Kotak Muctual Fund PROJECT REPORT

A Reprot On
Marketing of Mutual Funds with Competitive Analysis in Present Scenario.
COMPLETED IN
SUBMITTED BY : PANKAJ MATHUR
COMPANY GUIDE : MANAN BAPNA (STATE HEAD)
MAHARISHI ARVIND INSTITUTE OF ENGINEERING & TECHNOLOGY ( AFFILIATED TO UNIVERSITY OF RAJASTHAN)
MAHARSHI ARVIND INST. OF MANAGEMENT
CONTENTS
Acknowledgement Certificate Preface 1. Profile of Kotak Mahindra An Overview Ethics Areas of Operation Accolades Profile of Kotak Mahindra Mutual Fund An Overview Board of Directors Project Title
2.
3. Introduction to the Mutual Fund Industry Types of Mutual Fund History Constitution of Mutual Fund Working of Asset Management Company Net Asset Value Benefits of Mutual Fund Investment Allocation 4. 5. Schemes of Kotak Mutual Fund SWOT Ananlysis
6. 7. 8.
The Research Reccommandation Bibilography
ACKNOWLEDGEMENT
The project would not be complete without a mention of those, who have spared their valuable time and shared their rich experience, in making this project a success. I owe my indebtedness to Mr. Manan Bapna State Head, Rajasthan for Kotak Mutual Funds , for granting me an opportunity to work with the esteemed organization. He has been benevolent enough to lend his help and spare his valuable time throughout the project. I am thankful for his continuous motivation and encouragement. I extend my heartfelt thanks to Mr. Sanjeev Lodha and Mr. Ankit Babaerwal (H.R.), in charge, Back Office for their incessant guidance and support all through the project. They have been immensely contributive with their ideas and have guided me on all aspects. I also feel privileged to place on record the excellent marketing tactics, which I had learnt from them during my project. I express a deep sense of gratitude to all the staff members at my office- Kotak Mutual Funds .; who gave me a full-fledged support throughout my project.
PREFACE
A professional course like Business Management demands in depth theoretical knowledge and practical exposure to its application. For the same, the course design includes two months summer training. The course aims to groom the students professionally and offer him/her a chance to work in the real environment of the corporate world, so as to have an opportunity to gain experience on practical aspects and supplement his/her theoretical knowledge. Mutual Fund being the ideal investment vehicle in todays complex and modern financial scenario, consequently study of mutual fund has become an essential ingredient of any business and finance programs. Markets for equity, shares, bonds, and other fixed income instruments, real estates, derivatives and other assets have become mature and information driven. Mutual Fund is emerging as the most attractive investment avenue though still a recent phenomenon in the Indian context. I was fortunate enough to closely watch and learn the working of mutual fund, during my summer training at the esteemed organization- KOTAK MUTUAL FUND. The project assigned was based on marketing and then comparative analysis with investment schemes. The project dealt with Agency Expansion & Marketing of Mutual Funds. It is hoped that the organization will be benefited from the suggestions as well as study carried out.
Profile of Kotak Mahindra Group

The Kotak Mahindra Group was born in 1985 as Kotak Capital Management Finance Limited. This company was promoted by Uday Kotak, Sidney A. A. Pinto and Kotak & Company. Industrialists Harish Mahindra and Anand Mahindra took a stake in 1986, and that's when the company changed its name to Kotak Mahindra Finance Limited. Since then it's been a steady and confident journey to growth and success
1986 Kotak Mahindra Finance Limited starts the activity of Bill Discounting 1987 Kotak Mahindra Finance Limited enters the Lease and Hire Purchase market 1990 The Auto Finance division is started 1991 The Investment Banking Division is started. Takes over FICOM, one of Indias largest financial retail marketing networks 1992 Enters the Funds Syndication sector 1995 Brokerage and Distribution businesses incorporated into a separate company Kotak Securities. Investment Banking division incorporated into a separate company - Kotak Mahindra Capital Company 1996 The Auto Finance Business is hived off into a separate company - Kotak Mahindra Prime Limited (formerly known as Kotak Mahindra Primus Limited). Kotak Mahindra takes a significant stake in Ford Credit Kotak Mahindra Limited, for financing Ford vehicles. The launch of Matrix Information Services Limited marks the Groups entry into information distribution.
1998 Enters the mutual fund market with the launch of Kotak Mahindra Asset Management Company.
2000 Kotak Mahindra ties up with Old Mutual plc. for the Life Insurance business. Kotak Securities launches its on-line broking site (now www.kotaksecurities.com). Commencement of private equity activity through setting up of Kotak Mahindra Venture Capital Fund. 2001 Matrix sold Launches Insurance Services to Friday Corporation
2003 Kotak Mahindra Finance Ltd. converts to a commercial bank the first Indian company to do so. 2004 Launches India Growth Fund, a private equity fund. 2005 Kotak Group realigns joint venture in Ford Credit; Buys Kotak Mahindra Prime (formerly known as Kotak Mahindra Primus Limited) and sells Ford credit Kotak Mahindra. Launches a real estate fund
ETHICS
KOTAK MAHINDRAS reputation is critical to being the worlds leading emerging market bank. The preservation and enhancement of that reputation depends upon business operating to the highest standards of ethical conduct. The principles that govern the behavior of the business and employees are reflected in a group code of conduct. It is a practical working document that guides employees through the many difficult issues that confront them. There follows the summary of key elements in the Group Code of Conduct: Local Laws and Group Standards Confidentiality and Data Protection Suitable Products Money Laundering Insider Trading Bribery and Corruption Gifts and Entertainment Conflicts of interest Dealing in Standard Chartered shares Speaking up.
AREAS OF OPERATIONS
Personal Banking
Business Financial Services Commercial Banking
ACCOLADES
Best Debt House in India Euro money Awards for Excellence, 2003 Best Bond House in Thailand
KOTAK MAHINDRA MUTUAL FUNDS
Kotak Mahindra is one of India's leading financial institutions, offering complete financial solutions that encompass every sphere of life. From commercial banking, to stock broking, to mutual funds, to life insurance, to investment banking, the group caters to the financial needs of individuals and corporates. The group has a net worth of over Rs. 2,840 crore, employs around 7,800 people in its various businesses and has a distribution network of branches, franchisees, representative offices and satellite offices across 264 cities and towns in India and offices in New York, London, Dubai and Mauritius. The Group services over 1.6 million customer accounts. Kotak Mahindra Asset Management Company Limited (KMAMC), a wholly owned subsidiary of KMBL, is the asset manager for Kotak Mahindra Mutual Fund (KMMF). KMAMC started operations in December 1998 and has close to 4,34,504 investors in various schemes. KMMF offers schemes catering to investors with varying risk - return profiles and was the first fund house in the country to launch a dedicated gilt scheme investing only in government securities.
KMAMC ANNUAL REPORTS
2004-2005 2003-2004 2002-2003 2001-2002 2000-2001 1999-2000

FUND'S FINANCIALS
ANNUAL REPORT HALF-YEARLY RESULTS AND 2005-2006 PORTFOLIOS ANNUAL REPORT, HALF YEARLY RESULTS & 2004-2005 PORTFOLIOS ANNUAL REPORT, HALF YEARLY RESULTS & 2003-2004
PORTFOLIOS ANNUAL REPORT, HALF YEARLY RESULTS & PORTFOLIOS ANNUAL REPORT, HALF YEARLY RESULTS & PORTFOLIOS ANNUAL REPORT, HALF YEARLY RESULTS & PORTFOLIOS
KEY EMPLOYEES OF AMC Mr. Sandesh Kirkire CHIEF EXECUTIVE OFFICER
2002-2003 2001-2002 2000-2001
Mr. Sandesh Kirkire, 41, is a Mechanical Engineer, and holds a Masters degree in Management Studies from Jamnalal Bajaj Institute of Management Studies (JBIMS), Mumbai University. Following assignments with SBI Capital Markets Ltd. and ITC Bhadrachalam Finance & Investments Ltd., Mr. Kirkire joined the Kotak Mahindra Group in 1994. His 15 years of experience in the financial services space spans Corporate Finance, Proprietory Trading, Investment Banking, Treasury Sales, Debt Market Trading and Debt Fund Management. Mr. Kirkire has earned several awards in his last assignment as CIO (Debt) with the AMC, a position he held till May 2005.
Mr. Nilesh Shah PRESIDENT
Mr. Nilesh Shah, 36, is a CFA and holds a PGDRM from the Institute of Rural Management, Anand (IRMA). He has has over 13 years of experience and achievement in financial services. Following his post graduation from IRMA in 1992, Mr. Shah joined Gruh Finance Ltd., working in their Corporate Finance division for 2 years before joining the Kotak Group. In the vKotak Group, he handled assignments in the Corporate Finance and Capital Markets division before moving into equities. Prior to joining the AMC, Mr. Shah was Executive Director, Equity Strategy, at Kotak Securities Ltd. Mr. Shah is President of the AMC, and guides its equity strategy, among other responsibilities.
Mr. R. Krishnan SENIOR VICE PRESIDENT CHIEF OPERATIONS OFFICER
Mr. R. Krishnan, 36, is a Chartered Accountant and Cost Accountant with over 11 years of experience in the fields of Operations, Systems, Finance, MIS, Accounting, Audit and Taxation. Prior to joining the Kotak Group in August 1994, Mr. Krishnan was a practicing Chartered Accountant for two years, handling Accounting, Audit and Taxation matters for clients. Since joining the Kotak Group, Mr. Krishnan has handled major assignments like the US GAAP implementation for the erstwhile Kotak Mahindra Finance Limited (KMFL) and subsidiary/group companies, Systems Development and Implementation, for the Retail Assets Group and KMFL's transition to Kotak Bank. Mr. Krishnan's latest assignment was as Head - Operations, Retail Assets, at Kotak Bank. Mr. Krishnan joined Kotak Mutual in August 2004 as Senior Vice President, and Chief Operations Officer, and oversees the Operations, Accounting and IT functions of the Fund.
Mr. V.R. Narasimhan CHIEF COMPLIANCE OFFICER
V.R.Narasimhan 49, Post graduate in commerce, business administration and member of the Institute of company secretaries of India. He was associated with NSDL- the first depository in the country since its inception. He was designated as Senior Vice President at NSDL immediately before joining Kotak AMC. He has total experience of over 25 years of which four years was as faculty at university level, about 10 years in a state level development financial institution, about three years in a national level market regulator and about 10 years in the depository.
TITLE Marketing of Mutual Funds with Competitive Analysis in Present Scenario.
Problem Identification / Objectives of the Project
For a project to be successful, definition of objectives is the most important thing. The main objective of the project undertaken were: a) To market the mutual funds. b) To have a Competitive Analysis with other players in the industry.
It can be further segregated into following points:
a) To increase the customer base regarding the SCMF which was launched in Jaipur in January only. b) To create awareness among the investors for this investment vehicle, which is still at inception stage in Jaipur context. c) To find out the attractiveness of the mutual funds as compared to other investment avenues.
Significance of the study
The underlying motives of the research were to furnish the organization with vital information and facilitate the researcher to gain a practical insight to the market scenario. The study proved significant in terms of catering to the interests of both the company and the researcher.
Significance to the organization
The study enabled the organization to know about the perception of investors for investment in various investment avenues; the benefits people are looking forth from the mutual funds and the flaws in the various schemes.
MUTUAL FUNDS: AN OVERVIEW

INTRODUCTION
A mutual fund is a trust that pools the savings of a number of investors that share a common financial goal. The money thus collected is invested by the fund manager in different types of securities depending upon the objective of the scheme. These could range from shares to debentures to money market instruments. The income earned through these investments and the capital appreciation realized by the scheme are shared by its unit holders in proportion to the number of units owned by them (pro rata). Thus a mutual fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed portfolio at a relatively low cost. Anybody with an investible surplus of as little as a few thousand rupees can invest in mutual funds. Each mutual fund scheme has a defined investment objective and strategy. A mutual fund is the ideal investment vehicle for todays complex and modern financial scenario. Markets for equity shares, bonds and other fixed income instruments, real estate, derivatives and other assets have become mature and information driven. Price changes in these assets are driven by global events occurring in faraway places. A typical individual is unlikely to have the knowledge, skills, inclination and time to keep track of events, understand their implications and act speedily. An individual also finds it difficult to keep track of ownership of his assets, investments, brokerage dues and bank transactions etc. A mutual fund is the answer to all these situations. It appoints professionally qualified and experienced staff that manages each of these functions on a full time basis. The
large pool of money collected in the fund allows it to hire such staff at a very low cost to each investor. In effect, the mutual fund vehicle exploits economies of scale in all three areas- researches, investments and transaction processing. While the concept of individuals coming together to invest money collectively is not new, the mutual fund in its present form is a twentieth century phenomenon.
TYPES OF MUTUAL FUNDS

Mutual fund schemes may be classified on the basis of its structure and its investment objective. (1) By Structure/Operational classification:
Open-ended Funds-
An open-ended 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- ended schemes is liquidity.
Closed-ended Funds-
A closed-ended fund has a stipulated maturity period that generally ranges from 3 to 15 years. The fund is open for subscription only during a specified period. 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.
Interval Funds-
Interval funds combine the features of open-ended and closed-ended schemes. They are open for sale or redemption during pre-determined intervals at NAV related prices.
(2) By Investment Objective/ Portfolio Classification: Growth FundsThe aim of growth funds is to provide capital appreciation over the medium to long term. Such scheme normally invests a majority of their corpus in equities. It has been proven that returns from stocks, have outperformed most other kind of investments held over the long term. Growth schemes are ideal for investors having a long-term outlook seeking growth over a period of time.
Income Funds-
The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures and Government securities. Income funds are ideal for capital stability and regular income.
Balanced Funds-
The aim of these funds is to provide both growth and regular incomes. Such schemes periodically distribute a part of their earnings and invest both in equities and debts. These are ideal for investors looking for a combination of income and moderate growth. Money Market FundsThe 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 commercial paper etc. These
are ideal for Corporate and individual as a means to park their surplus funds for short-term periods. (3) Tax Saving Scheme 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 and pension schemes re allowed as deduction u/s 88 of I T Act 1961. (4) Special Schemes Industry Specific Scheme Industry specific scheme invest only in the industries specified in the offer document. The investment of these funds is limited to specific industries like InfoTech, FMCG, and Pharmaceuticals etc.
Index Scheme-
Index Funds attempt to replicate the performance of a particular index such as the BSE Sensex or the NSE 50
Sectoral Scheme
Sectoral Funds are those, which invest exclusively in a specified industry or a group of industries or various segments such as A group shares or initial public offerings.
HISTORY OF MUTUAL FUNDS

Structure of the Indian Mutual Fund Industry
The Unit Trust of India dominates the Indian mutual fund industry. The UTI has many funds/schemes in all categories i.e. equity, balanced, income, etc with some being openended and some being close-ended. UTI was floated by financial institutions and is governed by a special act of Parliament. Most of its investors believe that the UTI is government owned and controlled, which, while legally incorrect, is true for all practical purposes. The second category of mutual funds is the ones floated by nationalized banks. Canbank Asset Management floated by Canara Bank and SBI Funds Management floated by the State Bank of India are the largest of these. GIC AMC floated by General Insurance Corporation and Jeevan Bima Sahayog AMC floated by the LIC are some of the other prominent ones. The third largest category of mutual funds is the ones floated by the private sector and by foreign asset management companies. The largest of these are Birla Sun Life AMC, Standard Chartered AMC, Kotak AMC etc.
CONSTITUTION OF THE MUTUAL FUND

An attempt was made for first time in SEBI GUIDELINES 1992 to spell out for managing the affairs of mutual funds ensuring arms length distance between the sponsor and the fund. The four custodians and asset management company. Moreover in reality pooled funds of small investors were being put to use for the advantage of the sponsors. Four constituents for the management of mutual fund are presented in chart
Sponsors
(Promoters)
TRUSTEES
(Holding property of Fund)
Mutual Fund (A Trust)
Asset Manageme nt Company (Managing the investments of fund)
CUSTODIANS (SAFE CUSTODY OF FUND SECURITIES

SPONSORS
It refers to anybody corporate which initiates the launching of a mutual fund. It is this agency, which of its own or in collaboration with other body corporate comply the formalities of establishing a mutual fund. SEBI ensures that sponsors should have professional competence, financial soundness and general reputation of fairness and integrity in business transactions. Sponsor is normally not responsible for any loss or shortfall resulting from the operations of any scheme of the fund beyond its initial contribution towards the constitution of the trust fund.
TRUSTEES
A trustee is a person who holds the property of the mutual fund in trust for the benefits of the units holders. A company is appointed as a trustee to manage the mutual fund. To ensure fair dealings, mutual fund regulations require that one cannot be a trustee or a director of a trustee company in more than one mutual fund. Further at least fifty percent of the trustees are to be independent of the sponsors. Trustees take into their custody, or under their control all the property of the mutual fund. It is trustees duty to observe and ensure that AMC is managing schemes in accordance with the trust deed. Trustees for their services are paid trusteeship fee, which is to be specified in the trust deed.
CUSTODIANS
SEBI requires that each mutual fund shall have a custodian for managing the scrips bought from the market who is not in anyway associated with the AMC. He cannot act as sponsor or trustee of any mutual fund. Further he is not permitted to act as a custodian of more than one mutual fund without the approval of SEBI. Custodians main assignment is safekeeping of the securities or participation in any clearing system on behalf of the client to effect deliveries of the securities. Depending on the volume there can be co-custodian for a mutual fund. These custodians are entitled to receive custodianship fee based on the average weekly value of net assets or sale and purchase of securities along with per certificate custody charges. Asset Management Company (Investment manager) Asset Management Company as the name implies is to be a body corporate whose Memorandum and Articles of Association are to be approved by SEBI. It is the AMC, which operates all the schemes of the fund. AMC can act as AMC an AMC of only one mutual fund and cannot act as a trustee of any other mutual fund. To ensure efficient management SEBI desires that existing AMC should have a sound track record, dividend paying capacity and profitability, etc. Regulations require that at least 50% of the directors should be such who do not have any association with the sponsors or the trustees.
WORKING OF ASSET MANAGEMENT COMPANY

It is not required that AMC performs all its functions of its own. It can hire services of outside agencies as per its requirements or perform all functions of its own. The main agencies services of which an AMC may require are depicted in the chart.
ASSET MANAGEMENT COMPANY
Registrar And
Lend Managers
Legal advisors
Auditors
Transfer Agent
Fund Accounting Investment Advisors Fund Manager
REGISTRAR AND TRANSFER AGENT. FUND ACCOUNTING. LEND MANAGERS. INVESTMENT ADVISORS. LEGAL ADVISORS. FUND MANAGER. AUDITORS.
REGISTRAR AND TRANSFER AGENTS are assigned the job of receiving and processing the application forms of investors, issuing unit certificates, sending refund
orders, according all transfers of all units and maintaining all such records, repurchasing the units, redemption of units, issuing dividend or income warrants. FUND ACCOUNTING again depending upon on the size of the fund, its age and number of expected transactions may be assigned to specialized agencies. All accounting transaction is recorded and records are maintained by such agencies. LEAD MANAGERS select and co-ordinate activities of intermediaries such as advertising agency, printers etc. They normally engaged by AMC for extensive campaign about the scheme to attract the investors. They assist AMC in approach potential investors through personal as well as through impersonal promotion. INVESTMENT ADVISORS may be appointed by AMC if it cannot afford to cope up with the workload of its own. Investment advisors analyze the market and strategies on a continuous basis. Majority of Indian Mutual Fund have their own market analysis that design their own investment strategies. LEGAL ADVISORS are also sometimes appointed to get legal guidance about planning and execution of different schemes. A group of advocates and solicitors may be appointed as legal advisors. AMC is also required to have an auditor to undertake independent inspection and verification of its accounting activities. AMCs may also appoint a separate fund manager for each scheme. Such assets manager adheres to the guidelines evolved by AMC of its own or designed through investment advisors.
Functions of AMC
The two main functions of an Asset Management Company are discussed in detail here.
{A} Investment
The major strength of any AMC lies in its investment function. The investment department may be classified in four segments. These can be: Fund Manager Research and Planning Cell Dealer Underwriter [1] Fund Manager Asset Management Companies manage the investment of fund through a fund manager. His basic function is to decide about which, when, how much and at what rate securities are to be sold or bought. To a great extent the success of any scheme depends on the caliber of the fund manager. Many mutual funds especially in bank sponsored funds, the entire investment exercise is not left to one individual. One mutual fund has created two committees. First is Investment Committee which is broad based committee having even nominees of the
sponsor. It collectively decides about the primary market investment. The second is Market Operation Committee having the assignment of disinvestments and interacting with secondary market. [2] Research and Planning Cell This performs a very sensitive and technical assignment. Depending upon on the operational policies, such unit can be created by AMC on its own or research findings can be with respect of securities as well as prospective investors. This section also assists planning new schemes and designing innovations in schemes. [3] Dealer To executive the sale and purchase transactions in capital or money market, a separate section may be created under the charge of a person called dealer having deep understanding of stock market operations. Sometimes, this division is under charge of marketing division of AMC. Such brokers are to be approved Board of Directors of AMC. [4] Underwriter Recently mutual funds have been permitted by SEBI to go in for underwriting of public issues to generate additional income for their schemes. Activity will be subject to the following underwriting restrictions:
For the purposes of the SEBI underwriters regulations, the capital adequacy of the mutual fund shall be the original corpus of any of the scheme(s) and the undistributed gains lying to the credit of the scheme(s). The total underwriting obligations of the scheme shall not exceed the total value of the corpus of any scheme together with undistributed profits lying to the credit of the scheme. No understanding commitment may be undertaken in respect of the scheme during the period of six months prior to the date of redemption of any scheme.
{B} MARKETING
Marketing is a big challenge in business especially for mutual fund. Mutual funds deal with small investors hard earned money. The main challenge of marketing to mutual fund is that with same product, customers with diversified profile viz demographic, socio-economic background, life style and psychographics are to be served. It is the marketing division, which complies with the formalities to market the product i.e. a new scheme. Marketing people also evolve the target amount of a scheme. The most crucial marketing strategy is evolved to the best advantage of the fund. Marketing division has to evaluate the market potentials, strengths and weaknesses. For each scheme, what is its market share is very crucial question to design its future strategies. To identify which section of society is under serviced, is another important assignment of marketing division.
A mutual fund is an investment vehicle for those who want to spread their risk and seek returns, which are better than those available from bank deposits. Such investor education should also be taken up by marketing division to avoid facing situations of loose of faith of investor heavy off-loading, resulting in the huge discount to NAV. Marketing people also have a say in dividend policy of the mutual fund. Sufficient infrastructure facilities are to be created for quality and prompt services. Marketing a scheme is to be taken as marketing a consumer product. Marketing for mutual fund is not deal-based but is relationship based. The psychology of investor needs deep insight. There are potential investors in the present investors of the scheme. So understanding and responding to their needs obviously will bring mutual funds new investors besides retaining the present.
NET ASSET VALUE (NAV)

The net asset value of the fund is the cumulative market value of the assets fund net of its liabilities. In other words, if the fund ids dissolved or liquidated, by selling off the entire asset in the fund, this is the amount that the shareholders would collectively own. This give rise to the concept of net asset value per unit, which is the value represented by the ownership of one unit in the fund.
CALCULATION OF NAV The most important part of the calculation is the valuation of the asset owned by the fund. Once it is calculated, the NAV is simply the net asset value of assets divided by the number of units outstanding the detailed methodology for the calculation of the asset value is given below: Asset value is equal to Sum of market value of shares/ debentures +Liquid assets/ cash held, if any +Dividend/ interest accrued
-Amount due on unpaid assets -Expenses accrued but not paid
NAV is computed as follows: (Market or Fair Value of schemes investments+ Current assets including accrued income-Current liabilities and Provisions including accrued expenses) / Number of units outstanding at the end of the day.
DETAILS OF THE ABOVE ITEMS
For liquid shares/debentures, valuation is done on the basis of the last closing market price on the principal exchange where the security is trading. For illiquid and unlisted and /or thinly traded shares and debentures The value has to be estimated. For shares, this could be the book value per share or may be market price. For debentures and bonds, value is estimated on the basis of yields of comparable liquid securities after adjusting liquidity. The value of fixed interest bearing securities moves in the direction opposite to the interest rate changes valuation of debentures and bond is a big problem since most of them are unlisted and thinly traded. This gives considerably leeway to the AMCs on the valuation and some of the AMCs are believed to take advantage of this and adopt flexible valuation policies depending on the situation. Interest is payable on these on a periodic basis. Accrued interest on a particular day is equal to the daily interest rate multiplied by the number o days since the last interest payment date. Usually, dividends are proposed at the time of the Annual General Meeting and become due on the record date. There is a gap between the dates on which it becomes due and the actual payment date. In the intermediate period, it is deemed to be: accrued. Expenses including management fees, custody charges etc. are calculated on a daily basis.
BENEFITS OF MUTUAL FUND INVESTMENT
PROFESSIONAL MANAGEMENT Mutual fund 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 fund invests in a number of companies across a broad cross-section of industries and sectors. This kind of diversification enables to reducing the risk. CONVENIENT ADMINISTRATION Mutual fund reduces paper work and helps to avoid many problems such as bad deliveries, delayed payment etc and improves the administration efficiency. RETURN POTENTIAL Over a medium to long term, mutual fund have the potential to provide higher return as they invest in a diversified basket of selected securities. LOW COST Mutual fund are 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-ended schemes, the investor gets the money back promptly at net asset value related prices from the mutual fund. In closed ended, units can be sold on a stock exchange at prevailing market price or the investor can avail of the direct repurchase at NAV related prices by the mutual fund. TRANSPERENCY You get regular information on the value of your investment in addition to disclosure on the specific investment made by your scheme, the proportion invested in each class of asset and the fund managers 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 WELL REGULATED All mutual funds are registered with SEBI and they function within the provision of strict regulations designed to protect the interests of investors. The operations of mutual funds are regularly monitored by SEBI
INVESTMENT ALLOCATION
KMMF mainly looks towards that area of investments where they deal in 100% debts without taking leverage of equity so that risk level limits to its minimum. However, their area of operation directly gets influenced through bank rate and policies. From the above it can be concluded that: Basic investment in debt market Less risk Influenced by bank rate
Categories of allocation
Govt. of India (GOI) Securities
7.46% GOI 2017 9.39% GOI 2011 8.07% GOI 2017 5.64% GOI 2019 etc.
PSU Bonds/ FIs
IRFC National Thermal Power Company IDBI LIMITED Exim Bank etc.
Corporate Debentures
Reliance Industries Ltd. HDFC

Indo Gulf Corporation Ltd.
Citibank NA GE Capital Services India Tata Power Co. Ltd. etc.
Call Money Market
T-Bill CBLO
Bank Deposits Call / Reverse Repo / Others
Note: -The investment portfolio varies from scheme to scheme. Subject to the regulations, the asset allocation pattern may change from time to time, keeping in view market conditions, market opportunities, applicable regulations and political and economic factors. It must be clearly understood that the asset allocation between various types of debt instruments can vary substantially depending upon the perception of the investment Manager, the intention being at all times to seek to protect the interests of the Unit holders. Such changes in the investment pattern will be for a short term and for defensive considerations only.
SCHEMES of KOTAK MAHINDRA Mutual Fund
SWOT ANALYSIS
STRENGTHS

WEAKNESSES
Lower Lesser
Fund manager skill. Portfolio Management. Innovative Ideas.
Rate of Interest. Goodwill.
OPPURTUNITIES

THREATS
Rebate
Security Transaction Tax. Long-term Investment Benefits. Liquidity. Lesser Risk.

Rise
under section 88. Fund Benefit.
Providend Fixed
Deposits and
Government Securities.
in Inflation. Linked Insurance.
Tax Efficient.
Unit
SWOT Analysis implies that judging the organization on the basis of it strengths,
weaknesses, opportunities, threats. So for the same purpose generation of strengths and weaknesses come from the internal environment of the organization and opportunities and threats come from external macro environment like legal, economic, etc. The description of each is given below: STRENGTHS Fund managers skill: Investing the funds in the various debt schemes through fund manager is one of the strength for SCMF because they had to constantly look upon a well diversified sector for investment and investing in such a way as to provide optimal and maximum return. Portfolio management: Investment is made in diversified securities wit varying
maturity period so as to provide reasonable and less risky returns to the investors. Innovative ideas: Standard Chartered AMC has innovative and objective oriented ideas regarding investments. Looking the current situation prevailing this mutual fund provides different schemes like short-term-cash funds schemes and long-term floaters. According to the needs of the investors like buying houses or children education, this mutual fund enables to provide satisfactory investment schemes.
WEAKNESSES Lower rate of Interest: One of the weaknesses which is usually suffered by this debt house is providing lesser rate of return as compared to what investor gets in investing government securities and public provident fund and other schemes like insurance. Lesser goodwill: Being a foreign and private sector organization it has lesser goodwill than public sector funds like SBI mutual funds that has government backing. OPPORTUNITIES Security Transaction Tax: As per the current budget debt fund house is exempted from security transaction tax and thus has an edge over other equity mutual funds. Long-term Investment Benefits: The long-term investment schemes provided by the debt house not only gives a faster growth of NAV but also provides long-term capital gain tax benefits (10% without indexation and 20% with indexation). Liquidity: The schemes of SCMF provide high liquidity as the amount can be withdrawn any time with a lock in period of just 6 months in few schemes. Lesser Risk: Keeping the above points in the mind the possibility of uncertainty and risk comes to its minimal because of the fact that principal amount always remain intact and no kind of loss booking on it.
THREATS Rebate under section 88: The schemes do not enjoy the benefits of rebate under section 88 on investments. PF Benefits: As the PF provides stable 8% return on savings, which is not necessarily available in schemes. FD and the Government Securities: The investment in these schemes provides 100% safety of the amount, which is not as appropriate in the schemes. Rise in Inflation: In the current scenario because of the rise of crude oil prices and the delayed monsoons economy of India has touched 7.5% inflation rate and this has discouraged the investment in debt funds. Unit linked Insurance Plan: This scheme provides safety of investments as well as returns on the basis of market conditions, which proves to be the biggest threat to debt funds.
THE RESEARCH
Research has to be undertaken in a systematic manner, to ensure tat problems dealt with properly and that nothing overlooked. The systematic way, in which research was undertaken and referred to as the research process, to which there are a number of stages. Each stage is explained in brief in context with the project undertaken, as written as under:
NATURE OF MARKET RESEARCH
Information plays an important role in helping firm to make decisions. A firm undertakes marketing research to uncover facts about both buyer and non-buyers of its products. This involves ascertaining the nature of wants and assessing the current and potential demand for products and services. Information can help to reduce the element of uncertainty and guess work in making marketing decision. Main divisions of marketing research are as follows:
Product research: Concerned with the design, development and testing of new products, the improvement of existing products and prediction of trends in consumer preferences related to styling, product performance, and quality of materials.
Customer research: Covering such matters as buyer behavior in relationship to social, economic and cultural factors. Sales research: Examining the selling activities of a company, usually by sales outlets, territories, agencies and so on.
Promotion research: Concerned with testing and evaluation the effectiveness of the various methods used in promoting companys products or services. This includes things such as exhibitions public relation campaigns, merchandising, consumer and trade advertising, etc.
Customer Research
Product Research
Sales Research
Promotion Research
RECOMMENDATIONS
1. Investor friendly environment Company should lay emphasis to create investor friendly environment by helping the investors in selecting the right type of the schemes. Hence manpower should be increased to handle the back office responsibilities. 2. Service Centers Few of the potential cities of Rajasthan should have some kind of representation of the Kotaki Mutual Fund in the form of Investors service centers. 3. Investors education Programme Timely organizing such kind of programmes by calling professionals from various fields of Finance and especially from the members from the Fund managing team at Mumbai will increase investors trust in the investment with the company. 4. Survey indicated Jaipur to be a highly potential city in terms of the potential customers of the Mutual Fund in near future. This can only increase by their continuous liasioning through advertising and properly coordinated promotional program.
1. The Jaipur Branch office the only at Rajasthan should undertake a really planned
promotional program keeping in purview the whole of Rajasthan. Local newspapers, T.V. channels, Billboards and catchy hoarding should do it.
2. The company should focus its attention on those schemes, which have given good returns over the years. This will give boost to the investors confidence in the company and also help the company in increasing its clientele.
3. The company should categorize the investors into investors potential investors
high net worth investors and so on, there profile should be properly maintained which will help in better understanding the needs of its customers and suggesting the optimum mix of the schemes accordingly.
4. The recent launches like Kotak twin Advantage series III and All Seasons Bond
Fund (Funds of Funds) looking at the volatility in the current market has proved to be efficient for the fund. The KMMF should look more forward to such schemes.
BIBLIOGRAPHY
1. Bansal, Lalit, K., Mutual Funds Management & Working, Deep & Deep Publications New Delhi, 1996. 2. Griffeth, Bill, The Mutual Fund Masters, Probus Publishing, Chicago, Illinois, Cambridge, England, 1995. 3. Jain Nabhi Kumar, Manuals of SEBI Guidelines, Nabhi Publications, New Delhi, August 1996. 4. Kothari C.R., Research Methodology, New Delhi, Wishwa Prakashan, 1990. 5. Kotler P., Marketing Management, Prentice Hall of India Private Limited, New Delhi, 1999. 6. Kulshrestha C.M., Mastering Mutual Funds, New Delhi, Vision Books Pvt. Ltd., 1994.

Kotak Muctual Fund PROJECT REPORT

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A Reprot On

Marketing of Mutual Funds with Competitive Analysis in Present Scenario.

SUBMITTED BY : PANKAJ MATHUR

COMPANY GUIDE : MANAN BAPNA (STATE HEAD)

MAHARISHI ARVIND INSTITUTE OF ENGINEERING & TECHNOLOGY ( AFFILIATED TO UNIVERSITY OF RAJASTHAN)

MAHARSHI ARVIND INST. OF MANAGEMENT

MAHARSHI ARVIND INST. OF MANAGEMENT

The Research Reccommandation Bibilography

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Profile of Kotak Mahindra Group

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Business Financial Services Commercial Banking

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KOTAK MAHINDRA MUTUAL FUNDS

2004-2005 2003-2004 2002-2003 2001-2002 2000-2001 1999-2000

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2002-2003 2001-2002 2000-2001

Mr. Nilesh Shah PRESIDENT

Mr. R. Krishnan SENIOR VICE PRESIDENT CHIEF OPERATIONS OFFICER

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TITLE Marketing of Mutual Funds with Competitive Analysis in Present Scenario.

Problem Identification / Objectives of the Project

It can be further segregated into following points:

Significance of the study

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Significance to the organization

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MUTUAL FUNDS: AN OVERVIEW

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TYPES OF MUTUAL FUNDS

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HISTORY OF MUTUAL FUNDS

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CONSTITUTION OF THE MUTUAL FUND

(Holding property of Fund)

Mutual Fund (A Trust)

Asset Manageme nt Company (Managing the investments of fund)

CUSTODIANS (SAFE CUSTODY OF FUND SECURITIES

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WORKING OF ASSET MANAGEMENT COMPANY

ASSET MANAGEMENT COMPANY

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NET ASSET VALUE (NAV)

-Amount due on unpaid assets -Expenses accrued but not paid

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DETAILS OF THE ABOVE ITEMS

BENEFITS OF MUTUAL FUND INVESTMENT

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Govt. of India (GOI) Securities

PSU Bonds/ FIs