Mba 04006013

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People’s Education Society and Trust’s

Belgaum Institute of Management Studies,

MBA, Belgaum.(Approved by AICTE & Afliated to Karnatak University Dharwad)

Study On

“Analyzing Investment Views a mong Individuals in Auto Sector Mutual Funds in

Hubli city “

J !inan"ial Asset ana#e$ent %vt 'td A Report Submitted in Partial Fulfillment of

The Requirement for the Award of

MASTER’S D EGREE IN BUSINESS A DMINISTRATION

2004-2005

Submitted by

Sudarshan S. SavanoorMBA (IISem) !am "o. MBA0400#0$%

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Institute Guide: Company Guide:

r ah*l K Kavishwar iss a+eshwari

,id#*ndi

!a"*lty (!inan"e) -ran"h ana#er .ales%E.T/s -I .0 -A0 J !inan"e Asset

ana#e$ent %vt 'TD-el#a*$ Hubli.

People’s Education Society and Trust’s

-el#a*$ Instit*te o1 ana#e$ent .t*dies0-A

Adjacent to KUD PG Center, Bhutramanhatti, Belgaum.

(Recognized by AICTE, New Del i ! A"liated to #a$nata% &ni'e$sity

D a$wad )

This is to certify that Mr. Sudarshan S. Savanoor ,

K.U.D. Examination No. MBA0400#0$% of MBA II Semesterhas successfully completed his Summer In&lant 'raining

CERTI*ICAT E

CERTI*ICAT E

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!!"# !!$ for the said period of months from %uly & to

Au'ust (&) !!$.

ro e*t +uide ire*tor

ate

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ACKNOWLEDGEMENT

The completion and drafting is a solitary task but one which has been made smoother

with the help of many. Here I take this opportunity to thank those who have made a vital

contribution in shaping this study.

I would like to express my profound gratitude to Miss. Rajeshwari Nidgundi (Manager

of JM sset Management !vt.ltd" Hubli #ranch $ for giving me an opportunity to take up

my %ummer In&plant at JM 'inancial sset Management !vt )td Hubli.

ny accomplishment re*uires the efforts of many people. I am indebted to all the %taff

members of JM 'inancial sset Management !vt )td Hubli.

who extended their help and co&operation in collecting data for my pro+ect.

,egardless of the source I wish to express my gratitude to those who have contributed to

my pro+ect" even though anonymously.

I extend my thanks to our -irector" Dr. S. R. Bharamanai er " and Mr. R. !. !a"ishwar

('inance 'aculty$ for providing me an opportunity to work for JM 'inancial sset

Management !vt )td Hubli.

I would also like to thank my parent" my other family members" and friends for their

infinite love" valuable guidance" support and help during my pro+ect. This pro+ect

wouldn t have seen the light of the day" if it wasn t for the co&operation of all these

people.

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+uda$s an + +a'anoo$

DEC ARATI-N

I hereby declare that the project entitled

“Analyzing Investment Views Among Individuals in Auto Sector Mutual Funds in

Hubli city “

submitted in partial ful llment of the requirement for the degree of aster o1 -*siness Ad$inistration ( -A)

to Karnatak University0 Dharwad 0

is my original work and is not submitted to any other degree, diploma,

fellowship or other similar title or prizes.

The project has been individually carried out as a part of ummer

Inplant Training and is meant for academic purpose only.

.*darshan . savanoor

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Table of contents

Sr.No. Particulars Pg.No.

Part#$

Introduction

! "#ecuti$e Summer%

&! Title of the Pro'ect

(! )b'ecti$e of the stud% &

*! Purpose of the stud% &

+! Statement of the problem &

,! Research -esign (

! /ethodolog% (

0! Proposed area of the stud% (

1! Sample2 sample 3ind and sample area (

4! Findings (

! Recommendations *

Part# $$

Introduction to 5oncept of /utual Funds

&! /eaning of /utual Funds +

(! Histor% of /utual Funds ,

*! "$aluation of /utual Funds (

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%r./o. !articulars !g./o. Part# $$$

)$er$iew of /utual Funds Industr%

+! )$er$iew of /utual Industr% ,

Part# $%

)rgani6ation Profile

,! About 7/ Financial Asset /anagement P$t. 8td9 &*

Part- VIndustr% )$er$iew: Automobile Industr%

! Automobile Industr% &1

0! Auto Sector fund ++

Part- VI

1! /aster 5ode Sheet And Tabulation +,

&4! ;raphs And Interpretations ,(

&&! 8imitations And Recommendations (

&(! <uestionnaire +

&(! ;lossar%

&*! =ibliograph% 4*

&+! 5onclusions 4+ &,!

H%pothesis 4,

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Int roduction

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! "#ecuti$e Summer%: >

With policy of liberalization in the year 1990 our economy became open ended

of which result is many Multi-National ompanies are comin! to India and

preparin! nice platform for "oint #enture pro"ects between forei!n companies and

Indian automobile manufacturers$ %he penetration of the multinational companies

has resulted the chan!e in the spendin! pattern of the middle class$ &s people earn

more' also spend and in#est more$ &s le#el of income increases people try to in#est

more$ (adically' the pro"ect is entitled for )&nalyzin! In#estment Views of

Indi#iduals in auto *ector + which is based on the principle of earn wisely" save

regularly and invest smartly ' which deals with ,

• Anal%6ing indi$idual?s in$estment $iews

• @nowing the awareness le$el of abo$e said sectors

• "#plaining its plans.

%he sector was chosen with a #iew that there are !ood opportunities to

ac uire mar.et and create and retain clients because of /P Policy$

&! Pro'ect Title :>

BAnal%6ing In$estment Ciews of Indi$iduals in Auto SectorD

(! )b'ecti$e of the Stud% :>

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I %o find hi!h net worth in#estors plan their in#estment and in#estment #iews

amon! indi#iduals

II %o analyze #iews re!ardin! #arious in#estment plans and anticipation from their

In#estments$

III %o .now the awareness le#el of new in#estment sectors$ 23esides this to create

awareness about these sectors

IV %o .now the uantum of in#estment e#ery year$

V %o study the le#el of awareness of &uto *ector 4und with a #iew to recommend

measure to impro#e in#estment potential in 5ubli ity$

*! Purpose of the stud% 6 5ere our main purpose of study is to chec. the le#el

awareness of &uto *ector Mutual 4und with #iew to recommend measure to impro#e

in#estment potential in 5ubli city$ In this pro"ect we are analyzin! in#estment #iews

amon! indi#iduals and their #iews about &uto sector industry in#estment #iew in auto

sector fund$ in India .

+! Statement of the problem:

7efinin! the problem is the most critical part of the research process$ (esearch process

in#ol#es specifyin! the information needed by the mana!ement$ 8ur mana!ement problem is to .now the e tent of awareness of mutual fund in#estment in indi#idual$

(esearch Problem is to analyze in#estment #iews re!ardin! pharma sector in 5ubli city

and their e pectation from the in#estment$

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,! Research -esign :> II "#plorator%. 2(esearch consists of collection of and

analysis of data:s to e ecute a particular theoretical perspecti#e$

! /ethodolog%: > %he information is collected throu!h personal inter#iew and the

inter#iew is conducted trou!h the mode of the uestionnaire$ 7ata is collected thou!h

2I primary i$e$ inter#iew and the uestionnaire and inter#iew 2II secondary data i$e$

News papers' ma!azines' Internet and "ournals$

0! Proposed Area of stud% :> %he study is conducted in 5ubli %win-city $with help of

the *ample size of 10 E of the population in auto sector or minimum (4

1! Sample Si6e And Sample @ind: > *ample size is ;; and the sample .ind

) *uota0" because our samples were set up accordin! to some specified

characteristics$ It is often used in public opinion studies$ It occasionally' pro#ides

satisfactory results if he inter#iews are carefully trained <b if they follow their

instructions closely$ *ample area is 5ubli ity$ 4rom $3$% to Na#alur$

4! Findings on the basis of anal%tical tools: > The Main Samples o& our study

is the auto sector People '

8n the basis of oral inter#iew we !ot findin!s that =; > of the people who are in

auto sector are aware of mutual funds$ &mon! them 1? > of the respondents are

aware of auto sector fund$$ &mon! them @A$BA > people are interested to .now

about and ready to in#est in mutual funds$ In these people only ;0$90 are not

interested in mutual funds and ;$@;> are neutral towards this uestion$ In 5ubli city

the 10$90; people ha#e in#ested in auto sector and ?;$@;> ha#e not in#ested in auto

sector fund$ &nd ;$@;> ha#e in#ested in auto sector fund in other institutions other

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than Mutual 4unds$ %he in#estment in &uto sector fund is 1?$1?> throu!h C%I

8nly and no in#estments is ?1$?1 > and throu!h DM 4inancial is nil$ &fter

conductin! oral inter#iews and uestionnaire sur#ey $

11$ %uggestion2,ecommendations3&&s most of the prospecti#e customers are unaware of Mutual 4und so'awareness

should be created amon! them$%his can be done by #isitin! o#ernment officers and

contactin! respecti#e departments and educatin! them re!ardin! Mutual 4unds and

their benefits $

! separate counter should be opened in the centre,mainly for the

purpose of guiding the e"isting customers regarding the #utual funds

and.

3ased on sur#ey conducted most of the customers are interested in in#estin! in

Mutual 4unds but they ha#e not presently in#ested due to lac. of information about

the Mutual 4unds and their benefits$

o,the company should take adequate steps to tap the potential

market by educating investors.

!s most of the respondents would like to save ta"es by investing in

ta" saving securities. Therefore awareness should be created about

the ta" savings schemes.

#ost of the investors are habituated to invest in #utual $unds,%I&

policies ' (ost )*ce schemes for the purpose of safety and assured

returns.!s #utual $unds also have more bene ts than $i"ed

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+eposites.%I& policies ' (ost )*ce scheme. ene ts like liquidity,

transparency and professional management or invested funds.

The company should create awareness about the above

stated bene ts of #utual funds to investors.

Part#$$

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$ntroduction to (oncept o& Mutual )unds

&! /eaning of /utual Funds Mutual Funds - Concept

& Mutual 4und is a trust that pools the sa#in!s of a number of in#estors who share a

common financial !oal$ %he money thus collected is then in#ested in capital mar.et

instruments such as shares' debentures and other securities$ %he income earned

throu!h these in#estments and the capital appreciation realized is shared by its unit

holders in proportion to the number of units owned by them$ %hus a Mutual 4und is

the most suitable in#estment for the common man as it offers an opportunity to in#est

in a di#ersified' professionally mana!ed bas.et of securities at a relati#ely low cost$ It

also means that the mutual funds are the associations or trusts of the public members

who wish to ma.e in#estments in the financial instruments or assets of the business

sectors or the corporate sectors for the mutual benefit of their members$ %he followin!

/utual Fund )peration Flow 5hart

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chart will more sophisticatedly clear the abo#e e planation$

(! Histor% of /utual Funds

A. To Gorld conte#t at large!

Dust EB years a!o the mutual fund industry was born in the Cnited *tates$ %he first open-

end mutual fund' Massachusetts In#estors %rust was founded on March =1' 19=@ and

after one year had =00 shareholders and FA9='000 in assets$ %he entire industry' which

included a few closed-end funds' represented less than F10 million in 19=@$ &t the end

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of 7ecember 1999' the industryGs e plosi#e !rowth includes more than ?'000 mutual

funds with o#er FB$? trillion in assets$

!irst 23 4ears E5perien"ed .low 6rowth

-rowth for the industry during the rst / years was slow. In 0120, the

number of funds surpassed 033 and the number of shareholders

e"ceeded 0 million. It wasn4t until 0125 that the stock market nally

rose above its 01 1 peak and by the end of the fties there were 022

mutual funds with 602.7 billion in assets. In 018/ funds hit their best

year, one quarter earning at least 239 with an average return of 8/9,

but it was done by cheating using borrowed money, risky options, and

pumping up returns with privately traded :letter stock.: y the end of

the 834s there were 81 funds with a total of 657.; billion .

Inde5 !*nds are -orn in 7839s

In 01/8, <ohn &. ogle opened the rst retail inde" fund = $irst Inde"

Investment Trust >now the largest inde" fund = ?anguard 233 Inde"@

and the ne"t year (eter %ynch took over at $idelity #agellan, now the

largest stock mutual fund. The two funds are battling for top spot and

some think the ?anguard 233 Inde" will surpass $idelity #agellan by

the year 333. y the end of the /3s there were 2 5 funds with 615.2

billion in assets.

a+or 6rowth a1ter I A Introd*"ed

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In 0170, &ongress created the Individual Aetirement !ccount and by

the end of the 73s there were ,10/ funds and 617 billion in assets.

The ne"t big change for the industry was in 0110 when #orningstar

introduced its :star ratings.: y 0115, /29 of all new investments were

in funds with a rating of four or ve stars. In 011 , &harles chwab

started )ne ource, the rst :fund supermarket.: !s of +ecember

0117, stock mutual funds account for 6 .170 trillion or 2;.19 of total

mutual fund industry assets. #oney market funds account for 5.29

>60.;2; trillion@, bond funds comprise 02.39 >67;3.2 billion@, and

hybrid funds hold 8.89 >6;82.0 billion@. #utual funds held about 39

of all publicly traded B. . stocks in 0117. Couseholds, private pension

funds, state and local government retirement funds, insurance

companies, private trusts, residents of foreign countries, and other

investors held the remaining 739. The Investment &ompany Institute

gathers these numbers.

- (To Indian "onte5t)

%he ori!in of mutual fund industry in India is with the introduction of the concept of

mutual fund by C%I in the year 19BA$ %hou!h the !rowth was slow' but it accelerated

from the year 19?E when non-C%I players entered the industry$

In the past decade' Indian mutual fund industry had seen a dramatic impro#ement' both

ualities wise as well as uantity wise$ 3efore' the monopoly of the mar.et had seen an

endin! phaseH the &ssets Cnder Mana!ement 2&CM was (s$ BEbn$ %he pri#ate sector

entry to the fund family rose the &CM to (s$ @E0 bn in March 199A and till &pril =00@' it

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reached the hei!ht of 1';@0 bn$

Puttin! the &CM of the Indian Mutual 4unds Industry into comparison' the total of it is

less than the deposits of *3I alone' constitute less than 11> of the total deposits held by

the Indian ban.in! industry$

%he main reason of its poor !rowth is that the mutual fund industry in India is new in the

country$ /ar!e sections of Indian in#estors are yet to be intellectuated with the concept$

5ence' it is the prime responsibility of all mutual fund companies' to mar.et the product

correctly abreast of sellin!$

%he mutual fund industry can be broadly put into four phases accordin! to thede#elopment of the sector$ ach phase is briefly described as under$

Cnit %rust of India 2C%I was established on 19BA by an &ct of Parliament$ It was set up

by the (eser#e 3an. of India and functioned under the (e!ulatory and administrati#e

control of the (eser#e 3an. of India$ In 19E? C%I was de-lin.ed from the (3I and the

Industrial 7e#elopment 3an. of India 2I73I too. o#er the re!ulatory and administrati#e

control in place of (3I$ %he first scheme launched by C%I was Cnit *cheme 19B@$ &t the

end of 19?? C%I had (s$B' E00 crores of assets under mana!ement$

ntry of non-C%I mutual funds$ *3I Mutual 4und was the first followed by anban.

Mutual 4und 27ec ?E ' Pun"ab National 3an. Mutual 4und 2&u! ?9 ' Indian 3an.

Mutual 4und 2No# ?9 ' 3an. of India 2Dun 90 ' 3an. of 3aroda Mutual 4und 28ct 9= $

/I in 19?9 and I in 1990$ %he end of 199A mar.ed (s$@E'00@ as assets under

First Phase 1,*>0

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

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mana!ement$

With the entry of pri#ate sector funds in 199A' a new era started in the Indian mutual

fund industry' !i#in! the Indian in#estors a wider choice of fund families$ &lso' 199A was

the year in which the first Mutual 4und (e!ulations came into bein!' under which all

mutual funds' e cept C%I were to be re!istered and !o#erned$ %he erstwhile Jothari

Pioneer 2now mer!ed with 4ran.lin %empleton was the first pri#ate sector mutual fund

re!istered in Duly 199A$%he 199A * 3I 2Mutual 4und (e!ulations were substituted by a more comprehensi#e

and re#ised Mutual 4und (e!ulations in 199B$ %he industry now functions under the

* 3I 2Mutual 4und (e!ulations 199B$

%he number of mutual fund houses went on increasin!' with many forei!n mutual funds

settin! up funds in India and also the industry has witnessed se#eral mer!ers and

ac uisitions$ &s at the end of Danuary =00A' there were AA mutual funds with total assets

of (s$ 1'=1'?0; crores$ %he Cnit %rust of India with (s$@@';@1 crores of assets under

mana!ement was way ahead of other mutual funds$

%his phase had bitter e perience for C%I$ It was bifurcated into two separate entities$ 8ne

is the *pecified Cnderta.in! of the Cnit %rust of India with &CM of (s$=9' ?A; crores 2as

on Danuary =00A $ %he *pecified Cnderta.in! of Cnit %rust of India' functionin! under an

!hird Phase - 1993-"##3 (Entry of Pri$ate Sector Funds

Fourth Phase > since Februar% &44(

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administrator and under the rules framed by o#ernment of India and does not come

under the pur#iew of the Mutual 4und (e!ulations$

%he second is the C%I Mutual 4und /td' sponsored by *3I' PN3' 383 and /I $ It is

re!istered with * 3I and functions under the Mutual 4und (e!ulations$ With the

bifurcation of the erstwhile C%I which had in March =000 more than (s$EB' 000 crores of

&CM and with the settin! up of a C%I Mutual 4und' conformin! to the * 3I Mutual

4und (e!ulations' and with recent mer!ers ta.in! place amon! different pri#ate sector

funds' the mutual fund industry has entered its current phase of consolidation and !rowth$

&s at the end of *eptember' =00@' there were =9 funds' which mana!e assets of(s$1;A10? crores under @=1 schemes$

;rowth in Asset nder /anagement as:

%o& Mutual Funds is 'or in) in *ndia+

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The performance of mutual funds in India from the da% the concept of mutual fund

too3 birth in India. The %ear was 1,(. nit Trust of India in$ited in$estors or

rather to those who belie$ed in sa$ings2 to par3 their mone% in TI /utual Fund.

For (4 %ears it goaled without a single second pla%er. Though the 100>%ear saw

some new mutual fund companies2 but TI remained in a monopol% position.

The performance of mutual funds in India in the initial phase was not e$en closer to

satisfactor% le$el. People rarel% understood2 and of course in$esting was out of

question. =ut %es2 some &* million shareholders was accustomed with guaranteed

high returns b% the beginning of liberali6ation of the industr% in 11&. This good

record of TI became mar3eting tool for new entrants. The e#pectations of

in$estors touched the s3% in profitabilit% factor. Howe$er2 people were miles awa%

from the preparedness of ris3s factor after the liberali6ation.

The Assets nder /anagement of TI was Rs. , bn. b% the end of 10 . 8et me

concentrate about the performance of mutual funds in India through figures. From

Rs. , bn. the Assets nder /anagement rose to Rs. * 4 bn. in /arch 11( and the

figure had a three times higher performance b% April &44*. It rose as high as Rs.

2+*4bn.

The net asset $alue NAC! of mutual funds in India declined when stoc3 prices

started falling in the %ear 11&. Those da%s2 the mar3et regulations did not allow

portfolio shifts into alternati$e in$estments. There were rather no choices apart

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from holding the cash or to further continue in$esting in shares. )ne more thing to

be noted2 since onl% closed>end funds were floated in the mar3et2 the in$estors

disin$ested b% selling at a loss in the secondar% mar3et.

The performance of mutual funds in India suffered qualitati$el%. The 11& stoc3

mar3et scandal2 the losses b% disin$estments and of course the lac3 of transparent

rules in the where about roc3ed confidence among the in$estors. Partl% owing to a

relati$el% wea3 stoc3 mar3et performance2 mutual funds ha$e not %et reco$ered2

with funds trading at an a$erage discount of 4&4 percent of their net asset $alue.

The super$isor% authorit% adopted a set of measures to create a transparent and

competiti$e en$ironment in mutual funds. Some of them were li3e rela#ing

in$estment restrictions into the mar3et2 introduction of open>ended funds2 and

pa$ing the gatewa% for mutual funds to launch pension schemes.

The measure was ta3en to ma3e mutual funds the 3e% instrument for long>term

sa$ing. The more the $ariet% offered2 the quantitati$e will be in$estors.

At last to mention2 as long as mutual fund companies are performing with lower

ris3s and higher profitabilit% within a short span of time2 more and more people will

be inclined to in$est until and unless the% are full% educated with the dos and don?ts

of mutual funds.

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*! "$olution of /utual Funds

Ad$antages of /utual Funds

The advantages of investing in a #utual $und areD

• -i$ersification: %he best mutual funds desi!n their portfolios so indi#idual

in#estments will react differently to the same economic conditions$ 4or e ample'

economic conditions li.e a rise in interest rates may cause certain securities in a

di#ersified portfolio to decrease in #alue$ 8ther securities in the portfolio will

respond to the same economic conditions by increasin! in #alue$ When a portfolio

is balanced in this way' the #alue of the o#erall portfolio should !radually increase

o#er time' e#en if some securities lose #alue$

• Professional /anagement: Most mutual funds pay topfli!ht professionals to

mana!e their in#estments$ %hese mana!ers decide what securities the fund will

buy and sell$

• Regulator% o$ersight: Mutual funds are sub"ect to many !o#ernment re!ulations

that protect in#estors from fraud$

• 8iquidit%: ItGs easy to !et your money out of a mutual fund$ Write a chec.' ma.e

a call' and youG#e !ot the cash$

• 5on$enience: Kou can usually buy mutual fund shares by mail' phone' or o#er

the Internet$

• 8ow cost: Mutual fund e penses are often no more than 1$; percent of your

in#estment$ penses for Inde 4unds are less than that' because inde funds are

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not acti#ely mana!ed$ Instead' they automatically buy stoc. in companies that are

listed on a specific inde

-rawbac3s of /utual Funds

Mutual funds ha#e their drawbac.s and may not be for e#eryone6

• No ;uarantees: No in#estment is ris. free$ If the entire stoc. mar.et declines in

#alue' the #alue of mutual fund shares will !o down as well' no matter how balanced the portfolio$ In#estors encounter fewer ris.s when they in#est in mutual

funds than when they buy and sell stoc.s on their own$ 5owe#er' anyone who

in#ests throu!h a mutual fund runs the ris. of losin! money$

• Fees and commissions: &ll funds char!e administrati#e fees to co#er their day-

to-day e penses$ *ome funds also char!e sales commissions or LloadsL to

compensate bro.ers' financial consultants' or financial planners$ #en if you donGt

use a bro.er or other financial ad#iser' you will pay a sales commission if you buy

shares in a /oad 4und$

• Ta#es: 7urin! a typical year' most acti#ely mana!ed mutual funds sell anywhere

from =0 to E0 percent of the securities in their portfolios$ If your fund ma.es a

profit on its sales' you will pay ta es on the income you recei#e' e#en if you

rein#est the money you made$

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/anagement ris3: When you in#est in a mutual fund' you depend on the fundGs mana!er

to ma.e the ri!ht decisions re!ardin! the fundGs portfolio$ If the mana!er does not

perform as well as you had hoped' you mi!ht not ma.e as much money on your

in#estment as you e pected$ 8f course' if you in#est in Inde 4unds' you fore!o

mana!ement ris.' because these funds do not employ mana!ers$

Part> III

*+' ,"er"iew o& Mutual )und $ndustry

/a'or /utual Fund 5ompanies in India

%here are =9 mutual fund companies in India

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1 &3N &M(8 MC%C&/ 4CN7

= 3irla sun /ife MC%C&/ 4CN7

A 3an. of 3aroda MC%C&/ 4CN7

@ 574 MC%C&/ 4CN7

; 5*3 MC%C&/ 4CN7

B IN VK*K& MC%C&/ 4CN7

E *ahara MC%C&/ 4CN7

? *3I MC%C&/ 4CN7

9 %&%& MC%C&/ 4CN7

10 Jota. Mahindra MC%C&/ 4CN7

11 Cnit %rust of India MC%C&/ 4CN7

1= (eliance MC%C&/ 4CN7

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1A *tandard hartered MC%C&/ 4CN7

1@ 4ran.lin %empleton India MC%C&/ 4CN7

1; Mor!an *tanley MC%C&/ 4CN7 IN7I&

1B scorts MC%C&/ 4CN7

1E &lliance apital MC%C&/ 4CN7

1? 3enchmar. MC%C&/ 4CN7

19 anban. MC%C&/ 4CN7

=0 hola MC%C&/ 4CN7

=1 DM 4inancial MMC%C&/ 4CN7

== /I MC%C&/ 4CN7

=A I MC%C&/ 4CN7

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=@ *undaram &sset Mana!ement /%7

=; 7*P Myrill /ynch MC%C&/ 4CN7

=B 7eutche &sset Mana!ement /%7

=E 4idelity MC%C&/ 4CN7

=? Prudential I I I MC%C&/ 4CN7

=9 Principle &sset Mana!ement o$ PV%$ /%7$

III "$olution of /utual Funds in *ndia

3y 7ecember =00@' Indian mutual fund industry reached (s 1';0';AE crore$ It is

estimated that by =010 March-end' the total assets of all scheduled commercial ban.s

should be (s @0'90'000 crore$

%he annual composite rate of !rowth is e pected 1A$@> durin! the rest of the decade$ In

the last ; years we ha#e seen annual !rowth rate of 9>$ &ccordin! to the current !rowth

rate' by year =010' mutual fund assets will be double$

,))re)ate deposits of Scheduled Co ercial .an s in *ndia (/s0Crore

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Month/Year Mar-

98

Mar-

00

Mar-

01Mar-02 Mar-03

Mar-

04Sep-04 4-Dec

Deposits60541

0

85159

3

98914

1

113118

8

12808

53-

15672

51

16225

79Change in % o er

!ast "r 15 14 13 12 - 18 3

Source - RBI

Mutual Fund , M2s ro&th

Month/Year Mar-

98

Mar-

00

Mar-

01

Mar-

02

Mar-

03

Mar-

04

Sep-

04

4-Dec

M# $ M&s6898

4

9371

7

8313

1

9401

7

7530

6

13762

6

15114

1

14930

0Change in % o er

!ast "r 26 13 12 25 45 9 1

Source - AMFI

Some facts for the growth of mutual funds in India

• 100> !rowth in the last B years$

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• Number of forei!n &M Gs are in the ueue to enter the Indian mar.ets li.e

4idelity In#estments' C* based' with o#er C*F1trillion assets under mana!ement

worldwide$

• 8ur sa#in! rate is o#er =A>' hi!hest in the world$ 8nly channel zin! these

sa#in!s in mutual funds sector is re uired$

• We ha#e appro imately =9 mutual funds which is much less than C* ha#in! more

than ?00$ %here is a bi! scope for e pansion$

• G3G and G G class cities are !rowin! rapidly$ %oday most of the mutual funds are

concentratin! on the G&G class cities$ *oon they will find scope in the !rowin!

cities$

• Mutual fund can penetrate rurals li.e the Indian insurance industry with simple

and limited products$

• * 3I allowin! the M4Gs to launch commodity mutual funds$

• mphasis on better corporate !o#ernance$

• %ryin! to curb the late tradin! practices$

• Introduction of 4inancial Planners who can pro#ide need based ad#ice$

The sponsorers of Association of /utual Funds in India

=an3 Sponsored

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• *3I 4und Mana!ement /td$

• 383 &sset Mana!ement o$ /td$

• anban. In#estment Mana!ement *er#ices /td$

• C%I &sset Mana!ement ompany P#t$ /td$

Institutions

• I &sset Mana!ement o$ /td$

• Dee#an 3ima *ahayo! &sset Mana!ement o$ /td$

Pri$ate Sector

Indian6-

• 3enchMar. &sset Mana!ement o$ P#t$ /td$

• holamandalam &sset Mana!ement o$ /td$

• redit apital &sset Mana!ement o$ /td$

• scorts &sset Mana!ement /td$

• DM 4inancial Mutual 4und

• Jota. Mahindra &sset Mana!ement o$ /td$

• (eliance apital &sset Mana!ement /td$

• *ahara &sset Mana!ement o$ P#t$ /td

• *undaram &sset Mana!ement ompany /td$

• %ata &sset Mana!ement Pri#ate /td$

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Predominantl% India 7oint Centures:>

• 3irla *un /ife &sset Mana!ement o$ /td$

• 7*P Merrill /ynch 4und Mana!ers /imited

• 574 &sset Mana!ement ompany /td$

Predominantl% Foreign 7oint Centures:>

• &3N &M(8 &sset Mana!ement 2I /td$

• &lliance apital &sset Mana!ement 2India P#t$ /td$

• 7eutsche &sset Mana!ement 2India P#t$ /td$

• 4idelity 4und Mana!ement Pri#ate /imited

• 4ran.lin %empleton &sset M!mt$ 2India P#t$ /td$

• 5*3 &sset Mana!ement 2India Pri#ate /td$

• IN In#estment Mana!ement 2India P#t$ /td$

• Mor!an *tanley In#estment Mana!ement P#t$ /td$

• Principal &sset Mana!ement o$ P#t$ /td$

• Prudential I I I &sset Mana!ement o$ /td$

• *tandard hartered &sset M!mt o$ P#t$ /td$

There are many entities involved and the diagram below illustrates the

organizational set up of a mutual fundD

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Mutual Funds 4 5r)ani6ation

Part#$%

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)rgani6ation Profile

,! About 7/ Financial Asset /anagement P$t.8td9

I! The )rigination of 7/ Financial /utual Funds

DM 4inancial Mutual 4und is one of IndiaGs first pri#ate sector mutual funds-an

inte!ral part of the first wa#e that commenced operations in 199A-9@$ %oday' DM is

amon! the top ten mutual funds in the country' ran.ed by assets mana!ed' and en"oy a

superior performance record$ It is one of the many successful companies that ha#e

emer!ed out of DM roupGs stron! foundation in financial ser#ices$

roupGs ori!ins can be traced bac. to the 19;0s when the Jampani family be!an to !et

in#ol#ed in India Gs then nascent capital mar.ets$ 8n *eptember 1;' 19EA' D$M$ 4inancial

and In#estment onsultancy *er#ices was "ointly founded by Nimesh N$ Jampani'

Na#eenchandra Jampani and Mahendra Jampani$ Cnder the leadership of hairman

Nimesh N$ Jampani' the DM roup has played a stellar and multi-faceted role in the

de#elopment of India:s capital mar.ets$ &part from helpin! companies raise finance' DM

has also been instrumental in educatin! a bur!eonin! and prosperin! middle class about

the ad#anta!es of in#estin! in blue chip companies$ In 1999' we commenced a "oint

8/19/2019 Mba 04006013


#enture with Mor!an *tanley 7ean Witter' that today spans in#estment ban.in!' bro.in!'

fi ed income and retail distribution$

DM 4inancial &sset Mana!ement Pri#ate /imited' the &sset Mana!ement ompany of DM

4inancial Mutual 4und' is not a part of this "oint #enture$ *ponsored by D$M$ 4inancial

and In#estment onsultancy *er#ices P#t$ /td$' and co-sponsored by DM 4inancial /td$'

DM 4inancial &sset Mana!ement Pri#ate /imited started operations in 7ecember 199@

with a simultaneous launch of three funds-DM /i uid 4und 2now DM Income 4und ' DM

uity 4und and DM balanced 4und$ %oday' DM 4inancial Mutual 4und offers a bou uetof funds that caters to the di#erse needs of both its institutional and indi#idual in#estors '

II! The Foresight of 7/ Financial /utual Funds

DM 4inancial Mutual 4unds mission is to mana!e ris. effecti#ely while !eneratin!

top uartile returns across all product cate!ories$ It belie#es that to culti#ate in#estor

loyalty' hence it must pro#ide a safe ha#en for their in#estments

It is focused on helpin! their in#estors realize their in#estment !oals throu!h prudent

ad#ice' "udicious fund mana!ement' impeccable research' and stron! systems of

mana!in! ris. scientifically$5ence DM 4inancial Mutual 4unds !enuinely stri#e to be

their in#estorsG friend in the new world of ris3 $

iii! A 8egal Structure and )rganisation of 7/ Financial /utual Funds as laid downb% the S"=I ;uidelines

=oard 5f !rustee

Sponsor )f /utual Fund compan%2=an3 or Financial Institution

Policy Ma in) .ody for theFund /aisin) and operation on

the fund

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=oard of Trustee of 7/ Financial 5ompan%.

. /r. Nimesh N. @ampani (4hairman$

&. /r. -arius dwadia (%olicitor" !artner" 5dwadia 65deshi$

(. /r. Anant C. Setal$ad ( Industrialist$

*. /r. Shi$'i i Ci3amse% (4hartered ccountant$

+. /r. 7ala' Ashwin -ani (Industrialist$

=oard of Trustee of Asset /anagement )f 7/ Financial 5ompan% .

! -r. Ci'a% @el3ar 4hairman 6 ,etired 4ivil %ervant$

&! /r. Ra'endra 5hitale (!artner" M.!. 4hitale 6 4o. $

(! /r. Cishal @ampani ( Investment #anker$

*! -r. R. Srini$asan ('ormer 4hairman" I# and various

nationalized ban.s

Asset /anagement 5ompan%Actual Implementation of thePolic% and the In$estmentoperation

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+! /r. Nit%anath P. ;hane3ar (4onsultant$

,! /r. 7.@. /odi ( #roker "-elhi %tock 7xchange$

Management Team JM Financial Company.

DM 4inancial Mutual 4und has 1A in#estment plans and schemes

as shown below6 -

. -r. Ci'a% @el3ar > hairman

&. /r. @rishnamurth > 8

(. /r. 7imm% A. Patel > 88

*$/r. Prabal Nag >*enior Vice President' 5ead- Mar.etin! sales

+$/r. Nand3umar Surti: - 5ead - 4i ed Income2DM 4loater 4und' DM -*ec

4und' DM *hort %erm 4und' DM

Income 4und and DM 4MP 4und

,. /s. Shalini Tibrewala - 4und Mana!er' 7ebt 2DM 5i!h

/i uidity 4und and DM MIP 4und

$/r. Adit%a Palwan3ar - 4und Mana!er' uity

0$/r. Sandeep Neema - 4und Mana!er' uity

2 DM uity 4und and the DM

3alanced 4und

1. /r. =iren /ehta - 4und Mana!er-7eri#ati#es

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4. /r. ;eorge 5herian - Vice President' %echnolo!y < (is.

Mana!ement

. /r. Sarath Sarma > 5ead corporate *ales

In char!e of institutional business

de#elopment and relationships

&. /r. San'a% 8a3ra - ompliance 8fficer

(. /r. Harish 5. @u3re'a > 5ead' lient *er#ices

(esponsible for the smooth

functionin! of the in#estor ser#icin!

for DM 4inancial Mutual 4und

Industr% )$er$iew: Automobile Industr%

T:E I,DIA, AUT; ;TI<E I,DU.T 4 = En"o$passes "o$$er"ialvehi"les0 $*lti=*tility vehi"les0 passen#er "ars0 two wheelers0three wheelers0 tra"tors and a*to "o$ponents -ased on .IAanalysis0 it is esti$ated that India sho*ld have a healthy#rowth o1 sales (in"l*din# e5ports) in the a*to$obile se"tor in299>

India ran.s second in the production of two wheelers and fifth in commercial #ehicles$

With an in#estment of (s$;0'000 crores' the turno#er was (s$ ;9';00 crores in

&utomoti#e *ector durin! 1999-=000$ It employs @';0'000 people directly and

100'00'000 people indirectly and is now inhabited by !lobal ma"ors in .een contention$

India manufactures about A?'00'000 =-wheelers' ;'E0'000 passen!er cars' 1'=;'000 Multi

Ctility Vehicles' 1'E0'000 ommercial Vehicles and ='B0'000 tractors annually$

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Passenger Cehicles

%he e cise duty reduction on passen!er #ehicles !i#en in the union bud!et =00A-0@ has

directly impacted the sales of passen!er #ehicles positi#ely as it has reduced the

ac uisition cost to the customer$ %he cumulati#e passen!er #ehicle sales in the domestic

mar.et in &pril-March =00A-0@ ha#e !rown by o#er =E> o#er the same period last year$

5owe#er' this is a!ainst relati#ely low and ne!ati#e !rowth rates in the pre#ious years$

Within the passen!er #ehicle se!ment' while passen!er cars and utility #ehicles ha#e

!rown at a bris. pace of =?$B> and =E$B> respecti#ely' MPVs ha#e !rown at a lower rate

of around 1@$;>$ 5owe#er' the !rowth of MPVs this year is si!nificant as it was

2- 1;$E> in the last year$

5ommercial Cehicles The performance of the commercial vehicle segment during the course

of the year was very satisfying. It has clocked over ;39 growth rate in

consecutive years. The growth rate of all commercial vehicles during

the year 33;=35 grew by ;8.29. #'C&? segment has grown by

;1.29 whereas %&?s grew by ; 9. Eith improved economic

performance especially in the agricultural sector besides e"pansion of

the national highways and e"pressways. It is witnessing Feet

rationalization in the country. This has also led to increased penetration

of multi=a"le vehicles on our roads. +uring the year 0117=11 sale of

multi=a"le vehicles was 52;1. Ehereas, in the year 33;=35, 21 20

multi=a"le vehicles were sold, in percentage terms an increase of 8/9per annum over a ve year period. The share of multi=a"le vehicles

during the same period has gone up from 29 to around 539.

Two ?heelers

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Two wheeler segment as a whole during the period !pril=#arch 33;=

35 clocked a growth of 00.29. This is less than the previous years but

on a large base of 5.7 million vehicles. Cowever, with -overnmentGs

initiative on rural roads and better connectivity with major towns and

cities, the two wheeler industry is optimistic of better performance in

the year 335=32. #oreover, with improved agricultural performance,

the purchasing power in the hands of rural people will go up and

positively impact two wheeler sales. Eith changing consumption

pattern in sub=urban ' rural areas from food to non=food items >down

to 539 compared to 779 twenty years back@, it is hoped that we will

have reasonable growth in two wheeler segment in future also.

"#ports

%he performance of the automobile industry in e ports is also encoura!in!$ Passen!er

#ehicle e ports ha#e crossed the hundred thousand mar. and cloc.ed sales of around

1'A0'000 and two < three wheelers ha#e crossed three hundred thousand mar. for the

first time cloc.in! around A'AA'000$ ommercial #ehicle e ports ha#e also increased to

an all time hi!h of o#er 1E'000$ In percenta!e terms the !rowth durin! the year o#er the

pre#ious year ha#e been almost ?0> for passen!er #ehicles' o#er @9> for two < three

wheelers and o#er @0> for commercial #ehicles$

3ased on *I&M analysis' it is estimated that India should ha#e a healthy !rowth of sales

2includin! e ports in the automobile sector in =00@-0;$ *e!ment wise !rowth

e pectations' pro#ided the o#ernment ta.es necessary steps that promote !rowth are6

Passenger $ehicles: 4 J +E 5ommercial $ehicles: & J +E

Two wheelers: 4 J +E Three wheelers: 4 J +E

India:s automoti#e component industry manufactures the entire ran!e of parts re uired by

the domestic automobile industry and currently employs about =;0'000 persons$ &uto

component manufacturers supply to two .inds of buyers , ori!inal e uipment

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manufacturers 28 M and the replacement mar.et$ %he replacement mar.et is

characterized by the presence of se#eral small-scale suppliers who score o#er the

or!anized players in terms of e cise duty e emptions and lower o#erheads$ %he demand

fro %he auto sector 2e cludin! %ractors attained a steep cumulati#e annual !rowth of

==> between 199= and 199E$ %he %ractors achie#ed a cumulati#e annual !rowth of 1B>$

omponent production !rew by =?>$ %here has been a slowdown in the automobile

sector in the past two years$ 5owe#er' the component industry maintained a low but

positi#e !rowth rate mainly due to its e port performance$ 8#er the years' the component

industry has maintained a 10> - 1=> share of e ports in the total production$

$ 3efore the remo#al of uantitati#e (estrictions with effect from 01-0@-=001' the policy

placed import of capital !oods and automoti#e components under open !eneral license'

but restricted import of cars and automoti#e #ehicles in ompletely 3uilt Cnit 2 3C

form or in ompletely Jnoc.ed 7own 2 J7 or in *emi Jnoc.ed 7own 2*J7

condition$ ar manufacturin! units were issued licenses to import components in J7 or

*J7 form only on e ecutin! a Memorandum of Cnderstandin! 2M8C with the 7irector

eneral 4orei!n %rade 27 4% $ 11 companies si!ned M8Cs with 7 4% under which

they a!reed to6 stablish actual production of cars and not merely assemble #ehiclesH

3rin! in a minimum forei!n e uity of C* F ;0 Million if a "oint #enture in#ol#ed

ma"ority forei!n e uity ownershipH Indi!enize components up to a minimum of ;0> in

the third and E0> in the fifth year or earlier from the date of clearance of the first lot of

imports$ %hereafter the M8C and import licensin! will abateH Neutralize forei!n

e chan!e out!o on imports 2 I4 by e port of cars' auto components etc$ 2483 $ %his

obli!ation was to commence from the third year of start of production and to be fulfilled

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durin! the currency of the M8C$ 4rom the fourth year imports were to be re!ulated in

relation to the e ports made in the pre#ious year$

India manufactures about ;B'=@9;0' =-wheelers' E'?1'EB@ passen!er cars' 1'@B'10A Multi

Ctility Vehicles and ='E;'==@ ommercial Vehicle$ India ran.s second in the production

of two wheelers and fifth in commercial #ehicles$

Trend of the Industr%

!roduction of total automobiles has gone up in the year 8998&9: 1;<" from =8.> lakhs in 8998&9? to @8.? lakhs in 899?&9:.-omestic sales have not shown any change in the percentage it remained at 1:< level " [email protected]; lakhs from

;A.: lakhs. 7xports from ?.9@ lakhs in 8998&9? to :.> lakhs in 899?&9: which is a;=< +ump $

The (roduction trend that could be seen in #edium and heavy

commercial vehicles is a positive one where it is seen to growing at a

positive rate of ;./9 in 330=3 , 2.;9 in the year 33 =3; and nally

;29 in 33;=35 over the previous years. +omestic sales has not seen

back since 330=3 , it made a jump and then a big leap of ;39 and

rodu*tion omesti*Sales !&ort / *hange

( )/ *hange

( S)/ *hange

!&orts

2000-0$ "*$+(+ ","(" &,- -( # # &

200$-02 $(&,(! $ $*-- &-",-! & &( &!

2002-0% , *++,* $+"&$($ (!*(!- &- &" ,,

200%-04 * +""( ,*+"-& "*+($! &$ &" $,

ommer*ial vehi*les

M 1 3s(I) 3s (II)

'otal*ommer*ial

vehi*les(III)

/ *hangeI / *hange II / *hange III

200$-02 +,*$ ,$*$, &, $!- &!. #"., (.*2002-0% & !$! -(&+$ !(,+* ".$ ,.$ $.(200%-04 &,,&! &!+& *$ " (*.- (&. ($.&

8/19/2019 Mba 04006013


;8.29 in 33 =3; and 33;=35 respectively. H"ports have shown

improvements in 33;=35 with 539 rise in H"ports

Passenger $ehicles

%rend of %otal Passen!er #ehicles is an upward one with ' in =00A-0@ it !rew by AE>

o#er the pre#ious year ' with passen!er car cate!ory ma.in! the ma imum contribution in

percenta!e share and absolute #alue$ %otal 7omestic sales had been up by =E > in =00A-

0@' with an increase in all the three cate!ories ' Passen!er cars2 =9> ' CVs 2=?> ' MPVs

with 1@>$ EE> of the share is held by the passen!er cars in domestic sales

H"ports have shown overwhelming growth, 739 in 33;=35 and

numbers have gone to 0 1;08 . (assenger cars increased by /79, a

sharp rise in B?s 0809 and followed by #(?s with 8;9. It is worth

noticing that (assenger cars make 1/9 of the e"ports of total

(assenger vehicles

!&orts

M 1 3s(I) 3s (II)

'otal*ommer*ial

vehi*hes(III)

/ *hange I / *hange II / *hange III

200$-02 -++++ $,,* &",,*& +.- (.* *."2002-0% &&$*&& *"+*& &+!,- -., ( .( (!.!200%-04 &,&"&" +-+(& ,!("$ (+.$ ( .! (,.$

A' + 67 assengerars -I 83s-II M 3s-III

'otalassenger3ehi*les

I3

/ *hangeI

/ *hangeII

/ *hangeIII

/ *hangeI3

2002-0% $$*"&! &&""*+ $&""& * (((! && - #&+ -200%-04 *-&*," &",&!( ,!,*( +--$"! "! - &- (*

8/19/2019 Mba 04006013


In the two wheeler category, the driver which has set the total two

wheeler growth levels is #otercycles which has demonstrated best

results over the past seven years and more. The it maintained this

level until 33;=3; and a slight slow down in 33;=35, which was

balanced with the cooters production. The Total two wheeler categorydid well in the past years , keeping a double digit growth . In H"ports

are buoyant with 5/9 rise as compared to the previous year, cooter

and #otorcycles e"ports have picked up by 8;9 and 209 respectively.

Total +omestic sales has risen by 009 in 33;=35, and motorcycles

sales is on the rise in the domestic market which and the rise had

shown noticeable consistency and has been 059 in 33;=35

rodu*tion / *hange 7o7

A' + 67S*ooters 9

S*ooterettee -IMotor*:*les 9 Ste&

'hrough-II Mo&eds-III 'otal ';o<heelers-I3 I II III I3

$==5-=# & "--+ -!+!-* , !"& ,$,!&*

$==;heler#-=> &(& + ! +-- (( ,*-!*" +*+ * * + &

$==>-=? & *+",* && $+$- ,,* " (!* ,,* #( &" # (

$==?-== &(&$!$$ &(-* -, ,* &,* ((*"$!- ( ( & &!

$===-00 & $+" ( &*+"!*- * "$&! (**-!&& #" + - &

2000-0$ -*+*$+ &-(*-$ ,+"+*" (*$-$&- #(! #" #&

200$-02 +(*$!, +!,( ( " *"+- " *&( * * (( #(- &"

2002-0% -"-"(" (-*,&*$ ($&,& $!*, & #&! (( #&- &+

200%-04 +($(&+ "($$&(* ((""+" $, "+$! &! & #$ &&

8/19/2019 Mba 04006013


Three wheelers

(roduction of three wheelers is seen to have gone up since 333=30,

production was 0 /57 in 330=3 and which went up to /8/01 in

33 =3;, which was a ;39 rise and in 33;=35 recorded a ;9

increase. +omestic demand is on the rise from the year production

picked up and in 33;=35 it attained a growth rate of 089 to 87/3

from 08 8; in 333=30 .H"ports witnessed a rise since 33 =3; , 0739

and in 33;=35 about 2/9.

@ omesti* Sales / *hange 7o7

A' + 67 S*ooters 9S*ooterettee -I

Motor*:*les 9Ste& 'hrough-

IIMo&eds-III 'otal ';o

<heelers-I3 I II III I3

$==5-=# &&++$"( *,!+(& $-(-"( $""(&*

$==;heler#-=> & *"-&$ + -( + ,($,&* -(-*,& , + &

$==>-=? & ( "( &!-$+*, $+-+"( +&*($& #( &* #, (

$==?-== & +*&&$ &(,!&+, ,",&&" ((!(" $ $ $ - &(

$===-00 & ((*-& &*,&"(+ ,+-( & (,+($"& #$ + - &

2000-0$ -*, " &&",+( ,"(",& (,("(*- # + ! #- #

200$-02 +!- ,- --*&+" "!- ,( " !(* $ " (* #(* &,

2002-0% - $,"- (,"*"+( ((-+-$ "-& & , #+ , #&* &"

200%-04 --$!(- "&*!"$+ (!+$&, $(,$!&( * &" #+ &&

!&orts / *hange 7o7

ategor:

S*ooters 9S*ooterettee -I

Motor*:*les 9Ste& 'hrough-II

Mo&eds-III 'otal ';o<heelers-I3 I II III I3

2002-0% ( $,, & (* $ ((+& &*+,- &$ &&- ( *

200%-04 $(&"- &-* -* " (" ,",,+ ,( $& " "*

8/19/2019 Mba 04006013


&ll automobiles ha#e =0> ustoms duty' e cept for Motor cars and other motor #ehicles

principally desi!ned for the transport of persons 2other than those of headin! No$ ?E$0= '

includin! station wa!ons and racin! cars and Motorcycles 2includin! mopeds and cycles

fitted with an au iliary motor' with or without side-carsH side- cars where the customs

duty applied with 10;> and %an.s and other armoured fi!htin! #ehicles' motorised'

whether or not fitted with weapons' and parts of such #ehicles with no customs duty and

cise 7uty ran!es from 1B> to =@>

Vision of India so to ma.e the sector competiti#e !lobally and double its contribution to

the economy by =010

(olicy aims to promote integrated, phased, enduring and self=sustained

growth of the Indian automotive industry

'hree ;heelers

rodu*tion omesti*Sales

!&ort / *hange( )

/ *hange (S)

/ *hange !&orts

2000-0$ !( (" ","(" &,- -( * , #-

200$-02 & *"- $ $*-- &-",-! $ &! #$

2002-0% *,*&+ $+"&$($ (!*(!- (! &, &-!

200%-04 ("!* + ,*+"-& "*+($! ( &, $*

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'he a ove all information *an e summari ed in ;ith follo;ing

gra&h

$mpact -nalysis # -uto -ncillaries

-omestic growth to slow down9 surge in e#ports to continue in &44+>4,• %he auto ancillary industry is estimated to ha#e !rown by around =0 per cent in

the first 9 months of =00@-0; in terms of #alue of production as compared with

the same period last year$ %he !rowth was led by the stron! domestic !rowth

posted by almost all the se!ments of the automobile industry and hi!h !rowth in

e ports$ %he passen!er cars and utility #ehicles se!ment !rew by =E per cent'commercial #ehicles by A0 per cent' two-wheelers by 1@ per cent and tractors by

@0 per cent in the first 9 months of =00@-0;$ 4or the full year of =00@-0;' the auto

ancillary industry is e pected to !row by 1?-=0 per cent' while e ports are seen

!rowin! by =;-A0 per cent$

• In =00;-0B' the auto ancillary industry is li.ely to post a relati#ely lower !rowth

of 1=-1A per cent$ %he lower !rowth will be due to the reduced !rowth rate in

almost all the automobile se!ments$ 5owe#er' e ports are e pected to continuethe stron! !rowth momentum in =00;-0B at =0-=; per cent$ %his will be led by the

continued thrust on e ports by domestic manufacturers as well as increase in

outsourcin! of components from India by !lobal 8 Ms and %ier-I #endors$

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• 8peratin! profit mar!ins slipped mar!inally in the first 9 months of =00@-0;'

owin! to a rise in input costsH the mar!ins are e pected to remain under mar!inal

pressure in =00;-0B as well' as (I* IN4& e pects a#era!e steel prices to

remain firm in =00;-0B$ 3ut net profits of players ha#e risen' on account of hi!her

!rowth in net sales and lower capital char!es in the first 9 months of =00@-0;H the

net profits are e pected to impro#e further =udget Impact in =00;-0B$

• =udget Impact

Budget measures marginally positi"e &or the auto ancillary sector

%he reduction in the pea. customs duty on components will benefit companies that

import sub-components for manufacturin! their final product' such as MI 8 and *ona

Joyo *teerin! *ystems$

%he reduction in the pea. customs duty on aluminum will mar!inally reduce the input

costs of auto ancillaries in terms of lower prices$ %he cut in the pea. customs duty on

copper will mar!inally reduce the input costs of companies manufacturin! electrical

components such as wire harnesses$ %he reduction in the customs duty on lead to ; per

cent will reduce the input costs of automoti#e battery manufacturin! companies such as

ide and &mara (a"a 3atteries$ %he benefit of the abo#e measures will be passed on to

the ori!inal e uipment manufacturers$

%he increase in the e cise duty on steel will not ha#e any impact on the costs of auto

ancillary manufacturers' as the same is mo#eable$

%he e tension of the 1;0 per cent ta benefit for in-house (<7 will mar!inally benefit

auto ancillary companies underta.in! research and de#elopment$

%ri"es and D*ties

Auto ancillaries: Tariffsper cent! 5ustoms "#cise

&44*>4+ &44+>4, &44*>4+ &44+>4,Parts of four-wheelers =0$@ 1;$A 1B$A 1B$AParts of two-wheelers =0$@ 1;$A 1B$A 1B$AParts of I en!ines =0$@ 1;$A 1B$A 1B$AI en!ines =0$@ 1;$A 1B$A 1B$A%ransmission shafts' !ears and !ear bo es =0$@ 1;$A 1B$A 1B$A

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&uto !as.ets bra.e linin!s =0$@ 1;$A 1B$A 1B$Aatalytic con#ertors ;$1 ;$1 1B$A 1B$AP steel ;$1 ;$1 1=$= 1B$A

5( steel ;$1 ;$1 1=$= 1B$A

&luminum 1;$A 10$= 1B$A 1B$Aopper 1;$A 10$= 1B$A 1B$A

/ead 1;$A ;$1 1B$A 1B$A Nic.el ;$1 ;$1 1B$A 1B$A5(6 5ot rolledH 6 al#anised coilH P6 al#anised plateH I 6 Internal combustion

Robust Foundation of Auto Industr% in India

%he *ociety of Indian &utomobile Manufacturers 2*I&M is the ape national

association representin! the &uto Industry$ Incorporated as &I&M o#er A9 years

a!o<O1?@H it has !i#en the industry a social face' with increasin! emphasis on

en#ironment and safety related issues$ *I&M was formed in 199?' and all the

members of &I&M ha#e now become its members' in addition to A new members$

*I&M is an important channel of communication for the &utomobile Industry

with the o#ernment and National and International or!anizations$$ %he *ociety

also aims to play a pro-acti#e role in creatin! awareness on important matters li.e

(oad *afety and n#ironment Protection$ *I&M is also committed to the

ad#ancement of #ehicular technolo!y in India$

%he &utomoti#e omponent Manufacturers &ssociation of India 2& M& ' with a

membership of o#er AB; companies' has been the Indian auto component

Societ% of Indian Automobile /anufacturers SIA/

The Automoti$e 5omponent /anufacturers Association of India A5/A!

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industryGs spo.esman for the last A? years$ & M& has a membership of o#er AB;

companies that contribute 90> of the total output in the or!anized sector$ %he

&ssociationGs acti#e in#ol#ement in trade promotion' technolo!y up !radation'

uality enhancement' and collection and dissemination of information has made it

a #ital catalyst for the pro!ress of the industry$ & M& is represented on a number

of panels' committees and councils of the o#ernment of India throu!h which it

helps in the formulation of policies pertainin! to the Indian automoti#e industry$

%he Western India &utomobile &ssociation 2WI&& was founded on 8ctober 1;th

1919 and today is the lar!est and the oldest motorin! body with o#er forty-ei!ht

thousand members and a networ. of E branches in @ states of Western India$ %he

WI&& - astrol Institute of Motorin! at &hmedabad is e uipped with state of art

e uipment and aims at carryin! out research on (oad *afety and !i#in! trainin!

on road safety to all users of the road$

%he Western India &utomobile &ssociation is the lar!est &utomobile &ssociationin *outh &sia$ It:s current membership is to the tune of @?'000 members today and

the scope of its acti#ities e tends to co#er ma"or cities in Western India$ %he

&ssociation has its head uarters in Mumbai' and offers its ser#ices in the states of

Maharashtra' u"arat' (a"asthan' Madhya Pradesh and oa$ It has B branch

offices apart from the 58 in Mumbai' and offers to all its members a wide #ariety

of ser#ices ran!in! from issuin! of learnersG licenses to le!al ad#ice on motorin!

issues$

%he &ssociation also underta.es to promote tourism within the country$ In its #ery

first decade of e istence' the &ssociation built up o#er 1@00 routes co#erin!

nearly half a million miles$ %he WI&& is acti#ely in touch with its counterparts in

The Gestern India Automobile Association GIAA!

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other countries' !i#in! them the necessary tra#el information as a part of its

pro!ram to attract tourists in India$ %he WI&& also has reciprocal ser#ice

arran!ements with other &utomobile &ssociations and lubs all o#er the world$

%he &ssociation is reco!nized as IndiaGs ma"or authority on motorin! issues and

represents its members and motorists interests to the o#ernment and other sector

and industry !roups$

%his is the first Indian &ssociation formed by the dealer community in Danuary

19B@ and si!nified the ur!e of IndiaGs automobile dealer community to ha#e their

own identity and a national or!anization of their own$

4&7& pro#ides an all India platform to promote and safe!uard le!itimate

business interests of the auto dealer community$

The Founder /embers of FA-A are

21 %he &utomobile 7ealers &ssociation 8f Maharashtra /td$ Mumbai$

2= %he Motor Industries &ssociations ' alcutta$

2A %he &utomobile %raders &ssociation 7elhi ' New 7elhi$

2@ Motor Vehicles &nd &llied Industries &ssociation ' hennai$

Federation of ,uto obile ealers ,ssociations (F, ,

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4&7&Gs acti#ities include publication of *pecial studies ' Periodicals and

newsletters ' or!anizin! seminars and press conferences ' sponsorin! study tours

and newspaper supplements all desi!ned mainly to educate the automobile dealer

community in India on the many chan!es and inno#ations ta.in! place both in the

automobile industry and auto distribution networ.$ It also distributes free leaflets

on automobile related sub"ects and it<O1@BHs role is to !uide ' assist and moti#ate

the auto dealers to perform their tas. ably$

Members of the &ssociation of International &utomobile Manufacturers' Inc$

2&I&M distribute world-class passen!er cars' multipurpose passen!er #ehicles'

and li!ht truc.s in the Cnited *tates$ &I&M acts as the common #oice and

information clearin!house for the C$*$ subsidiaries of these internationalautomobile companies$ &I&M also represents se#eral ori!inal e uipment

manufacturers doin! business in the Cnited *tates$ %he or!anization

communicates the true ma.eup of todayGs &merican automobile industry and

creates an awareness of the contributions international automobile manufacturers

ma.e in &merica$ &I&M also ad#ocates on auto related issues before !o#ernment

re!ulatory a!encies$

,ssociation of *nternational ,uto obile Manufacturers *nc (,*,M

urrent status of Indian Automotive Industr:

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%he industry encompasses commercial #ehicles' multi-utility #ehicles' passen!er cars'

two wheelers' three wheelers' tractors and auto components$ %here are in place 1;

manufacturers of cars and multi utility #ehicles' 9 of commercial #ehicles' 1@ of

%wo %hree Wheelers and 10 of %ractors besides ; of en!ines$ With an in#estment of

(s$;0'000 crores' the turno#er was (s$ ;9';00 crores in &utomoti#e *ector durin!

1999-=000$ It employs @' ;0'000 people directly and 100'00'000 people indirectly and is

now inhabited by !lobal ma"ors in .een contention$

India manufactures about A?'00'000 =-wheelers' ;'E0'000 passen!er cars'

1'=;'000 Multi Ctility Vehicles' 1'E0'000 ommercial Vehicles and ='B0'000

tractors annually$ India ran.s second in the production of two wheelers and fifth

in commercial #ehicles$

India:s automoti#e component industry manufactures the entire ran!e of parts

re uired by the domestic automobile industry and currently employs about

=;0'000 persons$ &uto component manufacturers supply to two .inds of buyers ,

ori!inal e uipment manufacturers 28 M and the replacement mar.et$ %he

replacement mar.et is characterized by the presence of se#eral small-scale

suppliers who score o#er the or!anized players in terms of e cise duty e emptions

and lower o#erheads$ %he demand from the 8 M mar.et' on the other hand' is

dependent on the demand for new #ehicles$

%here has been a slowdown in the automobile sector in the past two years$

5owe#er' the component industry maintained a low but positi#e !rowth rate

mainly due to its e port performance$ 8#er the years' the component industry has

maintained a 10> - 1=> share of e ports in the total production$

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(oads occupy an eminent position in transportation as they' as per the present

estimate' carry nearly B;> of frei!ht and ?E> of passen!er traffic$ &lthou!h'

India has A$A million .ilometers of road networ.' which is the second lar!est in

the world' the Indian hi!hways are !ettin! o#erpopulated$ %raffic mana!ement

and road sense also need attention$

%raffic on roads is !rowin! at a rate of E to 10> per annum while the #ehicle

population !rowth for the past few years is of the order of 1=> per annum$ Poor

road infrastructure and traffic con!estion can be a bottlenec. in the !rowth of

#ehicle industry$ & balanced and coordinated approach will be underta.en for

proper maintenance' up !radation and de#elopment of roads by encoura!in!

pri#ate sector participation besides public in#estment and incorporatin! latest

technolo!ies and mana!ement practices to ta.e care of increase in #ehicular

traffic$

4or the con#enience of tra#elin! public the o#ernment shall also promote multi-

modal transportation and the implementation of mass rapid transport systems$

%he o#ernment shall promote (esearch < 7e#elopment in automoti#e industry by stren!thenin! the efforts of industry in this direction by pro#idin! suitable

fiscal and financial incenti#es$

Impro$ing Road Infrastructure

Incenti$e For Research And de$elopment

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%he current policy allows Wei!hted %a 7eduction under I$%$ &ct' 19B1 for

sponsored research and in-house (<7 e penditure$ %his will be impro#ed further

for research and de#elopment acti#ities of #ehicle and component manufacturers

from the current le#el of 1=;>$

In addition' Vehicle manufacturers will also be considered for a rebate on the

applicable e cise duty for e#ery 1> of the !ross turno#er of the company

e pended durin! the year on (esearch and 7e#elopment carried either in-house

under a distinct dedicated entity' faculty or di#ision within the company assessed

as competent and ualified for the purpose or in any other (<7 institution in the

country$ %his would include ( < 7 leadin! to adoption of low emission

technolo!ies and ener!y sa#in! de#ices$

o#ernment will encoura!e settin! up of independent auto desi!n firms by

pro#idin! them ta brea.s' concessional duty on plant e uipment imports and

!rantin! automatic appro#al$

&llocations to automoti#e cess fund created for (<7 of automoti#e industry shall

be increased and the scope of acti#ities co#ered under it enlar!ed$

Foresight

%o establish a !lobally competiti#e automoti#e industry in India and to double its contribution to the

economy by =010$

Auto Polic% of The ;o$ernment of India

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;b+e"tive

%his policy aims to promote inte!rated' phased' endurin! and self-sustained

!rowth of the Indian automoti#e industry$ %he ob"ecti#es are to6-

alt the sector as a le#er of industrial !rowth and employment and to achie#e a

hi!h de!ree of #alue addition in the countryH

Promote a !lobally competiti#e automoti#e industry and emer!e as a !lobal

source for auto componentsH

stablish an international hub for manufacturin! small' affordable passen!er

cars and a .ey center for manufacturin! %ractors and %wo-wheelers in the worldH

nsure a balanced transition to open trade at a minimal ris. to the Indian

economy and local industryH

onduce incessant modernization of the industry and facilitate indi!enous

desi!n' research and de#elopmentH

*teer IndiaGs software industry into automoti#e technolo!yH

&ssist de#elopment of #ehicles propelled by alternate ener!y sourcesH

7e#elopment of domestic safety and en#ironmental standards at par with

international standards

*I&M welcomed the announcement of &uto Policy' and feels that the policy

would ser#e as a reference document for all sta.e holders and other interested

parties$

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%he &uto Policy has spelt out the direction of !rowth for the auto sector in India

and addresses most concerns of the automobile sector' includin!-

Promotion of (<7 in the automoti#e sector to ensure continuous technolo!y up

!radation' buildin! better desi!nin! capacities to remain competiti#eH

impetus to &lternati#e 4uel Vehicles throu!h appropriate lon! term fiscal

structure to facilitate their acceptanceH

mphasis on low emission fuel auto technolo!ies and a#ailability of appropriate

auto fuels and

ncoura!ement to construction of safer bus truc. bodies - sub"ectin!

unor!anized sector also to 1B> e cise duty on body buildin! acti#ity as in case

of 8 Ms$

%he policy has ri!htly reco!nized the need for modernizin! the parc profile of

#ehicles to arrest de!radation of air uality$ %he terminal life policy for

commercial #ehicles and mo#e toward international ta in! policies lin.ed to a!e

of #ehicles' are steps in the ri!ht direction$

*I&M has always been ad#ocatin! encoura!ement of #alue addition within the

country a!ainst mere tradin! acti#ity$ 5owe#er' this aspect has not been fully

addressed$ %he &uto Policy allows automatic appro#al for forei!n e uity

in#estment up to 100> in the automoti#e sector and does not lay down any

minimum in#estment criteria$

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%he recommendation of promotin! passen!er cars of len!th upto A$? meters

throu!h e cise benefits is not in line with the free mar.et concept and may lead to

mar.et distortion$

5owe#er' with the &uto Policy in place' the automoti#e industry would !et further

fillip to become #ibrant and !lobally competiti#e$ %he industry would !et the

re uired support from other Ministries and departments of o#ernment of India in

achie#in! the !oals laid down in the auto policy$

%he Indian automoti#e industry has flourished li.e ne#er before in the recent

years$ %his e tra-ordinary !rowth that the Indian automoti#e industry has

witnessed' is a result of a two ma"or factors namely' the impro#ement in the li#in!

standards of the middle class' and an increase in their disposable incomes$

Moreo#er' the liberalization steps' such as' rela ation of the forei!n e chan!e and

e uity re!ulations' reduction of tariffs on imports' and refinin! the ban.in!

policies' initiated by the o#ernment of India' ha#e played an e ually important

role in brin!in! the Indian &utomoti#e industry to !reat hei!hts$ It is estimated

that the sale of passen!er cars ha#e tripled compared to their sale in the last fi#e

years$ %hus' the sale of cars has reached a fi!ure of 1 million users and is

e pected to increase further$ ItGs also to be noted that the demand for lu urious

models' *CVs' and mini-cars for family owners' ha#e shot up' lar!ely due to

increase in the consumerGs buyin! capacity$

(he increase) )e*an) +or ,n)ian a to*o.i!es has res !te) in a !arge n *.er o+ * !ti-nationa! a to co*panies

especia!!" +ro* apan ' S' $' an) rope entering the ,n)ian *ar et an) or ing in co!!a.oration ith the

,n)ian +ir*s' $!so the instit tiona!i ation o+ a to*o.i!e +inance has + rther pa e) the a" to s stain a !ong-ter*

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high gro th +or the in) str"'

(he .asic o. ecti e o+ this *ar et research report ,n)ian $ to*o.i!e ,n) str"- ecent (ren)s is to esti*ate

the )e*an) +or a to*o.i!es +ro* 2005 ti!! 2012' (he increasing ro!e o+ a to +inance is a!so scr tini e) ."

pro ing a series o+ s r e"s con) cte) across the co ntr" co ering a!! categories o+ pri ate an) co**ercia!

ehic!es& +inance' (he report a!so e a*ines the region- ise )e*an) an) gro th tren)s +or the se!ecte)

ehic!es an) ho the" in+! ence) ,n)ia&s D: gro th'

/EP5/! %* % * %!S:

• "#amines the production2 sales2 and e#port growth rates of the sector2 along

with a mention of the ma'or manufacturers.

• Identification of the opportunities for foreign companies in terms of

e#ports2 technolog% transfers2 strategic alliances2 financial collaborations

and 7C s2 in the Indian $ehicle sector.

• The component>wise share of production is assessed.

• Assessment of the implications of $ehicle emissions.

• Interpretation of the impact of the nion =udget on the Indian auto

industr%.

• -emand forecasts till &4 4.

• An o$er$iew of the ma'or changes occurring in the Indian mar3et.

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• A stud% of the mar3et access strategies for companies.

• An insight into the profiles of big pla%ers of the Indian automoti$e sector.

-i$ersified and large industrial base2 which is becoming globall%

competiti$e. "#amples2 Tata Steel and NA85) are the lowest cost

manufacturers of steel and aluminum in the world. /oser =aer is one of the

top three manufacturers of 5- R)/s in the world. =harat Forge is one of

the leading suppliers to auto giants2 such as Ford2 ;eneral /otors2 and

To%ota.

India s Hero Honda is the world s largest motorc%cle manufacturer with

&44& production of . million units. India is one of the largest mar3ets for

motorc%cles and the production was +. million units in &44&>4(. Honda and

@awasa3i ha$e made India as their global e#port hub.

The Indian companies ha$e drawn up ambitious plans for e#panding and

di$ersif%ing their manufacturing acti$ities with about & billion dollars in

the ne#t three %ears. /ost of the companies ha$e been able to generate the

funds from their own operations. The areas whose output is being scaled up

are automobiles2 auto parts2 metals2 chemicals2 pharmaceuticals and

electronics.

;rowth rate of industr% in &44(>4* was ,.1E and manufacturing registered

growth of .&E.

The pharma industr% s turno$er is e#pected to increase to SK & billion b%

&440 from SK ,.( billion in &44&.

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The pharma industr% of India has become a 3nowledge>based one and has

gained global recognition as a producer of low cost high qualit% bul3 drugs

and formulations. Some of the Indian companies ha$e gone global with

presence in ,4 countries2 including SA2 "urope and 5hina. India is one of

the top ten producers of bul3 drugs in the world and ,4E of India s bul3

drugs production is e#ported. India has the highest number of annual bul3

drugs filings &4! with SF-A accounting for one>fifth of the total. The

filings ha$e been broad>based with o$er &4 Indian companies. India is home

to the largest number of pharma plants , ! appro$ed b% SF-A outside

S. Indian Pharma companies are e#pected to get a re$enue of SK &.

billion b% &440 from ++* million dollars in &44(! in the S generics mar3et.

Ranba#% has become the ninth largest generics compan% in SA. Ranba#%

has manufacturing operations in countries including 5hina. Pharma

e#ports of India reached about & billion SK in &44(>&44*. It is to be noted

that one third of pharma production in India goes for e#ports.

The chemical industr% is becoming competiti$e and has $er% high growth

potential for production for local mar3et as well as e#ports. =a%er A;2 the

;erman chemical and pharmaceutical compan% has identified India as the

outsourcing hub for basic and specialt% chemicals.

There are +4 biotechnolog% companies whose business is growing

e#ponentiall%.

The auto parts industr% has emerged as one of the countr% s fastest>growing

manufacturing sectors and a globall% competiti$e one with a turno$er of

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SK +. billion in &44&. This is e#pected to reach SK ,.+ billion in &44+.

=harat Forge of India is the world s largest manufacturer of front a#les

for truc3s. India has emerged as an outsourcing center for auto parts for

companies such as Ford2 -aimler 5hr%sler2 Fiat Col$o and Renault. Cisteon

and -elphi2 the world s largest component manufacturers ha$e entered

India for production. To%ota has made India as the global hub for

transmission s%stems. Col$o and ;/ ha$e set up purchasing offices. A

rising share of Indian auto parts e#ports goes to original equipment

manufacturers )"/s!.

The Indian auto industr% has grown to a capacit% of .& million units per

%ear. 5ar sales in &44(>4* crossed one million units.

Tata /otors ha$e de$eloped cars based on indigenous design and

manufacture with 44 per cent of Indian parts and ha$e established

themsel$es as one of the leaders in Indian automobile industr%. It is

creditable that the% ha$e got a four>%ear contract for suppl% of 442444 cars

to @ under the brand L5it% Ro$erL. Tata is opening a manufacturing

plant in ;erman% for suppl% of auto parts to Ford.

H%undai has made India as the hub for their worldwide e#ports of small

cars.

The te#tile industr% of India2 the second largest in the world2 is undergoing

moderni6ation and is set to benefit from the dismantling of quota s%stem in

&44+. According to a -H8>/c3inse% Stud% of &44*2 India s share in world

te#tile will go up from * per as of now to ,.+ per cent b% &440.

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India is the second largest cement producer in the world with 4 million

tons.

India is the world s premier center for diamond cutting and polishing. Nine

out of e$er% 4 stones sold in the world pass through India.

India has a large entertainment industr%2 which produces 044 mo$ies per

%ear o$ershadowing Holl%wood. The turno$er is e#pected to reach SK ,.

=illion in &44+ from SK +. billion in &44&

0! 7/ Auto Sector Principal concern of the stud% !

Co panies in &hich ;M Mutual Funds in$ests for auto in$est ent

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:ort+o!io ; $s on 31 Ma" 2005<,nstr *ent =a*e ("pe % o+ =et $ssets>thers Ca!! Mone" 21'95Motor ,n) stries Co' ? it" 7'98

$a*te $ to ? it" 6'23(ata Motors ? it" 5'85

i)e ,n)s' ? it" 5'83( .e ,n est*ents o+ ,n)ia ? it" 5'62: n a. (ractors ? it" 5'26M # ? it" 3'94:rico! ? it" 3'58Mahin)ra @ Mahin)ra ? it" 3'35

icher Motors ? it" 3'07Sona Ao"o Steering S"ste*s ? it" 3'05Mar ti )"og Bt) ? it" 3'05

ico $ to ,n)s' ? it" 2'92ca! # e! S"ste*s ? it" 2'89

Motherson S *i S"ste*s ? it" 2'86>*aa $ tos ? it" 2'67( S Motor Co' ? it" 2'47

a.rie! ,n)ia ? it" 2'35 $ to*o.i!e Corpn'o+ oa ? it" 1'99Denso ,n)ia ? it" 1'92Ceat ? it" 0'87

a" haarat Mar ti ? it" 0'30 $sho Be"!an) ? it" 0'00

./ Auto +ecto$ *und

5i!hest N&V in ;= Wee.s , 1@$;E2 =00;-0E-

1;

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Part>CI

& 8imitations

8/19/2019 Mba 04006013


"$er% stud% or pro'ect has the two faces. )ur pro'ect also is ha$ing two faces as8imitations of the stud% and recommendations.

imitations /#1 %ime onstraints $

= *ur#ey is limited to 5ubli city only$

A *ometimes the responses depend upon respondents mood $

@ *ome data which are !i#en may be not accurate

; More emphasis is !i#en on the primary data$

,74BMM7/- TIB/%

&s most of the prospecti#e customers are unaware of Mutual 4und so' awareness

should be created amon! them$ %his can be done by #isitin! o#ernment officers and

contactin! respecti#e departments and educatin! them re!ardin! Mutual 4unds and

their benefits$

! separate counter should be opened in the center, mainly for the

purpose of guiding the e"isting customers regarding the #utual funds

and.

3ased on sur#ey conducted most of the customers are interested in in#estin! in

Mutual 4unds but they ha#e not presently in#ested due to lac. of information about

the Mutual 4unds and their benefits$

o, the company should take adequate steps to tap the potential

market by educating investors.

8/19/2019 Mba 04006013


!s most of the respondents would like to save ta"es by investing in

ta" saving securities. Therefore awareness should be created about

the ta" savings schemes.

#ost of the investors are habituated to invest in #utual $unds, %I&

policies ' (ost )*ce schemes for the purpose of safety and assured

returns. !s #utual $unds also have more bene ts than $i"ed

+eposites.%I& policies ' (ost )*ce scheme. ene ts like liquidity,

transparency and professional management or invested funds.

The company should create awareness about the above

stated bene ts of #utual funds to investors.

1! /aster 5ode Sheet

Age

=0 Krs$ , A0 Krs$ A0 Krs- ;0 Krs$ ;0 Krs &bo#e

1 = A

<. Source of Income

*alary 3usiness Profession In#estment 8thers

1 = A @ ;

<.& Income Per Annum

3elow , 1 /a.h 1 /a.h , A /a.h A /a.h , ; /a.h ; /a.h ,&bo#e

8/19/2019 Mba 04006013


1 = A @

<.( In$estment in an% other product other than ban3 deposits

Kes No1 0

<.* The In$estment instruments )ther than =an3 -eposits

Mutual

4unds

(3I

3onds

*toc.s (eal

state

Insurance 8thers

1 = A @ ; B

0 1 2$opo$tion In'estment inIn'estment

Inst$uments out o3 Income pe$ Annum

Mutual4unds

(3I 3onds *toc.s (eal state Insurance 8thers

1 = A @ ; B

0 4 T e inte$est o3 in'esto$

in /utual *unds

Kes No

1 0

8/19/2019 Mba 04006013


0 5 T e Reasons 3o$ Inte$est

in /utual *unds7i#ersified

Port 4olio

Professional

Mana!ement

*mall

In#estment

/i uidity 8thers

1 = A @ ;

<.0 Allocation of Assets

uity

7i#ersified

3alanced 4unds Pharma

*ector

&uto and &ncillary

*ector

I% *ector 8il <

ner!

y

3an.

4und

8the

rs

1 = A @ ; B E ?

0 6 T e In'estment in Auto

+ecto$

Kes No1 =

<. 4 The In$estment in Auto Sector Fund

DM 4inancial &sset Mana!ement P# /tdH C%I Mutual 4unds1 =

<. The interest of in$estor to see the $ndi"idual )inancial -d"isor

8/19/2019 Mba 04006013


Kes No

1 =

&4! ;raphs And Interpretation

&!e $ge =o' o+

espon)entsesponse in

percentage20-30 19 34'5430-50 27 49'09

50 $.o e 7 12'72

%hrou!h out of the sample of ;;

19 are between =0-A0 yrs$

=E are between A0-;0yrs$

E are are of abo#e ;0%he analysis is the respondents are more in the a!e !roup of A0-;0 which are consideredas conser#ati#e in#estors$

1

&.

.05

1015202530

Population

20-30 30-50 50 $.o e

,)e /an)e

,)e of the /espondents

20-30

30-50

50 $.o e

8/19/2019 Mba 04006013


<. Source of Income

So rce =o' o+ espon)ent

s

esponse inpercentage

Sa!ar" 11 20siness 40 72'72

:ro+ession 1 1'818,n est*ents 9 16'36

>thers 4 7'272

$rom sample of 22 salaried are 00 with 39 of total population, 53 arebusiness people are 53 with / ./ 9, (rofessionalist is 0 with 07.07 9 ,

(eople those who are more concerned about investment are 1 with

08.;8 9and )thers are 5 with /. /9. $inally, usiness people are the

highest in numbers in the sample.

Source of *nco-e

11

40

1

9

4

# 1# "# 3# <# =#

Salary

Profession

5thers

S o u r c

Population

Sa!ar"

D siness:ro+ession

,n est*ents

>thers

8/19/2019 Mba 04006013


. Income per !nnum

Income per&nnum3elow 1 /a.h 19 A@$;@1 /a.h - A/a.h =B @E$=EA /a.h - ; la.h ; 9$09

; /a.h &bo#e @ E$=E

19

2654

0204060

!hePopulation

1

*nco-e /an)e

*nco -e Per ,nnu- of the /espondents

in %ubli City

5 Ba h $.o e3 Ba h - 5 !a h1 Ba h - 3Ba h

e!o 1 Ba h

Here2 most of the respondents are l%ing between la3h to ( 8a3h income per annumcategor% with * .& E. The least is * i.e the income per annum +la3h and abo$e with

.& E. below la3h is onl% 1 people i.e (*.+* E.

8/19/2019 Mba 04006013


0. 1 The Ban Product other Than Ban ).D

(he an :ro) ct other (han an#'D'

Yes 39 70'90=o 12 21'81

/ost of the people are ha$ing in$estment products other than ban3 deposits i.e (1 .It means these people are more conser$ati$e 3ind of people regarding theirin$estments.

<. * In$estment Instruments

,n est*ent,nstr *ents

=o'o+ espon)ent

s

%

M# 9 16'36, on)s 3 5'45Stoc s 19 34'54

9 16'36

*n$est-ent Products 5ther !han .an( F

39

12Yes

=o

8/19/2019 Mba 04006013


,ns rance 41 74'54>thers 4 7'27

Gith this obser$ation it can be said that most of the people are aware of insuranceand the stoc3s. Their response is for insurance *.+*+ 2 stoc3s (*.+*E. and $er% lesspeople are aware of /utual funds and R=I bonds ,.(,E and +.*+E respecti$el%.

>0= Proportionate *n$est ent in *nstru ents

Proportionate Investment in

Instruments,nstr *ents respon)ents %

M# 10 18'18, on)s 2 3'63Stoc s 19 34'54

9 16'36,ns rance 39 70'90

93

19

9

<1

< M#D, Don)s

Stoc s

,ns rance>thers

10 219

9

39

0

20

40

M# D, Don)s Stoc s ,ns rance

respon)entsM#

D, Don)s

Stoc s

,ns rance

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As it is alread% stated that people are much aware of insurance and stoc3s mar3ets .here practicall% people ha$e in$ested 4E highest in insurance and (*.+*E instoc3s. )nl% the people who are aware of R=I =onds and /utual Funds those onl%ha$e in$ested in these instruments.

>0 ? *nterest in Mutual Funds

*nterest inMutual Funds

@o 0of /esponde

nts

A

Bes "< <30?3@o "8 =#09#

@eutral 3 =0<=

8/19/2019 Mba 04006013


Most of the people are not interested in utual funds because lac ofno&led)e and no interest and because of !* Mutual Fund scandal0

,bout <30?3 A people are interested in utual Funds because ofno&led)e and interest ha$in) the no&led)e about its benefits and

fle ibility0/e ainin) =0<=A people are purely neutral to this business0 .ecause theydon2t &ant to ta e ris 0

Q .7 Interest in MF Because of

,nterest in M#eca se o+

=o'o+ es %

D: 10 18'18:ro+essiona!

Mg*t4 7'27

S*a!! ,n est 14 25'45Bi? i)it" 7 12'72>thers 34 61'81

*nterest in utual funds

000

28

24

3

Yes =o =e tra!

8/19/2019 Mba 04006013


/ost of the respondents are interested this in$estment instrument because of otherreasons li3e ta# benefit2 fle#ibilit% in business and so on. Small in$estment optioninduces the sole proprietor to in$est in this 3ind of business. And di$ersified Portfolio fascinates to di$ide the business the ris3.

> 08 !he Potential Proportion of *n$est ent

(he :otentia! :roportion o+,n est*ent

D 2 3'636%# 8 14'545%

:har*a 11 20% $ to 25 45'454%

,( 13 23'636%>i! @ ng 13 23'636%

an 19 34'545%5thers 7 12'72%

104

147

34

0

10

20

30

40

1 2 3 4 5 6

8/19/2019 Mba 04006013


Most of the respondents are interested with auto sector and petroleum sector in#estments

because of it:s boomin! nice performance and returns to their in#estors$

Q.9 Investment in Auto Sector

,n est*ent in $ to Sector Yes 6 10'90 %=o 47 85'45%

>ther 3 5'45%

arlier people were not aware of &uto and petroleum sector fund i$$e why people ha#enot in#ested or e#en ha#e not thou!ht of auto sector fund$ 3ut after .nowin! about these

!he Potential Proportioan of *n$est-ent

2811

25

1313

19

7

39

D # :har*a $ to ,( >i! @ ng an >thers30?3A 1<0=<A "#A "30?3A

<=0<=A3<0=<A"30?3A 1"07"A

*n$est-ent in ,uto Sector

?

<7

3

Yes =o =e-tra!

1#09#A 8=0<=A =0<=A

8/19/2019 Mba 04006013


sector fund people are tryin! to in#est in these funds$ 2 Potential in#estor are morecomparati#ely other sector fund in last !raph

Q. 10 Investment in Auto Sector Fund

,n est*ent in $ toSector # n)

M 0 0(, 10 18'18

=o,n est*ents

45 81'81

In &uto sector fund DM 7oes not ha#e any in#estor because it:s #ery youn!est &M inthis .ind of sector fund in#estment it: is launched on 19 th Dune =00;' thus most of the

people are not aware of this &M $ While C%I it is one of the older &M in India since19B@$ %hus it is popular in this sort of sector fund with ha#in! @9 different sector fund

scheme that is why people are aware of this sector fund $ hence it is ha#in! 1?$1?>in#estors in 5ubli city$

*n$est ent in ,uto Sector Fund

0

20

40

60

1 2 3

C-panies

/ e

s p o n s e

8/19/2019 Mba 04006013


<. 4 Preferences for seeing the Indi$idual Financial Ad$isor

:re+erences +or seeingthe ,#$

=o'>+ es' %Yes 30 54'54=o 20 36'36

=e tra! 5 9'09

Now ' because of modern technolo!y and ad#ancement in I% the e#ery ad#anta!esin#estment and earnin! money ' and smart tech$ of sa#in!' earrin! and in#estment tech$are made a#ailable to people and also people are interested to ha#e that$ %hat is why insur#ey preferences for seein! Indi$idual Financial Ad$isor is more with +*+*E andsome are ha$ing alread% IFA that is wh% the% are not requiting to see an% IFA.

1 2 3 4S1

30

205

0 0 00

10

20

30

8/19/2019 Mba 04006013


;lossar% on /utual Funds

Account Statement

& physical document' similar to a ban. account statement' representin! the mutual fund

units owned$ Issued to the unit holder e#ery time he she carries out a transaction$

Annual Report

Cnabrid!ed financial results that comprise historical per unit statistics and complete

portfolio of schemes of a mutual fund for a certain period$ It is sent to unit holders once

in a year$

Appreciation

&n increase in an in#estment:s #alue$

Asset Allocation

%he process of di#ersifyin! in#estments amon! different types of assets li.e stoc.s'

bonds and cash in order to optimize ris. return tradeoff based on a person:s financial

situation and !oals$

Asset 5lass

7ifferent types of in#estments such as stoc.s' bonds' real estate and cash$

Asset /anagement 5ompan%

& firm that in#ests the pooled funds of retail in#estors in securities in line with the stated

in#estment ob"ecti#es$ 4or a fee' the in#estment company pro#ides more di#ersification'

li uidity' and professional mana!ement ser#ice than is normally a#ailable to indi#idual

in#estors$

8/19/2019 Mba 04006013


Asset>=ac3ed Securit%

& debt instrument bac.ed by loan paper or accounts recei#able from ban.s' companies or

other pro#iders of credit$

Assets

&n item of #alue owned by an indi#idual or an or!anization$ It could be stoc.s' cash'

house or a car$

Automatic In$estment Plan

Periodic in#estment of a fi ed amount by a unit holder' either directly from his ban.

account or by issuin! post-dated che ues' in his mutual fund account$ It allows the

in#estor to benefit from rupee cost a#era!in!$

Automatic Githdrawal Plan

&llows an in#estor to recei#e periodic payments of fi ed amount or units from his

in#estment in a mutual fund scheme$ (etirees who want a re!ular income supplement

often choose this$

A$erage Portfolio /aturit%

%he a#era!e maturity of all the bonds in a bond fund:s portfolio$

=ac3>"ndM Redemption 8oad

8ne of two possible sales char!e imposed by funds that char!e fees$ (edemption load is a

char!e an in#estor pays when units are redeemed or sold bac. to the fund$ It sometimes

depends on how lon! the in#estment is held -- !enerally the lon!er the time period' the

smaller the char!e$

8/19/2019 Mba 04006013


=alanced Scheme

& mutual fund scheme with an in#estment ob"ecti#e of both lon!-term !rowth and

Income' throu!h in#estment in stoc.s and bonds$ %ypically' the stoc.-bond ratio ran!es

around B0>-@0> in an effort to obtain the hi!hest returns consistent with a low ris.

strate!y$

=asis Point =P!

%he smallest measure used in uotin! yields on fi ed income securities$ 8ne basis point

is one percent of one percent' or 0$01>$

=ear /ar3et

& prolon!ed period of fallin! securities prices in a stoc. mar.et$

=enchmar3

& standard used for comparison$ Csually to pro#ide a point of reference for e#aluatin! a

fundGs performance$ %he common benchmar.s for e uity-oriented funds are the 3* =00

inde or the 3* *ense $

=eta

& measure of a fund:s #olatility in relation to the stoc. mar.et' as measured by a stated

inde $ 3y definition' the beta of the stated inde is 1H a fund with a hi!her beta has been

more #olatile than the mar.et' and a fund with a lower beta has been less #olatile than the

mar.et$ 3ased on past historical records' a beta hi!her than 1$0 indicates that when the

mar.et rises' the stoc. will rise to a !reater e tent than that of the mar.etH li.ewise' when

the mar.et falls' the stoc. will fall to a !reater e tent$ & beta lower than 1$0 indicates that

the stoc. will usually chan!e to a lesser e tent than that of the mar.et$ %he hi!her the

beta' the !reater the in#estment ris.s$

8/19/2019 Mba 04006013


=lue chip

*toc. of a nationally .nown company that has a lon! record of profit' !rowth' and

di#idend payment' and a reputation for uality mana!ement' products' and ser#ices$

=ond

& debt security' or an I8C' issued by a company or !o#ernment a!ency$ & bond in#estor

lends money to the issuer and' in e chan!e' the issuer promises to repay the loan amount

on a specified maturity dateH the issuer usually pays the bondholder periodic interest

payments o#er the period of the loan$

=ond Scheme

& scheme that in#ests primarily in bonds with the !eneral emphasis on income o#er

!rowth$

=ottom> p

&n in#estment strate!y that first see.s indi#idual companies with attracti#e in#estment

potential' then considers the economic and industry trends affectin! those companies$

=ull /ar3et

& prolon!ed rise in the price of stoc.s' bonds or commodities characterized by hi!h

tradin! #olumes$

=usiness -a%

& 3usiness 7ay is any day other than a *aturday' a *unday or a day on which ban.s are

not re uired or obli!ated by law or e ecuti#e order to remain closed includin! the

occasions when the functionin! of the 3an.s (3I is affected due to a stri.e call made by

a (eco!nized Cnion Mana!ement at any part of the country$

8/19/2019 Mba 04006013


5all mone%

Money' which is loaned in the call mar.et' which can be demanded for repayment on call'

which basically means immediately$ %he term call money is also .nown as money at

short notice as it is repayable in =@ hours$ It is also traded in the money mar.et$

5all Ris3

%he ris. that bonds will be redeemed 2or LcalledL before maturity$ %his possibility

increases durin! periods of fallin! interest rates$

5apital Appreciation

&n increase in the #alue of an in#estment' measured by the increase in a fund unitGs #alue

from the time of purchase to the time of redemption$

5apital ;ain

%he amount by which an in#estment:s sellin! price e ceeds its purchase price$

5apital /ar3et

& mar.et where debt or e uity securities are traded$

5ertificate of -eposit 5-!

*hort-term debt instrument issued by scheduled commercial ban.s e cludin! re!ional

rural ban.s$ %hey are unsecured instruments that mature between three months to one

year$

5ompounded Annuali6ed ;rowth Return 5A;R!

When you deposit money in a ban. it earns interest$ When that interest also be!ins to

earn interest the result is compound interest$ ompoundin! occurs if bond income or

8/19/2019 Mba 04006013


di#idends from stoc.s or mutual funds are rein#ested$ 3ecause of compoundin! the

money has potential to !row much faster$

5ontingent -eferred Sales 5harge 5-S5!

& type of bac.-end sales load char!ed when shares are redeemed within a specific period

followin! their purchase$ Csually assessed on a slidin! scale' these char!es reduce' the

lon!er the units are held$

5losed>"nd Scheme

& mutual fund scheme that offers a limited number of units which ha#e a loc.-in period'

usually of three to fi#e years$ /** schemes are closed-ended schemes$ %he units of

closed-end funds are often listed on one of the ma"or stoc. e chan!es and traded li.e

securities at prices which may be hi!her or lower than its net asset #alue

5ommercial Paper

7ebt instruments issued by corporations to meet their short-term financin! needs$ *uch

instruments are unsecured and ha#e maturities ran!in! from 1; to AB; days$

5ommission

& fee char!ed by a bro.er or distributor for his her ser#ice in facilitatin! a transaction$

5ompound Interest

Interest earned not only on the initially in#ested principal but also on accumulated

interest durin! the period$

5onsumer Price Inde#

8/19/2019 Mba 04006013


%he inde compiled by a !o#ernmental a!ency which follows the cost of li#in! by

followin! the chan!es in price of basic !oods and ser#ices o#er time$ %his inde

measures inflation$

5on$ertible securit%

orporate security 2usually preferred stoc. or bond that is e chan!eable for another

form of security 2usually common stoc. at a predetermined price$

5oupon

Interest rate on a debt security that the issuer promises to pay to the holder until maturity$

Csually e pressed as a percenta!e of the face #alue of the security$

5redit Rating

& measure of a bond issuerGs creditworthiness or the ability to repay the loan as rated by

an independent ratin! a!ency' such as (I*I/' I (& and &( $

5redit Ris3

%he possibility that a bond issuer will default' and fail to repay principal or interest as

promised$ &lso .nown as Ldefault ris.$L

5umulati$e <uantitati$e -iscount 5<-!

umulati#e uantitati#e discount 2 7 is discount on sales load to in#estors on

increasin! purchase of units$

5umulati$e total return

Csually calculated in the same manner as standardized a#era!e annual total return' e cept

that these fi!ures represent the total chan!e in #alue of an in#estment o#er the stated

periods and do not reflect any sales char!es

8/19/2019 Mba 04006013


5urrent assets

&ssets that can be con#erted to cash within a year$

5urrent liabilities

/iabilities that must be paid within a year$

5urrenc% Ris3

%he possibility that fluctuatin! currency e chan!e rates will affect the rupee #alue of an

in#estment$

5ustodian

%he or!anization 2usually a ban. that .eeps and safe!uards the custody of securities and

other assets of a fund$

5%clical stoc3s

*toc.s which rise and fall in price with the state of the economy' in such industries as

construction' automobile' en!ineerin! or those affected by the international economy

such as shippin!' a#iation' and tourism$ yclical stoc.s are also stoc.s which are affected

by the natural en#ironment such as fertilizers and tea$ amples of non-cyclical stoc.s

would be dru!s' insurance' basic foodstuffs and many other consumer products$

-ebentures

Instruments of debt' usually unsecured$ %hey are also usually credit rated$

-ebt fundsM securities

8/19/2019 Mba 04006013


& !eneral term for any security representin! money loaned that must be repaid to the

lender at a future date$ 3onds'%-notes' %-bills and money mar.et instruments are debt

securities' but they #ary in maturities$

-efault

& term that denotes the failure to pay the principal or interest on a financial obli!ation

2such as a bond $

-eri$ati$e

4inancial instrument whose #alue is based on the #alue of another underlyin! security$

-epreciation

& decline in an in#estmentGs #alue$

-iscount

(efers to the sellin! price of a bond when it:s price is below its maturity #alue$

-istribution

%he payment of di#idends to unit holders by a mutual fund$

-i$ersification

%he strate!y of spreadin! in#estments amon! different securities to reduce ris.$ 3y

nature' mutual funds are a di#ersified in#estment$

-i$idend

When companies pay part of their profits to the shareholders those profits are called

di#idends$ & mutual fund:s di#idend is money paid to shareholders from in#estment

income the fund has earned$ %he amount of each share:s di#idend depends on how well

the company does$

8/19/2019 Mba 04006013


-i$idend Rein$estment

& unit holder ser#ice that allows di#idend distributions to be rein#ested automatically to

purchase more fund units$

-ow 7ones Industrial A$erage

%he oldest and most uoted measure of stoc. mar.et price mo#ements' an indicator

showin! how the mar.et is !oin!$ It is a price-wei!hted a#era!e of A0 acti#ely traded

blue chip stoc.s$

"arnings per share!

%he net income for a company durin! a specific period$ It is calculated by subtractin! the

cost of sales' operatin! e penses and ta es from re#enues' for a specific time period$ It is

the reason corporations e ist and often the sin!le most important determinant of a stoc.:s

price$

"quit% Schemes

& scheme that in#ests primarily in stoc.s while see.in! to pro#ide relati#ely hi!h lon!-

term !rowth of capital$

"#>-i$idend -ate

%he date followin! the record date for a scheme$ When a fundGs net asset #alue reduces

by an amount e ual to a di#idend distribution$

"#pense Ratio

& fundGs operatin! e penses' e pressed as a percenta!e of its a#era!e net assets$

Face $alue

%he #alue printed on the face of a stoc.' bond or other financial instrument or document$

8/19/2019 Mba 04006013


Famil% )f Schemes

& set of schemes with different in#estment ob"ecti#es from a sin!le asset mana!ement

company usually allowin! in#estors to switch

their in#estments from one scheme to another at a no char!e or a nominal char!e$

F5NR

& 4ully on#ertible Non-(upee account that can be opened for funds comin! in from

abroad or from local funds$ %he funds in the account are held in a forei!n currency$

Fi#ed assets

& lon!-term asset that will not be con#erted to cash within a year such as a house or a

plot of land$

Fi#ed deposit

&n in#estment instrument where you in#est a fi ed amount of money for a fi ed period

of time at a fi ed rate of interest$

Fi#ed Income Securit%

& security that pays a fi ed rate of interest such as a bond but do not offer an in#estor

much potential for !rowth$

Front>"nd 8oad

& one-time char!e that an in#estor pays at the time of buyin! units of a scheme$

Fi#ed rate

& loan in which the interest rates do not chan!e durin! the entire term of the loan$

Floating rate

8/19/2019 Mba 04006013


&n interest rate which is periodically ad"usted' usually based on a standard mar.et rate

outside the control of the institution$ %hese rates often ha#e a specified floor and ceilin!'

which limit the floatin! rate$ %he opposite of ha#in! a floatin! rate is ha#in! a fi ed rate$

Floor

& lower limit for a price' interest rate' or other numerical factor$ %he price at which a stop

order is acti#ated 2an order to buy or sell at the mar.et when a definite price is reached

either abo#e 2for a buy or below 2for a sell the price that pre#ailed when the order was

!i#en $ &lso the area of a stoc. e chan!e where acti#e tradin! occurs$

Full% In$ested

%he in#estment of nearly all a#ailable assets in securities as per the stated ob"ecti#e of the

scheme and ha#in! no cash or cash e ui#alents in one:s portfolio$

Fund /anager

%he indi#idual responsible for ma.in! portfolio decisions for a mutual fund$

;o$ernment securities

*ecurities that are sold to the public by the !o#ernment' for e ample' bonds$

;rowth

&n in#estment ob"ecti#e of e uity funds which see. to pro#ide capital !ains' rather than

di#idend income$

;rowth funds

Mutual funds with a primary in#estment ob"ecti#e of lon!-term !rowth of capital$ Cnli.e

income' which is somewhat re!ular and consistent in most cases' !rowth is much less

certain$ rowth in#estments' howe#er' usually outpace the returns on income in#estments

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o#er the lon!-term 2fi#e to ten years' or lon!er $ It in#ests mainly in common stoc.s with

si!nificant !rowth potential$

;rowth In$esting

&n in#estment style that see.s stoc.s with the belief they will !o up in price' re!ardless

of the stoc.Gs current price relati#e to its underlyin! #alue$ 8ften discussed in contrast to

#alue in#estin!

Holdings

%he possessions or securities in an in#estors portfolio$

Historical ield

Kield pro#ided by a scheme' typically a money mar.et fund' o#er a specific time period$

Inception -ate

%he date when a scheme:s initial offerin! period ends and the scheme:s formation ta.es

place$

Income M-ebt Scheme

& scheme that in#ests primarily in fi ed income securities$ %ypically' income schemes

see. to pro#ide current income rather than !rowth of capital$

Inde#

& benchmar. a!ainst which the performance of a scheme is measured$ Csually' e uity

funds use 3* A0 or 3* =00 as the benchmar.$ 4or fi ed-income funds it is a bond

inde $ %he benchmar. inde must consist of securities similar to which the scheme

in#ests in$

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Inde# Fund

& fund that tries to mirror the performance of an inde by in#estin! in securities ma.in!

up that inde $ 2note6 it is not possible for in#estors to actually in#est in the actual inde '

such as the 3* A0 $

Inflation Ris3

%he possibility that the #alue of assets or income will be eroded by inflation affectin! the

purchasin! power of a currency$ 8ften mentioned in relation to fi ed income funds as

while they may minimise the possibility of losin! principal' they e pose an in#estor to

inflation ris.$

Initial Public )ffer IP)!

%he first sale of units of a scheme by a mutual fund to the public$ Csually' for a fi ed

time period$

Interest rate ris3

%he ris. that a security:s #alue will chan!e due to an increase or decrease in interest rates$

& bond:s price will always drop as interest rates rise and when interest rates fall' a bond:s

price will rise$

In$estment ;rade

5i!h uality bonds that are rated &&& or hi!her by a ratin! a!ency$ In#estment !rade

bonds are considered safe$ 5owe#er' the hi!her the bondGs ratin!' the lower the interest it

offers$

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In$estment )b'ecti$e

& scheme:s in#estment !oal$ *ay' a !rowth scheme typically has an in#estment ob"ecti#e

of pro#idin! lon!-term !rowth of capital$

8oad

& one-time sales char!e paid by an in#estor while buyin! or sellin! units of a scheme$

%ypically' there are two types of loads front-end char!ed at the time of purchase and

bac.-end char!ed at the time of redemption$

8iabilities

%he claims of in#estors who ha#e loaned to a company$ %he debts of a company$

8iquidit%

%he ease with which an in#estment can be con#erted into cash or cash e ui#alents$

Mutual fund units are !enerally considered hi!hly li uid in#estments as they can be sold

on any business day at their current net asset #alue

8isted

*ecurities which are traded and listed in any of the appro#ed *toc. chan!es of India

will be treated as listed security$

8oc3>in period

& period of time durin! which the in#estor is restricted from sellin! a particular

in#estment$

/anagement Fee

%he amount a scheme pays to its asset mana!ement company for its ser#ices$ %ypically' a

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certain percenta!e of assets under mana!ement$ & fundGs mana!ement fee is listed in its

offer document$

/ar3et ris3

%he potential loss that is possible as a result of short-term #olatility of the stoc. mar.et'

indicated by beta$ 8wnin! mutual fund shields an in#estor to some mar.et ris. that a

stoc.holder may be #ulnerable to because of their di#ersification$

/ar3et Timing

&ttemptin! to time the purchase and sale of securities or mutual fund units to coincide

with mar.et conditions$

/aturit% -ate

%he date on which the principal amount of a bond is to be paid in full$

/aturit% $alue

%he amount the issuer a!rees to pay out when the bond reaches it:s maturity date$

/inimum Purchase

%he smallest in#estment amount a scheme will accept to open a new unitholder account$

/one% /ar3et Fund

& fund that in#ests in the short-term' hi!h-!rade securities sold in the money mar.et

includin! !o#ernment securities' treasury bills' certificates of deposit' and commercial

paper$

/utual Fund

&n in#estment company throu!h which an in#estor can pool his money with other

in#estors who ha#e a similar ob"ecti#e$ Professional in#estment mana!ers' then in#est the

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pool in securities which in their "ud!ment will help in#estors achie#e their ob"ecti#e$

Mutual funds offer the benefits of portfolio di#ersification 2which pro#ides !reater safety

and reduced #olatility ' professional mana!ement' li uidity and con#enience$

Net Asset Calue NAC!

%he mar.et #alue of a mutual fund unit$ It is calculated daily by ta.in! the funds total

assets' securities' cash and any accrued earnin!s' deductin! liabilities' and di#idin! the

remainder by the number of units outstandin!$

Net Assets

%he net worth of a fund$

Net profit margin

& measure of a company:s profitability and efficiency calculated by di#idin! a measure

of net profits 2operatin! profit minus depreciation and income ta es by sales$

Net worth

%he #alue found by subtractin! total liabilities from total assets$

No 8oad Fund

& fund that sells its units to in#estors without a sales load char!e$

NR"

& Non-(esident ternal (upee account that N(Is can open with any Indian ban.$ %hey

can use this account for ma.in! in#estments in India on a repairable basis$

NRI

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& Non-(esident Indian who is an Indian citizen or a person of Indian ori!in but who

resides abroad$ N(Is ha#e to follow specific rules when in#estin! in India$

NR)

&n 8rdinary Non-(esident (upee account which can be opened for funds comin! in

from abroad or from local funds$ %he amount in the account is' howe#er' non-repairable$

)ffer -ocument M Prospectus

& le!al document' that describes a mutual fund scheme$ It contains information re uired

by the *ecurities and chan!e 3oard of India e plainin! the offer' includin! the terms'

issuer' ob"ecti#es' historical financial statements' and other information that could help an

indi#idual decide whether the in#estment is appropriate for him$

)ffering price

%he price at which mutual fund shares are offered for sale to the public$ &lso .nown as

offerin! price$ %he public offerin! price represents the net asset #alue plus any applicable

initial sales char!es$

)pen>"nded Scheme

& scheme where in#estors can buy and redeem their units on any business day$ Its units

are not listed on any stoc. e chan!e but are bou!ht from and sold to the mutual fund$

)perating "#penses

%he day-today costs a mutual fund incurs in conductin! business' such as for maintainin!

offices' staff' and e uipment$ %hese e penses are paid from the fundGs assets before any

earnin!s are distributed$

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Performance

& measure of how well a fund is doin!$ %ypically' mutual fund performance measures are

yield 2for di#idends and total return 2which measures di#idends plus chan!es in net asset

#alue $ Increase in the Net &sset Value 2N&V

Portfolio

& collection of securities owned by a mutual fund$ & fundGs portfolio may include a

combination of stoc.s' bonds' and money mar.et securities$

Portfolio /anager

%he indi#idual responsible for mana!in! a mutual fundGs portfolio$

Portfolio Turno$er

%he rate of tradin! acti#ity in a fundGs portfolio of in#estments$ In other words' how often

securities are bou!ht and sold$

Preferred stoc3

& type of capital stoc. whose holders are paid di#idends at a specified rate$ It has

preference o#er common stoc. in the payment of di#idends and the li uidation of assets'

but does not ordinarily carry #otin! ri!hts$ %he benefits of ownin! preferred stoc. are

realized if the company e#er !oes ban.rupt$ If this occurs' preferred stoc. shareholders

recei#e their money first$ eneral 2also .nown as common stoc.holders may not recei#e

any money' if none is remainin! after payin! preferred stoc. holders$

Price>earnings ratio PM"!

8ne of the benchmar.s used by portfolio mana!ers to help them #alue companies$ It is

calculated by di#idin! a company:s share price by its earnin! per share$

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Principal

%he ori!inal amount initially in#ested' e clusi#e of earnin!s$

Promissor% note

& document si!ned by the borrower in which he promises to repay a loan under a!reed-

upon terms$

Public )ffer Price

%he price at which an in#estor can buy units of a mutual fund scheme$ It includes the

current net asset #alue plus any sales load$

Rate of return

(ate of return is calculated by subtractin! the purchase #alue by the present #alue and

then di#idin! it by the purchase #alue$ 4or e uities' we often include di#idends with the

present #alue$

Real Return

%he rate return earned on an in#estment after ad"ustin! for the rate of inflation$

Record -ate

%he date on which a unit holder must officially own a schemeGs units in order to recei#e

declared di#idend$

Redeem

%o cash in units by sellin! them bac. to the mutual fund$

Redemption Price

%he price at which a mutual fund:s units are redeemed' or bou!ht bac.' by the fund$ It is

usually the current net asset #alue per unit less e it load if any$

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Reinstatement Pri$ilege

& facility which allows unit holders who ha#e redeemed units' and then wish to rein#est'

to rein#est without payin! the sales load$ %here is !enerally a A0-day time limit for this

ser#ice$

Repatriable

%he return from abroad of the financial assets of an or!anization or indi#idual' and the

con#ersion of forei!n currency to (upees$

Ris3

In !eneral' ris. is the possibility of sufferin! loss$ %here are many types of ris.' such as

credit ris. ' principal ris.' inflation ris.' interest rate ris. and in#estment ris.$ If you are

prepared to accept !reater ris.' you ha#e the chance of earnin! hi!her returns or profits

on your money$ /ow-ris. in#estments' while !enerally safer' do not usually produce a

hi!h return' hence the loss of potential !ain$

Ris3M reward trade>off

%he compromise made between hi!h- and low-ris. in#estments$ 5i!h-ris. in#estments

!enerally !enerate more earnin!s' while low-ris. ones !enerate a lower rate of return$

Ris3 tolerance

%he willin!ness of an in#estor to tolerate the ris. of losin! money for the potential to

ma.e money$

Rollo$er

& mo#ement of funds from one in#estment to another' often similar' in#estment$

%ypically used when securities are maturin!$

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Rupee 5ost A$eraging

&n in#estment strate!y that in#ol#es in#estin! a fi ed amount in a scheme at re!ular

inter#als - say' monthly or uarterly$ &s a result' more fund units are bou!ht when prices

are low than at hi!h prices' usually brin!in! down an in#estorGs a#era!e cost per share

o#er time$

Sales charge

& char!e added on to the price of a mutual fund when you buy it$

Sector Fund

& fund that in#ests primarily in securities of companies en!a!ed in a specific industry$

*ector funds entail more ris.' but may offer !reater potential returns than funds that

di#ersify their portfolios$

Securities

%he holdin!s of a mutual fund' such as stoc.s or bonds$ *toc.s are securities representin!

ownership shares$ 3onds are securities representin! a contractual debt obli!ation of the

issuer to repay the holder' with interest$

Settlement -ate

%he date by which a transaction must be settled' that is' to ma.e the payment of funds

and the deli#ery of securities$

Standard -e$iation

& measure of the de!ree to which a fundGs return #aries from the a#era!e of the scheme:s

own return$

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Stoc3 Fund

& fund that in#ests primarily in stoc.s$

Switching

%he mo#ement of in#estment from one scheme to another usually within the family of

schemes$ &n in#estor may switch schemes because of mar.et conditions$

S%stematic In$estment Plan SIP!

&llows an in#estor to periodically in#est in units by issuin! post-dated che ues$ It allows

the in#estor to benefit from rupee cost a#era!in!$

S%stematic Githdrawal Plan SGP!

Permits the in#estor to recei#e re!ular payments of a fi ed amount or capital appreciation

from his in#estment in a mutual fund scheme on a periodic basis$ (etirees in need of a

re!ular income often opt for this$

Top -own

&n in#estment method that first defines ma"or economic and industry trends' and then

identifies specific companies that are li.ely to benefit from those trends$

Total Return

& fundGs performance that ta.es into account6 income from di#idends and unit price

appreciation depreciation o#er a time period$

Treasur% bills T>bills!

& short-term security with a maturity of one year or less$

Treasur% bonds T>bonds!

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& lon!-term debt instruments with a maturity of 10 years or lon!er$

Treasur% notes T>notes!

& certificate representin! an intermediate-term loan to the !o#ernment with a maturity

between two to ten years$

Transaction costs

%he costs incurred by the buyin! and sellin! of securities' includin! bro.er commissions

and the difference between dealer buyin! and sellin! price$

Transfer

%he process of chan!in! ownership of a unit holder account within the same scheme$

Transfer Agent

& firm employed by a mutual fund to maintain unit holder records' includin! purchases'

sales' and account balances$

Treasur% =ill T>bill!

& debt security issued by the Indian !o#ernment' ha#in! a maturity of less than a year$

Turno$er Rate

3ased on the corpus' it is the number of times at which the fund buys and sells securities

each year$

nit holder

&n in#estor' ownin! units of a mutual fund$

nlisted

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*ecurities which are not traded or listed in any of the appro#ed *toc. chan!es of India

will be treated as unlisted security$

nreali6ed ;ain )r 8oss

Increase or decrease in the prices of securities held by the fund$

Calue In$esting

%he in#estment approach which fa#ours buyin! under priced stoc.s that ha#e the

potential to perform well and increase in price$

Colatilit%

%he rate by which the price of a security fluctuates in chan!in! mar.et conditions$

ear To -ate T-!

& period in a calendar year startin! Danuary 1 of that year and endin! on that date$

ield

%he annual rate of return on an in#estment usually e pressed as a percenta!e$

ield 5ur$e

& !raph depictin! yield #is- -#is maturity$ If short-term rates are lower than lon!-term

rates' it is a positi#e yield cur#e' if short-term rates are hi!her' it is a ne!ati#e or in#erted

yield cur#e$ If there is isn:t much difference' it is a flat yield cur#e$

ield To /aturit% T/!

%he yield earned by a bond if held to maturity

Oero 5oupon =ond

& bond issued at a discount' which accrues interest that is paid in full at maturity$ %he

maturity #alue an in#estor recei#es is e ual to the principal in#ested plus interest earned

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compounded semi-annually at the ori!inal rate to maturity$ Interest income from zero-

coupon bonds is sub"ect to ta es annually e#en thou!h no payments will be made$

&+! 5onclusion:.

2 onclusion is drown on the basic the 2raphic -nalysis3 ,ral $nter"iew 3 Direct

$nter"iew 4 0uestionnaire 4 5ypothesis test 6(hi#S7uare '.

/ost of the Auto sector people are not aware of the mutual funds and sectorfunds Those who are 3nowing this and ha$e in$ested in this 3ind of in$estment

instruments. Some of them ha$e en'o%ed nice profit because of 3nowledge aboutin$estment. Those are happ% with this option and those who has in$ested in thisinstrument but because of lac3 of 3nowledge these ha$e suffered with losses. Those

ner$ous with this option. =ut after ha$ing e#plained about this instrument thema'orit% of the people are read% to 3now about mutual funds and li3el% to be read%to in$est in this instrument. it can be said that the wor3 of pro'ect will be completed

when people will come on their own and in$esting in this instrument with full3nowledge.

2%he test of hypothesis is calculated after the conclusion part

Anal%sis through H%pothesis Test 5hi>square Test!

<. Source of Income :

H 4 : Income is equall% distributed in all the sources

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H : /ore 5lients ha$e business as source of income.

8e$el of significance is + E

n +E

n> * d.f . (.&0

Test of H%pothesis

Q& cal oi>"i! &M"i

Source )i "i )i>"i! )i>"i! &M"i

Salary *8 ** * 9.9:=usiness *& 1, 0 .,(

Profession 44 1.4*

In$estment ( * .(,

)thers * *1 *.*+

Total & ++ 4 .(

# & 5al 4 .(+

# & Tab (.&0

i.e re'ect H 4

Inference ma'or source of income is =usiness.

Anal%sis through H%pothesis Test 5hi>square Test!

<. Source of Income :

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H 4 : There is equal proportion in all in$estment instruments

H : There is unequal proportion in all in$estment instruments

8e$el of significance is + E

n +E

n> * d.f . (.&0

Test of H%pothesis

Q& cal oi>"i! &M"i

In$estment Instruments )i "i )i>"i! )i>"i! &M"i

$nsurance 1; ** <8: ==.8< /utual Funds 0 1 .0 0

Stoc3s &4 0 .(,

R=I =onds & 0 .(,

Real "state 0 1 .0 0

Total , ++ +0.,&

# & 5al +0.,&

# & Tab (.&0

Inference :

Since # & 5al # & Tab

H 4 Is re'ected

There is unequal proportion in all in$estment instruments. And ma'or in$estment is in

insurance.

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Documents

Mba 04006013