Bajaj Capital Innovative Marketing Strategies Used by Bajaj Capital Towards Mutual Funds

PUNJAB TECHNICAL UNIVERSITY, JALANDHAR
PROJECT REPORT ON
INNOVATIVE STRATEGIES ADOPTED

BY BAJAJ CAPITAL TOWARDS
MUTUAL FUNDS
Undertaken at
BAJAJ CAPITAL LTD.

Submitted in Partial Fulfillment of the Requirement for the Award of degree of
MASTER OF BUSINESS ADMINISTRATION
September, 2013
Submitted By
Subhash Chand Kumawat
Roll No-11208500004
Batch July 2011-13
Under the Guidance of

Ashish Kumar Sharma
Finance Manager
B-II/66, Sher Shah Suri Marg, MCIE, Mathura Road, Badarpur, New Delhi
LC -850
DECLARATION
I, Subhash Chand Kumawat, a bonafide student of MBA at IILM Business School,
New Delhi, hereby declare that I have undergone the Internship on Innovative
Strategies Adopted By Bajaj Capital Towards Mutual Funds under the guidance
of Mr. Ashish Kumar Sharma and from 1st Nov. 2012 to 15th Dec. 2012.
I also declare that the present project report is based on the above internship and is my
original work. The content of this project report has not been submitted to any other
university or institute either in part or in full for the award of any degree, diploma or
fellowship.
Further, I assign the right to the College, subject to the permission from the
organization concerned, use the information and contents of this project to develop
cases, caselets, case leads, and papers for publication and/or for use in teaching.
Place: New Delhi
Date:
Roll No-11208500004
ACKNOWLEDGEMENT
I take this opportunity to express my gratitude to Bajaj Capital Ltd. for providing me
with an opportunity to do my training at their esteemed organization.
I am thankful to all the companies with which I communicated with reference to this
project. I am thankful to all the staff members of Bajaj Capital Ltd. and all others
who gave me their valuable guidance, encouragement, and support in completing this
project.
TABLE OF CONTENTS
S. No
TOPIC
CHAPTER 1 INTRODUCTION
Page. No
6
1.1. Overview of Industry as a whole

1.2. Profile of the Organization
Origin
Recent Achievements
Mission & Vision
Products
Organization Structure
1.3 Introduction to the Topic/Title/Problem Studied
CHAPTER 2 - OBJECTIVE & METHODOLOGY

2.1. Objectives of the Study
2.2. Research Methodology
Research Design
Sources of data
Sampling Technique
Sample size, if any
Methods of data collection
Tools and techniques of analysis
2.3. Limitations of the Study
51
CHAPTER 3 - DATA ANALYSIS & INTERPRETATION
57
CHAPTER 4 - FINDINGS
79
CHAPTER 5 - RECOMMENDATIONS
82
ANNEXURES
87
Questionnaire/s
Tables/Graphs/ Annual Reports of Company/Industry etc.
Any other relevant documents
BIBLIOGRAPHY/REFERENCES
93
CHAPTER-1
INTRODUCTION
INTRODUCTION
1.1. Overview of Industry as a whole
Welcome to India's leading Financial Planning and Investment Advisory
Company.
Where dreams inspire us to excel. They ignite hope and kindle in us the passion to
stretch our limits. At Bajaj Capital we believe that nothing can or should stop us from
dreaming. And financial constraints should be the last thing to stop anyone from
realizing them.
For over four decades now, Bajaj Capital has been helping people to realize their
aspirations by making their wealth grow, and planning their financial lives. Bajaj
Capital offers advice on Investments, Insurance, Tax Saving, Retirement Planning,
Future Planning for Children and more. As India's largest distributors of financial
products, Bajaj Capital brings for you a wide range of investment options - the entire
gamut of financial instruments and investment products of almost all major public and
private companies and the Govt. sector. These services and products are delivered
through Bajaj Capital's network of over 200 branches located all over the country. The
company is a SEBI-approved Category I Merchant Banker catering to Individual
Investors, Corporates, HNI and NRI clients. The commitment of the company to
create wealth for its clients with independent, need-based and research based advice
has been recognized by 8, 00,000 individual investors and over 3000 institutional
clients.
In a world full of 'ready-to-give-free-of-cost-advice' people it is necessary that you
choose the one that works in your interest. You need help from a professional
investment advisor, who sees investments from your perspective.
That's what we
do.
WE CREATE WEALTH:
45 years of experience as Investment Advisors and Financial Planners
We give you impartial, research-based and need-based advice
We offer a wide range of financial products and services
Personalized wealth management advice: We offer investment guidance and
portfolio planning.
Prompt, courteous service, 24 x 7 online accessibility- www.bajajcapital.com
Countrywide network of over 200 branches
Strong team of qualified and experienced professionals including CAs, MBAs,
MBEs, CFPs, CSs, Insurance Experts, Legal Experts and others
SEBI-Approved Category I Merchant Bankers
Group Co BCIBL is an IRDA-licensed Direct Insurance Broker
While choosing an advisor, consider the following factors:
YOUR ADVISOR MUST BE AN ORGANISATION:
Your advisor needs to outlive the life of your investments. This is possible only if
your advisor is a company or institution rather than an individual advisor. Also a
company has better resources, research expertise, standardized processes and
qualified staff to render quality advice and services. It is much safer to deal with a
company that has a reputation for honesty, integrity, transparency and ethical
dealings than with an individual.
YOUR ADVISOR MUST BE EXPERINECED & REPUTED:
Find out the background and certifications of the firm you want to appoint as your
investment advisor. The more the experience of your advisor, the better it is. Find
out about the advisor's clientele. This will give you a better idea of what to expect
as a client and learning about their security guarantees will give you confidence
that you're making the right choice.
MUST HAVE AN ALL-INDIA PRESENCE:
In today's dynamic world, you never know which place or city you might be
located at, in the future; an advisor with a national footprint will ensure that you
do not miss his advice and service, irrespective of your location.
KNOW THE PRODUCTS AND SERVICES:

Decide what you need. Then choose invest advisory firm that caters to your needs
and matches your expectations. Know the breadth and depth of the investment
firm's products, the financial services it offers and the planning process it involves
to make your wealth grow.
MUST HAVE A RESEARCH DEPARTMENT:
This ensures that you get quality advice on time and are update about the market
trends and changes so that accordingly you can review your portfolio.
MUST HAVE AN ONLINE INVESTMENT PLATFORM:
Tech savvy investors will find this attribute very attractive as they will be able to
keep track of and manage their investments at the click of a mouse from the
comfort of their office or home, at any point of time.
10
1.2 COMPANY PROFILE OF THE BAJAJ CAPITAL
The Bajaj Group came into existence during the turmoil and the heady euphoria of
India's freedom struggle. Jamnalal Bajaj, founder of the Bajaj Group, was a
confidante and disciple of Mahatma Gandhi, and was deeply involved in the effort for
freedom. The integrity, dedication, resourcefulness and determination to succeed
which are characteristic of the Company today, are often traced back to its birth
during those long days of relentless devotion to a common cause.
1.2.1 Origin:
Today, Rahul Bajaj is the Head of the Group. He has been the Chief Executive Officer
of Bajaj since 1968 and is recognised as one of the most outstanding business leaders
in India. As dynamic and ambitious as his illustrious predecessors, he has been
recognised for his achievements at various national and international foray.
Bajaj is currently Indias largest two and three- wheeler manufacturer and one of the
biggest in the world. They have long left behind their annual turnover of Rs. 70
million (1968), to currently register an impressive figure of Rs. 40 billion.
Welcome to India's leading Financial Planning and Investment Advisory Company.

Where dreams inspire us to excel. They ignite hope and kindle in us the passion to
stretch our limits. At Bajaj Capital we believe that nothing can or should stop us from
dreaming. And financial constraints should be the last thing to stop anyone from
realizing them.
11
For over four decades now, Bajaj Capital has been helping people to realize their
aspirations by making their wealth grow, and planning their financial lives. Bajaj
Capital offers advice on Investments, Insurance, Tax Saving, Retirement Planning,
Future Planning for Children and more. As India's largest distributors of financial
products, Bajaj Capital brings for you a wide range of investment options - the entire
gamut of financial instruments and investment products of almost all major public and
private companies and the Govt. sector. These services and products are delivered
through Bajaj Capital's network of over 200 branches located all over the country. The
company is a SEBI-approved Category I Merchant Banker catering to Individual
Investors, Corporates, HNI and NRI clients. The commitment of the company to
create wealth for its clients with independent, need-based and research based advice
has been recognized by 8, 00,000 individual investors and over 3000 institutional
clients.
Chairman's Message
Dear Visitor,
Welcome to the cyber home of Bajaj Capital. Here, you can
learn how to turn your dreams into reality by investing wisely.
For well over four decades now, we at Bajaj Capital have
been helping millions of investors reach their financial goals, and live fuller, richer
and more satisfying lives. Over these years, the Bajaj Capital family has seen
tremendous growth. Now, with our online venture, we are all set to make our presence
felt even beyond the geographical boundaries.
12
We remain committed to offer the best of our services, skills and expertise to all our
valued investor clients and visitors. Seen from this perspective, our online venture is
yet another effort at reaching out to you.
I hope that you will find this website useful. I welcome your suggestions to improve
this site, and make it more useful to investors.
K.K. Bajaj
Chairman,
Bajaj Capital Ltd.
Bajaj Capital is among the pioneers of the investment advisory and financial planning
industry in India. For over four decades, the Company has been serving Indian
investors, and giving shape to the vision of its founder-chairman, Mr K.K. Bajaj.
Our Logo
Our logo depicts Lord Ganesha who is the source of all our values and ethics in
business.
The large ears of Lord Ganesha remind us to hear more. We listen carefully to
our clients to understand their needs.
The weight of the trunk on the mouth symbolises silence. We work silently,
without blowing our own trumpet.
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The long trunk symbolises continuous exploration. We explore all avenues to

provide the best investment opportunities for our clients.
The heavy posture of Ganesha symbolises stability. We help our clients to

attain financial stability through wise investments.
Lord Ganesha is known as the remover of obstacles and bestower of

prosperity. We emulate His example and try our best to help our clients attain
prosperity by proper financial planning.
Our logo has a yellow background. Yellow is the colour of gold, which
symbolises wealth. According to Vedic lore, it is also the colour associated
with Brihaspati, the guru and counsellor of the Gods. We offer our clients sage
counsel to make their wealth grow.
The letters are in red. Red is the colour rajas symbolising power and
incessant activity. It symbolises our aggressive quest for your well-being and
happiness.
The white streak represents the trunk of Lord Ganesha. White is the colour of
satva guna, and implies our selfless commitment to your life-long happiness.
Locate Branch
GREEN PARK
18, DDA Market, Yusuf Sarai Commercial Centre,
Yusuf Sarai
New Delhi - 110016
Phone : 011-26523166,26863789,41841143
Email : info@bajajcapital.com
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BHIKAJI CAMA PLACE

112,1st Floor,Ansal Chamber-1,
Bhikaji Cama Place
New Delhi - 110066
Phone : 011-26164343,26188644
KALKAJI
N - 10
Kalkaji , New delhi
New Delhi - 110019
Phone : 011-64640919,64736914,26223507
VASANT KUNJ
15, L.G.F. Central Market,
Masoodpur, Vasant Kunj
New Delhi - 110070
Phone: 011-26897632,64640940
Email: info@bajajcapital.com
DEFENCE COLONY
F-1,First Floor,B 87,Defence Colony
New Delhi
New Delhi - 110024
15
Phone: 011-64736930, 64640912, 64640913

RAJENDRA PLACE
9, Ground Floor, Rajendra Bhawan,
Rajendra Place, (Opp. Rachna Cinema)
New Delhi - 110008
Phone : 011- 41538597,25734989,64736940, 64640938
Paschim Vihar
G-8&9, Ground Floor, Bhanot Tower,
A-Block Opp. Jawala Heri Market
New Delhi - 110063
Phone : 011-64736947,64640929
Malviya Nagar
C-50, Shivalik, Main Road,
Malviya Nagar
New Delhi - 110017
Phone: 011-64640923, 64736907
Yusuf Sarai
18, DDA Market, Commercial Complex
16
Yusuf Sarai
New Delhi - 110016
Phone: 011-26523166, 26863789,41841143
REGISTERED HEAD OFFICE

97, Bajaj House
Nehru Place
New Delhi - 110019
Phone: 011-41693000, Call Center: 011-39881010
Contact Us
Registered and Corporate Office
Bajaj Capital Ltd.
Bajaj House, 97, Nehru Place,
New Delhi - 110019
Ph: 011 -41693000,26410315, 26415672, 6418903/04/06
Fax: 011-26476638,66608888
Call Centre: (+91 11)39881010
17
Regional Offices
Northern Region:
Bajaj Capital Ltd.
Bajaj House, 97, Nehru Place,
New Delhi - 110019
Phone: 011 -41693000,26410315, 26415672,
6418903/04/06
Fax: 011-26476638, 66608888
Call Centre: (+91 11)39881010
Southern Region
Bajaj Capital Ltd.
19, Wellington Plaza,
Ground Floor, 90, Anna Salai
Chennai-600002
Phone: 044-23451207,8 044-23451234
Call Center: 044-39881010
Eastern Region
Bajaj Capital Ltd.
507, 5th Floor, 7/1, Lord Sinha Road, Kolkata-700071
18
Phone: 033-22820383, 40034380-82

Call center : 033-39881010
Western Region
Bajaj Capital Ltd.
Unit no. 672, Building No. 6, 7th Floor,
Solitaire Corporate Park, Andheri Kurla Road,
Chakala, Andheri (E),
Mumbai- 400 093
Phone: 022 - 40099999
Call Centre: 022-39881010
Milestones
Bajaj Capital has contributed to the growth of the Indian Capital Market at every step.
In 1965, we were the first to innovate the Companies Fixed
Deposit. Today, we are playing an active role in the growth of
the Indian Mutual Fund industry. We are also working closely
with private insurance companies to deepen India's insurance market. Here is a
glimpse of our journey through the years.
1964: Bajaj Capital sets up its first Investment Centre in New Delhi to guide
individual investors on where, when and how to invest. India's first Mutual
Fund, Unit Trust of India (UTI) is incorporated in the same year.
1965: Bajaj Capital is incorporated as a Company. In the same year, the company
introduces an innovative financial instrument the Company Fixed Deposit.
EIL Ltd. (Oberoi Hotels, then known as Associated Hotels of India Ltd.)
19
becomes the first company to raise resources through Company Fixed

Deposits.
1966: Bajaj Capital expands its product range to include all UTI schemes and
Government saving schemes in addition to Company Fixed Deposits.
1969: Bajaj Capital manages its first Equity issue (through an associate company) of
Grauer & Wells India Ltd.; right from drafting the prospectus to marketing the
issue.
1975: Bajaj Capital starts offering 'need-based' investment advice to investors, which
would later be known as 'Financial Planning' in the investment world.
1981: SAIL becomes the first government company to accept deposits, followed by
IOC, BHEL, BPCL, HPCL and others; thus opening the floodgates for growth
of retail investment market in India. Bajaj Capital plays an active role in all
the schemes as 'Principal Brokers'
1986: Public Sector Undertakings (PSUs) begin making public issues of bonds
MTNL, NHPC, IRFC offer a series of Bond Issues. Bajaj Capital is among the
top ranks of resource mobilisers.
1987: SBI leads the launch of Public Sector Mutual Funds in India. Bajaj Capital
plays a significant role in fund mobilisation for all these players.
1991: SBI issues India Development Bonds for NRIs. Bajaj Capital becomes the top
mobiliser with collections of over US $20 million.
1993: The first private sector Mutual Fund Kothari Pioneer is launched, followed
by Birla and Alliance in the following years. Bajaj Capital plays an active role
and is ranked among the top mobilisers for all these schemes.
20
1995: IDBI and ICICI begin issuing their series of Bonds for retail investors. Bajaj
Capital is the co-manager in all these offerings and consistently ranks among
the top five mobilisers on an all-India basis.
1997: Private sector players lead the revival of Mutual Funds in India through Openended Debt schemes. Bajaj Capital consolidates its position as India's largest
retail distributor of Mutual Funds.
1999: Bajaj Capital begins marketing Life and General Insurance products of LIC
and GIC (through associate firms) in anticipation of opening up of the
Insurance Sector. Bajaj Capital achieves the milestone of becoming the top
'Pension Scheme' seller in India and launches marketing of GIC's Health
Insurance schemes.
2000: Bajaj Capital implements its vision of being a 'One-stop Financial
Supermarket.' The Company offers all kinds of financial products, including
the entire range of investment and insurance products through its Investment
Centres. Bajaj Capital offers 'full-service merchant banking' including
structuring, management and marketing of Capital issues. Bajaj Capital
reinvents 'Financial Planning' in its international sense and upgrades its entire
team of Investment Experts into Financial Planners.
2002: The company focuses on creating investor awareness for Financial Planning
and need-based investing. To achieve this goal, the company introduced the
International College of Financial Planning. The graduates of this institute
become Certified Financial Planners (CFPs), a coveted professional
qualification.
21
2004: Bajaj
Capital
obtains
the
All
India
Insurance
Broking
Licence.
Simultaneously, a series of wealth creation seminars are launched all over the
country, making Bajaj Capital a household name.
2005: Bajaj Capital launches 360 Financial Planning, a software-based programme
aimed at encouraging scientific and holistic investing.
2007: Bajaj Capital launches Stock Broking and Depository(Demat) Services.
2010: Bajaj Capital launches Just Trade, an online Platform for investing in Equities,
Mutual Funds, IPO's
1.2.2: Achievements
Bajaj Finance Ltd is one of the few NBFCs in the country to be awarded a rating of
FAAA/Stable for fixed deposits, indicating a very strong degree of safety with regard
to timely payment of interest and principal on the instrument by the Credit Rating and
Information Services India Limited (CRISIL).
In addition to this, we are also rated high in the following programs:
P1+ rating from CRISIL for Short-Term Debt Programme
AA+/Stable from CRISIL and LAA+ from ICRA for Long-Term Debt Programme
We have a network of over 2,500 Bajaj Auto and consumer durable dealerships and
over 63 branch offices throughout the country to cater to all the requirements of our
customers. We have earned the trust and loyalty of over 50 lac satisfied customers
across the country.
22
Milestones
To achieve individual targets fixed by the Branch Head.
Excel/Specialize in one or more products to market the same & also

responsible for achievement of targets for the same.
To attend Retail Clients with main emphasis on addition of such clients.
To provide support for Gen. Branch administration & Back Office

operations (e.g. maintaining records / Files / Database of Clients, sending
mailers /Insertions and renewal reminders.
To Provide support function to CRM /ACRM (e.g. in preparing presentations,

to provide after sales service & co-ordinate with Reg. /Head office for any
requirement like forms, stationary etc)
23
1.2.3: Mission & Vision

Mission Statement
Bajaj Capital aims to be the most useful, reliable and efficient provider of Financial
Services. It is our continuous endeavour to be a trustworthy advisor to our clients,
helping them achieve their financial goals.
Our Aims
To serve our clients with utmost dedication and integrity so that we exceed
their expectations and build enduring relationships.
To offer unparalleled quality of service through complete knowledge of

products, constant innovation in services and use of the latest technology.
To always give honest and unbiased financial advice and earn our cilent's
everlasting trust.
To serve the community by educating individuals on the merits of Financial

Planning and in turn help shape a financially strong society.
To create value for all stake holders by ensuring profitable growth.
To build an amicable environment that accords respect to every individual and

permits their personal growth.
24
To utilize the power of teamwork to function as a family and build a seamless

organization.
Our Vision
To be the most preferred financial planning and investment advisory company in

India by providing consumers with informed choices of
lasting value, create wealth for them to make their
tomorrow better than today.
1.2. 4. Product range of the company
Financial Planning
o
360Financial Planning
Investment Planning
Insurance Planning
Retirement Planning
Tax Planning
Children's Future Planning
Cash Flow Planning
Portfolio Tracker
Financial Planning Tools
Mutual Funds
o
Top Funds
Latest NAV
Historical NAV
25
Current NFOs
Compare Funds
Dividends Declared
Fund Barometer
Insurance
o
Life Insurance Products
Term Insurance Premium
General Insurance Products
General Insurance Brochures
Health Insurance Premium
Insurance Policy Reminder
ULIP Multimeter
Calculators
o
Crorepati Calculator
Child Education Planner
Child Marriage Planner
Pension / Retirement Planner
Future Value Calculator
Maturity Yield Calculator
Human Life Value Calculator
26
Financial Planning
The only thing permanent in life is change. Times change. People change. So does
life. You expect life to be much better tomorrow than it is today. Tomorrow, you hope
to fulfill all your dreams and aspirations.But what happens if things take an untoward
turn? What if life doesnt happen the way you planned it for? At Bajaj Capital we
understand this. We know that an unexpected change in your financial situation can be
incredibly stressful. Hence we help you plan your financial life. We make sure that
whatever be the situation; financially your life never goes unrestrained.So we bring
for you the most preferred solution:
Insurance Planning
Insurance Planning is concerned with ensuring adequate coverage against insurable

risks.Calculating the right level.
Tax Planning
Proper tax planning is a basic duty of every person which should be carried out
religiously. Basically, there are three steps in tax.
27
Children's Future Planning
The purpose of Children's Future Planning is to create a corpus for foreseeable

expenditures such as those on higher education.
Investment Planning
Investment Planning involves identifying your financial goals throughout your life,
and prioritising them. Investment Planning is.
Retirement Planning
It is important to plan for your life post-retirement if you wish to retain your financial
independence and maintain a comfortable standard.
28
Short Term Cash Flow
Cash Flow Planning refers to the process of identifying the major expenditures in
future (both short-term and long-term)
29
Financial Planning Tools
Our financial tools, financial calculators, insurance calcualtors help our investors to
do their financial and investment....
1.2.5 Organization Structure

Organization structure of the company
Fig. 1..1: Organization chart
30
Market share & position of the company in the industry.
Fig. 1.2: share price
31
1.3 Introduction to the Topic/Title/Problem Studied

Competition Information
MARKET SHARE STRUCTURE:
MARKET CAPITAL ( Rs Crore)

PUNJAB NATIONAL BANK
ICICI BANK
UCO BANK
IDBI BANK
SBI
INDIAN OVERSEAS BANK
BANK OF INDIA
UNION BANK
(FINANCIAL YEAR 2009-10)

16,232
79,378
3,241
6,306
96,082
5,331
14,999
7,779
ANDHRA BANK
2,864
32
INNOVATIVE MARKETING STRATEGIES OF BAJAJ CAPITAL IN

MUTUAL FUNDS INDUSTRY IN INDIA
Role in Innovation in Financial Products and Services

According to, Innovation in financial services: A McKinsey Global Survey, a recent
McKinsey Quarterly survey found that financial-services executives see innovation as
important to the performance of their companies. They view product innovation as
most important and expect a growing role for business model innovation. It also
found that a majority of executives say innovation is more challenging for financialservices firms than for other companies, mostly because of short-term financial
pressure. Executives rate their companies as no better than adequate at fostering
innovation through practices such as using consumer insights to drive new ideas and
dedicating people, processes, and funds to innovation and most executives expect
their companys spending on innovation to increase. Scott J. Edgett in The New
Product Development Process for Commercial Financial Services outlines why the
Financial Services need to focus on new product development and better process. He
lists some of the aspects affecting the current situation which involves the combined
pressures of:
Increased competition
Rapidly changing marketplace
New technology
New and pending legislative changes
The attention of senior executives in the financial services industry is increasingly
being focused on how well the new product development process is working within
their institutions. It is imperative to be able to design, develop, and launch new
products that are winners [Edgett, Scott J.]. The study showed that a success rate of
33
only 62.5% of projects launched were a commercial success, leaving significant room
for improvement. The study also found that most companies take short cuts and the
execution of the product process was never fully completed and generally only had a
moderate quality of execution. It has been discovered that institutions that follow a
systematic process have greater success. So it is imperative to look at this with
regards to research and development, without a successful product development
process RD&I will not be utilized to its full potential.
Constant innovation key to success

A constant attempt at innovation, both in terms of product and service, holds the key
for success of business in a competitive world, where consumer satisfaction is the
main mantra, Mr V.R. Muthu, Chief Executive Officer, Idhayam Group of Companies,
Virudhunagar, has said. Inaugurating the Business Line Club at the Alagappa
University, here, Mr Muthu said innovation for improving the quality of the product is
necessary, as consumers would reject an inferior product. Innovation helps make a
difference and attracts a consumer to a particular brand. Advertisements are an effort
towards reaching the consumer and the television has proved to be a powerful
medium. Impressed by an advertisement a consumer might chose to buy a product
initially but would not continue to do so if it is of inferior quality, he observed.
However, quality alone would not be enough in a competitive world. If the market is
to be expanded, one must know the preferences of the consumers and provide the
product/ service according to their needs. This has led to a search for value addition in
every product that comes to the market today. It must be realised that innovation
happens only when knowledge is acquired and the society that acquires the necessary
knowledge becomes the leader in the field and the company that brings the same to
34
application becomes the leader in the chosen field. Fundamentally, the research
towards continuous improvement is the bedrock of development and success, he said.
A great deal of innovation in the industry takes place at the level of index providers
such as Stoxx, which is now exploring the opportunities opened up its new ownership
structure following the purchase of the stake previously held by Dow Jones by
existing shareholders Deutsche Brse and Six Group. According to Konrad Sippel,
responsible for global product development and sales at the firm, the change not only
allows Stoxx to absorb the index businesses of its two shareholders into a combined
business but will enable it to extend its focus, previously limited to Europe under the
agreement with Dow Jones, to the global market. When developing new indices we
usually work very closely with the market and with our in-house experts, he says.
We have a group of financial engineers that continuously bring up innovative ideas,
test them in the market and develop them further in collaboration with market
participants. We also listen to what market participants need and create custom and
branded solutions for our clients. The best example of that is probably the series of
optimised sector indices launched in the past year.
Sippel believes the shift toward ever-greater customisation is set to intensify. Index
development trends are constantly moving toward individualisation, he says. The
time of the big benchmarks has passed in some respects those areas of the market
are well covered. However, we see increasing demand from clients seeking individual
solutions in terms of risk/return profile, specific market exposure and specific risk
exposure, and we are working hard to provide our clients with the right framework for
these indices. Among the most active developers of new products is db x-trackers,
the ETF business launched by Deutsche Bank. We have been very innovative over
35
the past year, for instance with the launch of our hedge fund ETF, says Simon Klein,
head of db x-trackers sales for continental Europe. We were the first ETF provider to
launch a product based on hedge fund exposure, and we are now bringing leveraged
long and short ETFs to the market. We will also focus on illiquid asset classes such
as the EPRA real estate indices, and create more unique products such as our recentlylaunched China A-share ETF, which was the first Ucits III-compliant ETF investing
on China A-shares. In addition, we also recently launched our exchange-traded
commodity platform, and we plan to list another 30 ETCs by the end of the year.
Exchange-traded commodities have been a major growth area during the crisis period
and more providers are coming into the market (another recent entrant is UBS).
However, pride of place is held by ETF Securities, whose founders launched the ETC
concept in Australia in the early 2000s and which now has an extensive commodities
platform spanning Europe, the US, Japan and Australia. While its ETC platform
continues to expand geographically, ETF Securities has also been active in other
areas, such as the launch of ETF Exchange, an ETF platform backed by a consortium
of banks. So far we have Barclays, Citibank, Merrill Lynch and Rabobank on the
platform, says head of sales Scott Thompson. The banks increasingly want to get
involved in the growth of ETFs, but its an expensive business with a high fixed cost
base. Joining a platform allows those costs to be shared and the banks to leverage
their distribution capabilities.
India's mutual fund market is booming, with new players and financial products
entering the market. Existing players are introducing new investment avenues and
innovations in existing schemes - the latest being facilities for free insurance. Service
innovations include gold exchange traded funds, capital protection funds and funds
36
focussing on real estate. "Service and product innovations are a must in today's
scenario, as they not only help in attracting investors, but also increase sales of
existing schemes," said R S Srinivas Jain, chief marketing officer, SBI Funds
Management Pvt Ltd. Investors must also look at the quality of service provided by
the mutual fund, he added. "The 70% of payments our clients have made
electronically is the highest figure in the industry, according to available data. We aim
to increase this to 85% this fiscal. Efforts are on to tie-up with other banks to make
payments hassle-free and timely," Jain added.
SBI Funds claims the industry is still developing, and there is a lot of scope for new
players as well as existing ones, since the total investments in the industry still lag
behind that in developed and other developing countries. "Investments in the industry,
as measured by assets under management, is less than 10% of GDP. This is less than
half the figure in Japan and Korea. New players are not a serious threat, though
existing players may witness a marginal fall in their share. The industry has enough
scope for both to exist simultaneously," said Achal Kumar Gupta, managing director,
SBI Funds Management. Quoting a recent McKinsey report, he said the industry was
poised to grow at a compounded annual rate of 30-35% over the next five years. "The
future of the industry looks good, but education and awareness among investors, is
required, as these act as a hurdle to growth," he added.
Customer Orientation in Designing Mutual Fund Products

The mutual fund industry in India has evolved little over three decades but the real
impetus has come after the changes in the mutual fund regulations in early 80s.
Private and foreign mutual funds are operating in the Indian market and constitute a
substantial portion of the mutual fund industry. Today the industry consists of Unit
37
Trust of India, mutual funds sponsored by public sector banks and insurance
corporations, private and foreign mutual funds. Investors are constantly being
bombarded by questions concerning their risk profile. Either a money market or guilt
fund is targeted for the risk averse or a low graded company offering a high return on
its fixed deposits. Banks like Citibank , ANZ Grindlays, Deutsche bank, Hongkong
bank, Commerze bank, Banque nationale de Paris and HDFC bank are not only
aggressively marketing funds many are also planning to launch their own. The list of
potential entrants includes ABN Amro, ANZ Grindlays, Hongkong bank and Jammu
and Kashmir bank.
The Reserve Banks Currency and Finance report 1997-1998 shows that the investors
appetite for risk has diminished considerably. As much as 46% of the financial
savings of the household sector found its way back to bank deposits; 12% went in to
Government savings plans and 18% in to provident funds. Only a miniscule 2%
wound up in the capital market and 4% in company deposits. The mutual fund
product designers have identified a strategic gap in the product offering in the capital
market and now are fighting a loosing battle with government savings plans, bank
deposits and provident funds. They are providing cheque facility on money market
mutual funds to make them more enticing and guilt funds for the risk averse.
Product innovations and new product combinations have started rolling in to the
Indian market. GIC mutual fund has launched an open-ended scheme named as GIC
DMAT in which 71 demat scripts having a weight of nearly seventy- percent in the
sensex and the Nifty are being marked for trading. The specialty of this new product
is that investors will have an opportunity to exchange their holdings of scrips, which
are available for dematerialization with units of this scheme. There are 252 mutual
fund schemes and are likely to go higher in the future. The reason for launching of
38
these large number of mutual fund products is the distributed pattern of investment
behavior of Indian small investor .The purchase decision of a mutual fund is largely
dependant upon investors level of savings, investment pattern and the risk profile.
Many managers are now taking interest in designing mutual fund products with multi
feature options for investors. Customers are often benefited from the improvements
that are offered by new features, for example by enhanced quality products [Garvin
(1984)]. These additions of features also offer advantages to others in the value chain.
For the mutual fund agents new features provide new sales arguments in seller buyer
interaction. New features do not only infuse single products but also entire product
categories periodically with new lease of life [Broadbent (1980), Dowdy W.L.
(1986)]. Based on the literature [Kotler (2000), Nicholas, (1992), Sen. (1996),
Starr(1992)] a product feature is defined as each identifiable aspect of the total
offering that a critical reference group perceives and evaluates as an extra to a
known standard among comparable products. The success of a mutual fund and its
capacity largely depends on its ability to mobilize funds.
On the total 252 mutual fund schemes are now available to the buyers out of which
103 are income schemes and 94 are growth schemes. The rest are hybrids. The total
assets under all mutual funds are Rs. 90,685.25 crores. The share of Unit Trust of
India continues to be stagnant at 71 percent (64,637.37 crore). Private players now
command assets of 17041.34 crore (19%). Public sector funds are holding the least
(10%) with Rs. 9006.54 crore assets. The Government owned banks and UTI have 32
assured return schemes where as no private sector mutual funds offer assured returns.
The securities scam, unprecedented boom and the slow down in the economy saw the
Indian stock market enters through a prolonged phase of instability. Therefore
39
investors preferences shift from equity funds to fixed income and debt instruments.
Due to the reduction in the interest rate in USA the Indian bond market rallied in
expectation of a similar cut, debt funds staged a come back. Investors realize that an
interest rate cut reduces the market yield and hence, increases the demand for long
term debt papers bearing high coupon rates. The average annualized return for the
quarter in debt funds was 14.64 which were much higher than the returns posted by
any other debt based investment instruments on a post tax basis.
The new mutual fund product launches had seen many of the equity based funds in
the market during this period, primarily to attract investors who would like to take
advantage of the low prices in the stock market but majority of the funds launched
were debt funds. The budget has also supported the cause of debt fund rather than
equity due to a lower dividend distribution tax. The investors hesitate to invest in the
equity fund when the market is down but the marketing and distribution cost of these
incurred during this period does not reflect a rise in the investors choice. As a product
manager one is ought to design mutual fund products, which shall combine an optimal
mix of return, risk liquidity and safety for the small investors.
40
Loading of Selected Variables on Key Factors
It is evident from the analysis that the changing preferences of the investor create
many new needs, which may be controlled by key determinants. Table- V depicts that
the first factor identified with product features are awareness of attribute of the
product, hassle free trading, exclusivity for small investors, ownership of the product,
technology, lock in period and brand name. These attributes can be grouped under
41
Factor- 1 and termed as Core Product. These are the core part of a mutual fund
product, which are common expectation of any customer while making a purchase
decision. The second factor is designated Performance Factor on the basis of the
loaded variables. The data set of the Factor-2 loading indicates that among various
product feature variables, performance of the fund, safety, liquidity, regular income,
tax benefit, emergency need fulfillment attributes are found to be important by
customers for making a brand choice. This is an indicator that by sheer name of the
company no mutual fund product is going to survive and grow in the market. This is
supported by the recent series of poor performances of UTI in the Indian Market.
People are no more looking in to the name for making decision. The market has
moved purely from a market of single choice to a competitive choice.
This kind of consumer orientation is good for the Indian market. It not only offers a
basket of products to choose from but also makes the fund managers to think and take
prudent decision regarding the investment and market capitalization. Unless the fund
provides growth equipped with assured return and high liquidity the market response
is going to be poor. While designing a mutual fund product the product manager has
to be concerned about offering a mix of combination in risk return and liquidity. Thus
performance factor of the fund expressed in its NAV details is an influential variable
in the purchase decision of the investor making it the most tangible component
visible to the investor in the offering.
It shows the significance for transparency, service behaviors and delivery schedule.
This factor suggests that the process of delivery should be prompt and on time. An
investors service expectation statement should be the vision for the organization to
aspire for. This component of service augmentation or Augment Part of the
42
product makes it mandatory on the part of the fund manager to provide services in a
continuous basis so that the customer stays loyal and happy with the fund and
responds to changing need of the customers
It includes attributes such as sponsor reputation, advertisements, Broker/Agents
recommendations, friend/ relative suggestion. This element is more important in a
competitive market where most of the product offerings are similar and the customer
finds it difficult to take a decision. In an advanced and matured market like that of
urban India what needs to be done for the success of a mutual fund is a high degree of
persuasive communication than the current practice. Present communication and
promotions about various mutual fund products in India are informative only. As the
market has advanced to a higher level what needs to be done is to promote own
brands than promoting the category only for attracting investors of mutual fund. The
concept of brand image and market goodwill generated out of past performance of
mutual fund is explained by the term sponsor reputation.
It clearly indicates the combination of three attributes such as performance guarantee,
assured return and degree of capital appreciation. This factor is termed as investors
confidence factor, which is built over a period of time due to consistency in
performance and transparency in market behavior. The five factors explained above
are the proposed product combinations of a mutual fund offering to the investors. If
the product designers will be careful about these key issues while designing a brand of
mutual fund then only the brand will see a higher customer response and enjoy market
success.
The Whole Mutual Fund Product
43
Where F1: -Core Expectations

F2: -Tangible Product (Market Performance)
F3: -Augment Product (Service Behavior)
F4: -Persuasive Communication
F5: - Confidence Factor
Critical Risk Factors of Product Innovation

For financial institutions, product innovation entails both opportunity and risk.
Opportunities are numerous and include, for example: providing better service
offerings to respond to increasingly dynamic markets, deregulation and shifting
industry boundaries to eliminate the traditional barriers of market entry; and learning
new ways to narrow the gap to the world leading competitors. At the same time,
product innovation is extremely risky. Unfortunately, the rate of success tends to be
low, and the outcome tends to be poor. The risk of innovation is additionally
magnified by the own risk attribute of financial services industry. To control the risk
44
and achieve better performance of product innovation, financial institutions should

identify the critical risks and enrich the methods of risk management.
Compared with abundant studies for the risk management of technological innovation
for manufacturing sector, only in recent years have studies on new product success
factors been undertaken in the financial services sector. As same as the development
course of studies for technological innovation, the studies for risk in financial product
innovation firstly begin with the determinant factors to success and failure, for the
failure is the highest risk in innovation. An important conclusion drawn from these
studies is that how companies orchestrate their development activities has a
significant impact on new service performance. In other words, successful new
services rarely happen by chance. Rather, they are the result of a well-designed
organizational effort and a carefully coordinated new service development process.
Edgett also suggests that the new product process impacts the success rates of new
commercial financial services, and success is manageable on the basis of a rigorous
new product process, early upfront marketing and quality of execution. Over time,
financial institutions should be in a position to reap the competitive benefits of a high
quality new product process. For success factors of financial product innovation,
Easingwood and Storey reveal these key factors as internal marketing and synergy,
communications strategy, overall quality, technological advantage, use of market
research, distribution support, direct mail support, and responsiveness. By further
study, they suggest that the success of a new financial product should owe to not a
unique factor, but at least four factors as overall quality, discrepant product, product
synergy, and use of technology. De Brentani uncovers six factors appear to provide a
good description of the key dimensions that encompass the development of new
industrial services in financial firms including formal up-front design and evaluation,
45
formal and extensive launch programme, supportive and high-involvement NSD

environment, marketing-dominated NSD process, customer-driven NSD, and expertdriven NSD. Edgett and Parkinson abstract eleven interpretable factors as
organizational factor, resource allocation, formalization, preliminary assessment,
market research, design testing, business/financial analysis, product launch
effectiveness, project updates, market synergy, and market potential. Harrison reckons
the material factors which determines the success of a new financial service include
formal preliminary design and assessment, formal and elaborate launch process,
supportive and highly compatible environment, strong market orientation, customer
orientation ensuring idea steps from the customer, importance of internal experts in
the process of idea generation and new product plan, product with significant different
from other products in the marker. Moreover, for imitative innovation, speed of
response and control of cost are necessary. Avlonitis et al. proposes the determinant
factors in the development activities as idea generation and screening, business
analysis and marketing strategy, technical development, testing, and launching.
Along with the simple standard of success and failure in innovation further measured
by quantitative dimensions of innovation performance, the emphases of study turns to
innovation performance and the corresponding risk factors. According to the
framework provided by Cooper et al., new product performance in financial services
sector can be viewed on three different and independent performance dimensions
financial performance, relationship enhancement, and market development. The
numerous characteristics or variables that capture the nature of new financial service
are reduced to eleven underlying factors marketing synergy, a market-driven new
product process, effective marketing communications, customer service, managerial
and financial synergy, launch preparation, product responsiveness, product advantage,
46
innovative technology, reputation, proficient operating and delivery systems. Each of

these eleven factors is then tested for its impact on new product performance, against
each of the three performance dimensions. Storey and Easingwood measure new
service performance as three dimensions sales performance, enhanced opportunities,
and profitability. Factor analysis is used to reduce the large number of attributes of
new service to a more manageable number of underlying dimensions. Seven critical
factors are found to be closely associated with outstanding performance in new
services overall company/product fit, compatibility/importance, staff: skills and
support, distribution strength, effective communication, product/tangible quality,
quality of service delivery.
47
S.W.O.T ANALYSIS OF BAJAJ CAPITAL
Strengths:
1. Bajaj Capital draws strength from years of experience in handling the ever
changing financial scenario strong customer relationships.
2. Ability to provide the cutting edge technology at best-value for money.
3. An excellent service and support infrastructure.
Weakness:
1. The company needs to evolve a comprehensive plan and strategy to make
inroads into a part of middle class.
2. Lack of R & D centers also makes it difficult to launch new products over
here.
Opportunities:
1. The present rate of growth of the financial industry and a large potential
available in these areas provides excellent opportunities for the company to
widen its market.
2. With the fast growing economy the pricing strategy needs to be tackled with
care as it can decide upon long term decisions of the company.
48
Threats:
1. It is natural that threats from the existing as well as new entrants will affect the
present turnover and market share.
2. The nearest competition having the identical product range are the greatest
threat to the company
49
CHAPTER- 2
OBJECTIVE & METHODOLOGY
50
OBJECTIVE & METHODOLOGY
2.1: RESEARCH OBJECTIVE

The broad objectives of the present study are as follows:
To study the mutual fund industry in general and its various facets.
To understand various product innovation techniques used by Bajaj Capital
To understand the applicability of product innovation techniques used by Bajaj
Capital in the financial sector.
To analyze the feasibility, advantages and limitations of product innovation in the
mutual fund sector.
2.2: Research Methodology

Research Design
A Research Methodology defines the purpose of the research, how it proceeds, how to
measure progress and what constitute success with respect to the objectives
determined for carrying out the research study. The appropriate research design
formulated is detailed below.
Exploratory research: this kind of research has the primary objective of
development of insights into the problem. It studies the main area where the problem
lies and also tries to evaluate some appropriate courses of action. The research
methodology for the present study has been adopted to reflect these realties and help
reach the logical conclusion in an objective and scientific manner. The present study
contemplated an exploratory research
51
Nature of Data
Primary Data:
Data which is collected through direct interviews and by raising
questionnaires. For the present study, data is restricted to secondary data only.
Primary data:
Interviews and Questionnaires with the Officials of

Bajaj Capital, and Customers in this segment in New
Delhi
Tools:
Bar Diagrams, pie-charts, tabulation
Sampling method:
Random sampling method
Sample size:
100
Target audience:
Officials of Bajaj Capital and Customers in this segment
Secondary Data: Secondary data that is already available and published .it could be
internal and external source of data. Internal source: which originates from the
specific field or area where research is carried out e.g. publish broachers, official
reports etc. External source: This originates outside the field of study like books,
periodicals, journals, newspapers and the Internet.
Secondary data have been collected through the following sources: Articles,
Reports,
Journals,
Magazines,
Newspapers and
Internet
52
QUESTIONNAIRE DESIGN / FORMULATION

Questionnaires: - A questionnaire consists of a set of questions presented to
respondent for their answers. It can be Closed Ended of Open Ended
Open Ended: - Allows respondents to answer in their own words & are difficult to
Interpret and Tabulate.
Close Ended: - Pre-specify all the possible answers & are easy to Interpret and
Tabulate.
53
TYPES OF QUESTIONS USED IN THIS PROJECT

Close ended Questions
To know the choice of the people regarding various matters.
Dichotomous Questions
This has only two answers Yes or No.
Multiple Choice Questions
Where respondent is offered more than two choices. This is done to know the
choice of the customers regarding different matters.
Sample Extent
Central Delhi
Time Frame
8 weeks
2.3 : Limitations of the Research

To analyze the feasibility, advantages and limitations of product innovation in the
mutual fund sector. The mutual fund industry started in India in a small way with the
UTI Act creating what was effectively a small savings division within the RBI. Over a
period of 25 years this grew fairly successfully and gave investors a good return, and
therefore in 1989, as the next logical step, public sector banks and financial
institutions were allowed to float mutual funds and their success emboldened the
government to allow the private sector to foray into this area.
The major limitation show that the concentration has declined and competition
increased in the mutual fund industry in terms of both funds and schemes. The
regression coefficient for funds indicates that the concentration has declined and the
large firms lost their share to small firms. Sector wise (among the public sector,
private and foreign sectors and also within sectors) analysis of competition among
mutual funds has also being attempted.
54
CHAPTER 3
DATA ANALYSIS & INTERPRETATION
55
DATA ANALYSIS AND INTERPRETATION
1. Are you aware about the present boom in the investment Market?
Yes --------------------------------------------------
82 per cent
No. --------------------------------------------------
12 per cent
Do not know/ Can not say -----------------------
06 per cent
56
Interpretation:
As regard to market boom and the respondents awareness level about this, nearly 82%
of the respondents are aware about the market boom in the present economy, while
the rest 12% are not aware about any market boom. The awareness level is high
among the middle and the upper middle class, and particularly among the business
class and the traders. One of the interesting finding of the study was that many
respondents confuse between inflation and market growth. Respondents belonging to
lower middle and middle class confuse whether price rise has anything to do with
investment scenario.
About the reasons, 65% of the respondents who are aware about the market boom feel
that it reflects the resilience of the Indian economy and reflects a true picture of it.
This they attribute to the persistent increase in Sensex and continuing economic
growth rate which is somehow near the double digit mark. 27% of the respondents
who are aware about the market boom feel that this is a temporary situation which is
likely to recede. Rest of the respondents could not attribute any concrete causal
relationship for the market boom.
57
2.
Which sectors or Any Particular Sector you look as market Performer?

IT-------------------------------------------------
78 per cent
Engineering
05 per cent
----------------------------------
Banking -----------------------------------------
12 per cent
Telecom ----------------------------------------
05 per cent
58
Interpretation:
More than78 percent of the investors were of the opinion that it is the Information
Technology which is the main driving force behind the present market boom. They
felt that IT combined by Engineering and Telecom can take the Indian investment
scenario to a new high.
59
3.
Do you agree that your company has a good financial standing in

comparison with others in the market?
Agree ------------------------------------------------
73 per cent
Disagree --------------------------------------------
06 per cent
Do not know/ Can not say ------------------------
21 per cent
Interpretation:
Cutting across the companies, 73 per cent of the respondents rate their companies
with better or at least sound financial position in comparison with their rivals in the
market.
60
4.
Why do you think the mutual funds of your company should be accepted
among the investors?
It is more risk proof -------------------------------------
16 per cent
Can stand against market volatility -------------------
44 per cent
Design according to the investors needs ------------
25 per cent
Other reasons ---------------------------------------------
13 per cent
Do not know/ Can not say ------------------------------
02 per cent
61
62
Interpretation:
Going by the respondents view, the company officials believe that the capability of
their mutual funds to stand against the market volatility and risks make their mutual
funds attractive to the customers.
63
5.
Do you agree that strong management is an asset for better financial

performance of mutual funds in the capital market?
Agree -----------------------------------------------
92 per cent
No --------------------------------------------------
00 per cent
Do not know/ Can not say ----------------------
08 per cent
Interpretation:
Strong and efficient management can effectively contribute to better performance of
mutual funds in the capital market in India.
64
6.
Do you agree that private sector mutual funds and public sector mutual
funds differ in terms of their financial performance and return?
Agree -----------------------------------------------
23per cent
No ---------------------------------------------------
70 per cent
Do not know/ Can not say ------------------------
07 per cent
Interpretation:
The result of our study gives an impression that public sector mutual funds and
private sector mutual funds do not differ substantially in terms of their financial
performance and returns.
65
7. Which types of mutual funds are better placed in terms of their return?
Unit linked growth funds ---------------------------
30 per cent
Equity linked growth funds -------------------------
30per cent
Tax saving bonds ------------------------------------
38 per cent
Others --------------------------------------------------
02 per cent
Interpretation:
Going by the response of the respondents, it is the tax saving bonds which gives better
returns followed by the unit linked and equity linked growth funds.
66
8.
How significant is portfolio diversification for better returns out of the

mutual funds?
Very significant -------------------------------
25 per cent
Significant -------------------------------------
54 per cent
Less significant -------------------------------
11 per cent
Not significant at all --------------------------
05 per cent
Do not know/ Can not say --------------------
05 per cent
Interpretation:
In the present market scenario, the respondents believe that portfolio diversification is
important for getting better returns out of the mutual fund investment and
management.
67
9.
Are you satisfied with the returns you are getting from the mutual funds
of your company present available in the market?
Very satisfied --------------------------------
27 per cent
Satisfied --------------------------------------
60 per cent
Less satisfied ---------------------------------
04 per cent
Not significant at all -------------------------
05 per cent
Do not know/ Can not say ------------------
04per cent
Interpretation:
The result of our study says that the officials are satisfied with the returns they are
getting from the mutual funds of their company.
68
10.
Are you aware about product innovation techniques in the mutual fund
sector?
Yes ---------------------------------------------------
97 per cent
No ----------------------------------------------------
03 percent
Interpretation:
The awareness level among the officials about the product innovation techniques in
the mutual fund sector is quite high.
69
11.
Does your company resort to product innovation methods?

Yes ----------------------------------------------------
76 per cent
No -----------------------------------------------------
20 percent
Do not know / Can not say -------------------------
04 percent
Interpretation:
The companies resort to product innovation methods to optimize their sales and profit
figures.
70
12.
Do you agree that product innovation can neutralize competition in the

mutual fund sector?
Agree ----------------------------------------------
30 percent
Strongly Agree ----------------------------------
42 percent
Disagree ------------------------------------------
10 percent
Strongly Disagree -------------------------------
08 percent
Do not know / Can not say ---------------------
10 percent
Interpretation:
If we go by the respondents views, product innovation can neutralize competition in
the mutual fund sector.
71
13.
Do you agree that product innovation is a difficult strategy for the small
firms to adopt?
Agree --------------------------------------------
40 percent
Strongly Agree ---------------------------------
40 percent
Disagree -----------------------------------------
10 percent
Strongly Disagree ------------------------------
05 percent
Do not know / Can not say --------------------
05 percent
Interpretation:
Small firms have their own advantages owing to their size and turn over, therefore,
they face difficulties in adopting product innovation methods.
72
14.
Do you agree that recruitment from rival companies can be a viable

alternative to product innovation?
Agree ---------------------------------------------
28 percent
Strongly Agree ----------------------------------
32 percent
Disagree ------------------------------------------
20 percent
Strongly Disagree -------------------------------
12 percent
Do not know / Can not say ---------------------
08 percent
Interpretation:
Recruitment from rival companies can be a viable alternative to product innovation,
particularly for the small firms.
73
15.
What future do you predict for the mutual funds of your company in the
near future?
The profit scenario will continue --------------------------
46 per cent
Returns may not be so significant -------------------------
20 per cent
Returns will depreciate --------------------------------------
15 per cent
Do not know/ Can not say -----------------------------------
19 per cent
74
Interpretation:
While the performance of new funds needs to be evaluated over a longer term before
fresh exposures can be considered, the good showing of theme-based funds is
expected to continue.
75
16.
With the given market valuations and most analysts making a hue and
cry about Indian markets being expensive, do you still see untapped
opportunities in the market?
Interpretation:
A summary of the response to this the Indian economy is in the midst of a structural
shift. The primarily agrarian economy is shedding its old clothes to don new ones.
The economy, which a decade ago was primarily dependent on agriculture, is now
driven by the services and manufacturing sectors. Outsourcing as a theme, which was
prevalent only in services, is now fast catching up even in the manufacturing sector.
The GDP growth at >7%, and industrial growth of >10%, is one of the highest in the
world. And the pace of change as well as the pace of growth is not expected to slow
down too soon. Considering the above, we feel that the current market levels, more or
less, reflect the fundamentals prevalent in the economy. The results declared, so far,
by India Inc. also do not suggest any slow down in momentum. The strong economic
growth, sustained corporate performance and ample liquidity in the system suggest
that in the long run there is still money to be made in the market. While the journey to
the current BSE Sensex level of 12,000 points has been sharp and therefore, in the
short term, we could see some volatility in the market, but what we want to emphasis
is that the story behind such a rise is intact and therefore the up move is likely to
sustain. Another thing that we believe and we want to stress is that irrespective of the
market level, there are always pockets of opportunities available in the market.
76
CHAPTER-4
FINDINGS
77
FINDINGS
A summary of the response to this the Indian economy is in the midst of a structural
shift. The primarily agrarian economy is shedding its old clothes to don new ones.
The economy, which a decade ago was primarily dependent on agriculture, is now
driven by the services and manufacturing sectors. Outsourcing as a theme, which was
prevalent only in services, is now fast catching up even in the manufacturing sector.
The GDP growth at >7%, and industrial growth of >10%, is one of the highest in the
world. And the pace of change as well as the pace of growth is not expected to slow
down too soon. Considering the above, we feel that the current market levels, more or
less, reflect the fundamentals prevalent in the economy.
The results declared, so far, by India Inc. also do not suggest any slow down in
momentum.
The strong economic growth, sustained corporate performance and ample liquidity
in the system suggest that in the long run there is still money to be made in the
market.
While the journey to the current BSE Sensex level of 12,000 points has been sharp
and therefore, in the short term, we could see some volatility in the market, but
what we want to emphasis is that the story behind such a rise is intact and
therefore the up move is likely to sustain. Another thing that we believe and we
want to stress is that irrespective of the market level, there are always pockets of
opportunities available in the market.
78
Small firms have their own advantages owing to their size and turn over,
therefore, they face difficulties in adopting product innovation methods.
If we go by the respondents views, product innovation can neutralize competition

in the mutual fund sector
79
CHAPTER 5
RECOMMENDATIONS
80
RECOMMENDATIONS
The small investors purchase behavior does not have a high level of coherence due to
the influence of different purchase factors. The buying intent of a mutual fund product
by a small investor can be due to multiple reasons depending upon customers risk
return trade off. Due to the reduction in the bank interest rates and high degree of
volatility in Indian stock market, investors are looking for an alternative for their
small time investments which will provide them a higher return and also safety to
their investments. The bond market is also passing through a recession due to its
interest parity with bank instruments. So mutual funds offer the best alternative to the
small investors in India. A prudent product design by adding the features expected by
investors and spelt out in this research will make the new mutual fund products
attractive for the Indian investors. The factors identified in the study provide key
information inputs regarding investors preferences and priorities that will guide
future mutual fund product managers in designing attractive mutual fund products for
the Indian market.
By carefully dealing with these risk factors and integrating the findings with
innovation management and risk management, it is hoped that Indian financial
institutions will be better able to optimize the allocation of resources, and to achieve
expected performance of the innovation in terms of reasonable risk tolerance.
CONCLUSION
The mutual fund industry is a lot like the film star of the finance business. Though it
is perhaps the smallest segment of the industry, it is also the most glamorous in that
it is a young industry where there are changes in the rules of the game everyday, and
81
there are constant shifts and upheavals. The mutual fund is structured around a fairly
simple concept, the mitigation of risk through the spreading of investments across
multiple entities, which is achieved by the pooling of a number of small investments
into a large bucket. Yet it has been the subject of perhaps the most elaborate and
prolonged regulatory effort in the history of the country.
The mutual fund industry started in India in a small way with the UTI Act creating
what was effectively a small savings division within the RBI. Over a period of 25
years this grew fairly successfully and gave investors a good return, and therefore in
1989, as the next logical step, public sector banks and financial institutions were
allowed to float mutual funds and their success emboldened the government to allow
the private sector to foray into this area. The initial years of the industry also saw the
emerging years of the Indian equity market, when a number of mistakes were made
and hence the mutual fund schemes, which invested in lesser-known stocks and at
very high levels, became loss leaders for retail investors. From those days to today the
retail investor, for whom the mutual fund is actually intended, has not yet returned to
the industry in a big way. But to be fair, the industry too has focused on brining in the
large investor, so that it can create a significant base corpus, which can make the retail
investor feel more secure.
The growth of the industry continued to be corporate focused barring a few initiatives
by mutual funds to expand the retail base. Large money brought with it the problems
of low retention and consequently low profitability, which is one of the problems
plaguing the business. But at the same time, the industry did see spectacular growth in
assets, particularly among the private sector players, on the back of the continuing
debt bull run. Equity did not find favor with investors since the market was lack-luster
and performances of funds, barring a few, were quite disappointing for investors. The
82
other aspect of this issue is that institutional investors do not usually favor equity. It is
largely a retail segment product and without retail depth, most mutual funds have
been unable to tap this market.
The major findings show that the concentration has declined and competition
increased in the mutual fund industry in terms of both funds and schemes. The
regression coefficient for funds indicates that the concentration has declined and the
large firms lost their share to small firms. Sector wise (among the public sector,
private and foreign sectors and also within sectors) analysis of competition among
mutual funds has also being attempted. The result shows that the competition is
moderate among the sectors. Within the sectors competition is high in the public
sector and foreign sector and it has declined in the private sector. Also at the same
time the concentration index has declined and competition increased among the
schemes.
With the bond yields plateauing and with the mutual fund industry trying to attract
people to the equity market, the year also saw some remarkable products flavors for
Indian investors. Birla Sunlife Mutual Fund led the pack with an equity fund focused
on dividend yield stock, a bond index fund and a bond-for-units swap product. Some
of the other innovative products were the series of exchange-traded funds from
Benchmark, including a liquid index traded fund. Prudential- ICICI also launched an
exchange-traded fund, the SPICE, in association with BSE.
The industry focused also on making existing products more attractive by adding on a
number of service features and cost control measures. Same day redemption in liquid
funds, institutional plans which would reduce the overall cost of investment and
bonus units in lieu of dividend were some of these features.
83
Innovation is crucial to a firms success and as a result the financial services industry
needs to be more involved in developing its research and development sector. New
products and processes are constantly being created and R&D could open up new
ways of improving productivity of the innovation process for the financial services. If
RD&I are not already a top source for generating innovation a firm should work
towards advancing in making it one. In reviewing collaboration, centralization,
patenting, product development processes, and executive awareness of the problems
inherent to innovation in the financial industry we can see that there are a number of
areas where gaps exist. A new method for approaching research and development and
the role it plays in innovation needs to be defined. Financial services are an important
sector that need to make use of technological and information systems advances, to
mention just a few. It is vital to manage these changes and move forward with the
next wave, or even better, lead the next wave.
84
ANNEXURES
85
ANNEXURES
Questionnaire
1. Are you aware about the present boom in the investment Market?
Yes ------------------------------------------------- No. ------------------------------------------------- Do not know/ Can not say -----------------------
2. Which sectors or Any Particular Sector you look as market Performer?

IT------------------------------------------------ Engineering
----------------------------------
Banking ---------------------------------------- Telecom ----------------------------------------
3.
Do you agree that your company has a good financial standing in

comparison with others in the market?
Agree ----------------------------------------------- Disagree ------------------------------------------- Do not know/ Can not say ------------------------
86
4.
Why do you think the mutual funds of your company should be accepted
among the investors?
It is more risk proof ------------------------------------ Can stand against market volatility ------------------ Design according to the investors needs ----------- Other reasons -------------------------------------------- Do not know/ Can not say ------------------------------
5.
Do you agree that strong management is an asset for better financial

performance of mutual funds in the capital market?
Agree ---------------------------------------------- No ------------------------------------------------- Do not know/ Can not say ----------------------
6.
Do you agree that private sector mutual funds and public sector mutual
funds differ in terms of their financial performance and return?
Agree ---------------------------------------------- No -------------------------------------------------- Do not know/ Can not say ------------------------
7. Which types of mutual funds are better placed in terms of their return?
Unit linked growth funds -------------------------- Equity linked growth funds -------------------------
87
Tax saving bonds ----------------------------------- Others -------------------------------------------------8.
How significant is portfolio diversification for better returns out of the

mutual funds?
Very significant ------------------------------ Significant ------------------------------------ Less significant ------------------------------ Not significant at all ------------------------- Do not know/ Can not say --------------------
9.
Are you satisfied with the returns you are getting from the mutual funds
of your company present available in the market?
Very satisfied ------------------------------- Satisfied ------------------------------------- Less satisfied -------------------------------- Not significant at all ------------------------ Do not know/ Can not say ------------------
10.
Are you aware about product innovation techniques in the mutual fund
sector?
Yes -------------------------------------------------- No ----------------------------------------------------
11.
Does your company resort to product innovation methods?
88
Yes --------------------------------------------------- No ---------------------------------------------------- Do not know / Can not say ------------------------12.
Do you agree that product innovation can neutralize competition in the

mutual fund sector?
Agree --------------------------------------------- Strongly Agree --------------------------------- Disagree ----------------------------------------- Strongly Disagree ------------------------------ Do not know / Can not say ---------------------
13.
Do you agree that product innovation is a difficult strategy for the small
firms to adopt?
Agree ------------------------------------------- Strongly Agree -------------------------------- Disagree ---------------------------------------- Strongly Disagree ----------------------------- Do not know / Can not say --------------------
14.
Do you agree that recruitment from rival companies can be a viable

alternative to product innovation?
Agree -------------------------------------------- Strongly Agree --------------------------------- Disagree ------------------------------------------
89
Strongly Disagree ------------------------------ Do not know / Can not say ---------------------
15.
What future do you predict for the mutual funds of your company in the
near future?
The profit scenario will continue ------------------------- Returns may not be so significant ------------------------ Returns will depreciate ------------------------------------- Do not know/ Can not say -----------------------------------
16.
With the given market valuations and most analysts making a hue and
cry about Indian markets being expensive, do you still see untapped
opportunities in the market?
90
91
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(vi)
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(vii)
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(viii)
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(xi)
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(xii)
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(xiii)
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(xiv)
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(xv)
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(xviii)
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PUNJAB TECHNICAL UNIVERSITY, JALANDHAR

INNOVATIVE STRATEGIES ADOPTED

BAJAJ CAPITAL LTD.

Under the Guidance of

Place: New Delhi

Subhash Chand Kumawat

Subhash Chand Kumawat

1.1. Overview of Industry as a whole

Mission & Vision

1.3 Introduction to the Topic/Title/Problem Studied

CHAPTER 2 - OBJECTIVE & METHODOLOGY

Sample size, if any

Methods of data collection

Tools and techniques of analysis

2.3. Limitations of the Study

CHAPTER 3 - DATA ANALYSIS & INTERPRETATION

Tables/Graphs/ Annual Reports of Company/Industry etc.

Any other relevant documents

investment advisor, who sees investments from your perspective.

KNOW THE PRODUCTS AND SERVICES:

1.2 COMPANY PROFILE OF THE BAJAJ CAPITAL

Welcome to India's leading Financial Planning and Investment Advisory Company.

The long trunk symbolises continuous exploration. We explore all avenues to

The heavy posture of Ganesha symbolises stability. We help our clients to

Lord Ganesha is known as the remover of obstacles and bestower of

BHIKAJI CAMA PLACE

Phone: 011-64736930, 64640912, 64640913

REGISTERED HEAD OFFICE

Phone: 033-22820383, 40034380-82

becomes the first company to raise resources through Company Fixed

To achieve individual targets fixed by the Branch Head.

Excel/Specialize in one or more products to market the same & also

To attend Retail Clients with main emphasis on addition of such clients.

To provide support for Gen. Branch administration & Back Office

To Provide support function to CRM /ACRM (e.g. in preparing presentations,

1.2.3: Mission & Vision

To offer unparalleled quality of service through complete knowledge of

To serve the community by educating individuals on the merits of Financial

To create value for all stake holders by ensuring profitable growth.

To build an amicable environment that accords respect to every individual and

To utilize the power of teamwork to function as a family and build a seamless

To be the most preferred financial planning and investment advisory company in

1.2. 4. Product range of the company

Children's Future Planning

Cash Flow Planning

Financial Planning Tools

Life Insurance Products

Term Insurance Premium

General Insurance Products

General Insurance Brochures

Health Insurance Premium

Insurance Policy Reminder

Child Education Planner

Child Marriage Planner

Pension / Retirement Planner

Future Value Calculator

Maturity Yield Calculator

Human Life Value Calculator

Insurance Planning is concerned with ensuring adequate coverage against insurable

Children's Future Planning

The purpose of Children's Future Planning is to create a corpus for foreseeable

Short Term Cash Flow

Financial Planning Tools

1.2.5 Organization Structure