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Documente Cultură
PROJECT REPORT
ON
MUTUAL FUNDS & INSURANCE FOR INDIAN INVESTORS
FOR
KARVY STOCK LTD
IN PARTIAL FULFILLMENT
OF
MASTER IN BUSINESS ADMINISTRATION (MBA)
SUBMITTED BY
PARUL MAZUMDAR
MBA-I
FINANCE SPECIALIZATION
COLLEGE OF MANAGEMENT RESEARCH
& ENGINEERING (CMRE),
PUNE-52
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ACKNOWLEDGEMENT
Thanks giving seem to be the most Pleasant of all jobs, but it is difficult
when one tries to put into words.
During the course of this project various person have rendered valuable help
& guidance to me. I m highly grateful to Mr. Ravi Gaikwad (Relationship
Manager, Karvy stock Broking Ltd.) who allowed me to do my summer
training in their prestigious organization.
My sincere thanks to Prof. Shusmita Nande of CMRE , who guided me
throughout my project, also giving me opportunity to learn how to exel in
the field of Finance.
With deep sense of reverence, I would like to express my wholehearted
thanks & deep gratitude to my parents who have always been a souce of
inspiration for me.
Finally, I would like to thank Mr. Anshul B Sharma (Director, CMRE) for
his technical & moral support required for the realization of this project
report.
-----------------------Parul Mazumdar
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SR NO.
CONTENTS
PAGE NO.
Executive Summary
Company Profile
Introduction of Karvy
Objective & Scope
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8
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Mutual funds
A New window to the investment world
What is Mutual fund?
Organization of A Mutual Funds
Types of Mutual Fund
Merits & Demerits of Mutual Fund
Mutual Fund Companies
Insurance
What is Insurance?
History of Insurance
Insurance in India
Need of Insurance
Insurance sector Reform
Insurance Players
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34
35
37
40
41
45
Conclusion
46
Recommendations
48
Format of Questionnaires
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Bibliography
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14
15
16
17 & 20
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25
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EXECUTIVE SUMMARY
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PROJECT TITLE:
MUTUAL FUNDS & INSURANCE FOR
INDIAN INVESTORS
ORGANIZATION:
KARVY STOCK BROKING LTD.
Pune city and its location where the survey has been undertaken those are
Hinjewadi IT Park, Kothrud, Senapati Bapat Road, Aundh IT Park,
Magarpatta City, Kharadi, Yerawada and Baner.
Karvy is the only personalized service provider offering a range
of investment services depending on the customer requirements.
The methodology for carrying out the project was very simple that is
through secondary data obtained through various mediums like fact sheet of
the funds, the Internet, Business magazines, Newspaper, etc. The funds have
been analyzed under various types such as Equity Funds, Income Funds and
Balanced Funds.
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COMPANY PROFILE
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INTRODUCTION OF KARVY
Founded by a group of Hyderabad-based chartered accountants in 1982, as
a professional services firm Karvy Consultants Limited
Thus, over the last 20 years Karvy has traveled the success route, towards
building a reputation as an integrated financial services provider, offering a
wide spectrum of services. And its employee have made this journey by
taking the route of quality service, path breaking innovations in service,
versatility in service and finallytotality in service.
Unique value proposition Full-service retail financial services
intermediary with Indias largest owned branch network. Caters to the
entire gamut of investor needs:
Evolving into the role of a personal financial advisor,
Bouquet of services include (equity - cash and derivatives, and debt
trading), Depository services, Distribution of financial products
(Mutual funds, IPOs, Fixed deposits, Bonds) and Merchant banking,
Expanding services to include commodity and insurance .
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BONDS & FD
MUTUAL FUND
TAX PLANNING
INSURANCE
STOCK
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OBJECTIVES
The survey aimed at bringing about awareness in the public about the
various Services provided by the Karvy consultancy and suggesting services
according to their needs and requirement.
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SCOPE
Karvy is the leading organization in terms of providing the
personalized advisory services in investment sector. It focuses extensively in
providing the quality service to its customers. So the company
commissioned to understand the customer behavior and their investment
pattern.
Karvy is available in more then 450 cities in all over India.
Thus, it has access to India , Indian Economy rising & here consumer can
invest more money in financial instruments. An average income per house
hold is rising. People can invest much more money.
Karvy is recently entered in the Commodity Market, which is having a very
good future in India and Karvy can encase opportunities.
Also it tries to understand customer perception about their
services better than the competitors.
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MUTUAL FUNDS
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Mutual Fund is a trust that pools the savings of a number of investors who
share a common financial goal. The money thus collected is then invested in
capital market instruments such as shares, debentures and other securities.
The income earned through these investments and the capital appreciation
realized is shared by its unit holders in proportion to the number of units
owned by them. Thus a Mutual Fund is the most suitable investment for the
common man as it offers an opportunity to invest in a diversified,
professionally managed basket of securities at a relatively low cost.
The flow chart below describes broadly the working of a mutual fund :
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There are many entities involved and the diagram below illustrates
the organizational set up of a mutual fund:
The mutual fund industry in India began with the setting up of the Unit Trust
In India (UTI) in 1964 by the Government of India. During the last 36 years,
UTI has grown to be a dominant player in the industry with assets of over
Rs.76,547 Crores as of March 31, 2000. The UTI is governed by a special
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legislation, the Unit Trust of India Act, 1963. In 1987 public sector banks
and insurance companies were permitted to set up mutual funds and
accordingly since 1987, 6 public sector banks have set up mutual funds. Also
the two Insurance companies LIC and GIC established mutual funds.
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 set up by the private and joint sectors.
Aggressive Funds
Growth Funds
Balanced Funds
Conservative Funds
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AGGRESSIVE FUNDS:
This strategy might be appropriate for investors who seek High growth
and who can tolerate wide fluctuations in market values, over the short
terms.
85%
Stocks
Bonds
15%
GROWTH FUNDS:
This strategy might be appropriate for investors who have a preference
for growth and who can withstand significant fluctuation in market values.
70%
Stocks
Bonds
Short-Term
25%
5%
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BALANCED FUNDS:
Capital appreciation and income. This strategy might be appropriate for
investors who want the potential for capital appreciation and some growth,
and who can withstand moderate fluctuations in market values.
50%
40%
Stocks
Bonds
Short-Term
10%
CONSEVATIVE FUNDS:
Income and Capital appreciation. This strategy might be appropriate for
investors who want to preserve their capital and minimize fluctuations in
market value.
50%
Stocks
Bonds
30%
20%
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Short-Term
NAV=
The number of units outstanding goes up or down every time the fund
issues new units or repurchases existing units. In other words, the unit
capital of an open-end mutual fund is not fixed but variable.
Where as, in closeend fund it makes a one time of sale of fixed number
of units Later on, unlike open-end funds do not allow investors to buy or
redeem units directly from funds. In this, the fund units can be traded at a
discount or premium to NAV based on investors perception about the funds
future performance and other market factor affecting the demand for or
supply of funs units. The number of units outstanding of a close-end fund
does not vary on account of trading the funds units at stock exchange.`
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Liquidity: It's easy to get your money out of a mutual fund. Write a
check, make a call, and you've got the cash.
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Low cost: Mutual fund expenses are often no more than 1.5 percent
of your investment. Expenses for Index Funds are less than that,
because index funds are not actively managed. Instead, they
automatically buy stock in companies that are listed on a specific
index.
DEMERITS OF MUTUAL FUNDS:Mutual funds have their demerits and may not be for everyone:
No Guarantees:
Taxes:
During a typical year, most actively managed mutual funds sell
Management risk:
When you invest in a mutual fund, you depend on the fund's manager to
make the right decisions regarding the fund's portfolio. If the manager
does not perform as well as you had hoped, you might not make as much
money on your investment as you expected. Of course, if you invest in
Index Funds, you forego management risk, because these funds do not
employ managers.
ABN AMRO Mutual Fund was setup on April 15, 2004 with ABN
AMRO Trustee (India) Pvt. Ltd. as the Trustee Company. The AMC, ABN
AMRO Asset Management (India) Ltd. was incorporated on November 4,
2003. Deutsche Bank A G is the custodian of ABN AMRO Mutual Fund.
Birla Sun Life Mutual Fund
Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group
and Sun Life Financial. Sun Life Financial is a global organization evolved
in 1871 and is being represented in Canada, the US, the Philippines, Japan,
Indonesia and Bermuda apart from India. Birla Sun Life Mutual Fund
follows a conservative long-term approach to investment. Recently it
crossed AUM of Rs. 10,000 crores.
Bank of Baroda Mutual Fund (BOB Mutual Fund)
Bank of Baroda Mutual Fund or BOB Mutual Fund was setup on
October 30, 1992 under the sponsorship of Bank of Baroda. BOB Asset
Management Company Limited is the AMC of BOB Mutual Fund and was
incorporated on November 5, 1992. Deutsche Bank AG is the custodian.
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Benchmark Mutual Fund was setup on June 12, 2001 with Niche
Financial Services Pvt. Ltd. as the sponsor and Benchmark Trustee
Company Pvt. Ltd. as the Trustee Company. Incorporated on October 16,
2000 and headquartered in Mumbai, Benchmark Asset Management
Company Pvt. Ltd. is the AMC.
Can bank Mutual Fund
Can bank Mutual Fund was setup on December 19, 1987 with Canara
Bank acting as the sponsor. Can bank Investment Management Services Ltd.
incorporated on March 2, 1993 is the AMC. The Corporate Office of the
AMC is in Mumbai.
Chola Mutual Fund
Chola Mutual Fund under the sponsorship of Cholamandalam
Investment & Finance Company Ltd. was setup on January 3, 1997.
Cholamandalam Trustee Co. Ltd. is the Trustee Company and AMC is
Cholamandalam AMC Limited.
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INSURANCE
What is insurance?
All assets have economic value. The asset would have been created
through the efforts of the owner, in the expectation that, either through the
income generated there from or some other output, some of his needs would
be met. In the case of a motor car, it provides comfort & convenience in
transportation. There is no direct income. There is a normally expected life
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time for the asset during which time it is expected to perform. The owner,
aware of this, can so manage his affairs that by the end of that life time, a
substitute is made available to ensure that the value or income is not lost.
However, if the asset gets lost earlier, being destroyed or made nonfunctional, through an accident or other unfortunate event, the owner & those
deriving benefits there from suffer.
HYSTORY OF INSURANCE
The origin and practice of insurance is as ancient as human civilization.
From Cave age till date, the story of evolution of mankind is in fact a saga of
continuous search for security. His problems have been the same, though the
form has changed with the social & economic circumstances.
When man used to live in the caves, he used to search for security against
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animals because they could kill him while he was asleep. He was not at all
sure if he could hunt every day & get his food. Because of the above
insecurity he used to live in groups so that the other members of the tribe
could come to help him in time of crisis. Later on, insurance was practiced in
a different form. Small contributions of food grains were collected from
farmers, hoarded in the local temple premises to be released when there was a
famine or other calamity. Today, insurance works on the same principle. But,
with growing financial implications the process started demanding money
rather than community contribution.
The modern concept of insurance came to India with the arrival of
Europeans. The first life Insurance company was established in India in
1818 as Oriental Life Insurance Company by Europeans for the welfare of
widows of Europeans.
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Insurance act was passed by the British parliament. The insurance business
flourished thereafter.
By the year 1955 there were 245 insurance companies and provident
societies, out of which 16 were non Indian companies. A comprehensive
legislation "The Insurance act 1938" was passed with a view to consolidate
and amend the laws relating to the business of insurance. It came into force
with effect from July '01, 1939.The act was modified in 1950.
The broader objectives of socialism prompted the government to nationalize
the insurance business, in the year 1956. The general insurance business was
nationalized in 1972, through GIC Act 1972. The Life Insurance corporation
of India came into existence on 1st September 1956.
INSURANCE IN INDIA
The insurance sector in India has come a full circle from being an open
competitive market to nationalization and back to a liberalized market again.
Tracing the developments in the Indian insurance sector reveals the 360
degree turn witnessed over a period of almost two centuries.
The business of life insurance in India in its existing form started in India in
the year 1818 with the establishment of the Oriental Life Insurance
Company in Calcutta. Some of the important milestones in the life insurance
business in India are:
1912: The Indian Life Assurance Companies Act enacted as the first statute
to regulate the life insurance business.
1928: The Indian Insurance Companies Act enacted to enable the
government to collect statistical information about both life and non-life
insurance businesses.
1938: Earlier legislation consolidated and amended to by the Insurance Act
with the objective of protecting the interests of the insuring public.
1956: 245 Indian and foreign insurers and provident societies taken over by
the central government and nationalized. LIC formed by an Act of
Parliament, viz. LIC Act,
1956, with a capital contribution of Rs. 5 crore from the Government of
India. The General insurance business in India, on the other hand, can trace
its roots to the Triton Insurance Company Ltd., the first general insurance
company established in the year 1850 in Calcutta by the British.
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Need of Insurance.
To provide cash to meet various routine expenses of the family on
or immediately after the death of the income earner of the family.
To prevent the familys accustomed standard of living even after the
death of the breadwinner.
To provide continuous flow of funds for the living spouse.
To allocate income funds for the childrens education.
To provide a retirement income throughout old age.
To provide a reliable savings plan for the future.
To supplement income when earning power is reduced or eroded by
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In 1994, the committee submitted the report and some of the key
recommendations included:
i) Structure
Government stake in the insurance Companies to be brought down to
50%
Government should take over the holdings of GIC and its subsidiaries
so that these subsidiaries can act as independent corporations
All the insurance companies should be given greater freedom to
operate
ii) Competition
Private Companies with a minimum paid up capital of Rs.1bn should
be allowed to enter the industry
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CONCLUSION
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Investors have to compensate their risk with the return. Higher the
return higher the risk.
For the people who are looking for regular income should opt for any
of the Debt Fund, as the long term returns of all the funds are almost
the same.
Those who want regular income and also capital appreciation should
go for Principal Balanced Fund.
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RECOMMENDATION
For Karvy......
1. The AMC (Asset Management Company) should create in
awareness level among the individuals about the benefits of
Mutual Funds & the returns from the Mutual Fund market.
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For Individuals
1. Please make your future secure by investing in Mutual Funds,
as this will promise you higher rate of return that conventional
investments like Banks and Post Office cannot provide
2.
QUESTIONNAIR
NAME: ____________________________________________________
AGE: _______
SEX: __________
ADDRESS:____________________________________________________
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_____________________________________________________________
E-MAIL: _____________________________________________________
1) Are you aware of KARVY Consultancy?
o YES
NO.
ENAM
Morgan Stanley
HDFC
Magazine
Newspaper
TV
Radio
Interest
Agents
Franchisee
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Hoardings
Friends
Others
4) Would you like to invest in Financial Sector?
Yes Go to (5)
No Go to (6)
5) Which Financial Service you will prefer to invest and why?
INSURANCE
MUTUAL FUNDS
TAX PLANNING
BONDS/FD
PERSONAL PORTFOLIO MANAGEMENT
STOCK :
6) Reason Being:
High Risk
Lack of Knowledge
Previous Loss
Lack of Financial Planning
7) How much percentage you will like to invest from your annual
income?
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INSURANCE
5 to 10% ,
10 to 15% ,
15 to 20%,
10 to 15%,
15 to 20%,
10 to 15% ,
15 to 20% ,
10 to 15% ,
15 to 20%,
MUTUAL FUNDS
5 to 10% ,
PPM
5 to 10%,
TAX
5 to 10%,
STOCK
5 to 10%,
10 to 15% ,
15 to 20% ,
10 to 15% ,
15 to 20% ,
BONDS/FD
5 to 10% ,
_____________________________________________________________
_____________________________________________________________
______________________________________________
10) If, Yes What all services you expect from Consultancy?
_____________________________________________________________
_____________________________________________________________
______________________________________________
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BIBLIOGRAPHY
www.karvy.com
www.taxman.com
www.mutualfundindia.com
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