Investment Managment-Shiram

ABSTRACT
Savings form an important part of the economy of any nation. With the savings invested in
various options available to the people, the money acts as the driver for growth of the country.
Indian financial scene too presents a plethora of avenues to the investors. Though certainly not
the best or deepest of markets in the world, it has reasonable options for an ordinary man to
invest his savings.
The money you earn is partly spent and the rest saved for meeting future expenses. Instead of
keeping the savings idle you may like to use savings in order to get return on it in the future. This
is called Investment.
One needs to invest to and earn return on your idle resources and generate a specified sum of
money for a specific goal in life and make a provision for an uncertain future One of the
important reasons why one needs to invest wisely is to meet the cost of Inflation. Inflation is the
rate at which the cost of living increases.
The cost of living is simply what it costs to buy the goods and services you need to live. Inflation
causes money to lose value because it will not buy the same amount of a good or service in the
future as it does now or did in the past. The sooner one starts investing the better. By investing
early you allow your investments more time to grow, whereby the concept of compounding
increases your income, by accumulating the principal and the interest or dividend earned on it,
year after year. The three golden rules for all investors are:
Invest early
Invest regularly
Invest for long term and not short term
This project will also help to understand the investors facet before investing in any of the
investment tools and thus to scrutinize the important aspects for the investors before investing
that further helped in analyzing the relation between the features of the products and the
investors requirements.
Index
CONTENTS
CHAPTER 1
INTRODUCTION
Need for the study

Objectives of the study
Scope of the study
Research Methodology
Limitation of study
CHAPTER 2
CHAPTER 3
CHAPTER 4
CHAPTER 5
LITERATURE
REVIEW
COMPANY PROFILE
DATA ANALYSIS &
INTERPRETATION
FINDINGS
CHAPTER 6
SUGGESTION &
RECOMMANDATIONS
CHAPTER 7
CONCLUSION
CHAPTER 8
BIBILIOGRAPHY
QUESTIONNAIRE
Page.no
CHAPTER-1
INTRODUCTION
NEED OF THE PROJECT:
The purpose of the study was to determine the saving behavior and investment preferences
of customers. Customer perception will provide a way to accurately measure how the customers
think about the products and services provided by the company. Todays trying economic
conditions have forced difficult decisions for companies. Most are making conservative
decisions that reflect a survival mode in the business operations. During these difficult times,
understanding what customers on an ongoing basis is critical for survival. Executives need a 3 rd
party understanding on where customer loyalties stand. More than ever management needs
ongoing feedback from the customers, partners and employees in order to continue to innovate
and grow.
OBJECTIVE OF THE STUDY
The main objective of the project is to find out the needs of current and future customers. For
this report , customer perception and awareness level will be measured in many important areas
like:
To understand all about different investment avenues available in India.

To find out how the investors get information about the various financial instrument
To find out how the investor wants to invest i.e. on his own or through a broker.
To find out the saving habits of the different customers and the amount they invest in
various financial instruments.
In which type of financial instrument they like to invest.
How long they prefer to keep their money invested.
What is the return that they expect from the investment.
What are the various factors that they consider before investing.
To find out the risk profile of the investor.
To give a recommendation to the investors that where they should invest.
To give a suggestion to my company where our fund lacks in the market & how it should
be rectified.
After all as a management trainee I will try to get some valuable knowledge from my
seniors in the organization as well as from my faculty guide which will help me in the
future.
To evaluate the consumer attitude towards saving and decision making regarding
investments.
Scope of the study

This report will help the company to strengthen customer intimacy. The report on various
investment avenues available In India will help the company in many areas like.
It will help the company to understand the expectations the customer have about their company
from the perspective of financial performance and corporate social responsibility.
It will provide fresh insights which can help their business continue to flourish.
The company can identify the particular service requirements of different types of customers.
The company can understand the problem areas.
The company can evaluate new services initiatives.
The study will help in gaining a better understanding of what an investor looks for in an
investment option.
It can be used by the financial sector in designing better financial instrument customized to suit
the needs of the investor.
It will help agents and brokers in marketing the existing instruments.
It will provide knowledge to the customer about the various financial services provided by the
company to their customers.
It can help the company to understand what is the requirement of the different categories of
customers
This report will be developed in order to empower companies with detailed primary market
research needed to make well informed decisions and it will provide independent measurement
and validation of the health of companys relationship with their customers. These are the various
advantages which will give some value addition to the company in understanding the awareness
level of the customer about the various investment options and what is the perception of the
investors with regard to the investments they want to make.
METHODOLOGY:
Source of Data:Primary Data
: Questionnaire, visiting organization.
Secondary Data : Information from the Company, Websites,

Sample Size
journals and magazines.
: 100.
Sampling technique : Random sampling.
SAMPLING METHODOLOGY
Sampling Unit:
The respondents who were asked to fill out questionnaires are the sampling units. These
comprise of employees of MNCs, Govt. Employees, Self Employed and existing customers of
DBFS
Sample size:
The sample size was restricted to only 100, which comprised of mainly peoples from different
regions of Hyderabad due to time constraints.
Sampling Area:
Hyderabad
The project work can only be complete after:
Analyzing the data.
Referring books and gathering more relevant information from the internet.
Drawing detailed and careful inferences from the analysis.
Data Collection
Questioning & observing are the two basic methods of collecting primary data. Questionnaire
studies are more relevant than observation studies
Presentation of the data

6
The collected data will be analyzed and will be represented through various charts, graphs, pie
charts, tabulation and a master sheet of the surveyed data. The data will be presented to
determine market shares and percentage of readers out of the total population. The same pattern
will be repeated in the case of advertisers.
LIMITATIONS OF THE STUDY

The project is based upon various financial instrument that are available in India and the
perception level of the customer about these financial instruments. For which there will be the
need of information from the customers about their knowledge of these financial products. The
various limitations of the study are:
Total number of financial instrument in the market is so large that it needs a lot of resources to
analyze them all. There are various companies providing these financial instruments to the
public. Handling and analyzing such a varied and diversified data needs a lot of time and
resources .
As the project is based on secondary data, possibility of unauthorized information cannot be
avoided.
Reluctance of the people to provide complete information about themselves can affect the
validity of responses.
Due to time and cost constraint study will be conducted in only selected area of Hyderabad and
Secundrabad.
The lack of knowledge in customers about the financial instruments can be a major limitation.
The information can be biased due to use of questionnaires.
CHAPTER 2
LITERATURE REVIEW
Mutual Fund:-
Mutual fund is a pool of money collected from investors and is invested

according to stated investment objectives Mutual fund investors are like shareholders and they
own the fund. Mutual fund investors are not lenders or deposit holders in a mutual fund.
Everybody else associated with a mutual fund is a service provider, who earns a fee. The money
in the mutual fund belongs to the investors and nobody else. Mutual funds invest in marketable
securities according to the investment objective. The value of the investments can go up or down,
changing the value of the investors holdings.NAV of a mutual fund fluctuates with market price
movements. The market value of the investors funds is also called as net assets. Investors hold a
proportionate share of the fund in the mutual fund. New investors come in and old investors can
exit, at prices related to net asset value per unit.
Benefits of Investing in Mutual Funds

Professional Management: -
Mutual Funds provide the services of experienced and skilled professionals, backed by
a dedicated investment research team that analyses the performance and prospects of companies
and selects suitable investments to achieve the objectives of the scheme.
Diversification:
Mutual Funds invest in a number of companies across a broad cross-section of

industries and sectors. This diversification reduces the risk because seldom do all stocks decline
at the same time and in the same proportion. You achieve this diversification through a Mutual
Fund with far less money than you can do on your own.
Convenient Administration:
Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such
as bad deliveries, delayed payments and follow up with brokers and companies. Mutual Funds
save your time and make investing easy and convenient.
Return Potential: -
Over a medium to long-term, Mutual Funds have the potential to provide a higher
return as they invest in a diversified basket of selected securities.
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Low
Costs:
Mutual Funds are a relatively less expensive way to invest compared to directly
investing in the capital markets because the benefits of scale in brokerage, custodial and other
fees translate into lower costs for investors.
Liquidity:
In open-end schemes, the investor gets the money back promptly at net
asset value related prices from the Mutual Fund. In closed-end schemes, the units can be sold on
a stock exchange at the prevailing market price or the investor can avail of the facility of direct
repurchase at NAV related prices by the Mutual Fund.
Transparency:
You get regular information on the value of your investment in addition to

disclosure on the specific investments made by your scheme, the proportion invested in each
class of assets and the fund manager's investment strategy and outlook.
Flexibility:
Through features such as regular investment plans, regular withdrawal plans and
dividend reinvestment plans, you can systematically invest or withdraw funds according to your
needs and convenience.
Affordability: -
Investors individually may lack sufficient funds to invest in high-grade stocks. A

mutual fund because of its large corpus allows even a small investor to take the benefit of its
investment strategy.
Choice of Schemes: Mutual Funds offer a family of schemes to suit your varying needs over a lifetime.
Well Regulated
All Mutual Funds are registered with SEBI and they function within the provisions of
strict regulations designed to protect the interests of investors. The operations of Mutual Funds are
regularly monitored by SEBI.
Types of Mutual Funds

10
Mutual fund schemes may be classified on the basis of its structure and its objective:By Structure:Open-ended Funds:An open-end fund is one that is available for subscription all through the
year. These do not have a fixed maturity. Investors can conveniently buy and sell units at Net
Asset Value ("NAV") related prices. The key feature of open-end schemes is liquidity.
Closed-ended Funds:A closed-end fund has a stipulated maturity period which generally
ranging from 3 to 15 years. The fund is open for subscription only during a specified period.
Investors can invest in the scheme at the time of the initial public issue and thereafter they can
buy or sell the units of the scheme on the stock exchanges where they are listed. In order to
provide an exit route to the investors, some close-ended funds give an option of selling back the
units to the Mutual Fund through periodic repurchase at NAV related prices. SEBI Regulations
stipulate that at least one of the two exit routes is provided to the investor.
Interval Funds:Interval funds combine the features of open-ended and close-ended schemes.
They are open for sale or redemption during pre-determined intervals at NAV related prices.
Money Market Funds:The aim of money market funds is to provide easy liquidity, preservation of
capital and moderate income. These schemes generally invest in safer short-term instruments
such as treasury bills, certificates of deposit, commercial paper and inter-bank call money.
Returns on these schemes may fluctuate depending upon the interest rates prevailing in the
market. These are ideal for Corporate and individual investors as a means to park their surplus
funds for short periods.
Load Funds:A Load Fund is one that charges a commission for entry or exit. That is, each
time you buy or sell units in the fund, a commission will be payable. Typically entry and exit
loads range from 1% to 2%. It could be worth paying the load, if the fund has a good
performance history.
No-Load Funds:11
A No-Load Fund is one that does not charge a commission for entry or exit. That
is, no commission is payable on purchase or sale of units in the fund. The advantage of a no load
fund is that the entire corpus is put to work.
Tax Saving Schemes:These schemes offer tax rebates to the investors under specific provisions of
the Indian Income Tax laws as the Government offers tax incentives for investment in specified
avenues. Investments made in Equity Linked Savings Schemes (ELSS) and Pension Schemes are
allowed as deduction u/s 88 of the Income Tax Act, 1961. The Act also provides opportunities to
investors to save capital gains u/s 54EA and 54EB by investing in Mutual Funds, provided the
capital asset has been sold prior to April 1, 2000 and the amount is invested before September
30, 2000.
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Various types of Mutual Funds:
13
EQUITY SHARES
ABOUT SHARES:At the most basic level, stock (often referred to as shares) is ownership, or equity, in a company.
Investors buy stock in the form of shares, which represent a portion of a company's assets
(capital) and earnings (dividends).
As a shareholder, the extent of your ownership (your stake) in a company depends on the number
of shares you own in relation to the total number of shares available For example, if you buy
1000 shares of stock in a company that has issued a total of 100,000 shares, you own one per
cent of the company.
While one per cent seems like a small holding, very few private investors are able to accumulate
a shareholding of that size in publicly quoted companies, many of which have a market value
running into billions of pounds. Your stake may authorize you to vote at the company's annual
general meeting, where shareholders usually receive one vote per share.
In theory, every stockholder, no matter how small their stake, can exercise some influence over
company management at the annual general meeting. In reality, however, most private investors'
stakes are insignificant. Management policy is far more likely to be influenced by the votes of
large institutional investors such as pension funds.
a) STOCKS SYMBOLS:A stock symbol, or 'Epic' symbol, is the standard abbreviation of a stock's name. You can find
stock symbols wherever stock performance information is published - for example, newspaper
stock listings and investment websites. Company names also have abbreviations called ticker
symbols. However, it's worth remembering that these may vary at the different exchanges where
the company is quoted.
b) PERFORMANCE INDICATORS:Here is a list of the standard performance indicators
Performance Indicator
Definition
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Closing price
The last price at which the stock was bought or sold
High and low

day
The highest and lowest price of the stock from the previous trading
52 week range
The highest and lowest price over the previous 52 weeks
Volume
and low
The amount of shares traded during the previous trading day High
Net change
the
The difference between the closing price on the last trading day and
closing price on the trading day prior to the last
THE STOCK EXCHANGES:A marketplace in which to buy or sell something makes life a lot easier.
The same applies to stocks. A stock exchange is an organization that provides a marketplace in
which investors and borrowers trade stocks. Firstly, the stock exchange is a market for issuers
who want to raise equity capital by selling shares to investors in an Initial Public Offering (IPO).
The stock exchange is also a market for investors who can buy and sell shares at any time.
a) Trading shares on the stock exchange:
As an investor in the INDIA, you can't buy or sell shares on a stock exchange yourself. You need
to place your order with a stock exchange member firm (a stockbroker) who will then execute
the order on your behalf. The NSE AND BSE are the leading stock exchange in the INDIA.
Trading is done through computerized systems.
b) The trading process:If you decide to buy or sell your shares, you need to contact a stockbroker who will buy or sell
the shares on your behalf. After receiving your order, the stockbroker will input the order on the
SETS or SEAQ system to match your order with that of another buyer or seller. Details of the
trade are transmitted electronically to the stockbroker who is responsible for settling the trade.
You will then receive confirmation of the deal.
c) Types of shares available on the stock exchange:You cannot trade all stocks on the stock exchange. To be listed on a stock exchange, a stock must
meet the listing requirements laid down by that exchange in its approval process. Each exchange
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has its own listing requirements, and some exchanges are more particular than others. It is
possible for a stock to be listed on more than one exchange. This is known as a dual listing.
Insurance
People need insurance in the first place.An insurance policy is primarily meant to protect the
income of the familys breadearners. The idea is if any one or both die their dependents continue
to live comfortably.The circle of life begins at birth follower by education , marraige and
eventually after a lifetime of work we look forward to life of retirement . Our finances too tend
to change as we go through the various phases of life. In the first twenty of our life, we are
financially and emotionally dependents on our parents and their are no financial committments to
be met.In the next twenty years we gain financial independence and provide financial
independence to our families. This is also the stage when our income may be unable to meet the
growing expenses of a young household. In the next twenty as we see our investments grow after
our children grow and become financially independent. Insurance is a provision for the
distribution of risks that is to say it is a financial provision against loss from unavoidable
disasters. The protection which it affords takes form of a gurantee to indemnify the insured if
certain specified losses occur. The principle of insurance so far as the undertaking of the
obligation is concerned is that for the payment of a certain sum the gurantee will be given to
reimburse the insured. The insurer in accepting the risks so distributes them that the total of all
the amounts is paid for this insurance protection will be sufficient to meet the losses that occur.
Insurance then provide divided responsibilty. This principle is introduced in most stores where a
division is made between the sales clerk and the cashiers department the arrangement dividing
the risks of loss. The insurance principle is similarly applied in any other cases of divided
responsibilty. As a business however insurance is usually recognized as some form of securing a
promise of indemnity by the payment of premium and the fulfillment of certain other stipulations
Types of insurance
Term insurance plans
Term insurance is the cheapest form of life insurance available. Since a term insurance contract
only pays in the event of eventuality the life cover comes at low premium rates . Term insurance
is a usefu tool to purchase against risk of early death and protection of an asset.
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Endowment plans
Endowment plans are savins and protection plans that provide a dual benifit of protection as well
as savings. Endowment plans pay a death benifit in the event of an eventuality should the
customer survive the benifit period a maturity benifit is paid to the life insured.
Whole of life plans
A whole of life plan provides life insurance cover to an individua upto a specified age . A whole
of life plan is suitable for an individual who is looking for an extended life insurance cover
and /or wants to pay premium over as long as tenure as possible to reduce the amount of upfront
premium payment.
Pension plans
Pension plans allow an individual to save in a tax deffered manner. An individual can either
contribute through regular premiums or make a single premium investments. Savings accumulate
over the deferment period. Once the contract reaches the vesting age , the individual has the
option of choosing an annuity plan from a life insurance company. An annuity is paid till the life
the lifetime of the insured or a pre-determined period depending upon the annuity option chosen
by the life insured.
Unit Linked Insurance Plans
Unit linked insurance plan (ULIP) is life insurance solution that provides for the benefits of risk
protection and flexibility in investment. The investment is denoted as units and is represented by
the value that it has attained called as Net Asset Value (NAV). The policy value at any time
varies according to the value of the underlying assets at the time.
In a ULIP, the invested amount of the premiums after deducting for all the charges and premium
for risk cover under all policies in a particular fund as chosen by the policy holders are pooled
together to form a Unit fund. A Unit is the component of the Fund in a Unit Linked Insurance
Policy.
The returns in a ULIP depend upon the performance of the fund in the capital market. ULIP
investors have the option of investing across various schemes, i.e, diversified equity funds,
balanced funds, debt funds etc. It is important to remember that in a ULIP, the investment risk is
generally
borne
by
the
investor.
In a ULIP, investors have the choice of investing in a lump sum (single premium) or making
premium payments on an annual, half-yearly, quarterly or monthly basis. Investors also have the
17
flexibility to alter the premium amounts during the policy's tenure. For example, if an individual
has surplus funds, he can enhance the contribution in ULIP. Conversely an individual faced with
a liquidity crunch has the option of paying a lower amount (the difference being adjusted in the
accumulated value of his ULIP). ULIP investors can shift their investments across various
plans/asset classes (diversified equity funds, balanced funds, debt funds) either at a nominal or
no cost.
Expenses Charged in a ULIP

Premium Allocation Charge:
A percentage of the premium is appropriated towards charges initial and renewal expenses apart
from commission expenses before allocating the units under the policy.
Mortality Charges:
These are charges for the cost of insurance coverage and depend on number of factors such as
age, amount of coverage, state of health etc.
Fund Management Fees:
Fees levied for management of the fund and is deducted before arriving at the NAV.
Administration Charges:
This is the charge for administration of the plan and is levied by cancellation of units.
Surrender Charges:
Deducted for premature partial or full encashment of units.
Fund Switching Charge:
Usually a limited number of fund switches are allowed each year without charge, with
subsequent switches, subject to a charge.
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Service Tax Deductions:

Service tax is deducted from the risk portion of the premium.
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GOVERNMENT SECURITIES
Government securities(G-secs) are sovereign securities which are issued by the Reserve Bank of
India on behalf of Government of India,in lieu of the Central Government's market borrowing
programme.
The term Government Securities includes:
Central Government Securities.
State Government Securities
Treasury bills
The Central Government borrows funds to finance its 'fiscal deficit'.The market borrowing of the
Central Government is raised through the issue of dated securities and 364 days treasury bills
either by auction or by floatation of loans.
In addition to the above, treasury bills of 91 days are issued for managing the temporary cash
mismatches of the Government. These do not form part of the borrowing programme of the
Central Government
Types of Government Securities
Government Securities are of the following types:Dated Securities : are generally fixed maturity and fixed coupon securities usually carrying
semi-annual coupon. These are called dated securities because these are identified by their date
of maturity and the coupon, e.g., 11.03% GOI 2012 is a Central Government security maturing in
2012, which carries a coupon of 11.03% payable half yearly. The key features of these securities
are:
They are issued at face value.
Coupon or interest rate is fixed at the time of issuance, and remains constant till
redemption of the security.
The tenor of the security is also fixed.
Interest /Coupon payment is made on a half yearly basis on its face value.
The security is redeemed at par (face value) on its maturity date.
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Zero Coupon bonds are bonds issued at discount to face value and redeemed at par. These
were issued first on January 19, 1994 and were followed by two subsequent issues in 1994-95
and 1995-96 respectively. The key features of these securities are:
They are issued at a discount to the face value.
The tenor of the security is fixed.
The securities do not carry any coupon or interest rate. The difference between the issue
price (discounted price) and face value is the return on this security.
Partly Paid Stock is stock where payment of principal amount is made in installments over a
given time frame. It meets the needs of investors with regular flow of funds and the need of
Government when it does not need funds immediately. The first issue of such stock of eight year
maturity was made on November 15, 1994 for Rs. 2000 crore. Such stocks have been issued a
few more times thereafter. The key features of these securities are:
They are issued at face value, but this amount is paid in installments over a
specified period.
Coupon or interest rate is fixed at the time of issuance, and remains constant till
redemption of the security.
Floating Rate Bonds are bonds with variable interest rate with a fixed percentage over a
benchmark rate. There may be a cap and a floor rate attached thereby fixing a maximum and
minimum interest rate payable on it. Floating rate bonds of four year maturity were first issued
on September 29, 1995, followed by another issue on December 5, 1995. Recently RBI issued a
floating rate bond, the coupon of which is benchmarked against average yield on 364 Days
Treasury Bills for last six months. The coupon is reset every six months. The key features of
these securities are:

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Coupon or interest rate is fixed as a percentage over a predefined benchmark rate

at the time of issuance. The benchmark rate may be Treasury bill rate, bank rate
etc.
Though the benchmark does not change, the rate of interest may vary according to
the change in the benchmark rate till redemption of the security.
Bonds with Call/Put Option: First time in the history of Government Securities market RBI
issued a bond with call and put option this year. This bond is due for redemption in 2012 and
carries a coupon of 6.72%. However the bond has call and put option after five years i.e. in year
2007. In other words it means that holder of bond can sell back (put option) bond to Government
in 2007 or Government can buy back (call option) bond from holder in 2007. This bond has been
priced in line with 5 year bonds.
Capital indexed Bonds are bonds where interest rate is a fixed percentage over the wholesale
price index. These provide investors with an effective hedge against inflation. These bonds were
floated on December 29, 1997 on tap basis. They were of five year maturity with a coupon rate
of 6 per cent over the wholesale price index. The principal redemption is linked to the Wholesale
Price Index. The key features of these securities are:
Coupon or interest rate is fixed as a percentage over the wholesale price index at
the time of issuance. Therefore the actual amount of interest paid varies according
to the change in the Wholesale Price Index.
The tenor of the security is fixed.
The principal redemption is linked to the Wholesale Price Index.
Features of Government Securities

Nomenclature
22
The coupon rate and year of maturity

Example: 12.25% GOI 2008 indicates the following:
identifies
the
government
security.
12.25% is the coupon rate, GOI denotes Government of India, which is the borrower, 2008 is the
year of maturity.
Eligibility
All entities registered in India like banks, financial institutions, Primary Dealers, firms,
companies, corporate bodies, partnership firms, institutions, mutual funds, Foreign Institutional
Investors, State Governments, Provident Funds, trusts, research organisations, Nepal Rashtra
bank and even individuals are eligible to purchase Government Securities.
Availability
Government securities are highly liquid instruments available both in the primary and secondary
market. They can be purchased from Primary Dealers. PNB Gilts Ltd., is a leading Primary
Dealer in the government securities market, and is actively involved in the trading of government
securities.
Forms of Issuance of Government Securities
Banks, Primary Dealers and Financial Institutions have been allowed to hold these
securities with the Public Debt Office of Reserve Bank of India in dematerialized
form in accounts known as Subsidiary General Ledger (SGL) Accounts.
Entities having a Gilt Account with Banks or Primary Dealers can hold these
securities with them in dematerialized form.
In addition government securities can also be held in dematerialized form in demat

accounts maintained with the Depository Participants of NSDL.
Minimum Amount
In terms of RBI regulations, government dated securities can be purchased for a minimum
amount of Rs. 10,000/-only.Treasury bills can be purchased for a minimum amount of Rs
25000/- only and in multiples thereof. State Government Securities can be purchased for a
minimum amount of Rs 1,000/- only.
Repayment
Government securities are repaid at par on the expiry of their tenor. The different repayment
methods are as follows :
For SGL account holders, the maturity proceeds would be credited to their current
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accounts with the Reserve Bank of India.
For Gilt Account Holders, the Bank/Primary Dealers, would receive the maturity
proceeds and they would pay the Gilt Account Holders.
For entities having a demat acount with NSDL,the maturity proceeds would be
collected by their DP's and they in turn would pay the demat Account Holders.
Day Count
For government dated securities and state government securities the day count is taken as 360
days for a year and 30 days for every completed month. However for Treasury bills it is 365 days
for a year.
Example : A client purchases 7.40% GOI 2012 for face value of Rs. 10 lacs.@ Rs.101.80,
i.e. the client pays Rs.101.80 for every unit of government security having a face value of Rs.
100/- The settlement is due on October 3, 2002. What is the amount to be paid by the client?
The security is 7.40% GOI 2012 for which the interest payment dates are 3rd May, and 3 rd
November every year.
The last interest payment date for the current year is 3 rd May 2002. The calculation would be
made as follows:
Face value of Rs. 10 lacs.@ Rs.101.80%.
Therefore the principal amount payable is Rs.10 lacs X 101.80% =10,18,000
Last interest payment date was May 3, 2002 and settlement date is October 3, 2002. Therefore
the interest has to be paid for 150 days (including 3rd May, and excluding October 3, 2002)
(28 days of May, including 3rd May, up to 30th May + 30 days of June, July, August and
September + 2 days of October). Since the settlement is on October 3, 2002, that date is
excluded.
Interest payable = 10 lacs X 7.40% X 150 = Rs. 30833.33.
360 X 100
Total amount payable by client =10,18,000+30833.33=Rs. 10,48,833.33
Benefits of Investing in Government Securities
No tax deducted at source
Additional Income Tax benefit u/s 80L of the Income Tax Act for Individuals
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Qualifies for SLR purpose
Zero default risk being sovereign paper
Highly liquid.
Transparency in transactions and simplified settlement procedures through

CSGL/NSDL
Methods of Issuance of Government Securities

Government securities are issued by various methods, which are as follows:
Auctions:
Auctions for government securities are either yield based or price based.
In an yield based auction, the Reserve Bank of India announces the issue size(or
notified amount) and the tenor of the paper to be auctioned. The bidders submit
bids in terms of the yield at which they are ready to buy the security.
In a price based auction, the Reserve Bank of India announces the issue size(or
notified amount), the tenor of the paper to be auctioned, as well as the coupon
rate. The bidders submit bids in terms of the price. This method of auction is
normally used in case of reissue of existing government securities.
The basic features of the auctions are given below:
Method of auction: There are two methods of auction which are followed-
Uniform price Based or Dutch Auction procedure is used in auctions of dated

government securities. The bids are accepted at the same prices as decided in the cut off.
Multiple/variable Price Based or French Auction procedure is used in auctions of
Government dated securities and treasury bills. Bids are accepted at different prices /
yields quoted in the individual bids.
Bids: Bids are to be submitted in terms of yields to maturity/prices as announced

at the time of auction.
Cut off yield: is the rate at which bids are accepted. Bids at yields higher than the
cut-off yield is rejected and those lower than the cut-off are accepted. The cut-off
yield is set as the coupon rate for the security. Bidders who have bid at lower than
25
the cut-off yield pay a premium on the security, since the auction is a multiple
price auction.
Cut off price: It is the minimum price accepted for the security. Bids at prices
lower than the cut-off are rejected and at higher than the cut-off are accepted.
Coupon rate for the security remains unchanged. Bidders who have bid at higher
than the cut-off price pay a premium on the security, thereby getting a lower yield.
Price based auctions lead to finer price discovery than yield based auctions.
Notified amount: The amount of security to be issued is notified prior to the

auction date, for information of the public.
The Reserve Bank of India (RBI) may participate as a non-competitor in the
auctions. The unsubscribed portion devolves on RBI or on the Primary Dealers if
the auction has been underwritten by PDs. The devolvement is at the cut-off
price/yield.
Underwriting in Auctions
fFor the purpose of auctions, bids are invited from the Primary Dealers one day
before the auction wherein they indicate the amount to be underwritten by them
and the underwriting fee expected by them.
The auction committee of Reserve Bank of India examines the bids and based on
the market conditions, takes a decision in respect of the amount to be underwritten
and the fee to be paid to the underwriters.
Underwriting fee is paid at the rates bid by PDs , for the underwriting which has
been accepted.
In case of the auction being fully subscribed, the underwriters do not have to
subscribe to the issue necessarily unless they have bid for it.
If there is a devolvement, the successful bids put in by the Primary Dealers are set-off
against the amount underwritten by them while deciding the amount of devolvement.
On-tap issue
This is a reissue of existing Government securities having pre-determined yields/prices by
Reserve Bank of India. After the initial primary auction of a security, the issue remains open to
further subscription by the investors as and when considered appropriate by RBI. The period for
which the issue is kept open may be time specific or volume specific. The coupon rate, the
interest dates and the date of maturity remain the same as determined in the initial primary
auction. Reserve Bank of India may sell government securities through on tap issue at lower or
26
higher prices than the prevailing market prices. Such an action on the part of the Reserve Bank of
India leads to a realignment of the market prices of government securities. Tap stock provides an
opportunity to unsuccessful bidders in auctions to acquire the security at the market determined
rate.
Fixed coupon issue
Government Securities may also be issued for a notified amount at a fixed coupon. Most State
Development Loans or State Government Securities are issued on this basis.
Private Placement
The Central Government may also privately place government securities with Reserve Bank of
India. This is usually done when the Ways and Means Advance (WMA) is near the sanctioned
limit and the market conditions are not conducive to an issue. The issue is priced at market
related yields. Reserve Bank of India may later offload these securities to the market through
Open Market Operations (OMO).
After having auctioned a loan whereby the coupon rate has been arrived at and if still the
government feels the need for funds for similar tenure, it may privately place an amount with the
Reserve Bank of India. RBI in turn may decide upon further selling of the security so purchased
under the Open Market Operations window albeit at a different yield.
Open Market Operations (OMO)
Government securities that are privately placed with the Reserve Bank of India are sold in the
market through open market operations of the Reserve Bank of India. The yield at which these
securities are sold may differ from the yield at which they were privately placed with Reserve
Bank of India. Open market operations are used by the Reserve Bank of India to infuse or suck
liquidity from the system. Whenever the Reserve Bank of India wishes to infuse the liquidity in
the system, it purchases government securities from the market, and whenever it wishes to suck
out the liquidity from the system, it sells government securities in the market.
National Savings Certificate
National Savings Certificate, popularly known as NSC, is a time-tested tax saving instrument
that combines adequate returns with high safety. NSCs are an instrument for facilitating longterm savings. A large chunk of middle class families use NSCs for saving on their tax, getting
double benefits. They not only save tax on their hard-earned income but also make an investment
which are sure to give good and safe returns.
How to Invest
27
National Savings Certificates are available at all post-offices. The application can be made either
in person or through an agent. Post office agents are active in nooks and corners of the country.
Following types of NSC are issued:
Single Holder Type Certificate: This can be issued to: (a) An adult for himself or on behalf of a
minor (b) A Trust.
Joint 'A' Type Certificate: Issued jointly to two adults payable to both holders jointly or to the
survivor.
Joint 'B' Type Certificate: Issued jointly to two adults payable to either of the holders or to the
survivor.
Who can Invest
An adult in his own name or on behalf of a minor
A trust
Two adults jointly
Denomiations and Limit
National Savings Certificates are available in the denominations of Rs. 100 Rs 500, Rs. 1000, Rs.
5000, & Rs. 10,000. There is no maximum limit on the purchase of the certificates. So it is for
you to decide how much you want to put in the NSCs. This is of course a huge benefit for you
can
decide
as
much
as
your
budget
allows.
Maturity
Period of maturity of a certificate is six years. Presently interest paid is 8 % per annum half
yearly compounded. Maturity value of a certificate of any other denomination is at proportionate
rate. Premature encashment of the certificate is not permissible except at a discount in the case of
death of the holder(s), forfeiture by a pledgee and when ordered by a court of law.
Tax Benefits
Interest accrued on the certificates every year is liable to income tax but deemed to have been
reinvested.
Income Tax rebate is available on the amount invested and interest accruing under Section 88 of
Income Tax Act, as amended from time to time.
Income tax relief is also available on the interest earned as per limits fixed vide section 80L of
Income Tax, as amended from time to time.
28
Public Provident Fund

Public Provident Fund, popularly known as PPF, is a savings cum tax saving instrument. It also
serves as a retirement planning tool for many of those who do not have any structured pension
plan covering them. The balances in PPF account cannot be attached by any authority normally.
How to Open Account
Public Provident Fund account can be opened at designated post offices throughout the country
and at designated branches of Public Sector Banks throughout the country.
Who can Open Account
The account can be opened by an individual in his own name, on behalf of a minor of whom he
is a guardian.
Tabs on Investment
Minimum deposit required in a PPF account is Rs. 500 in a financial year. Maximum deposit
limit is Rs. 70,000 in a financial year. Maximum number of deposits is twelve in a financial year.
Maturity
The maturity period of the account is 15 years.
Rate of interest is 8% compounded annually.
One deposit with a minimum amount of Rs.500/- is mandatory in each financial year.
The amount of deposit can be varied to suit the convenience of the account holders.
The account holder can retain the account after maturity for any period without making any
further deposits. In this case the account will continue to earn interest at normal rate as
admissible till the account is closed.
The account holder also has an option to extend the PPF account for any period in a block of 5
years at each time, after the maturity period of 15 years.
Lapse in Deposits
If deposits are not made in a PPF account in any financial year, the account will be treated as
discontinued. The discontinued account can be activated by payment of the minimum deposit of
Rs.500/- with default fee of Rs.50/- for each defaulted year.
Premature Closure or Withdrawl
29
Premature closure of a PPF Account is not permissible except in case of death. Nominee/legal
heir of PPF Account holder cannot continue the account after the death.
Premature withdrawal is permissible in the 7th year of the account subject, to a limit of 50% of
the amount at credit preceding three year balance. Thereafter one withdrawal in every year is
permissible.
Account Transfer
The Account is transferable from one post Office / bank to another and from post Office to bank
or from a bank to a post office.
Tax Benefits
Deposits in PPF are eligible for rebate under section 80-C of Income Tax Act.
The interest on deposits is totally tax free.
Deposits are exempt from wealth tax.
30
BONDS
A bond is a debt security, in which the authorized issuer owes the holders a debt and, depending
on the terms of the bond, is obliged to pay interest (the coupon) and/or to repay the principal at a
later date, termed maturity. It is a formal contract to repay borrowed money with interest at fixed
intervals.[1]
Thus a bond is like a loan: the issuer is the borrower, the bond holder is the lender, and the
coupon is the interest. Bonds provide the borrower with external funds to finance long-term
investments, or, in the case of government bonds, to finance current expenditure. Certificates of
deposit (CDs) or commercial paper are considered to be money market instruments and not
bonds. Bonds must be repaid at fixed intervals over a period of time
Bonds are issued by public authorities, credit institutions, companies and supranational
institutions in the primary markets. The most common process of issuing bonds is through
underwriting. In underwriting, one or more securities firms or banks, forming a syndicate, buy an
entire issue of bonds from an issuer and re-sell them to investors. The security firm takes the risk
of being unable to sell on the issue to end investors. However government bonds are instead
typically auction. The most important features of a bond are:
Nominal, principal or face amount the amount on which the issuer pays interest, and which
has to be repaid at the end.
Issue price The price at which investors buy the bonds when they are first issued, which will
typically be approximately equal to the nominal amount. The net proceeds that the issuer
receives are thus the issue price, less issuance fees.
Maturity date The date on which the issuer has to repay the nominal amount. As long as all
payments have been made, the issuer has no more obligations to the bond holders after the
maturity date. The length of time until the maturity date is often referred to as the term or tenor
or maturity of a bond. The maturity can be any length of time, although debt securities with a
term of less than one year are generally designated money market instruments rather than bonds.
Most bonds have a term of up to thirty years. Some bonds have been issued with maturities of up
to one hundred years, and some even do not mature at all. In early 2005, a market developed in
euros for bonds with a maturity of fifty years. In the market for U.S. Treasury securities, there
are three groups of bond maturities:
short term (bills): maturities up to one year;
medium term (notes): maturities between one and ten years;
long term (bonds): maturities greater than ten years.
31
Coupon The interest rate that the issuer pays to the bond holders. Usually this rate is fixed
throughout the life of the bond. It can also vary with a money market index, such as LIBOR, or it
can be even more exotic. The name coupon originates from the fact that in the past, physical
bonds were issued which had coupons attached to them. On coupon dates the bond holder would
give the coupon to a bank in exchange for the interest payment.
The quality of the issue, which influences the probability that the bondholders will receive the
amounts promised, at the due dates. This will depend on a whole range of factors.
Indentures and Covenants An indenture is a formal debt agreement that establishes the
terms of a bond issue, while covenants are the clauses of such an agreement. Covenants specify
the rights of bondholders and the duties of issuers, such as actions that the issuer is obligated to
perform or is prohibited from performing. In the U.S., federal and state securities and
commercial laws apply to the enforcement of these agreements, which are construed by courts as
contracts between issuers and bondholders. The terms may be changed only with great difficulty
while the bonds are outstanding, with amendments to the governing document generally
requiring approval by a majority (or super-majority) vote of the bondholders.
High yield bonds are bonds that are rated below investment grade by the credit rating agencies.
As these bonds are more risky than investment grade bonds, investors expect to earn a higher
yield. These bonds are also called junk bonds.
coupon dates the dates on which the issuer pays the coupon to the bond holders. In the U.S.
and also in the U.K. and Europe, most bonds are semi-annual, which means that they pay a
coupon every six months.
Optionality: Occasionally a bond may contain an embedded option; that is, it grants option-like
features to the holder or the issuer:
Callability Some bonds give the issuer the right to repay the bond before the maturity date on
the call dates; see call option. These bonds are referred to as callable bonds. Most callable bonds
allow the issuer to repay the bond at par. With some bonds, the issuer has to pay a premium, the
so called call premium. This is mainly the case for high-yield bonds. These have very strict
covenants, restricting the issuer in its operations. To be free from these covenants, the issuer can
repay the bonds early, but only at a high cost.
Putability Some bonds give the holder the right to force the issuer to repay the bond before
the maturity date on the put dates; see put option. (Note: "Putable" denotes an embedded put
option; "Puttable" denotes that it may be putted.)
call dates and put datesthe dates on which callable and putable bonds can be redeemed early.
There are four main categories.
32
A Bermudan callable has several call dates, usually coinciding with coupon dates.
A European callable has only one call date. This is a special case of a Bermudan callable.
An American callable can be called at any time until the maturity date.
A death put is an optional redemption feature on a debt instrument allowing the beneficiary of
the estate of the deceased to put (sell) the bond (back to the issuer) in the event of the
beneficiary's death or legal incapacitation. Also known as a "survivor's option".
sinking fund provision of the corporate bond indenture requires a certain portion of the issue to
be retired periodically. The entire bond issue can be liquidated by the maturity date. If that is not
the case, then the remainder is called balloon maturity. Issuers may either pay to trustees, which
in turn call randomly selected bonds in the issue, or, alternatively, purchase bonds in open
market, then return them to trustees.
convertible bond lets a bondholder exchange a bond to a number of shares of the issuer's
common stock.
exchangeable bond allows for exchange to shares of a corporation other than the issuer.
Fixed rate bonds have a coupon that remains constant throughout the life of the bond.
Floating rate notes (FRNs) have a coupon that is linked to an index. Common indices include:
money market indices, such as LIBOR or Euribor, and CPI (the Consumer Price Index). Coupon
examples: three month USD LIBOR + 0.20%, or twelve month CPI + 1.50%. FRN coupons reset
periodically, typically every one or three months. In theory, any Index could be used as the basis
for the coupon of an FRN, so long as the issuer and the buyer can agree to terms.
Zero-coupon bonds don't pay any interest. They are issued at a substantial discount to par value.
The bond holder receives the full principal amount on the redemption date. An example of zero
coupon bonds are Series E savings bonds issued by the U.S. government. Zero-coupon bonds
may be created from fixed rate bonds by a financial institutions separating "stripping off" the
coupons from the principal. In other words, the separated coupons and the final principal
payment of the bond are allowed to trade independently. See IO (Interest Only) and PO
(Principal Only).
Inflation linked bonds, in which the principal amount and the interest payments are indexed to
inflation. The interest rate is normally lower than for fixed rate bonds with a comparable
maturity (this position briefly reversed itself for short-term UK bonds in December 2008).
However, as the principal amount grows, the payments increase with inflation. The government
of the United Kingdom was the first to issue inflation linked Gilts in the 1980s. Treasury
Inflation-Protected Securities (TIPS) and I-bonds are examples of inflation linked bonds issued
by the U.S. government.
33
Other indexed bonds, for example equity-linked notes and bonds indexed on a business indicator
(income, added value) or on a country's GDP.
Asset-backed securities are bonds whose interest and principal payments are backed by
underlying cash flows from other assets. Examples of asset-backed securities are mortgagebacked securities (MBS's), collateralized mortgage obligations (CMOs) and collateralized debt
obligations (CDOs).
Subordinated bonds are those that have a lower priority than other bonds of the issuer in case of
liquidation. In case of bankruptcy, there is a hierarchy of creditors. First the liquidator is paid,
then government taxes, etc. The first bond holders in line to be paid are those holding what is
called senior bonds. After they have been paid, the subordinated bond holders are paid. As a
result, the risk is higher. Therefore, subordinated bonds usually have a lower credit rating than
senior bonds. The main examples of subordinated bonds can be found in bonds issued by banks,
and asset-backed securities. The latter are often issued in tranches. The senior tranches get paid
back first, the subordinated tranches later.
Perpetual bonds are also often called perpetuities. They have no maturity date. The most famous
of these are the UK Consols, which are also known as Treasury Annuities or Undated Treasuries.
Some of these were issued back in 1888 and still trade today, although the amounts are now
insignificant. Some ultra long-term bonds (sometimes a bond can last centuries: West Shore
Railroad issued a bond which matures in 2361 (i.e. 24th century)) are virtually perpetuities from
a financial point of view, with the current value of principal near zero.
Bearer bond is an official certificate issued without a named holder. In other words, the person
who has the paper certificate can claim the value of the bond. Often they are registered by a
number to prevent counterfeiting, but may be traded like cash. Bearer bonds are very risky
because they can be lost or stolen. Especially after federal income tax began in the United States,
bearer bonds were seen as an opportunity to conceal income or assets. [2] U.S. corporations
stopped issuing bearer bonds in the 1960s, the U.S. Treasury stopped in 1982, and state and local
tax-exempt bearer bonds were prohibited in 1983.[3]
Registered bond is a bond whose ownership (and any subsequent purchaser) is recorded by the
issuer, or by a transfer agent. It is the alternative to a Bearer bond. Interest payments, and the
principal upon maturity, are sent to the registered owner.
Municipal bond is a bond issued by a state, U.S. Territory, city, local government, or their
agencies. Interest income received by holders of municipal bonds is often exempt from the
federal income tax and from the income tax of the state in which they are issued, although
municipal bonds issued for certain purposes may not be tax exempt.
Book-entry bond is a bond that does not have a paper certificate. As physically processing paper
bonds and interest coupons became more expensive, issuers (and banks that used to collect
34
coupon interest for depositors) have tried to discourage their use. Some book-entry bond issues
do not offer the option of a paper certificate, even to investors who prefer them.[4]
Lottery bond is a bond issued by a state, usually a European state. Interest is paid like a
traditional fixed rate bond, but the issuer will redeem randomly selected individual bonds within
the issue according to a schedule. Some of these redemptions will be for a higher value than the
face value of the bond.
War bond is a bond issued by a country to fund a war.
Serial bond is a bond that matures in installments over a period of time. In effect, a $100,000, 5year serial bond would mature in a $20,000 annuity over a 5-year interval.
Revenue bond is a special type of municipal bond distinguished by its guarantee of repayment
solely from revenues generated by a specified revenue-generating entity associated with the
purpose of the bonds. Revenue bonds are typically "non-recourse," meaning that in the event of
default, the bond holder has no recourse to other governmental assets or revenues.
[edit] Investing in bonds
35
CHAPTER-3
COMPANY PROFILE
36
Stock Broking business of the group was started in 1995, promoted by professional entrepreneurs
and incubated by the Shriram Group through its entity, Shriram Insight Share Brokers Ltd.
Stock Broking business commenced operations with a corporate membership in NSE in the cash
segment in 1996. Membership in the derivatives segment in the NSE was acquired in 2003.
The Business has expanded into the commodities market with a trading-cum-clearing
membership in the Multi Commodity Exchange (MCX) and the National Commodities and
Derivatives Exchange (NCDEX) through a 100% subsidiary.Stock Broking business is firmly
focused in the rapidly growing High Networth Individual (HNI) and Retail space. Member:
National Stock NSE SEBI Reg. No. : NSE-CM [INB 230947033] | BSE-CM [INB 010947035] ||
NSE-F&O [INF 230947033] ,DP [IN-DP-CDSL-293-2005] ,MCX [Membership No: 10115] |
The business has an active client base of over 1,50,000.The business operates through 1000
branches with equal no. of trading terminals. The business model of Stock Broking largely
focused on owned branches in the initial years and has now graduated into the franchisee mode
of expansion that will cater to PAN India target market. Rapid expansion has been made possible
in this two-pronged strategy of owned and franchised outlets and is expected to have an end-state
distribution, networking over 3000 branches. As the business starts targeting the next level of
mass affluent customers, expanding into wealth management and advisory space, same would
also become a key thrust area that can potentially enhance profitability and shareholder value in
the medium term.
Shiram Insight Logo:
37
Shiram Insight slogan
About Shiram Insight

The Group has also made investments in Manufacturing, Value Added Services, Project
Development, Engineering Services, Pharmaceuticals, Machined & Auto Components, Press
Dies & Sheet Metal Stamping, Packaging, Information Technology, Property Development etc.
Genesis of the Shriram phenomenon

The 30,000 Cr Shriram Group had its humble beginnings in the Chit Fund business
over three decadesago. R Thyagarajan, AVS Raja and T Jayaraman were the three
musketeers who ventured into these businesses. Not many in the financial services
industry thought at that time, this small Chit Funds business in Chennai would
indeed be the foundation for the financial conglomerate that Shriram is today.
The Shriram Way!

Shriram Groups businesses strive to serve the largest number of common people. Consider
these: Commercial Vehicle Financing, Consumer & Enterprise Finance, Retail Stock Broking,
Life Insurance, Chit Funds and Distribution of Investment & Insurance Products. Our foray into
Non-Life (General) Insurance is again a strong expression of this commitment.
Milestones
Year
Milestone
1974
Commencement of Business - Shriram Chits
38
1979
Commencement of Business - Shriram Transport Finance Co (STFC)
1982
Commencement of Business - Shriram Investments Ltd
1984
IPO of STFC
1986
Commencement of Business - Shriram City Union Finance Co (SCUF)
1988
IPO of SCUF
1989
Commencement of Business - Shriram Overseas Finance Ltd
1995
Commencement of Business- Shriram Properties Pvt Ltd
1999
Commencement of Business - Shriram Insight Share Brokers Ltd
1999
Citicorp CV financing tie up with STFC
2000
Commencement of Business - Shriram EPC Ltd
2000
Commencement of Business - TAKE Solutions Ltd
2004
Commencement of Business - Shriram Capital Ltd
2005
Entry of Chryscapital as Partner with STFC & EPC
2005
Entry of Sanlam as Life Insurance business partner and commencement of business-
Shriram Life Insurance Co

2006
Merger of Shriram Investments Ltd & Shriram Overseas Finance Ltd with STFC
2006
Commencement of Business - Shriram Fortune Solutions Ltd
2006
Commencement of Business - Shriram Value Services
2006
Entry of TPG as STFC's partner
2007
Shriram EPC's JV with Leitner Technologies for Manufacture of wind turbines
2007
EPC's foray into Air Pollution Control with Hamon through JV
39
2007
Orient Green Power was founded by Shriram EPC
2007
IPO of TAKE Solutions Ltd
2008
Commencement of Business - Shriram General Insurance Ltd
2008
IPO of Shriram EPC Ltd
2009
NCD Placement of Rs 10 Bn by STFC
2010
IPO of Orient Green power
Industrial Investments
Non-Finanical service:Shriram Group has always encouraged entrepreneurship by demonstrating continuous apetite for
investing in start-up manufacturing business.
Our Investment
About Founder
Mr.R Thyagarajan, Founder
40
Chairman of the Shriram Group of Companies - Promoted the Shriram Group Companies in
1974. Today the group has over 15, 000 employees and operating through 700 locations and
manage funds of over 15,000 Crores in the business of financial services including life insurance
and general insurance.
Masters in Mathematics
Masters in Mathematical Statistics from Indian Statistical Institute
Associate of Chartered Insurance Institute (A.C.I.1), London
Visiting faculty of Asian Institute of Insurance, Philippines on Consequential Loss Insurance.
By inculcating the philosophy of putting people first, he has transformed the Shriram Group
into Indias Premier Networked Financial Services Supermarket Chain. The Network Shriram
comprises over 650 Branches and Service Centers, served by more than 6000 employees and
60,000 agents committed to ensuring world-class customer service. The Groups aggregate
turnover exceeds Rs. 5000 crores.
41
Shiram group Services

Fina
Financial
Services
No-Financial
Services
ncial Services :-
Helping Create Wealth. Empowering people through prosperity. Resulting in inclusive growth.
The relentless pursuit of this mission, since our inception in 1974 has given the Shriram Group
our raison d'tre and our distinct identity. The Groups reputation for effectiveness, transparency
and integrity has helped it to become one of Indias largest Financial Services Network.The
Groups Financial Services Businesses manage assets exceeding Rs.40,000 crores, has 6.5
million clients, served by 1,00,000 Agents and 36,000 employees, through 2700 Branches across
India.Our core financial services businesses are housed under the holding company Shriram
Capital Ltd:
Commercial Vehicle Finance

Life Insurance
General Insurance
Consumer & Enterprise Finance
Financial Product Distribution
Retail Stock Broking
Chit Funds
42
Non-Financial Services:Shriram Group has always encouraged entrepreneurship by demonstrating continuous apetite for
investing in start-up manufacturing business.
Our Investment
Corporate management :Board Of Directors

Arun Duggal
Mr. Arun Duggal is an experienced international banker and has advised companies on financial
strategy, M&A and capital raising.
He is Chairman of Board of Directors of Shriram, Shriram Properties Limited, Shriram City

Union Finance Limited and Shriram EPC Limited. He is the Vice Chairman of International
Asset Reconstruction Company. He is on the Board of Directors of Jubilant Energy NV., Patni
Computers (Chairman - Audit Committee), Fidelity Fund Management, LNG Petronet (Nominee
Director of Asian Development Bank), Manipal Acunova, Zuari Industries, Info Edge (India),
Dish TV India , Mundra Port & SEZ, and Hertz (India). Mr. Duggal is Advisor to IMA (formerly
Economist Intelligence Unit, India). He is a member of the Investment Committee of Axis
Private Equity. He was on the Board of Governors of the National Institute of Bank
Management. He is a Board Member and erstwhile Chairman of the American Chamber of
43
Commerce, India. Mr. Duggal is involved in several initiatives in social sector. He is a founder
Director of Bellwether Microfinance Fund which provides equity capital to promising Micro
Finance organizations and helps them in capacity building. He is a Trustee of Centre for Civil
Society. New Delhi, which focuses on improving the quality and access of education to students
especially for the poor. He is Senior Advisor (Asia Pacific ) to Transparency International Berlin,
which is undertaking a number of initiatives to combat corruption problem around the world. Mr.
Duggal had a 26 years career with Bank of America, mostly in the U.S. Hong Kong and Japan.
His last assignment was as Chief Executive of Bank of America in India from 1998 to 2001. He
spent ten years (1981-1990) with the New York Corporate Office of Bank of America handling
multinational relationships. From 1991-1994 as Chief Executive of Bank of America Asia
Limited, Hong Kong he looked after Investment Banking activities for the Bank in Asia. In 1995
he moved to Tokyo as the Regional Executive, managing Bank of America 's business in Japan,
Australia and Korea. From 2001 to 2003 he was Chief Financial Officer of HCL Technologies,
India. A Mechanical Engineer from the prestigious Indian Institute of Technology, Delhi, Mr.
Duggal holds an MBA from the Indian Institute of Management, Ahmedabad. He teaches
Banking & Finance at the Indian Institute of Management, Ahmedabad as a visiting Professor.
R.Sridhar (Managing Director)

Adit Jain
S.Venkatakrishnan
Maya Shanker Verma
Mukund Manohar Chitale
Puneet Bhatia
Ranvir Dewan
Sumatiprasad M. Bafna
S.Lakshminarayanan
44
Services offered from Shiram Insight
capital
market
Mutual
Funds
Ipo
Commodit
es
Derivative
s
45
CHAPTER 4
DATA ANALYSIS &
INTERPRETATION
46
Do you know about the following financial instruments?

YES
EQUITY SHARES
MUTUAL FUNDS
BONDS
INSURANCE
FIXED DEPOSIT
GOVT SECU
REAL ESTATE
IPO
GOLD
NO
Column1
95
90
60
95
100
50
75
70
100
5
10
40
5
0
50
25
30
0
120
100
80
60
40
YES
20
Column1
47
100
90
80
70
60
50
40
30
20
10
0
YES
Column1
GOVT SECU REAL ESTATE
IPO
GOLD
The sample size consists of 100 respondents and out of which almost all the people are fully
aware about investment avenues like gold and fixed deposits and almost 95 are aware about
equity shares and mutual funds
How do you get information about the following investment avenues?

INFORMATION
ADVERTISEMENT
EXECUTIVE
FRIENDS
MAGAZINES
55
10
10
30
INFORMATION
ADVERTISEMENT
EXECUTIVE
FRIENDS
MAGAZINES
48
Out of the 100 respondents about 55 investors of them get the information from advertisements
on the television and internet and the rest from the magazines , company sales executives and
friends and relatives.
49
Rate the following according to your preference?
MUTUAL FUND
INSURANCE
EQUITY
SHARES
BONDS
FIXED
DEPOSIT
GOLD
MORE
PREFERRED
25
60
70
MODERATE
55
30
20
LESS
PREFERRED
20
10
10
10
80
30
15
60
5
60
25
15
90
80
70
60
50
40
MORE PREFERRED
30
MODERATE
20
LESS PREFERRED
10
0
Out of the 100 respondents asked the most preferred financial instrument is fixed deposits and
the then the rest like equity shares with 60 investors more preference and insurance.60 investor
investing in debt market
50
What is your age?

AGE
20-30
31-40
41-50
51-60
Responce
20
38
12
6
24
60
AGE
20-30
24%
20%
41-50
51-60
6%
12%
31-40
60
38%
According to this chart out of 60 investors of Hyderabad the 38% investor are in
the age group of 31-40 yrs. i.e. 20, the second most investors are in the age group
of 41-45yrs i.e. 20% and the least investors are in the age group of below 51-60
yrs.
51
Why you are investing?

Response
RETURN
TAX SAVING
LIQUIDITY
REGULAR INCOME
SAFETY
50
10
30
10
50
60
50
40
30
Axis Title 20
Column1
10
0
Axis Title
50 people investing for returns only 10 people investing tax benefits government giving tax
deduction for money market or bond market investments ,30people investing for liquidity reason
10people investing for regular income 50 investor investing for long term on short term purpose
52
On what basis you invest in any particular financial instrument?
PAST PERFORMANCE
PORTFOLIO
FUND MANAGER
ANALYSIS
SENTIMENT
5
35
15
30
15
35
30
25
20
15
10
Axis Title
Column2
5
0
Interpretation:-5 investors are investment past performance and 35people are investing on
portfolio basis 15 people investing through portfolio manger advice 30people investing technical
and fundamental analysis Basis
53
How will you invest your money in any financial instrument?

BROKER
SUB BROKER
AGENTS
BANKS
HOW DO YOU INVEST

60
20
15
5
HOW DO YOU INVEST

BROKER
SUB BROKER
AGENTS
BANKS
5%
15%
20%
60%
From the above chart it can be inferred that the broker
is the most important source of
information about investment . Out of 100 Respondents, 60 members investing through broker
20 members through sub brokers 15 member investing through Agents 5 Members investing
through banks
54
What is your annual income?

INCOME
1-3LAKHS
3-5LAKHS
5-10LAKHS
MORE THAN10LAKHS
15%
58
22
15
5
INCOME
58%
1-3LAKHS
3-5LAKHS
5-10LAKHS
MORE THAN10LAKHS
15%
22%
5%
58%
22%
In the Income Group of the investors of this project , out of 100 investors, 58 investors that is the
maximum investors are in the monthly income group 1-3LAKHS, Second one i.e. 22 investors
are in the monthly income group of more than 3-5LAKHS and the minimum investors i.e. 5 are
in the monthly income group of below Rs. MORE THAN10LAKHS
55
In what type of Financial Instrument you like to invest?

Equity based
Debt based
Balanced Fund
Hybrid Fund
ELSS (equity linked saving
52
21
12
5
7
If any other please specify
scheme)
100
Equity based
Debt based
Balanced Fund
Hybrid Fund
ELSS (equity linked saving scheme)
If any other please specify
7% 3%
5%
12%
52%
21%
Interpretation: the above chart showing 52% people are like to invest Equity oriented funds 21%
of investor are Debt based funds 12 people response is for balance funds5% people are hybrid
funds ELSS (equity linked saving scheme)only 7%
56
How much of your money you invest in financial instruments?
Chart Title
Column1
50
30
10%to20%
20%to30%
10
10
30%to50%
MORE THAN 50%
50 people are investment 10%-20% and 20%-30% investment made by 30people 30%-50%are
invested by 10 people more then 10% invested by rest of people
57
Preference of factors while investing
Factors
(a) Liquidity
No. of
40
(b) Low
(c) High
Risk
Return
60
64
(d) Trust
36
Respondents
18%
Liquidity
20%
32% Low Risk
30%
High Return
Trust
Interpretation:
Out of 100 People, 32% People prefer to invest where there is High Return, 30%
prefer to invest where there is Low Risk, 20% prefer easy Liquidity and 18%
prefer Trust
58
59
How long do you prefer to keep your money invested?

Response
6 MONTHS
1 YEAR
1TO 3 YEAR
3 TO 5 YEAR
5
10
65
20
65
20
10
5
6 MONTHS
1 YEAR
1TO 3 YEAR
3 TO 5 YEAR
Out of the 100 respondents 65 investors were of the view that they invested there for a money at
least for a period of 1year to 3 years Everybody have to know about the investment fact
Investment is Regularly Invest not for short term 3-5 years period are investing 20 people
and below 1 year investing only 15 people
60
How much return do you expect from your investments?

Column1
10 TO
20 TO
30 TO
MORE
20%
30%
50%
THAN 50%
28
45
17
10
50
45
40
35
30
25
Column1
20
15
10
5
0
10 TO 20%
20 TO 30%
30 TO 50% MORE THAN 50%
Interpretation:-45 persons are expecting returns 20-30% and now a days including
market volatility inventor getting 20-30% profits only,28 investors Expectation is 10%-15%
returns on their investments
61
CHAPTER 5
FINDINGS
62
The over all project is depending up on the findings that has been explained previously. All my
survey findings are corelated and being explain in the above graphs.
After completing the survey and watching the analysis I come to this conclusiion that the before
investment investors do have focus on Tax savings, Income, Capiatal preservation etc. They also
have a predetermination of the time period of investment.
According to my view the age group of 21-30 can be a great potential investors for the
company as the has high risk profile, more disposible income, and the time horizon is
perfect 3-5 years.
100 respondents and out of which almost all the people are fully aware about investment
avenues like gold and fixed deposits and almost 95 are aware about equity shares and
mutual funds
100 respondents about 55 investors of them get the information from advertisements on
the television and internet and the rest from the magazines, company sales executives and
friends and relatives.
60 investors of Hyderabad the 38% investor are in the age group of 31-40 yrs. i.e.
20, the second most investors are in the age group of 41-45yrs i.e. 20% and the
least investors are in the age group of below 51-60 yrs.

50 people investing for returns only 10 people investing tax benefits government giving
tax deduction for money market or bond market investments ,30people investing for
liquidity reason 10people investing for regular income 50 investor investing for long term
on short term purpose
5 investors are investment past performance and 35people are investing on portfolio basis
15 people investing through portfolio manger advice 30people investing technical and
fundamental analysis Basis
Broker is the most important source of information about investment . Out of 100
Respondents, 60 members investing through broker 20 members through sub brokers 15
member investing through Agents 5 Members investing through banks

58 investors that is the maximum investors are in the monthly income group 1-3LAKHS,
Second one i.e. 22 investors are in the monthly income group of more than 3-5LAKHS
and the minimum investors i.e. 5 are in the monthly income group of below Rs. MORE
THAN10LAKHS
50 people are investment 10%-20% and 20%-30% investment made by 30people 30%50%are invested by 10 people more then 10% invested by rest of people
63
32% People prefer to invest where there is High Return, 30% prefer to invest where
there is Low Risk, 20% prefer easy Liquidity and 18% prefer Trust
65 investors were of the view that they invested there for a money at least for a period of
1year to 3 years Everybody have to know about the investment fact Investment is
Regularly Invest not for short term 3-5 years period are investing 20 people and
below 1 year investing only 15 people
45 persons are expecting returns 20-30% and now a days including market volatility
inventor getting 20-30% profits only,28 investors Expectation is 10%-15% returns on
their investments
64
CHAPTER-6
SUGGESTION &
RECOMMANDATIONS
65
Suggestions and Recommendations

The most vital problem spotted is of ignorance. Investors should be made aware of the benefits.
Nobody will invest until and unless he is fully convinced. Investors should be made to realize
that ignorance is no longer bliss and what they are losing by not investing.
Investments a lot of benefit which no other single option could offer. But most of the people are
not even aware of what actually What is investment avenues?, How to Invest? Where I invest?
They only see it as just another investment unsecured option. So the need to Change the to
change their mindsets. The advisors should target for more and more young investors. Young
investors as well as persons at the height of their career would like to go for advisors due to lack
of expertise and time.
Investment Companies Company needs to give the training of the Individual Investor about the
Investment its objective, because that is help Full To Our Economy .
Before making any investment Financial Advisors should first enquire about the
risk tolerance of the investors/customers, their need and time (how long they want to invest). By
considering these three things they can take the customers into consideration.
Younger people aged fewer than 35 will be a key new customer group into the future, so making
greater efforts with younger customers who show some interest in investing should pay off.
For a person with no experience in direct equity , investing in mutual funds via SIP is the best
way to start. Invest only in the top rated funds on this website. ( 5* or 4* )
66
Stick to large cap diversified equity funds or balanced funds.

Avoid sector funds and NFOs
1. Investment Growth Takes Time: Invest for the Long Term

Long term means when you buy something for the purpose of investment growth, you need to
plan on owning it for at least ten years.Statistics tell us that 70% of the time, the stock market
will have a positive calendar year return; 30% of the time it will be negative. Pretty good odds!
Stay invested, and the investment growth that occurs in the positive years will outweigh the
investment loss that happens in the negative years.
2. Invest. Dont Speculate.
People lose money in the markets every day. Why? They are speculating; not
investing.Speculators try to time the markets to make a quick profit. They may win big; or they
may lose big. This is not the strategy to take with your retirement money.Investment growth does
not occur from speculation; it occurs from buying an asset that, over time, will appreciate in
value. Take the time to learn how the investment will grow. This means you must understand
what you own.
3. Diversify
If you put your assets in a single stock, or a single piece of property, you mind as well go to
Vegas.Long term investment growth is achieved by setting up a disciplined approach to invest
systematically across stocks and real estate.
If youre investing in stocks, use index funds.If youre buying real estate, set up plan to buy
smaller, affordable investment properties, rather than putting all your money into one large piece
of property.You will achieve long term investment growth if you consistently invest for the long
term, avoid the temptation to speculate, and diversify your investments.
67
CHAPTER 7
CONCLUSION
68
Now that you have an idea of some of the places where you can invest your hard-earned Returns,
we hope that you are on your way to making your money work for you. Here's a recap of the 20
investments detailed in this:
An American Depository Receipt (ADR) is a stock that trades in the United States but
represents a specified number of shares in a foreign corporation. ADRs are bought and
sold on U.S. stock markets just like regular stocks and are issued/sponsored in the U.S.
by a bank or brokerage.
An annuity is a series of fixed-amount payments paid at regular intervals over the
specified period of the annuity. Most annuities are purchased through an insurance
company.
A closed-end fund is an investment fund that issues a fixed number of shares in
an managed portfolio of securities. The shares are traded in the market just like stocks,
but because closed-end funds represent a portfolio of securities they are very similar to
a mutual fund.
A collectible is any physical asset that appreciates in value over time because it is rare or
it is desired by many. Many people think of collectibles as things like stamps, coins, fine
art or sports cards, but there really are no strict rules as to what is or is not a collectible.
Common stock is ownership in part of a company. This gives you entitlement to a portion
of the company's profits and any voting rights attached to the stock.
A convertible bond is a bond that can be converted into the company's common stock.
You can exercise the convertible bond and exchange the bond into a predetermined
amount of shares in the company.
When you buy a corporate bond, you are loaning your money to a corporation for a
predetermined period of time (known as the maturity). In most cases, the bonds par
value is $1,000. This is the face value of the bond and the amount the lender will be
repaid once the bond matures.
Futures are contracts on commodities, currencies, and stock market indexes that attempt
to predict the value of these securities at some date in the future.
Life insurance is income protection in the event of your death. The person you name as
your beneficiary will receive proceeds from an insurance company to offset the income
lost as a result of your death.
Money market instruments are forms of debt that mature in less than one year and are
very liquid.
A mortgage-backed security (MBS), also known as a "mortgage pass-through" or a "passthrough certificate", is an investment instrument that represents ownership of an
undivided interest in a group of mortgages. Principal and interest from the individual
mortgages are used to pay principal and interest on the MBS.
Municipal bonds, or "munis" for short, are debt securities issued by a state, municipality
or county to finance its capital expenditures.
A mutual fund is a large group of people who lump their money together and give it to a
management company to invest it on their behalf. A mutual fund manager proceeds to
buy a number of stocks from various markets and industries.
Options are a privilege sold by one party to another that offers the buyer the right to buy
(call) or sell (put) a security at an agreed-upon price during a certain period of time or on
69
a specific date.
CHAPTER 8
BIBILIOGRAPHY
70
www.dbfssecurites.com
www.icicidirect.com
www.mutualfundsindia.com
www.nseindia.com
www.bseindia.com
www.scribd.com
www.mcx.com
www.equitymaster.com
Business Today
The Economic Times
The Mint
71

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ABSTRACT

Need for the study

NEED OF THE PROJECT:

To understand all about different investment avenues available in India.

Scope of the study

Source of Data:Primary Data

: Questionnaire, visiting organization.

Secondary Data : Information from the Company, Websites,

journals and magazines.

Sampling technique : Random sampling.

Presentation of the data

LIMITATIONS OF THE STUDY

Mutual fund is a pool of money collected from investors and is invested

Benefits of Investing in Mutual Funds

Mutual Funds invest in a number of companies across a broad cross-section of

You get regular information on the value of your investment in addition to

Investors individually may lack sufficient funds to invest in high-grade stocks. A

Types of Mutual Funds

Various types of Mutual Funds:

The last price at which the stock was bought or sold

High and low

The highest and lowest price over the previous 52 weeks

Expenses Charged in a ULIP

Service Tax Deductions:

Central Government Securities.

State Government Securities

They are issued at face value.

The tenor of the security is also fixed.

The security is redeemed at par (face value) on its maturity date.

The tenor of the security is also fixed.

The security is redeemed at par (face value) on its maturity date.

They are issued at face value.

Coupon or interest rate is fixed as a percentage over a predefined benchmark rate

The security is redeemed at par (face value) on its maturity date.

They are issued at face value.

The tenor of the security is fixed.

The principal redemption is linked to the Wholesale Price Index.

Features of Government Securities

The coupon rate and year of maturity

In addition government securities can also be held in dematerialized form in demat

accounts with the Reserve Bank of India.

Qualifies for SLR purpose

Zero default risk being sovereign paper

Transparency in transactions and simplified settlement procedures through

Methods of Issuance of Government Securities

The basic features of the auctions are given below:

Uniform price Based or Dutch Auction procedure is used in auctions of dated

Bids: Bids are to be submitted in terms of yields to maturity/prices as announced

Notified amount: The amount of security to be issued is notified prior to the

Public Provident Fund

Shiram Insight Logo:

Shiram Insight slogan

About Shiram Insight

Genesis of the Shriram phenomenon

The Shriram Way!

Commencement of Business - Shriram Chits

Commencement of Business - Shriram Transport Finance Co (STFC)

Commencement of Business - Shriram Investments Ltd

Commencement of Business - Shriram City Union Finance Co (SCUF)

Commencement of Business - Shriram Overseas Finance Ltd

Commencement of Business- Shriram Properties Pvt Ltd

Commencement of Business - Shriram Insight Share Brokers Ltd

Citicorp CV financing tie up with STFC