View
215
Download
0
Category
Preview:
Citation preview
7/28/2019 Thesis Final s
1/62
DIVYA KOTHIWAL
INDIAN INSTITUTE OF
PLANNING AND
MANAGEMENT
NEW DELHI
THESIS REPORT ON
STUDY OF INVESTMENT PATTERNS OF SMALL AND MEDIUMENTERPRISES (SMEs)
SUBMITTED TO:
PROF.SUMANTA SHARMA
PROF. VIJAY KR.BODDU
EXTERNAL GUIDE:
MR.ANIRUDH SHARMA
SUBMITTED BY:
DIVYA KOTHIWAL
PGP-FW-2008-2010
ALUMNI ID NO.: DF/08/10-F-579
ABSTRACT
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
2/62
DIVYA KOTHIWAL
Starting with the acknowledgement, I have presented with the background of the
Mutual Fund Industry. There is information on mutual fund comprising of things
like as to what mutual fund is: its history, types of mutual funds etc. Next there is
information of study etc., actual analysis but firstly starting with giving someinformation on the type of questionnaire design used, sampling technique,
research design etc.,
The primary objective of the report is to study the investment patterns of Small
and Medium Enterprises and to further establish if the type of trade they are in
affects the investment decisions in Mutual Funds.
We did a market research by making the company fill a structured questionnaire
and find out their exposure to Mutual Funds.
SIGNATORY PAGE
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
3/62
DIVYA KOTHIWAL
This is to certify that the thesis titled Study of investment patterns of Small
and Medium Enterprises(SMEs) prepared by Ms. Divya Kothiwal for the
award of degree in Master of Business Administration has been completed under
my supervision & guidance. It is an original piece of work based on primary as
well as secondary data.
This work is satisfactory and complete in every respect. I wish her all the success
for her future endeavour.
Thanking you
Yours Sincerely
ANIRUDH SHARMA
THESIS APPROVAL LETTER
Dear Divya Kothiwal,
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
4/62
DIVYA KOTHIWAL
This is to inform that your thesis proposal on Study of Investment Patterns of
Small & Medium Enterprises, to be conducted under the guidance of Mr.
Anirudh Sharma is hereby approved and the topic registration id number
is DF/08/10-F-579
Make it a comprehensive thesis by ensuring that all the objectives as stated by
you in your synopsis are met using appropriate research design; a thesis should
aim at adding value to the existing knowledge base.
You are required to correspond with your internal guide Prof. Vijay Kr. Boddu
at boddu.vijay@iipm.edu Ph.-0124-3350714 by sending at least four response
sheets (attached along with this mail) at regular intervals before the last date of
thesis submission.
Regards,
Prof .Sumanta Sharma
Dean (Projects)
IIPM
Sumanta.sharma@iipm.edu
Phone:
+91 0124 3350701 (D)+91 0124 3350715 (Board)
SYNOPSIS
Name: Divya Kothiwal
PGP/FW/08-10 DF/08/10-F-579
NB:
1) A thesis would be rejected if there is any variation in the topic/title from the
one approved and registered with us.
2) The candidate needs to handwrite at least 1200 to 1500 words on the
summary of thesis at the time of viva.
mailto:boddu.vijay@iipm.edumailto:Sumanta.sharma@iipm.edumailto:boddu.vijay@iipm.edumailto:Sumanta.sharma@iipm.edu7/28/2019 Thesis Final s
5/62
DIVYA KOTHIWAL
Section: F.7
Batch: Fall/Winter 2008-2010
Phone Number: 9818593910
E-mail Id: kothiwaldivya@gmail.com
Thesis Topic: Study of Investment Patterns of Small & Medium
Enterprises
Specialization Area: Finance
Introduction:
I will be focusing primarily on the small and medium enterprises in New Delhi, NCR
analyzing their investment patterns. My External Guide, Mr. Anirudh Sharma
(Manager, ICICI Bank) will be helping me in the research and the study. The basic
aim of the research in the initial stages will be to analyze the trend of the mutual fund
industry. Later, followed by the primary research and by forecasting with and without
the two external forces or factors and finally coming up with a solution in the final
stage.
PGP/FW/08-10 DF/08/10-F-579
mailto:kothiwaldivya@gmail.commailto:kothiwaldivya@gmail.com7/28/2019 Thesis Final s
6/62
DIVYA KOTHIWAL
Research Objectives:
1. To study and understand the investment patterns of SMEs.
2. To further establish that if the type of trade affects the investmentdecisions in Mutual funds.
Hypothesis: Mappingthe concerned areato do a market research study with the
help of the questionnaires and find out their exposure to the Mutual Funds.
Research Methodology:
Secondary Data: This form of methodology will be used for finding the trend
followed by the enterprises and forecasting the possible outcome in the coming
years. The sources for the same will consist of internet, relevant study papers,
newspaper articles, books and so on. Hence, an analysis of pre-existing data in a
different way to answer the questions or else to answer a separate question than
the originally intended one will help with the use of secondary data.
Primary Data: This form of data will be used to in the form of questionnaires
which will be filled by the top management and officials of various enterprises
and set- ups involved in this business. Mostly, the questions will be open ended
but will make sure that the information that will be extracted from the same
should be very effective in coming to conclusions.
Scope of the Work: The scope for this study is to gather information from the
various sources, understand it and derive the factors that are responsible or
affect the investment patterns of SMEs in relation to the mutual fund industry. A
primary research will help show (in which I would be visiting officials of various
companies in this business) the forecasting in which I would be using all the tools
possible to forecast what could go wrong and what can possibly be the effects
and after effects?
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
7/62
DIVYA KOTHIWAL
Justification for choosing the topic: Mutual funds industry has been moving
up and a growing sector recently. It is very important to understand how the
various enterprises work towards handling the mutual funds in their respective
companies? Depending, on the market conditions and the various ups and
downs, the fund value changes. I would study all that affects these changes.
Details of External Guide:
Name: Mr.Anirudh Sharma
Qualification: MBA
Designation: Manager
Company: ICICI Bank Ltd
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
8/62
DIVYA KOTHIWAL
ACKNOWLEDGEMENT
I sincerely feel that the guidance and support extended towards me by all themembers of ICICI was more than I could expect. I express my immense gratitudetowards all the members of this organization.
They really made my learning experience the most memorable and respectableone. It was a great honour to be associated with a company.
I take the opportunity to express my sincere gratitude to my project guide Mr.Anirudh Sharma, without whose guidance and support I could not havecompleted my project.
I am also thankful to all the other managers and employees for taking out timefrom their busy schedule and guiding me in order to make this project a success.
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
9/62
DIVYA KOTHIWAL
TABLE OF CONTENTS
1. Acknowledgement
2. Background
3. Mutual Funds
3.1Returns
3.2Advantages
3.3Disadvantages
3.4Risks
3.5Mutual fund types
3.6Procedure of opening a folio
4. Mutual fund companies in India
5. The study
5.1Purpose
5.2Scope
5.3Data collection and job requirement
5.4Limitations
5.5About Small and Medium enterprises
5.6Current investment patterns
5.7Instruments in Indian debt market
6. The analysis
6.1Sources of data
6.2Sampling
6.3Scope of study
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
10/62
DIVYA KOTHIWAL
6.4Research design
6.5Questionnaire design
6.6Procedure of data collection
7. Results and interpretation
7.1Findings
8. Conclusion
9. Annexures
10. References
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
11/62
DIVYA KOTHIWAL
BACKGROUND
My work involved two tasks:
I. Lead generation through series of appointments with the prospective
company.
II. Marketing Research and data collection which involved mapping the
allotted area, getting the required information by asking the company to fill
the questionnaire. Here is a little background on marketing research:
Marketing research is defined as the systematic and objective identification,collection, analysis, and dissemination of information for the purpose of assisting
management in decision making related to the identification and solution of
problems (and opportunities) in marketing.
1) Identification: Involves defining the marketing research problem (or
opportunity) and determining the information that is needed to
address it.
2) Collection: Data must be obtained from relevant sources.
3) Analysis: Data are analyzed, interpreted, and inferences are drawn.
4) Dissemination of information: The findings, implications, andrecommendations are provided in a format that makes this informationactionable and directly useful as an input into decision making.
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
12/62
DIVYA KOTHIWAL
Mutual Funds
A Mutual Fund is a trust that pools the savings of a number of investors who
share a common financial goal. It is essentially a diversified portfolio of financialinstruments - these could be equities, debentures / bonds or money marketinstruments. The corpus of the fund is then deployed in investment alternativesthat help to meet predefined investment objectives. The income earned throughthese investments and the capital appreciation realised are shared by its unitholders in proportion to the number of units owned by them. Thus a Mutual Fundis a suitable investment for the common man as it offers an opportunity to investin a diversified, professionally managed basket of securities at a relatively lowcost.
One could make money from a mutual fund in three ways:
1) Income is earned from dividends declared by mutual fund schemes from timeto time.
2) If the fund sells securities that have increased in price, the fund has a capitalgain. This is reflected in the price of each unit. When investors sell these units atprices higher than their purchase price, they stand to make a gain.
3) If fund holdings increase in price but are not sold by the fund manager, thefund's unit price increases. You can then sell your mutual fund units for a profit.This is tantamount to a valuation gain.
Every mutual fund has a goal - either growing its assets (capital gains) and/orgenerating income (dividends) for its investors. Distributions in the form ofcapital gains (short-term and long-term) and dividends may be passed on (paid)to shareholders as income or reinvested to purchase more shares.
Like any business, mutual funds have risks and costs associated with returns.As a shareholder, the risks of a fund and the expenses associated with fund'soperation directly impact your return. You can look at the flowchart to understandin brief as to how mutual funds work.
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
13/62
DIVYA KOTHIWAL
A. Returns on Mutual Funds
As an investor, you want to know the fund's return-its track record over aspecified period of time. So what exactly is "return?" A mutual fund's return is therate of increase or decrease in its value over a specific period of time usuallyexpressed in the following increments: one, three, five, and ten year, year to
date, and since the inception of the fund. Since return is a common measure ofperformance, you can use it to evaluate and compare mutual funds within thesame fund category. Generally expressed as an annualized percentage rate,return is calculated assuming that all distributions from the fund are reinvested.
Since average returns can sometimes "hide" short-term highs and lows, youshould evaluate returns for a time period of several years-not just one year orless. A fund that has a high return in one year may have experienced losses inother years-these fluctuations may not be apparent in its average return. While afund's return shows its track record, keep in mind that past performance is noguarantee of future results.
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
14/62
7/28/2019 Thesis Final s
15/62
DIVYA KOTHIWAL
purchase decision. Investors should always read the prospectus carefully beforeinvesting in any mutual fund.
Liquidity
Mutual fund shares are liquid and orders to buy or sell are placed during markethours. However, orders are not executed until the close of business when theNAV (Net Average Value) of the fund can be determined. Fees or commissionsmay or may not be applicable. Fees and commissions are determined by thespecific fund and the institution that executes the order.
C. Disadvantages
Risks and Costs
Changing market conditions can create fluctuations in the value of amutual fund investment.
There are fees and expenses associated with investing in mutual fundsthat do not usually occur when purchasing individual securities directly.
As with any type of investment, there are drawbacks associated withmutual funds.
No Guarantees
The value of your mutual fund investment, unlike a bank deposit, could fall andbe worth less than the principle initially invested. And, while a money market fundseeks a stable share price, its yield fluctuates, unlike a certificate of deposit. Inaddition, mutual funds are not insured or guaranteed by an agency of the U.S.government. Bond funds, unlike purchasing a bond directly, will not re-pay theprinciple at a set point in time.
The Diversification Penalty
Diversification can help to reduce your risk of loss from holding a single security,but it limits your potential for a "home run" if a single security increasesdramatically in value. Remember, too, that diversification does not protect youfrom an overall decline in the market.
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
16/62
DIVYA KOTHIWAL
Costs
In some cases, the efficiencies of fund ownership are offset by a combination ofsales commissions, redemption fees, and operating expenses. If the fund ispurchased in a taxable account, taxes may have to be paid on capital gains.Keep track of the cost basis of your initial purchase and new shares that areacquired by reinvesting distributions. It's important to compare the costs of fundsyou are considering.
D. Risk
Every type of investment, including mutual funds, involves risk. Risk refers to thepossibility that you will lose money (both principal and any earnings) or fail tomake money on an investment. A fund's investment objective and its holdingsare influential factors in determining how risky a fund is. Reading the prospectuswill help you to understand the risk associated with that particular fund.
Generally speaking, risk and potential return are related. This is the risk/returntrade-off. Higher risks are usually taken with the expectation of higher returns atthe cost of increased volatility. While a fund with higher risk has the potential forhigher return, it also has the greater potential for losses or negative returns. Theschool of thought when investing in mutual funds suggests that the longer yourinvestment time horizon is the less affected you should be by short-termvolatility. Therefore, the shorter your investment time horizon, the moreconcerned you should be with short-term volatility and higher risk.
Defining Mutual fund risk
Different mutual fund categories as previously defined have inherently differentrisk characteristics and should not be compared side by side. A bond fund withbelow-average risk, for example, should not be compared to a stock fund withbelow average risk. Even though both funds have low risk for their respectivecategories, stock funds overall have a higher risk/return potential than bondfunds.
Of all the asset classes, cash investments (i.e. money markets) offer the greatestprice stability but have yielded the lowest long-term returns. Bonds typicallyexperience more short-term price swings, and in turn have generated higherlong-term returns. However, stocks historically have been subject to the greatestshort-term price fluctuationsand have provided the highest long-term returns.Investors looking for a fund which incorporates all asset classes may consider abalanced or hybrid mutual fund. These funds can be very conservative or veryaggressive. Asset allocation portfolios are mutual funds that invest in othermutual funds with different asset classes. At the discretion of the manager(s),
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
17/62
DIVYA KOTHIWAL
securities are bought, sold, and shifted between funds with different assetclasses according to market conditions.
Mutual funds face risks based on the investments they hold. For example, a bond
fund faces interest rate risk and income risk. Bond values are inversely relatedto interest rates. If interest rates go up, bond values will go down and viceversa. Bond income is also affected by the change in interest rates. Bond yieldsare directly related to interest rates falling as interest rates fall and rising asinterest rise. Income risk is greater for a short-term bond fund than for a long-term bond fund.
Similarly, a sector stock fund (which invests in a single industry, such astelecommunications) is at risk that its price will decline due to developments in itsindustry. A stock fund that invests across many industries is more sheltered fromthis risk defined as industry risk.
Following is a glossary of some risks to consider when investing in mutual funds.
Call Risk: The possibility that falling interest rates will cause a bond issuerto redeemor callits high-yielding bond before the bond's maturity date.
Country Risk: The possibility that political events (a war, nationalelections), financial problems (rising inflation, government default), ornatural disasters (an earthquake, a poor harvest) will weaken a country'seconomy and cause investments in that country to decline.
Credit Risk: The possibility that a bond issuer will fail to repay interest
and principal in a timely manner. Also called default risk.
Currency Risk: The possibility that returns could be reduced forAmericans investing in foreign securities because of a rise in the value ofthe U.S. dollar against foreign currencies. Also called exchange-rate risk.
Income Risk: The possibility that a fixed-income fund's dividends willdecline as a result of falling overall interest rates.
Industry Risk: The possibility that a group of stocks in a single industrywill decline in price due to developments in that industry.
Inflation Risk: The possibility that increases in the cost of living willreduce or eliminate a fund's real inflation-adjusted returns.
Interest Rate Risk: The possibility that a bond fund will decline in valuebecause of an increase in interest rates.
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
18/62
DIVYA KOTHIWAL
Manager Risk: The possibility that an actively managed mutual fund'sinvestment adviser will fail to execute the fund's investment strategyeffectively resulting in the failure of stated objectives.
Market Risk: The possibility that stock fund or bond fund prices overallwill decline over short or even extended periods. Stock and bond marketstend to move in cycles, with periods when prices rise and other periodswhen prices fall.
Principal Risk: The possibility that an investment will go down in value, or "lose
money," from the original or invested amount.
E. Mutual Fund Types
Wide varieties of Mutual Fund Schemes exist to cater to the needs such asfinancial position, risk tolerance and return expectations etc. The table belowgives an overview into the existing types of schemes in the Industry.
TYPES OF MUTUAL FUND SCHEMES
By Structureo Open - Ended Schemes
o Close - Ended Schemes
o Interval Schemes
By Investment Objective
o Growth Schemes
o Income Schemes
o Balanced Schemes
o Money Market Schemes
Other Schemes
o Tax Saving Schemes
o Special Schemes
Index Schemes
Sector Specific Schemes
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
19/62
DIVYA KOTHIWAL
Mutual Funds by Structure
Open-Ended Schemes: An open-ended fund or scheme is one that is available
for subscription and repurchase on a continuous basis. These schemes do not
have a fixed maturity period. Investors can conveniently buy and sell units at Net
Asset Value (NAV) related prices which are declared on a daily basis. The key
feature of open-end schemes is liquidity.
Close-Ended Schemes: A close-ended fund or scheme has a stipulated
maturity period e.g. 5-7 years. The fund is open for subscription only during aspecified period at the time of launch of the scheme. Investors can invest in the
scheme at the time of the initial public issue and thereafter they can buy or sell
the units of the scheme on the stock exchanges where the units are listed. In
order to provide an exit route to the investors, some close-ended funds give an
option of selling back the units to the mutual fund through periodic repurchase at
NAV related prices. SEBI Regulations stipulate that at least one of the two exit
routes is provided to the investor i.e. either repurchase facility or through listing
on stock exchanges. These mutual funds schemes disclose NAV generally on
weekly basis.
Mutual Funds by Investment Objective
Growth / Equity Scheme: The aim of growth funds is to provide capital
appreciation over the medium to long-term. Such schemes normally invest a
major part of their corpus in equities. Such funds have comparatively high risks.
Growth schemes are good for investors having a long-term outlook seeking
appreciation over a period of time.
Income / Debt Oriented Scheme: The aim of income funds is to provide regular
and steady income to investors. Such schemes generally invest in fixed income
securities such as bonds, corporate debentures, Government securities and
money market instruments. Such funds are less risky compared to equity
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
20/62
DIVYA KOTHIWAL
schemes. These funds are not affected because of fluctuations in equity markets.
However, opportunities of capital appreciation are also limited in such funds.
Balanced Funds: The aim of balanced funds is to provide both growth and
regular income as such schemes invest both in equities and fixed income
securities in the proportion indicated in their offer documents. These are
appropriate for investors looking for moderate growth. They generally invest 40-
60% in equity and debt instruments. These funds are also affected because of
fluctuations in share prices in the stock markets. However, NAVs of such funds
are likely to be less volatile compared to pure equity funds.
Money Market / Liquid Schemes: These funds are also income funds and their
aim is to provide easy liquidity, preservation of capital and moderate income.
These schemes invest exclusively in safer short-term instruments such as
treasury bills, certificates of deposit, commercial paper and inter-bank call
money, government securities, etc. Returns on these schemes fluctuate much
less compared to other funds. These funds are appropriate for corporate and
individual investors as a means to park their surplus funds for short periods.
PGP/FW/08-10 DF/08/10-F-579
Risk Hierarchy of Different Mutual Funds
7/28/2019 Thesis Final s
21/62
DIVYA KOTHIWAL
Others:
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
22/62
DIVYA KOTHIWAL
Gilt Funds: These funds invest exclusively in government securities.
Government securities have no default risk. NAVs of these schemes also
fluctuate due to change in interest rates and other economic factors as is
the case with income or debt oriented schemes.
Index Funds: Index Funds replicate the portfolio of a particular index such
as the BSE Sensitive index, S&P NSE 50 index (Nifty), etc. These
schemes invest in the securities in the same weightage comprising of an
index. NAVs of such schemes would rise or fall in accordance with the rise
or fall in the index, though not exactly by the same percentage.
Sector-Specific Schemes: These are the funds/schemes which invest in
the securities of only those sectors or industries as specified in the offer
documents E.g. Pharmaceuticals, Software, Fast Moving Consumer
Goods (FMCG), Petroleum stocks etc. The returns in these funds are
dependent on the performance of the respective sectors/industries. While
these funds may give higher returns, they are more risky compared to
diversified funds.
Tax Saving Schemes: These schemes offer tax rebates to the investors
under specific provisions of the Income Tax Act, 1961 as the Government
offers tax incentives for investment in specified avenues. E.g. Equity
Linked Savings Schemes (ELSS). Pension Schemes launched by the
mutual funds also offer tax benefits. These schemes are growth oriented
and invest pre-dominantly in equities. Their growth opportunities and risks
associated are like any equity-oriented scheme.
Load or No Load Funds: Load Fund is one that charges a percentage of
NAV for entry or exit. That is, each time one buys or sells units in the fund,
a charge will be payable. This charge is used by the mutual fund for
marketing and distribution expenses. The investors should take the loads
into consideration while making investment as these affect their
yields/returns. However, the investors should also consider the
performance track record and service standards of the mutual fund which
are more important.
A no-load fund is one that does not charge for entry or exit. It means the
investors can enter the fund/scheme at NAV and no additional charges
are payable on purchase or sale of units.
Here is a sales sheet of various types of mutual funds as on April 2008:
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
23/62
DIVYA KOTHIWAL
Sales during the month of April, 2008
Amount in Rs. Crores
Nature StructureOpen End Close End Total
No. of Schemes
Amount No. ofSchemes
Amount No. ofSchemes
Amount
Balanced 31 370 6 - 37 370ELSS 30 271 11 179 41 450FOFInvestingOverseas
6 143 - - 6 143
Gilt 30 157 - - 30 157GOLD ETF 5 33 - - 5 33
Growth 222 4071 49 29 271 4100Income 152 118553 265 4222 417 122775Liquid/Money Market
57 386820 - - 57 386820
Other ETF 8 352 - - 8 352Total 541 510770 331 4430 872 515200
F. Procedure of Opening up a Folio
Fresh Purchase: After deciding on the type of scheme, the investor will have to
fill in the Application form, attach a payment instrument and submit it at any of
the funds' collection centers before the cut off time. The investor has to invest in
rupees and units will be allotted to him in fractions depending upon the NAV.
Additional Purchase: Buying more units either of the same scheme or of
a different scheme under the SAME FOLIO is an additional purchase,which can be done through Additional Purchase slips provided along with
the account statement. After filling the same, the investor will have to
attach a cheque with it and submit it at any of the collection centers before
the cut-off time.
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
24/62
DIVYA KOTHIWAL
Switch Units: A switch request will have to be filled in and submitted at
any of the collection centers before the cut off time. SWITCH can be done
with either partial or all units under a particular scheme to another scheme
as specified by him under the same folio.
Redeem / Repurchase Units: If the fund is open ended, the investor hasto send the repurchase requisition slip, duly completed and signed, to anyof our branches. It is possible to lodge repurchase requests on the Internetalso. The redemption can be done for all units, partial units, or for anamount.
Mutual Fund Companies in India
ABN AMRO Mutual Fund
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 AssetManagement (India) Ltd. was incorporated on November 4, 2003. DeutscheBank 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 golbal organisation evolved in 1871 and is beingrepresented in Canada, the US, the Philippines, Japan, Indonesia and Bermudaapart from India. Birla Sun Life Mutual Fund follows a conservative long-termapproach 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
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
25/62
DIVYA KOTHIWAL
Company Limited is the AMC of BOB Mutual Fund and was incorporated onNovember 5, 1992. Deutsche Bank AG is the custodian.
HDFC Mutual Fund
HDFC Mutual Fund was setup on June 30, 2000 with two sponsorers nemelyHousing Development Finance Corporation Limited and Standard LifeInvestments Limited.
HSBC Mutual Fund
HSBC Mutual Fund was setup on May 27, 2002 with HSBC Securities andCapital Markets (India) Private Limited as the sponsor. Board of Trustees, HSBCMutual Fund acts as the Trustee Company of HSBC Mutual Fund.
ING Vysya Mutual Fund
ING Vysya Mutual Fund was setup on February 11, 1999 with the same namedTrustee Company. It is a joint venture of Vysya and ING. The AMC, INGInvestment Management (India) Pvt. Ltd. was incorporated on April 6, 1998.
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
26/62
DIVYA KOTHIWAL
Prudential ICICI Mutual Fund
The mutual fund of ICICI is a joint venture with Prudential Plc. of America, one ofthe largest life insurance companies in the US of A. Prudential ICICI Mutual Fund
was setup on 13th of October, 1993 with two sponsorers, Prudential Plc. andICICI Ltd. The Trustee Company formed is Prudential ICICI Trust Ltd. and the
AMC is Prudential ICICI Asset Management Company Limited incorporated on22nd of June, 1993.
Sahara Mutual Fund
Sahara Mutual Fund was set up on July 18, 1996 with Sahara India FinancialCorporation Ltd. as the sponsor. Sahara Asset Management Company PrivateLimited incorporated on August 31, 1995 works as the AMC of Sahara MutualFund. The paid-up capital of the AMC stands at Rs 25.8 crore.
State Bank of India Mutual Fund
State Bank of India Mutual Fund is the first Bank sponsored Mutual Fund tolaunch offshor fund, the India Magnum Fund with a corpus of Rs. 225 cr.approximately. Today it is the largest Bank sponsored Mutual Fund in India. Theyhave already launched 35 Schemes out of which 15 have already yieldedhandsome returns to investors. State Bank of India Mutual Fund has more thanRs. 5,500 Crores as AUM. Now it has an investor base of over 8 Lakhs spreadover 18 schemes.
Tata Mutual Fund
Tata Mutual Fund (TMF) is a Trust under the Indian Trust Act, 1882. Thesponsorers for Tata Mutual Fund are Tata Sons Ltd., and Tata InvestmentCorporation Ltd. The investment manager is Tata Asset Management Limitedand its Tata Trustee Company Pvt. Limited. Tata Asset Management Limited's isone of the fastest in the country with more than Rs. 7,703 crores (as on April 30,2005) of AUM.
Kotak Mahindra Mutual Fund
Kotak Mahindra Asset Management Company (KMAMC) is a subsidiary of
KMBL. It is presently having more than 1,99,818 investors in its variousschemes. KMAMC started its operations in December 1998. Kotak MahindraMutual Fund offers schemes catering to investors with varying risk - returnprofiles. It was the first company to launch dedicated gilt scheme investing only ingovernment securities
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
27/62
DIVYA KOTHIWAL
Unit Trust of India Mutual Fund
UTI Asset Management Company Private Limited, established in Jan 14, 2003,manages the UTI Mutual Fund with the support of UTI Trustee Company Private
Limited. UTI Asset Management Company presently manages a corpus of overRs.20000 Crore. The sponsorers of UTI Mutual Fund are Bank of Baroda (BOB),Punjab National Bank (PNB), State Bank of India (SBI), and Life InsuranceCorporation of India (LIC). The schemes of UTI Mutual Fund are Liquid Funds,Income Funds, Asset Management Funds, Index Funds, Equity Funds andBalance Funds.
Reliance Mutual Fund
Reliance Mutual Fund (RMF) was established as trust under Indian Trusts Act,1882. The sponsor of RMF is Reliance Capital Limited and Reliance Capital
Trustee Co. Limited is the Trustee. It was registered on June 30, 1995 asReliance Capital Mutual Fund which was changed on March 11, 2004. RelianceMutual Fund was formed for launching of various schemes under which units areissued to the Public with a view to contribute to the capital market and to provideinvestors the opportunities to make investments in diversified securities.
Standard Chartered Mutual Fund
Standard Chartered Mutual Fund was set up on March 13, 2000 sponsored byStandard Chartered Bank. The Trustee is Standard Chartered Trustee CompanyPvt. Ltd. Standard Chartered Asset Management Company Pvt. Ltd. is the AMCwhich was incorporated with SEBI on December 20,1999.
Franklin Templeton India Mutual Fund
The group, Frnaklin Templeton Investments is a California (USA) basedcompany with a global AUM of US$ 409.2 bn. (as of April 30, 2005). It is one ofthe largest financial services groups in the world. Investors can buy or sell theMutual Fund through their financial advisor or through mail or through theirwebsite. They have Open end Diversified Equity schemes, Open end SectorEquity schemes, Open end Hybrid schemes, Open end Tax Saving schemes,Open end Income and Liquid schemes, Closed end Income schemes and Openend Fund of Funds schemes to offer.
Morgan Stanley Mutual Fund India
Morgan Stanley is a worldwide financial services company and its leading in themarket in securities, investment management and credit services. MorganStanley Investment Management (MISM) was established in the year 1975. Itprovides customized asset management services and products to governments,corporations, pension funds and non-profit organisations. Its services are also
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
28/62
DIVYA KOTHIWAL
extended to high net worth individuals and retail investors. In India it is known asMorgan Stanley Investment Management Private Limited (MSIM India) and its
AMC is Morgan Stanley Mutual Fund (MSMF). This is the first close enddiversified equity scheme serving the needs of Indian retail investors focussing
on a long-term capital appreciation.
Escorts Mutual Fund
Escorts Mutual Fund was setup on April 15, 1996 with Escorts Finance Limitedas its sponsor. The Trustee Company is Escorts Investment Trust Limited. Its
AMC was incorporated on December 1, 1995 with the name Escorts AssetManagement Limited.
Alliance Capital Mutual Fund
Alliance Capital Mutual Fund was setup on December 30, 1994 with AllianceCapital Management Corp. of Delaware (USA) as sponsorer. The Trustee isACAM Trust Company Pvt. Ltd. and AMC, the Alliance Capital AssetManagement India (Pvt) Ltd. with the corporate office in Mumbai.
Benchmark Mutual Fund
Benchmark Mutual Fund was setup on June 12, 2001 with Niche FinancialServices Pvt. Ltd. as the sponsorer and Benchmark Trustee Company Pvt. Ltd.as the Trustee Company. Incorporated on October 16, 2000 and headquarteredin Mumbai, Benchmark Asset Management Company Pvt. Ltd. is the AMC.
Canbank Mutual Fund
Canbank Mutual Fund was setup on December 19, 1987 with Canara Bankacting as the sponsor. Canbank Investment Management Services Ltd.incorporated on March 2, 1993 is the AMC. The Corporate Office of the AMC isin 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.
LIC Mutual Fund
Life Insurance Corporation of India set up LIC Mutual Fund on 19th June 1989. Itcontributed Rs. 2 Crores towards the corpus of the Fund. LIC Mutual Fund wasconstituted as a Trust in accordance with the provisions of the Indian Trust Act,1882. . The Company started its business on 29th April 1994. The Trustees of
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
29/62
DIVYA KOTHIWAL
LIC Mutual Fund have appointed Jeevan Bima Sahayog Asset ManagementCompany Ltd as the Investment Managers for LIC Mutual Fund.
GIC Mutual Fund
GIC Mutual Fund, sponsored by General Insurance Corporation of India (GIC), aGovernment of India undertaking and the four Public Sector General InsuranceCompanies, viz. National Insurance Co. Ltd (NIC), The New India Assurance Co.Ltd. (NIA), The Oriental Insurance Co. Ltd (OIC) and United India Insurance Co.Ltd. (UII) and is constituted as a Trust in accordance with the provisions of theIndian Trusts Act, 1882.
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
30/62
DIVYA KOTHIWAL
The Study
Purpose of the study
The purpose of the study is to evaluate how much SMEs have an exposure to
mutual funds and what are their investment patterns.
Scope of the Study
The scope of study is limited to studying the investment patterns and exposure to
mutual funds of SMEs in Nehru Place.
Data Collection and Job Requirement
The methods that I have employed in collecting data are:
a. Online Directories like Just dial, Fundoodata etc.
b. Existing database given by Reliance ( small proportion)
c. Mapping the areas given to us which involves fieldwork and in turn
involves gathering information like company name, financial heads
name, companys contact number, companys line of work etc.
d. Telephonic calls to fix an appointment with the concerned person.
e. Relationship management
Limitations of the Study
a. Not getting enough appointments as the financial heads may refuse
to talk to us.
b. Sometimes you cant reach the right person who is actually the
decision maker in the organization.
c. Cold calling sometimes doesnt yield the desired results
d. Database sometimes given on the net is not updated which leads to
wastage of time and effort.
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
31/62
DIVYA KOTHIWAL
e. Corporates not revealing true information sometimes
f. Small sample size
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
32/62
DIVYA KOTHIWAL
About Small and Medium Enterprises (SMEs)
With the advent of planned economy from 1951 and the subsequent policyfollowed by government of India, both planners and government earmarked a
special role for small-scale industries and medium scale industries in the Indian
economy. Due protection was accorded to both sectors, and particularly for small
scale industries from 1951 to 1991, till the nation adopted a policy of liberalization
and globalization. Certain products were reserved for small-scale units for a long
time, though this list of products is decreasing due to change in industrial policies
and climate. It can be observed that by and large, SMEs in India met the
expectations of the government and developed in a manner, which made it
possible for them to achieve the following objectives:
High contribution to domestic production
Significant export earnings
Low investment requirements
Operational flexibility
Location wise mobility Low intensive imports
Capacities to develop appropriate indigenous technology
Import substitution
Technology oriented industries
Competitiveness in domestic and export markets
At the same time one has to understand the limitations of SMEs, which are:
Low capital base
Inadequate exposure to international environment
Inability to face impact of WTO regime
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
33/62
DIVYA KOTHIWAL
Inadequate contribution towards R&D
Lack of professionalism
In spite of these limitations, the SMEs have made significant contribution towards
technological development and exports. SMEs have been established in almost
all major sectors in the Indian industry such as:
Food processing
Agricultural inputs
Chemicals & pharmaceuticals
Electronics
Textiles and Garments
Leather and leather goods
Meat products
Bio-engineering
Sports goods
Plastics products
Computer software, etc.
The following points more clearly brings out why banks and mutual fund
companies should
focus on SMEs:
Government and RBI pushing for SME funding in urban and semi urban
areas.
Large corporate are accessing funds directly from the capital markets.
SMEs have become big producers and exporters of consumer goods.
SMEs are now conscious of quality, production efficiencies and costs.
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
34/62
DIVYA KOTHIWAL
SMEs have a repayment record comparable to the best borrowers.
Sector growing at over 10% per annum.
Large corporate are increasingly outsourcing work to SMEs.
As clearly stated above, SMEs sector has become a major source of income for
the banks and
mutual fund companies and is therefore selling like hot cake. Bust just making
the funds and FMP s available is not a solution-neither for the SMEs nor for the
banks. These products have to be made known to the investors for whom they
are meant. The project undertaken deals with the marketing of these new and
existing funds and FMP s to the SMEs. The project therefore started with the
study of the history of mutual fund industry in India and various stages which
contributed to its evolution in India and the various factors and developments
added at each stage.
When the thought and research process was started for the first one it was found
out that the SMEs has several investment options in their pockets from the very
starting like:
Fixed interest government bonds.
Bank fixed deposits.
Share market.
Commercial papers.
Although as we can see that there were various options available in the hands of
the people but if we give a good analyzing look at most of these options today
and have a comparative evaluation for various investments with reference to the
rate of return and the unavoidable evil inflation rate we can see very clearly that
in most of these investments the rate of return is very much closer to the inflation
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
35/62
DIVYA KOTHIWAL
rate which minimizes the net increase in the income and increase of the wealth of
the people keeping it somewhere around 1-3%. So what is required by all the
AMC s and other broking houses is that apart from the normal business they are
doing they should also organize or sponsor several such seminars in which
various prospective clients could be called and all their doubts can be cleared off
according to their convenience and they should be encouraged to be a part of
this booming Indian economy.
Current Investment Pattern of SMEs
The investment pattern of people whose investment perspective have taken anew turn, has changed a lot and they are looking towards new horizons of
investments.
Currently the chief options available for investment are:
Government bonds and debentures
Commercial papers and deposits
Fixed deposits
PPF
Retirement and Pension schemes
Equity based MF & ELSS plan
Direct trading into stock market
Multi commodity exchange
Real estate
Now we can make out that today people are not just looking towards a simple
and safer saving but they are making attempts to get an investment which can
lead for a healthy return along with the security of money and moreover they are
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
36/62
DIVYA KOTHIWAL
diversifying their investment and following the simple policy of don t keep all your
eggs in one basket. So a wise diversification no doubt reduces the net risk and
makes the total portfolio a better returning one and obviously a lesser risky.
Hence we can conclude by saying that the present day investor is much wiser
and has more number of baskets to keep his eggs in.
Factors affecting the investors while making the portfolio:
Time frame of investment
Return on investment
Risk-benefit ratio
Diversification of risk
Tax benefits
Risk coverage
Value added features
Flexibility and liabilities of investments
Inflation rate
If we analyze closely we can see that the MF more or less satisfy all the
parameters of the present day investor, may be this is the reason behind the fast
and healthy growth of the MF industry.
Instruments in the Indian Debt Market:
Certificate of Deposit: Issued by the scheduled commercial banks
excluding the regional rural banks. These are unsecured negotiable
promissory notes.
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
37/62
DIVYA KOTHIWAL
Commercial Paper: A CP is a short term, unsecured instrument
issued by corporate bodies (public and private) to meet short term
working capital requirements. The maturity varies between 3
months to 1 year.
Corporate debentures: These are issued by companies with
physical assets, as secured instruments in the form of certificates.
They are assigned a credit rating by the rating agencies.
Floating rate bonds: Short to medium term interest bearing
instruments issued by financial corporations. A typical maturity
ranges from 3 years to 5 years. Such bonds if issued by Financial
Institutions are generally unsecured, while those issued by Private
corporations are secured.
Government Securities: These are medium to long term interest
bearing obligations issued by the Government of India and the
States through the RBI. These are issues where the rates are pre-
specified and the investor (a corporate or an individual) only bids
for quantity. The RBI here acts only as a Depository.
Treasury Bills: These are short term obligations issued through
the RBI also by the government of India at a Discount. RBI issues
T- Bills for different tenures ranging from 91 days to 364 days, also
issued through an auction procedure. The yield is determined on
the basis of bids tendered and accepted.
Bank and Financial institution Bond: Most of these are in the
form of promissory notes transferable by endorsement and delivery.These are issued mainly by Financial Institutions such as
ICICI/IDBI/IFCI or by commercial Banks
Public Sector Undertaking (PSU) Bonds: These are medium and
long term obligations issued by public sector companies where the
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
38/62
DIVYA KOTHIWAL
government shareholding is grater than 51%. Some PSU bonds
Carry tax exemptions. The minimum maturity is 5 years for taxable
bonds and 7 years for tax free bonds. Such bonds are generally not
guaranteed by the government and are transferable in the Formby
endorsement and delivery
The Analysis
Sources of Data
Data are of two types namely primary and secondary:
Primary Data refers to information that is developed or gathered by the
researcher specifically for the research project at hand.
Secondary Data refers to information that has previously been gathered by
someone other than the researcher and/or for some other purpose than the
research project at hand.
When deciding if the data to be collected is secondary in nature, ask the following
question: Would the data have been collected as a part of the normal course
requirements? If the answer is no, then the data should be classified as primary.
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
39/62
DIVYA KOTHIWAL
INTERNAL DATA
Internal data are data available within the organization for which the research is
being conducted. The information may be in a ready to use format or may require
processing. In our organization data was found on the company server.
EXTERNAL DATA
External data are data that originate external to the organization. This data was
found on company websites, it included published material, online databases and
some syndicated services.
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
40/62
DIVYA KOTHIWAL
QUALITATIVE RESEARCH
An unstructured, exploratory research methodology based on small samples that
provides insights and understanding of the problem setting.
QUANTITATIVE RESEARCH
A research methodology that seeks to quantify the data and, typically, applies
some form of statistical analysis
Our research involved quantity, we had a large number of representative cases
which had structured data collection and we also recommended a final course of
action.
In my study, primary data is the data that I collected by mapping the companies
in Nehru place and appointments that I had with financial heads who gave
valuable information. Secondary data would include the already existing
database given initially by Reliance Mutual fund house and also data collected on
the internet through websites like Fundoodata, Just Dial etc.
Sampling
Sampling Design
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
41/62
DIVYA KOTHIWAL
The sample chosen from the target population for retailers was based on the size
of the particular area of Delhi as well as the number of retailers present in that
particular area. This was also done on the basis of convenience sampling.
The customers were sampled on the basis of convenience sampling.
Sample Size
The sample size for the project was taken as 200. The market research was
based on convenient sampling.
Scope of Study
The research is categorically classified into three sub-researches on the basis of
the products provided by the company. The scope of this study essentiallyincludes the regions, areas, and the product categories in which the surveys
have been conducted. The scope of the study can be broadly categorized into
three scopes, namely:
Geographical scope
Product scope
Time scope or extent of study
Geographical scope
The geographical scope covers areas from where the samples have been taken.
Majorly the sample has been taken from Nehru place and the adjoining areas
and a couple of samples have been taken from Okhla Industrial Estate
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
42/62
DIVYA KOTHIWAL
Product scope
The product scope features the product category in which the research has been
carried out. The product category of this study is mutual funds and specifically
highly liquid debt schemes catering to corporate clients.
Procedure for Data Collection
Data collection means gathering information to address those critical evaluation
questions that may be in the minds of the company/ researcher. And the
procedure for data collection to be adopted depends on the requirements of the
research.
For the purpose of data collection, I first identified the area that I would work inand in that I identified the companies which were capable of making an
investment who had decent turnover so that they could have the capacity to
invest atleast 1 crore which is the minimum amount for institutional investment.
This was done with the help of internet, database provided by the company as
well as cold callings.
Before going further to decide the method of data collection, we identified some
of the important issues in this regard. These were:
1. Availability: We realized that there may be some information alreadyavailable that can help answer some questions or guide the development of new
guidelines. Hence we reviewed information in prior records, reports, and
summaries.
2. Pilot Testing: It was essential to test the information collection instrument or
the process we designed.
3. Protocol Needs: In many situations, we needed to obtain appropriate
permission or clearance to collect information from people or other sources.
4. Reactivity: Reactivity refers to how the way of asking a question would alterthe response we would get. It may also be a concern if our presence during data
collection may possibly alter the results..
5. Reliability: Will the evaluation process designed consistently measure what
we want it to measure? That is whether multiple interviews, settings, or
observers, will consistently measure the same thing each time? In whatever
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
43/62
DIVYA KOTHIWAL
instrument we design, will people interpret our questions the same way each
time?
6. Validity: Validity means will the information collection methods designed
produce information that measures what we require to measure? We should be
sure that the information we collect is relevant to the purpose in hand.
Having kept these issues in mind, we adopted the following methods for data
collection:
1. Personal Interview
An interview is called personal when the Interviewer asks the questions face-to-
face with the Interviewee. Personal interviews were conducted in companies
where I went for the appointment. These were mainly of the form of structuredinterviews.
2. Questionnaire
A questionnaire is a structured technique for data collection that consists of a
series of questions that a respondent answers. The questionnaire comprised of
multiple choice, numeric open-ended as well as text-open ended questions,
depending on the nature of the query.
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
44/62
DIVYA KOTHIWAL
Results and Interpretation
In this section we present all the facts and figures along with analysis collectedduring the market research activities performed during the course of thesis work.
The analysis is based on the questionnaire, a copy of which is there in this
report. The software used to analyse the data is Microsoft Excel and Stats
software.
The primary purpose of the study was to understand the current investment
patterns of SMEs and their exposure to mutual funds. Companies at Nehru place
which is considered to be the IT hub of Delhi were consciously chosen for the
purpose of study as they house maximum number of companies in the cityacross various segments. The numbers of companies covered have already
been mentioned (200).
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
45/62
DIVYA KOTHIWAL
The Findings
Diversified Portfolio
Figure 11 tells us that about how companies invest their money at present in the
market.
We see that about 55% of the companies had diversified portfolio and 45%didnt. A diversified portfolio would mean investing in more than one instruments.
Now which type of instruments are we talking about here remains to be seen
which will come up in later questions. From the information given by ICICI we are
here assuming that most companies are investing in either bank FDs or share
market. Next question will prove whether it is true or not.
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
46/62
DIVYA KOTHIWAL
Investment Tools Company Invests In
Instruments Company invests in as you can see, majority i.e. about 61% of
investments were either done in equity or bank FDs where in Bank FDs share is
32% which actually proves our hypothesis earlier on based on past information.
Now if companies are majorly investing in FDs and Equity then Savings and
Returns should be the two biggest factors in compelling the company to invest. Itmay be because of this only that Reliance Mutual Fund Houses Fixed Maturity
Plan which is on the similar line as bank FD is selling like hot cake. This figure
also shows another important result, only 14% of the companies invest in
mutual funds which justifies our hypothesis showing lack of penetration of
mutual funds in SMEs.
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
47/62
DIVYA KOTHIWAL
Reason for investment
As you can see from the above figure 45% of companies invests for savings
purpose and 30% returns which confirms. This could be because of companies
investing in bank FDs and equity.
Rank Instruments
If you look at the ranking you can make out that majorly companies are opting foreither bank FDs (95) or RBI bonds (66) which are safe as 1st rank or 2 nd or prefer
for equities (116). This might indicate that companies are not aware about how
safe mutual funds are on the debt side. This is an early indication that companies
are not much aware about the safety and steady retruns given by mutual funds.
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
48/62
DIVYA KOTHIWAL
Frequency of company investment
The above figure shows the frequency of company investment where you can
see majorly companies do it once in 15 days or once in a week.
Short investment or Long term investment
As you can see from the above figure that mainly companies are going for long
term investments which indicates two things. One, companies are not aware
about highly liquid debt funds that we have in mutual funds where in you can
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
49/62
DIVYA KOTHIWAL
invest even for one day and get return on it. Second, it gives an indication that
companies are sticking to longer term Bank Fixed deposits.
Expected rate of return on Debt investments
Mainly companies are expecting return on debt investment to be above 6% which
is reasonable enough.
Expected return on Equity investments
As we can see from the above figure that undoubtedly companies are expecting
20% and above return on their equity investment which is again reasonable as
capital gain has been increased to 15% recently.
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
50/62
DIVYA KOTHIWAL
Awareness Level if Already Investing in Mutual Funds
As you can see those who are already investing know the benefits provide by
mutual funds. Mutual funds offer liquidity steady returns and tax advantage as
well.
On whose advice do you invest
This figure shows role of relationship management to an extent as 41% of the
companies are investing through relationship managers. So this highlights the
point that relationship management is quite necessary if you want to bring in
business for the company. Its not only with the relationship managers, but it
applies to all segments. If you want your company to grow you have to have
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
51/62
DIVYA KOTHIWAL
good relationship with the client from whom you are thinking of bringing in the
business.
Type of mutual fund you company invests in
This again confirms the hypothesis that there is lack of awareness about highly
liquid debt schems for corporates as you can see companies are heavily
investing in equity (62%) which actually brings in another interesting point in the
forefront. This figure is actually bringing in one of the limitations of the study
which is wrong information provided by the company due to either lack of
knowledge or some other reason. As earlier on we had a chart which showed
those who invested in mutual funds knew about liquidity in mutual funds, and
they also knew everything about mutual funds. But ehre the figure are giving
contradictory views.
Reason for company investing in Debt Mutual Funds
Here you can clearly see that mainly companies are investing in debt mutual
funds because it offers steady returns and liquidity (total-74%)
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
52/62
DIVYA KOTHIWAL
Reason for investing in equity mutual funds
As you can see mainly companies are investing in equity mutual funds for greater
return over inflation which currently is a big factor in India.
Company not investing in mutual funds because:
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
53/62
DIVYA KOTHIWAL
As you can see the reason for not investing is dipersed but majorly its either
because of lack of knowledge or low returns as compared to share market which
again strengthens our claim of companies investing in equities more than mutual
funds.
Would you consider investing in mutual funds if:
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
54/62
DIVYA KOTHIWAL
Since mutual funds provides liquidity, steady returns, low risk,tax benefits, once
companies are made aware about this they are either ready to invest in them orcan think of investing.
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
55/62
DIVYA KOTHIWAL
Awareness about current account surplus earning interest
As it is clear from the above figure that mostly people are not aware about
current account surplus earning interest for even one day (61%) which again
strengthens our argument that companies are not aware about liquid funds that
much.
Would you invest in mutual funds if you knew about benefits:
As you can clearly see that most of the companies (89%) are ready to invest if
given proper information about mutual funds which is a very important point. So
this gives mutual fund companies motivation to explore even more areas where
they can find prospective clients.
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
56/62
DIVYA KOTHIWAL
Would you like to know more about mutual funds
As you can see the eagerness of companies once they are provided the right
information about mutual funds.
It states that 94% companies want to know more about mutual funds. This is a
good indication for mutual fund houses that are always in a hunt to find new
corporate.
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
57/62
DIVYA KOTHIWAL
Conclusion
The conclusion is that currently a lot of companies are still not fully informed
about the benefits that are associated with investing in mutual funds. The ones
which are investing are investing more in equity schemes which shows that they
dont know much about the highly liquid debt schemes that mutual fund provides.
Non mutual fund investors are mainly investing their money in bank fixed
deposits of longer maturity when they can get better returns if they park money in
mutual funds. Also, though the sample size is small but it still gives an indication
that the sector in which an SME is in will affect its decision to whether or not
invest in mutual funds but a conclusive research needs to be done on this. Its
now the job of mutual fund houses to increase their efforts even more and try tocreate more and more awareness about mutual funds.
PGP/FW/08-10 DF/08/10-F-579
7/28/2019 Thesis Final s
58/62
DIVYA KOTHIWAL
Annexure
In the annexure I am attaching the questionnaire which used for analysis and
interpretation:
A Study On Investment Pattern of Small & Medium Enterprise (SME) Segment
(Focus on Mutual Funds)
Name: __________________________
Company: __________________________
Designation: __________________________
Contact Number: __________________________
1. Does your company have a diversified portfolio?
2. Which are the investment tools your company invests in?
Equity
3. Your company primarily invest for
PGP/FW/08-10 DF/08/10-F-579
Tax Benefits
Returns
Liquidity
Savings
Others
Any other (Please Specify)
Bank Fixed Deposit
Mutual Funds
RBI Bonds
Yes No
7/28/2019 Thesis Final s
59/62
DIVYA KOTHIWAL
4. Rank the investments options according to your companys preference ofInvestment:
5. What is the frequency of your companys investment?a. Once a Weekb. Once in 15 Daysc. Once a Monthd. Once in 3 Monthse. Once in 6 Months
f. Once a Year
6. Does your company go in for:a. Short-termb. Long-term investments(Please specify the period) _____________________
7. What is the expected rate of return of your company from debtinvestments?
a. Below 4%b. 4%-5%
c. 6%-7%d. Above 7%
8. What is the expected rate of return of your company from equityinvestments?
a. 5% - 9%b. 10% - 14%c. 15% - 20%d. Above 20%
9. If your company invests in mutual finds:
a. Are you aware of the various schemes offered by Mutual Funds?b. Do you know that Mutual Funds offers Liquidity to your funds?c. Do you know that Mutual Funds offers steady returns?d. Do you know you can get Tax Advantages by investing in Mutual
Funds?
PGP/FW/08-10 DF/08/10-F-579
Bank Fixed Deposit
RBI BondsMutual FundsEquities
Any other (Please Specify)
NoYes No
Yes No
YesYes
NoYes
7/28/2019 Thesis Final s
60/62
DIVYA KOTHIWAL
e. Primarily on whose external advice do you invest?
1. Bank2. Distributor
3. Agent4. Direct Investment5. RM
f. Which type of Mutual Fund does your company primarily invest in?
g. Your company invests in Debt Mutual Funds because it offers:
h. Your company invests in Equities Mutual Funds because it offers:
i. Your company invests in Balanced Mutual Funds because it offers:
10.If your company does not invest in Mutual Funds:
a. Your company does not invest in Mutual Funds because of
i) Bitter Past Experienceii) Lack of Knowledgeiii) Lack of Confidence in Service Being Providediv) Difficulty in Selection of Schemesv) Inefficient Investment Advisorsvi) Low Returns as compared to Share Market
b. Would you invest in Mutual Funds for your company if it offered (Y/N)i) Greater Tax Benefits vis--vis Others.ii) Greater Liquidity vis--vis Others.iii) Investment for a Shorter Duration, Even for One Day
iv) Steady Returnsv) Net Returns Better than a Bank Fixed Deposit with HighLiquidityvi) Diversification of Portfoliovii) Minimization of Risks
PGP/FW/08-10 DF/08/10-F-579
Debt Equities Balanced
Steady Returns
Risk Mitigation Any Other
Tax BenefitsLiquidity
Returns>InflationHigher ReturnsWealth Creation Any OtherTax Advantage
Long Term Capital Gains
Higher Returns than debt
fundsTax Advantage Any otherReturns>Inflation
Yes
Yes No
Yes NoYes No
No
Yes No
7/28/2019 Thesis Final s
61/62
DIVYA KOTHIWAL
11.Are you aware that current account surpluses can also earn interest byparking in Mutual Funds even for one day?
12..If Mutual Funds offer you Steady Returns, Tax Benefits, Liquidity,Diversification of portfolio, Lesser risk etc., would you consider it as aninvestment option in the future for your company?
13.Would you be interested to know more about Mutual Funds?
PGP/FW/08-10 DF/08/10-F-579
Yes No
Yes No
Yes No
7/28/2019 Thesis Final s
62/62
DIVYA KOTHIWAL
References
www.mutualfundsindia.com
www.amfiindia.com
Richard I. Levin, David S. Rubin Seventh edition, Statistics For
Management
www.worldbank.org
Recommended