural and semi urban areas to reap the benefits of the
stock market investments. Indian mutual funds are thus playing a very important role in
allocation of scarce resources in the emerging economy.

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RECOMMENDATION AND SUGGESTIONS
Though the Edelweiss have a very good ascribed plan with exclusive band of opportunities but
as nothing is free from the hurdles therefore there are few shortcomings which I felt makes
Edelweiss fail to achieve its target :

 There is high potential market for mutual fund advisors in Satna city but this market
needs to be explored as investors are still hesitated to invest their money in mutual
fund.
 In Satna investors have inadequate knowledge about mutual fund, so proper marketing
of various schemes is required. Company should arrange more and more seminars on
mutual funds.
 Awareness of mutual fund services among the investors are very low so Asset
Management Company needs proper marketing of their all services by advertising ,
distribution of pamphlet , arranging seminars etc.
 Most advisors are not interested in dealing of mutual funds because they get very low
commission.
 Company should also provide knowledge about the growth rate and expected growth
rate of mutual fund industry in India.
 Most people are aware of Life Insurance , NSC and PPF for tax saving so company
should market various tax saving scheme of mutual fund and their benefits.

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ANNEXURE

QUESTIONNAIRE

(Hello, I am Anubhav Sood.I need your spare time to fill up the questionnaire, as this is the part
of my Summer Internship Training under PGDM curriculum)

NAME: ______________________________________ __________________

AGE

0-18_____ 18-36_____ 36-54_____ 54-72______ 72 ABOVE______

GENDER: Male

Female

OCCUPATION: Businessman [ ] Pvt. Employee [ ]

Govt. Employee [ ] Professional [ ]

Student [ ] other (specify):________

CONTACT NO: __________________________________

Q1. In which of these Financial Instruments do you invest into?

Mutual Funds [ ] Bonds [ ]

Derivatives [ ] Online trading [ ]

Q2 .By structure in which type of schemes did you invested?

Open Ended Fund [ ]

Close Ended Fund [ ]

Interval Schemes [ ]

Q3.By investment objective in which type of schemes have you invested?

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Growth Schemes [ ]

Income Schemes [ ] Balanced Schemes [ ]

Q4.In which type of funds you want to invest?

Tax Saver Funds [ ]

Index Funds [ ]

Sectorial Funds [ ]

Q5. Did you repeat your investment after your initial investments?

Yes [ ] No [ ]

Q6. What percentage of your earnings do you invest in Mutual Funds?

Up to 10% Up to 25% Up to 50% Above 50%

Q7. In which you have invested?

SIP [ ] Lump Sum [ ] Both [ ]

Q8. What is your allocation criterion?

<1000b [ ] 1000-3000 [ ] 3000-5000 [ ] >5000b [ ]

Q9. For what time period you have invested?

<= 1 yr. [ ] <= 2 yr. [ ] <= 3 yr. [ ] <= 4 yr. [ ] <= 5 yr. [ ]

Q10. Which has given you more profit?

SIP [ ] Lump Sum [ ]

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Bibliography

1. Internet
2. Magazines and journal of the company
3. Book of financial Management
4. Website:-

www.edelweiss.in

www.wikipedia.com

www.moneycontrol.com

www.valueresearch.com

www.google.com

www.mutaulfundsindia.com

www.investopedia.com

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