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Mahindra & Mahindra Financial Services ltd


Mahindra & Mahindra Financial services Ltd, BANGALORE

A project report submitted to College name in partial fulfillment for the award of




Submitted by:



Faculty Name

Management Faculty

College logo

College Name


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Mahindra & Mahindra Financial Services ltd



Mahindra & Mahindra Financial services Ltd, BANGALORE

A project report submitted to College Name in partial fulfillment for the award of




Submitted by:

Name Reg No.



Head- HR & Corporate Relations




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This is to certify that the project

FUND SCHEMES’, submitted by name is his original and bonafide
work submitted in partial fulfillment of the requirement for the award of
Post graduation Diploma in Business Management of COLLEGE

The said student has submitted a ‘project report’ that

has been verified and found satisfactory.


Head- HR & Corporate Relations

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I, Sajith G.S. do hereby declare that the report titled

done by me under the guidance of Mr.NAME, HR and Corporate Relation,

This report is submitted in partial fulfillment for awarding of degree of

Post graduation Diploma in Business Management in COLLEGE NAME. I
also declare that all facts included in this report are original and no part of this
work has been replicated or been submitted by me for the award of any other
degree or diploma elsewhere.

Date: 31-08-08 NAME

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I would like to take this opportunity to extend my sincere

gratitude to Mr. Manager Name, state head
distribution channel Mahindra and Mahindra financial services ltd
(finsmart) for providing me the opportunity to conduct a project
study in his esteemed organization.

I would like to express my most sincere gratitude to my Faculty

Guide and my Company Guide Mr. Name, cluster head
investment products, Mahindra financial services ltd for the
constant guidance, encouragement and motivation they extended
for the project study.

I also regard my sincere thanks to my Parents, Friends, Well-

wishers and all those who are directly and indirectly have helped
me in completion of this project.

Any task will not be completed successfully without sincere effort

and effort of various people who have sensibly, logically,
systematically blended their thoughts and efforts in achieving
goals. I have been able to make this research in a very short
period of time that was at my disposal. Hence it gives me great
pleasure to my thanks and gratitude to those who have been
instrumental directly as well as indirectly in completion of the

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Abstract 02
Introduction 03
Objective 03
Methodology 05
Schedule 06
Company Profile 07
What is Mutual Funds 09
Evolution of Mutual Funds 12
Mutual Fund Types 17
Mutual Fund Classification 19
Various Plan of Mutual Funds 21
Risk Hierarchy of Mutual Funds 24
Structure of Mutual Funds 25
NAV and other terms 27
Advantage of Mutual Funds 31
Disadvantage of Mutual Funds 33
Structure of Organization 34
Gap Analysis 35
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Problem Statement 36
SWOT Analysis 38
Mutual Fund scheme analysis 39
Chronicle Order of Companies 42
Asset Under Management 43
Marketing Experience 45
Finding and Observation 47
Conclusion 48
Suggestion 49
Bibliography 51


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Being such a hot and much talked about financial product in the recent times, I
take it as a great opportunity to study and analyze the Indian mutual fund Industry and give
my observation on it. It will not only help building my career but it will also help Mahindra
finance in certain aspect.

The Indian Mutual Funds Industry has witnessed a sea change since UTI was first
established in 1963. From a single player the number of players has increased to more than
30 and the number of schemes has spiraled to more than 3500. The last decade has been a
period of rapid growth for the MF industry. The industry is in nascent stage at present. It
has come a long way and still has lots of potential for growth.

My project in Mahindra finance mainly deals with selling through several financial
channels available in the market. And my main aim is to attain profit for the company and
give them good business. For selling I have done various surveys to get the database and
then I have done proper market segment based on their income etc. Because no two clients
are same so we have to deal everyone according to their needs. And after that we do
telephonic calls and try to get appointment with the person so to give them knowledge
about the product and then try to sale the product to them.

And in these project my main aim to see which schemes are giving better returns
and at a reasonable risk. But risk itself is a very subjective terms that depend on person to
person. And also how asset management companies are performing and how their ranking
in investment terms is.

And during the course of the project I have not only learnt about mutual fund
industry but also try to understand customer behavior and also who can be the potential
client for the company.


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The definition of a mutual fund is a form of collective investment that pools

money from many investors and invests their money in stocks, bonds, short-term money
market instruments, and/or other securities. In a mutual fund, the fund manager trades the
fund's underlying securities, realizing capital gains or losses, and collects the dividend or
interest income. The investment proceeds are then passed along to the individual investors.
The value of a share of the mutual fund, known as the net asset value per share (NAV), is
calculated daily based on the total value of the fund divided by the number of shares
currently issued and outstanding.


 The purpose of the study at the Mahindra finance is to get the insight knowledge into mutual fund
industry and also try to gain some knowledge in equity market

 I also have to see analysis of mutual fund of various fund houses available in the market

 Try to understand consumer behavior and then do their market segment and then try to sell their


1) To gain knowledge about the various investment

2) To understand the selling techniques of mutual fund

3) It will help me to improve my communication skills and as well manners as to how to

remain in front of client.

4) It will help me to understand stock market better.

5) To have the feel of real life work experience.

6) It will help me to learn commitment as well as discipline.

7) It will make me more confident and interactive.

8) To generate revenue for the company.

9) To understand behavior of the client.

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Mahindra & Mahindra Financial Services ltd

10) To gain insight knowledge of mutual fund and how it benefit the investors.


1) Sometime stock market are not performing well so people are not interested to invest
2) Sometime because of negative sentiments in the market people are not ready to invest
for e.g. the subprime crisis in US affected the stock market in India.

3) Many people have good knowledge of the equity market by themselves so they don’t
want to invest in mutual fund

4) Many are looking for the short term benefits for which sometime mutual fund is not the
best option

5) Many people who want to have high risk high return are not suitable for mutual fund

6) Some people are not ready to invest in mutual fund because of the lack of knowledge
about the product

7) Most of the time people are busy in their schedule and so they don’t want to listen to
anything on the telephone calls.

8) In small towns people are not willing to purchase mutual fund because of lack of
knowledge they rather prefer to invest in real state

9) It is also difficult to measure economic factor associated with time constrain

10) Time constrain


Whatever I have learnt in the 1 st and 2nd semester theory most of all the concept are put
into practice firstly I can say market segmenting in this whole process of investing I have

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segmented various customer based on their income , occupation etc . And also try to
understand consumer behavior either meeting them directly or at field work. I have also
done lot of telephone calls that help me to know their responses and to know that how
much people know investing in the mutual fund or either they are having no knowledge for
that. When I meet customer I have to tell them about net asset value and annualized return
for that I have to use all the concept of my financial management. And since I am taking
specialization as marketing this project would help me in shaping and building my career
and also this work experience would help me a lot.


Firstly I did survey and based on that I collect the database and then did the
telephonic call and get the customer information and then try to fix appointment with them
so to give them knowledge about our product and how to invest. After calling to customer
and at the time of meeting I did market segmentation based on income etc because no two
client are same so for every client we have to deal him differently for e.g. A low earning
person who don’t have to give tax for him scheme such as equity linked saving scheme
which is related to tax is of no use so for every client there is a different investment option
so we have to recognize that and based on the need we have to offer different schemes of
different mutual fund as well as different asset management company product to him by
this way we help them to get into good schemes according to their needs. And sometimes i
also tried to contact HR manager of small firms and try to convince about our product and if
he feels satisfied then we take permission to give corporate presentation to his employees
and then try to convince and then sell the product. We also provide them after sale service
by sending them statement every month and also the factsheet of the various AMC so they
can know there return exactly and also know properly that where their money is invested.
And then I also have prepared questionnaire for the person whom I meet to recognize the
factors which they take into account while investing in mutual fund and then also I see
various factors like age , occupation , income group , locality and then see how this factor
affect while investing in various schemes.


This project provides me with learning insight about mutual fund and also little bit
about equity market. The Mutual fund industry in India comprises of a large number of fund

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houses and schemes, however the project is limited to study of a few fund houses and
schemes which are performing well in the current market scenario. The analysis will mainly
be carried on mainly by the data collected from client and from the internet


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Training on mutual fund- learns about the

concept of mutual fund and the different
schemes related to different mutual fund. And
04-07-08 to 10-07-08
also Something about taxation and Financial

Then class on asset management and also done 11-07-08 to 20-08-08

survey by asking People to fill questionnaire

Marketing of mutual fund by telephonic 11-07-08 to 27-08-08

Call and try to fix appointment with them and then

give them product knowledge and then try to close
the deal

For marketing of mutual fund I have visited to Tech- 15-08-08 to 22-08-08

Mahindra for 7 days to give them the product
knowledge and also try to sale the product.

Submission of project proposal report 17-08-08 to 19-08-08

Submit of project interim report 21-08-08 to 26-08-08

Submission of project final report 29-08-08 to 31-08-08

Total project period 04-07-08 to 31-08-08


Mahindra & Mahindra Financial Services Limited, a subsidiary of Mahindra &

Mahindra Limited, was established in the year 1991 with a vision to become the
number one semi urban and rural Finance Company. In a short span of 12 years, it has

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become one of the India’s leading non-banking finance company providing finance for
acquisition of utility vehicles, tractors and cars. It has more than 350 branches covering the
entire India and services over 6, 00,000 customer contracts.

The Mahindra group is a US$4.5 billion conglomerate and a leading manufacturer

of multi –utility vehicles .The Group celebrated its 60th anniversary in 2005-06.It has a
leading presence in key sectors of the Indian economy, including trade and financial
services. (Mahindra intertra de, Mahindra & Mahindra Financial Services Ltd.) , automotive
components, information technology & telecom (Tech Mahindra), and infrastructure
development. Mahindra group is among top ten industrial houses in India.

Mahindra and Mahindra financial services ltd operates in various location of the
country to have a faster response to the needs of all customer for finance and in particular
the dealer and customer for M&M products.

Recently it has received the necessary permission from Reserve Bank of India
(RBI) to start the distribution of Mutual Fund products through its network. Hitherto the
company was only participating in the liability requirements of its customers and with
mutual fund distribution business, it can also participate in their asset allocation.
When it comes to investing everyone has unique needs based on their own objective and
risk profile.

Even though many investment avenues such as fixed deposit, bonds etc exists,
equities typically outperform these investments, over a longer period of time. We are of the
opinion that, systematic investment in equity will allow you to create Wealth. Hence only
through proper allocation of your portfolio, you can get the maximum return with moderate
risk. Investing in equity is not as straight forward as investing in bonds or bank deposits. It
requires expertise and time. Our Investment Advisory services will help you to invest
your money in equity through different Mutual Fund Schemes. For instance there are some
products of Mutual Fund, which allows you to manage your cash flow by providing liquidity
(liquid Funds) as well give you tax free return.

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A Share market is the place where buying and selling of shares takes place. Nowadays due
to internet and advanced technology buying and selling of shares takes place anywhere in
India and also from foreign country; there is no need to be physical present in exchanges
like NSE and BSE. These share market has a great impact on the mutual fund because of
the schemes of mutual fund most of the investment of mutual fund goes into equity market
either scheme can be in the form of index fund, or equity diversified or either money can be
invested in small cap, large cap, mid cap so we can say that sensex movement had a great
correlation with the increase or decrease of net asset value of mutual fund so we can easily
say that mutual funds are heavily depended on share market. Financial markets like NSE
(National Stock Exchange) and BSE (Bombay Stock Exchange) are countries economic
barometer (a guide to economic growth). Stock markets like NSE and BSE enable trading of
a company's stock.

BSE Sensex (sensitive index) is the prime and old indicator of stock market trend in India. It
consist of 30 stocks representing wide spread industries. It is also calculated using well
attested method called free float market capitalization method (market capitalization of all
shares in free float). Free float shares are those that are available for trading in open
market. The rest may me promoters holding, FDI holdings, locked in shares, ESOPS etc.
market Capitalization takes into consideration only those shares issued by the company
that are readily available for the trading in the market.

Market capitalization = Price of its stock * No. of stocks issued by the company

Free float market capitalization rate = market capitalization * free float factor

BSE determines the free float factor for each company based on detailed information
submitted by the companies in the prescribed format. Free-float factor is the multiple with
which the total market capitalization of a company is adjusted to arrive at the Free-Float
market capitalization. Once the free float of a company is determined, it is rounded of to
the higher multiple of 5. A Free-Float factor of say 0.55 means that only 55 % of market
capitalization of the company will be considered for index calculation.

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SENSEX = Free Float market capitalization of 30 companies

Index Divisor



A Mutual Fund is a trust that pools the savings of a number of investors who share a
common financial goal. The money thus collected is then invested in capital market
instruments such as shares, debentures and other securities. The income earned through
these investments and the capital appreciations realized are shared by its unit holders in
proportion to the number of units owned by them. 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 basket of securities at a relatively low cost. The flow chart below
describes broadly the working of a mutual fund:

Mutual Fund Operation Flow Chart

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A mutual fund is the ideal investment vehicle for today’s 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 - research, 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 20th century phenomenon. In fact, mutual funds gained popularity only after the Second
World War. Globally, there are thousands of firms offering tens of thousands of mutual funds with
different investment objectives. Today, mutual funds collectively manage almost as much as or more
money as compared to banks.

Thus a mutual fund is the most suitable investment for the common man as its offers an
opportunity to invest in a diversified, professionally managed portfolio at a relatively low
cost. Thus the mutual fund is packed product which consists of following attributes:-

 Professionally manage portfolio

 Diversification
 Convenience
 Tax benefits u/s 80c
 Liquidity
 Lesser risk

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Mutual fund scheme is prepared by fund manager of that company where offer document

 Load structure (exit load /exit load)

 Type of fund
 Investment objective
 Asset allocation
 Plans and options
 Minimum application
 Bench mark index

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The mutual fund industry in India started in 1963 with the formation of Unit Trust of India,
at the initiative of the Government of India and Reserve Bank. The objective then was to
attract the small investors and introduce them to market investment. The history of mutual
funds in India can be broadly divided into four distinct phases

Phase 1- 1964-87: Growth of Unit Trust of India

In 1963, UTI was established by an act of Parliament. The first scheme launched by UTI
was Unit Scheme 1964. Later in 1970’s and 80’s, UTI started innovating and offering
different schemes to suit the different classes of investors. Unit Link Insurance Plan (ULIP)
was launched in 1971. Six new schemes were introduced between 1981 and 1987. The
asset under management of UTI was increased from Rs. 600 crores in 1984 to Rs. 6700 cr.
by the end of 1987.

Phase 2- 1987-1993: Entry of public sector funds

1987 marked the entry of public sector mutual funds. With the opening up of the economy,
many public sector banks and financial institutions were allowed to establish mutual funds.
State Bank of India established the first non UTI mutual fund- SBI Mutual Fund in November
1987. This was followed by Canbank Mutual Fund, LIC Mutual Fund, Indian Bank Mutual
Fund, Bank of India Mutual Fund, GIC Mutual Fund and PNB Mutual Fund. From 1987-88 to
1992-93, the asset under management increased from Rs.6700 cr. to Rs.47004 cr.

Phase 3-1993-1996: Emergence of Private Funds

A new era of mutual fund industry began in 1993 with the permission granted for the
entry of private sector funds. This gave the Indian investors a broader choice of ‘fund
families’ and increasing competition to the existing private sector funds. Foreign fund
management companies entered joint ventures with Indian companies to start the mutual
fund business in India. These private funds have bought in with them the latest product

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innovation, investment management techniques and investor-servicing technology that

make the Indian mutual fund industry today a vibrant and growing financial intermediary.
During the year 1993-94, five private sector mutual funds launched their schemes followed
by six others in 1994-95. Due to the SEBI regulatory in Indian mutual fund industry, the
fund industry began to witness much greater investor confidence in due course. The
erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector
mutual fund registered in July 1993.

Phase 4-1996-1999: Growth and SEBI regulation

Since 1996, the mutual fund industry in India saw tighter regulation and higher growth.
It scaled new heights in terms of mobilization of funds and number of funds. Deregulation
and liberalization of the Indian economy had introduced competition and provided impetus
to the growth of industry. Measures were taken both by SEBI to protect the investor and by
the Government to enhance investors’ returns through tax benefits.

A comprehensive set of regulations for all mutual funds operating in India was introduced
with SEBI (mutual fund) Regulations, 1996. These regulations set uniforms standards for all
funds. The budget of Union Government in 1999 took a big step in exempting all mutual
fund dividends from income tax in hands of investors. During this phase, both SEBI and
AMFI launched investor awareness programmes aimed at educating all investors about
investing through mutual funds.

Phase 5-1999-2004: Emergence of a large and uniform industry

The other major development in the fund industry has been the creation of a level
playing field for all mutual funds operating in India. This happened in February 2003, when
the UTI Act was repealed. Unit Trust of India no longer has a special legal status as a trust
established by an Act of Parliament. Instead, it has also adopted the same structure as any
other fund in India- a Trust and an Asset Management Company. UTI Mutual Fund is the
present name of the erstwhile Unit Trust of India. UTI Mutual Fund is now under the SEBI’s
(Mutual Fund) Regulations, 1996 like all other Mutual Fund in India. UTI Mutual Fund is still
the largest player in the Indian Fund industry.

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The emergence of a uniform industry with the same structure, operations and regulations
made it easier for distributers and investors to deal with any fund house in India. 1999
marked the beginning of a new phase in the history of the mutual fund industry in India, a
phase of significant terms of both amounts mobilized from investors and asset under
management. Between 1999 and 2005, the size of the industry has doubled in terms of
asset under management which has gone up from Rs. 68000 cr. to Rs. 1, 50,000cr. Within
the growing industry, the relative share of different players in terms of amount mobilized
and asset under management have also undergone changes.

2003-2004: A retrospect:

This year was extremely eventful for mutual funds. The aggressive competition in the
business took its toll and two more mutual funds bit the dust. Alliance decided to remain in
the ring after a highly public bidding war did not yield an acceptable price, while Zurich has
been sold to HDFC Mutual. The growth of the industry continued to be corporate focused
barring a few initiatives by mutual funds to expand the retail base. Large money brought
with it the problems of low retention and consequently low profitability, which is one of the
problems plaguing the business. But at the same time, the industry did see spectacular
growth in assets, particularly among the private sector players, on the back of the
continuing debt bull run. Equity did not find favor with investors since the market was lack-
luster and performances of funds, barring a few, were quite disappointing for investors. The
other aspect of this issue is that institutional investors do not usually favor equity. It is
largely a retail segment product and without retail depth, most mutual funds have been
unable to tap this market.

Impact of local and international developments

During the year we had two major political developments that affected the mutual fund
industry. The standoff between India and Pakistan at the beginning of the financial year saw
the debt market being extremely volatile. Investors pulled out of funds and this also put
pressure on fund managers to hold returns and at the same time meet redemption
commitments. The equity markets were equally subdued but the industry did not react
greatly to this since equity funds were in any case not a significant part of the mobilization
in the last few years. With the stand down on the Indian side, the debt markets recovered

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and with that the inflow of funds into our industry soared once again. But at the end of the
year the industry was hit by another war – the impending US attack on Iraq and consequent
oil price pressures once again made the debt market volatile. It is a mark of the maturing of
the Indian investor that redemptions were only need based and the industry did not see as
much outflows as one feared.

Product innovations

With the bond yields plateauing and with the mutual fund industry trying to attract people
to the equity market, the year also saw some remarkable products flavors for Indian
investors. Birla Sunlife Mutual Fund led the pack with an equity fund focused on dividend
yield stock, a bond index fund and a bond-for-units swap product. Some of the other
innovative products were the series of exchange-traded funds from Benchmark, including a
liquid index traded fund. Prudential-ICICI also launched an exchange-traded fund, the SPICE,
in association with BSE.

The industry focused also on making existing products more attractive by adding on a
number of service features and cost control measures. Same day redemption in liquid
funds, “institutional” plans which would reduce the overall cost of investment and bonus
units in lieu of dividend were some of these features.

A new Emphasis on Risk Management

The year also saw a tremendous emphasis on risk management. A number of mutual funds
were already taking steps to mitigate risks not only in operations as in the past, but also in
the area of management of funds. A committee constituted by AMFI carried the initiative
taken under the FIRE (Financial Institutions Reform and Expansion) Project forward and
developed a risk management framework for the industry. The subsequent circular by SEBI
is perhaps one of the most comprehensive attempts to address the issue of risk in the
mutual fund business and carries with it the added advantage of phase wise escalation
starting with mandatory items and moving towards best practices.

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The graph of total asset under management is given above

AMFI and its role

One of the most effective industry bodies today is probably the Association of Mutual Funds
in India (“AMFI”). It has been a forum where mutual funds have been able to present their
views, debate and participate in creating their own regulatory framework. The association

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was created originally as a body that would lobby with the regulator to ensure that the fund
viewpoint was heard. Today, it is usually the body that is consulted on matters long before
regulations are framed, and it often initiates many regulatory changes that prevent
malpractices that emerge from time to time. This year some of the major initiatives were
the framing of the risk management structure, a code of conduct and registration structure
for mutual fund intermediaries, which were subsequently mandated by SEBI. In addition,
this year AMFI was involved in a number of developments and enhancements to the
regulatory framework. AMFI works through a number of committees, some of which are
standing committees to address areas where there is a need for constant vigil and
improvements and other which are adhoc committees constituted to address specific
issues. These committees consist of industry professionals from among the member mutual
funds. There is now some thought that AMFI should become a self-regulatory organization
since it has worked so effectively as an industry

Phase 6: From 2004 0nwards: Consolidation and Growth

The industry has lately witnessed a spate of mergers and

acquisitions, most recent ones being the acquisition of schemes of Alliance Mutual Fund by
Birla Sun Life, Sun F&C Mutual Fund by Principal, and PNB Mutual Fund by Principal. At the
same time, more international players continue to enter India, including Fidelity, one of the
largest funds in the World. The stage is now set for growth through consolidation and the
entry of new international and private sector players. As at the end of August 2008, there
were 32 funds.

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Number of schemes


All mutual funds would be either close-end or open-end, and either load or no-load.
These classifications are general. For example all open-end funds operate the same way; or
in case of a load fund a deduction is made from investors’ subscription or redemption and
only the net amount used to determine his number of shares purchased or sold.

Once we have reviewed the fund classes, we already to discuss more specific fund
types. Funds are generally distinguished from each other by their investment objectives
and types of securities they invest in. we now look at major types of fund available under
the general classifications as discussed above. It may be noted some of the following fund
types are not yet available popular in India at present.

a) Broad fund types by nature of investments

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Mutual funds may invest in equities, bonds or fixed income securities, or short-term money
market securities. Some have equity, bond or money market or liquid funds. All these invest in financial
assets. But there are funds that invest in physical assets. For example, there is Gold or other precious
metal funds and there are real estate funds.

b) Broad fund types by investment objective

Investors and hence the mutual funds pursue different objectives while investing. Thus, growth funds
invest for medium to long term capital appreciation. Income funds invest to generate regular income and
less for capital appreciation. Value funds invest in equities that are considered undervalued today, whose
value will be unlocked in future.

c) Broad fund types by risk profile

The nature of a fund’s portfolio and its investment objective imply different levels of risk under
taken. Funds are therefore, often grouped in order of risk. Thus, equity funds have a greater risk of
capital loss than a debt fund that seeks to protect the capital while looking for income. Liquid funds are
exposed to less risk than bond funds. Since they invest in short-term fixed income securities, as
compared to longer-term portfolios of bond funds.
Fund managers often try to alter the risk profile of funds by suitably changing the investment objective.
For example, a fund house may structure an “Equity Income Fund” investing in shares that don’t
fluctuate much in value and offer steady dividends-say power sector companies, or a real estate income
fund that invests only in income-producing assets. A balanced fund seeks to produce a lower risk
portfolio by mixing equity investments with debt investments. Investors and their advisors need to
understand both the investment objective and the level of risk of the different types of funds.

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Open-end Vs Closed-end Funds

An open-end fund is one that sells and repurchases units at all times. When the fund
sells units, the investor buys them from the fund. When the investor redeems the units, the
fund repurchases the units from the investor. An investor can buy units or redeem units
from the fund itself at a price on the net asset value (NAV) per unit.NAV per units is
obtaining by dividing the amount of market value of the fund’s asset (plus accrued income
minus the fund liabilities) by the number of units outstanding. The number of units
outstanding goes up or down every time the fund sells new units or repurchases existing
units. In other words, the ‘unit capital’ of an open- end mutual fund is not fixed but variable.
When sale of unit exceed repurchase, the fund increases in size. When the repurchase
exceeds sale, the fund shrinks.

A closed-end fund is a one-time sale of fixed number of units and it is fixed. After
the offer closes, closed-end funds don’t allow investors to buy or redeem units directly from
the funds. However, to provide the much-needed liquidity to investors, closed-end funds list
on a stock exchange. Trading through stock exchange enables investors to buy or sell units
of a closed-end mutual fund from each other, through a stockbroker, in the same fashion as
buying or selling shares of a company. The fund’s units may be traded at a discount or
premium to NAV based on investor’s perceptions about the fund’s future performance and
other market factors affecting the demand for or supply of the fund’s units. The number of
outstanding units of a closed-end fund does not vary on account of trading in the fund’s
units at the stock exchange. Sometimes, closed-end funds do offer “buy-back of fund
shares/units”, thus offering another avenue for liquidity to closed-end fund investors. In this
case, the mutual fund actually reduces the number of outstanding units. In India, SEBI
regulations ensure that the closed end scheme investors are given at least one of the two
exit avenues.

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Load and No-load Funds:

Marketing of a new mutual fund scheme involves initial expenses. These expenses
may be recovered from the investors in different ways at different times. Three usual ways
in which a fund’s marketing expenses may recover from the investors are:

 At the time of investor’s entry into the fund/scheme, by deducting a specific amount from his
 By charging the fund/scheme with a fixed amount each year, during a specified number of years.
 At the time of investor’s exit from the fund/scheme, by deducting a specified amount from the
redemption proceeds payable to the investor.
These charge imposed on the investors to cover distribution/sales/marketing
expenses are often called “loads”. The load charged to the investor at the time of entry into
a scheme is called a “front-end load or entry load”. This is the first case. The load
amount charged to the scheme over a period of time is called a “deferred load”. This is
the second case above. The load that the investor pays at the time of his exit is called a
“back-end load or exit load”. This is the third case above. Some fund may also charge
different amount of loads to the investors, depending upon how many years the investor
has stayed with the fund; the longer the investors stay with the fund, less the amount of
‘exit load’ he is charged. This is called “contingent deferred sales charge”.

Fund that charge front-end, back-end or deferred loads are called load funds. Funds that
make no such charges or loads for sales expenses are called no-load funds.

Tax-exempt Vs Non Tax-exempt Funds

When a fund invests in tax-exempt securities, it is called a tax-exempt fund. In India,

any income received by mutual funds is tax-free. After the 1999 Union Government Budget,
all of the dividend income received from any of the mutual fund is tax free in the hands of
the investor. However, funds other than open-end equity oriented funds have to pay a

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distribution tax, before distributing income to investors. In other words, open-end equity
oriented mutual fund schemes are tax exempt, while other funds are taxable for
distributable income.


Growth Plan:
Dividend is not paid-out under a Growth Plan and the investor realizes only the capital appreciation on the
investment (by an increase in NAV).

Income Plan:
Dividends are paid-out to investors under an Income Plan to the investors. However, the NAV of the
mutual fund scheme under an Income Plan falls to the extent of the dividend payout.

Dividend Re-investment Plan:

Here the dividend accrued on mutual funds is automatically re-invested in purchasing additional units in
open-ended funds. In most cases mutual funds offer the investor an option of collecting dividends or re-
investing the same.

Retirement Pension Plan:

Some schemes are linked with retirement pension. Individuals participate in these plans for themselves,
and corporate participate for their employees.
Insurance Plan:
UTI and LIC Mutual Funds have some schemes that offer insurance cover to investors.
Systematic Investment Plan (SIP):
Here the investor is given the option of preparing a pre-determined number of post-dated cheques in favor
of the fund. The investor is allotted units on the date of the respective cheques at the applicable NAV.
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Systematic Withdrawal Plan:

As opposed to the Systematic Investment Plan, the Systematic Withdrawal Plan allows the investor the
facility to withdraw a pre-determined amount / units from his fund at a pre-determined interval. The
investor's units will be redeemed at the applicable NAV as on that day.


1) Growth Funds
The aim of growth fund is to provide capital appreciation over the medium to long term. Such
schemes normally invest a majority of their corpus in equities. It has proved that return from stock, have
outperformed most other kinds of investment held over the long term. Growth schemes are ideal for
investors having a long term outlook seeking growth over a period of time. Growth funds invest in
companies whose earnings are expected to rise at an above average rate. These companies may be operating in
sectors like technology considered having a growth potential. Growth funds are therefore, less volatile than funds
that target aggressive growth.
2) Income Funds (Debt Funds)
The aim of income fund 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. These funds do not target capital
appreciation but look for current income, and therefore distribute a substantial part of their surplus to
investors. Income funds targets high return and can face more risk.
3) Balanced fund
The aim of balanced fund is to provide both growth and regular income. Such schemes
periodically distribute a part of their earning and invest both in equities and fixed income securities in the
proportion indicated in their offer document. By investing in a mix of nature, balanced funds seek to
attain the objectives of income, moderate capital appreciation and preservation of capital and are ideal for
investors with a conservative and long-term orientation. In a rising stock market, the NAV of these

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schemes may not normally keep pace, or fall equally when the market falls. These are ideal for investors
looking for a combination of income and moderate growth.
4) Money market funds (Liquid Funds)
The aim of money market fund is to provide easy liquidity, preservation of capital
and moderate income. These schemes generally invest in safer short term instrument such
as treasury bills, certificate of deposit, commercial papers and inter-bank call money.
Return 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 fund for short periods.

5) Gilt Funds
Gilt funds are government securities with medium to long term maturities, typically of over one
year. In India, we have Government securities or Gilt Funds that invest in government paper called dated
securities. Since the issuer is the Government of India or States, these funds have little risk of default and
hence offer better protection of principal. However, Gilt Securities, like all debt securities, face interest
rate risk. Debt Securities price fall when interest rate level increase (and vice versa). Investors have to
understand the potential change in NAV s of gilt funds on account of changes in interest rates in the
6) Equity Linked Tax Saving schemes
These scheme offer tax rebates to the investors under specific provision of the Indian income tax
laws as the government offers tax incentive for investment in specified avenues. Investment made in the
equity linked saving schemes (ELSS) and pension schemes are allowed as deduction u/s 88 of the income
tax act, 1961. The act also provides opportunity to investors to save capital gains u/s 54EA and 54EB by
investing in mutual funds.

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Money Equity
Market Fund
Gilt Fund
Growth and Aggressive
High Yield
Income Funds Growth Fund

Growth Funds

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Focused Flexible Asset

Debt Allocation
Funds Fund
Value Funds

Equity Fund

Equity Income

Money Diversifie Balanced Index Fund

Gilt Funds
Market d Debt Funds
Funds Fund


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Trustee Sponsor


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The Fund Structure

Sponsor is defined as any person who, acting alone or in combination with another body
corporate, establishes a mutual fund. The sponsor of a fund is akin to the promoter of a
company as he gets the fund registered with SEBI. The sponsor will form a Trust and
appoint a Board of Trustees. The sponsor will also generally appoint an Asset Management
Company as fund managers. The sponsor, either directly or acting through the Trustees, will
also appoint a Custodian to hold the fund assets. As per the SEBI regulation, for a person to
qualify as a sponsor, he must contribute at least 40% of the net worth of AMC and possess a
sound financial track record over five years prior to registration.

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The mutual fund in India is constituted in the form of a Public Trust created under the Indian
Trust Act, 1882. The fund sponsor acts as the settler of the Trust, contributing to its initial
capital, and appoints a Trustee to hold the assets of the Trust for the benefit of unit holder,
who are the beneficiaries of the Trust. The fund then invites investors to contribute their
money in common pool, by subscribing to “units” issued by various schemes established by
the trust. Under the Indian Trusts Act, the Trust or the Fund has no independent legal
capacity itself, rather it is the Trustee or Trustees who have the legal capacity and therefore
all acts in relation to the trust are taken on its behalf by the Trustees. The Trustee hold the
unit-holders money in a fiduciary capacity, i.e., the money belongs to the unit-holders and
is entrusted to the fund for the purpose of investment.


Trustee is usually a company (corporate body) or a board of Trustees (body of

individuals) .The main responsibility of the Trustee is to safeguard the interest of the Unit
holders and inter alias ensure that the AMC functions in the interest of investors and in
accordance with the Securities and Exchange board of India (MUTUAL FUNDS) Regulations.
Most of the funds in India are managed by Board of Trustees. The Trustees do not directly
manage the portfolio of securities. The Trustee being the primary guardian of the unit-
holders’ funds and assets, a Trustee has to be a person of high repute and integrity.


The AMC is appointed by the trustee as the investment manager of the mutual fund. The
AMC is required to be approved by the Securities and Exchange Board of India (SEBI) to act
as Asset Management Company of the mutual fund. The AMC would, in the name of the
Trust, float and then manage the different investment “schemes” as per SEBI regulations
and as per the investment management agreement it signs with the Trustees. The Asset
Management Company of a mutual fund must have a net worth of at least Rs. 10 crores at
all times. Directors of the AMC, both independent and non-independent, should have

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adequate professional experience in financial services and should be individuals of high

moral standing. At least 50% of the directors of the AMC are independent directors who are
not associated with the Sponsor in any manner.


Net Asset Value is the market value of the assets of the scheme minus its liabilities.
The per unit NAV is the net asset value of the scheme divided by the number of units
outstanding on the Valuation Date.

How is NAV calculated?

The value of all the securities in the portfolio in calculated daily. From this, all
expenses are deducted and the resultant value divided by the number of units in the fund is
the fund’s NAV.

Expense Ratio

AMCs charge an annual fee, or expense ratio that covers administrative expenses,
salaries, advertising expenses, brokerage fee, etc. A 1.5% expense ratio means the AMC
charges Rs1.50 for every Rs100 in assets under management.

A fund's expense ratio is typically to the size of the funds under management
and not to the returns earned. Normally, the costs of running a fund grow slower than the
growth in the fund size - so, the more assets in the fund, the lower should be its expense.

Entry load and an exit load

Some Asset Management Companies (AMCs) have sales charges, or loads, on their funds (entry load
and/or exit load) to compensate for distribution costs. Funds that can be purchased without a sales charge are called
no-load funds. Entry load is charged at the time an investor purchases the units of a scheme. The entry load

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percentage is added to the prevailing NAV at the time of allotment of units. Exit load is charged at the time of
redeeming (or transferring an investment between schemes). The exit load percentage is deducted from the NAV at
the time of redemption (or transfer between schemes). This amount goes to the Asset Management Company and not
into the pool of funds of the scheme.

How does "entry load" affect the investment returns?

A 2.25% entry load sounds small. But it still bites a chunk off the returns over a long period of time. For
instance, Rs 1 lakh invested directly in the no-load option of an equity fund that grows at a rate of 15% over
a period of 20 years yields around Rs 16.36 lakh against Rs 15.99 lakh that a load fund would return—a
difference of Rs 36,820. This is because even a small sum of 2.25% gets compounded over the years.

The pinch remains the same even in a systematic investment plan (SIP). As SIPs entail investments on a
regular basis, say every month, you end up paying entry loads on all your investment installments. Assume
you had invested Rs 5,000 in Reliance Vision Fund (RVF) on January 1, 2003 through a monthly SIP. If
you had withdrawn your entire investment after five years, on December 31, 2007, you would have got back
Rs 11.52 lakh in the no-load option and Rs 11.25 lakh in a load option, a difference of a cool Rs 25,914.

Are investments in mutual fund units risk-free or safe?

This depends on the underlying instrument that a mutual fund invests in, based on its investment
objectives. Mutual funds that invest in stock market-related instruments cannot be termed “risk-free or
safe” as investment in shares are inherently risky by nature, whereas funds that invest in fixed-income
instruments are relatively safe and those that invest only in government securities are the safest.

Why Mutual Funds are an investment option?

Firstly, we are not all investment professionals. We go to a doctor when we need medical advice or a
lawyer for legal guidance, similarly mutual funds are investment vehicles managed by professional fund
managers. And unless you rate highly on the Investment IQ Quiz, we recommend you use this option for
investing. Mutual funds are like professional money managers, however a key factor in their favor is that
they are more regulated and hence offer investors the ability to analyze and evaluate their track record.

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Secondly, investing is becoming more complex. There was a time when things were quite simple - the
market went up with the arrival of the first monsoon showers and every year around Diwali. Since India
started integrating with the world (with the start of the liberalization process), complex factors such as an
increase in short-term US interest rates, the collapse of the Brazilian currency or default on its debt by the
Russian government, have started having an impact on the Indian stock market. Although it is possible for
an individual investor to understand Indian companies (and investing) in such an environment, the process
can become fairly time consuming. Mutual funds (whose fund managers are paid to understand these
issues and whose asset management company invests in research) provide an option of investing without
getting lost in the complexities.

Lastly, and most importantly, mutual funds provide risk diversification: Diversification of a portfolio is
amongst the primary tenets of portfolio structuring (see The Need to Diversify). And a necessary one to
reduce the level of risk assumed by the portfolio holder. Most of us are not necessarily well qualified to
apply the theories of portfolio structuring to our holdings and hence would be better off leaving that to a
professional. Mutual funds represent one such option.

How to select a mutual fund scheme?

What's strategy got to do with selecting a mutual fund? Shouldn't you just go and invest in the best
performing fund? The answer is no. Mutual fund investing requires as much strategic input as any other
investment option. But the advantage is that the strategy here is a natural extension of your asset
allocation plan (use our Asset Allocator to understand what your optimum asset allocation plan should be,
based on your personal risk profile). The following processes are important to select a mutual fund

 Identify funds whose investment objectives match your asset allocation needs
Just as you would buy a computer that fits your needs and budget, you should
choose a mutual fund that meets your risk tolerance (need) and your risk
capacity (budget) levels (i.e. has similar investment objectives as your own).
Typical investment objectives of mutual funds include fixed income or equity,
general equity or sector-focused, high risk or low risk, blue-chips or
turnarounds, long-term or short-term liquidity focus. The investment objectives
match yours are

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 Evaluate past performance, look for consistency. Although past performance is

no guarantee of future performance, it is a useful way of assessing how well or
badly a fund has performed in comparison to its stated objectives and peer
group. A good way to do this would be to identify the five best performing
funds (within your selected investment objectives) over various periods, say 3
months, 6 months, one year, two years and three years. Shortlist funds that
appear in the top 5 in each of these time horizons as they would have thus
demonstrated their ability to be not only good but also, consistent performers.

Are investments in mutual fund units risk-free or safe?

This depends on the instrument mutual fund invests in, based on its investment objectives. Mutual funds
that invest in stock market-related instruments cannot be termed “risk-free or safe” as investment in shares
are inherently risky by nature, whereas funds that invest in fixed-income instruments are relatively safe
and those that invest only in government securities are the safest.

Role of a Fund Manager:

Fund managers are responsible for implementing a consistent investment strategy that reflects the goals
and objectives of the fund. Normally, fund managers monitor market and economic trends and analyze
securities in order to make informed investment decisions.

How are mutual funds regulated?

All Asset Management Companies (AMCs) are regulated by SEBI and or the RBI (in case the AMC is
promoted by a bank). In addition, every mutual fund has a board of directors that represents the unit
holders’ interests in the mutual fund.


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Mutual funds provide the services of experienced and skilled professionals, backed by a
dedicated investment research team that analyze the performance and prospect of
companies and select suitable investments to achieve the objective of the scheme.

If mutual fund is emerging as the favorite investment vehicles, it is because of the many
advantages it has over other forms and avenues of investing, particularly for the investor
who has limited resources available in terms of capital ability to carry out detailed research
and marketing monitoring. The following are the major advantages offered by mutual funds
to all investors:

 Portfolio Diversification: Mutual Fund normally invests in a well-diversified portfolio of securities.

Each investor in a fund is an owner of the fund’s assets. This enables him to tell a diversified investment
portfolio even with a small amount of investment, which would otherwise require big capital.

 Professional Management: Even if an investor has a big amount of capital available to him, he
benefits from the professional management skills bought in by the fund in the management of the
investor’s portfolio. The investment management skills, along with the needed research into available
investment options, ensure a much better return that what an investor can manage own his own. Few
investors have the skills and resources of their own to succeed in today’s fast-moving, global and
sophisticated markets.

 Reduction/Diversification of Risk: An investor in a mutual fund acquired a diversified portfolio; no

matter how small is his investment. Diversification reduces the risk of loss, as compared to investing
directly in one or two shares of debentures or other investments. When an investor invests directly, all the
risk of potential loss is his own. While investing in the pool of funds with other investors, any loss on one
or two securities is also shared with other investors. This risk reduction is one of the most important
benefits of a collective investment vehicle like mutual funds.
 Liquidity: Often, investors hold shares or bonds they cannot directly, easily or quickly sell.
Investment in a mutual fund, on the other hand, is more liquid. An investor can liquidate the investment
by selling the units to the fund if it is an open end fund, or by selling the units in the stock market if the
fund is a closed-end fund, since closed end funds have to be listed on a stock exchange, in any case, the
investor in a closed end fund receives the sale proceeds at the end of a period specified by the mutual fund
or the stock exchange.

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 Convenience and Flexibility: Mutual fund management companies offer many investor services that
a direct market cannot get. Within the same fund family, investor can easily transfer or switch their
holdings from one scheme to another. They can also invest or withdraw their money at regular investors
in most open end schemes. Mutual fund investment process has been made further more convenient with
the facility offered by funds for investors to buy or sell their units through the internet or email using
other communication means. The investors also get updated market information fro the funds. The
information about the share is also shared by the fund managers in a transparent manner, with all material
facts required by regulators to be disclosed to the investors.
 Safety: Mutual fund industry is well regulated. All funds are registered with SEBI which lays down
rules to protect the investors. Thus, investors also benefit from the safety of a regulated investment

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While the benefits of investing through mutual fund far outweigh the disadvantages, an
investor and his advisor will do well to be aware of a few shortcomings of using the mutual
fund as an investment vehicle.

 No control over cost: An investor in a mutual fund has any control over the overall cost of investing.
He pays the investment management fees as long as he remains with the fund, albeit in return for the
professional management and research. Fees are usually payable as a percentage of the value of his
investment, whether the fund value is raising or declining. A mutual fund investor also pays fund
distribution cost, which he would not incur in direct investing. However, this shortcoming only means
that there is a cost to obtain the benefits of mutual fund services, and this cost is often less than the cost of
direct investing by the investors. Besides the regulators have prescribed a ceiling on the maximum
expenses that the fund managers can charge to the schemes, thus limiting the investors’ expenses of
investing through mutual funds.
 No Tailor-made Portfolio: Investors who invest on their own portfolios of shares, bonds and other
securities. Investing through funds means he delegates this decision to the fund managers. High-net-worth
individuals or large corporate investors may find this to be a constraint in achieving their objectives.
However, most mutual funds help investors overcome this constraint by offering families of schemes-a
large number of different schemes- within the same fund. In each schemes there are various plans and
options. An investor can choose from different investment plans and options. An investor can choose
from different investment schemes/plans/options and construct an investment portfolio that meets his
investment objectives.
 Managing a Portfolio of Funds: Availability of a large number of options from mutual funds cam
actually mean too much choice for the investor. He may again need advice on how to select a fund to
achieve his objectives, quite similar to the situation when he has to select individual shares or bonds to
invest in. Fortunately, India now has a large number of AMFI registered and tested fund distributers and
financial planners who are capable of guiding the investors.

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Structure of the organization

Company’s structure

Structure of the company consists of following entities:-

 Country head
 State head distribution channel
 Cluster heads of investments
 Individual brokers
 Back office operation
 Sales team

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State head looks after all the operation in Karnataka region like Bellary, Mysore and other
cities of Karnataka and coordinates with asset management companies i.e. AMCs and
reports to country head, and cluster heads of investments are responsible for sales team
and report to state head distribution channel and sales people who directly interact with
investors for the investments report to cluster head investment. Sales team is supported by
back office operations, like role of back office operation

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Gap analysis
Customers expect different levels of services from different organizations for example the
level of customer services from different organizations. For example, the level of customer
services expected from a fast food outlet differs from that of a restaurant at a star hotel.
Therefore, an organization should understand customer expectations and deliver the
service in a way that matches these expectations. Some of the gaps that MAHINDRA
FINANCE (finsmart) should minimize to improve the quality of services delivered to their
customer are:-

Gap 1. Consumer Expectation----------------------Management

Perception Gap

This gap arises as service marketers may not always understand what consumers
expect in a service. This type of gap has an impact on the consumer’s evaluation of
service quality

Gap 2.Management Perception ------------ Service Quality

Specification Gap

This gap arises from the fact that many services provider fail to set appropriate
service standards required to deliver the service expected by the customer

Gap 3.Service Quality Specification ----- Actual Service

Delivery Gap

This gap results from the employee’s inability to deliver the service according to the
standards set. This may be due to unclear standards or due lack of empowerment

Gap 4.Service Delivery--------------- External

Communications Gap

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This gap arises due to poor external communications that affect consumer
expectations about a service and his perception of the delivered service

Problem statement:-

As described above in structure the main four entities that are responsible for providing
good/bad services are as follows

 Sales team
 Back office
 Cams
 AMCs

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Sales team generates new clients with the help database given by the
company, then sales team interacts them as per the appointments, now investor decides
about the investments then sales executive provides them the application form of
respective schemes then after filling the application form, application form comes to back
office where application gets processed then application reaches to CAMs and ,later
respective AMCs receive that application form, from the CAMs and then AMCs will send
the account statement along with a folio number of that mutual fund schemes through
which investor comes to know about units purchased by him and NAV of his mutual fund

Here the entire process takes around 3-4 days, so because of the share
market performance the NAV of that fund fluctuates because mutual funds are dependent
on share market so once customer agrees on particular NAV, any change at the time of
purchase effects the profitability of investor

Because allotment of NAV is subject to realization of the cheque so as number of units

this generally does not matches with the investor’s expectation not only this investors do
not get their account statements on prescribed date so investor has to enquire about the
account statement time and again

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SWOT analysis of the company and its competitor



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Equity Diversified Scheme

Scheme NAV 1 year 3 year 5 year Since

annuali annuali annuali Incepti
zed zed zed on

Birla Sun Life Frontline Equity 58.3 -0.53 26.659 34.53 36.58
Fund 9

DBS Chola Opportunities Fund- 34.9 09.83 25.7 33.17 12.39

Cumulative 8

DSP Merrill Lynch Equity Fund- 10.9 05.36 N.A N.A 8.56
Growth 6

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DSP Merrill Lynch India T.I.G.E.R 37.6 -04.33 29.13 N.A 38.34
Fund –Growth 3

DSP Merrill Lynch Top 100 69.3 06.92 30.923 37.71 44.36
Equity Growth Fund 8

DWS Alpha Equity Growth Fund 62.7 08.23 29.07 38.283 39.77

DWS Investment Opportunity 31.2 11.23 30.27 N.A 29.07

Fund 0

Fidelity Equity Fund –Growth 23.1 -04.41 23.47 N.A 29.49


HDFC Growth Fund-Growth 60.5 08.61 28.24 34.63 31.77


HSBC Equity Fund- Growth 85.3 08.91 25.19 41.81 46.15


ICICI Prudential Dynamic Plan- 72.8 01.98 27.67 31.78 29.76

Growth 1

ICICI Prudential Infrastructure 25.1 17.82 N.A N.A 34.26

Fund-Growth 7

IDFC Imperial Equity fund- 16.2 06.82 N.A N.A 17.48

Growth 7

Kodak 30-Growth 81.0 05.78 26.67 39.29 45.02


Kodak Opportunities-Growth 35.7 08.57 26.61 39.28 41.39


Reliance growth fund-growth 331. 06.97 26.72 47.17 31.91


Reliance Regular Saving Fund- 20.8 18.41 26.56 N.A 22.62

Equity-Growth 6

SBI Magnum Sector Umbrella- 34.7 09.11 16.74 22.78 17.64

Contra Fund-Growth 3

Sundaram BNP Paribas CAPEX 19.1 -06.67 N.A N.A 20.18

opportunities Fund-Growth 8

Sundaram BNP Paribas Select 71.0 13.47 30.40 36.91 40.29

Focus-Growth 1

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Tata Equity PE Fund-Growth 31.9 02,87 22.71 N.A 32.81


Tata Infrastructure Fund-Growth 29.5 04.78 32.06 N.A 36.26


Templeton India Growth Fund- 82.1 10.51 24.84 N.A 32.63

Growth 9

UTI Dividend Yield Fund-Growth 19.6 06.28 21.49 N.A 22.68


UTI Contra Fund-(G) 10.6 02.12 16.49 N.A 18.82



Scheme Name NAV 1 Year 3 Year 5 Year Since

Annualiz Annualiz Annualiz Incepti
ed ed ed on

DWS Tax Saving Fund 12.3 1.59 N.A N.A 8.52


Fidelity Tax Advantage Fund 14.2 -1.43 N.A N.A 14.48


Franklin India Taxshield- 112. 08.39 14.23 27.32 26.56

Growth 2

HDFC Long Term Tax Adv. 68.4 05.29 12.38 18.45 24.32
Fund 9

HSBC Tax Saver Equity Fund 12.5 1.62 16.86 N.A 17.86

Kodak Tax Saver Scheme 14.4 -10.13 22.49 N.A 15.64


Principal Personal Tax Saver 82.4 -5.85 24.51 33.74 26.49


Reliance Tax Saver-Growth 17.6 3.06 12.73 N.A 13.45


Sundaram BNP Paribas Tax 32.6 7.63 22.50 40.94 29.56

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Saver 1

Tata Tax Advantage Scheme 19.4 3.57 13.57 17.83 17.78



Scheme Name NAV 1 Year 3 Year 5 Year Since

Annualiz Annualiz Annualiz Inceptio
ed ed ed n

Birla Sun Life Balanced Fund 29.3 -2.82 14.42 21.39 13.21

DSP Merrill Lynch Balanced 46.8 7.19 22.72 22.72 18.38

Fund-Growth 2

FT India Balanced Fund- 36.6 0.36 18.52 25.78 18.62

Growth 2

HDFC Balanced Fund- 34.2 5.61 14.72 21.62 17.82

Growth 7

Kodak Balance Fund 20.5 2.75 17.78 28.43 17.77


Tata Balanced Fund- 56.8 0.08 18.79 26.78 19.72

Growth 2

UTI Children’s Career 12.4 1.24 09.57 16.84 15.22

Balanced 5


Scheme Name NAV 1 Year 3 Year 5 Year Since

Annualiz Annualiz Annualiz Inceptio
ed ed ed n

Baroda Pioneer MIP Fund 14.9 5.67 12.78 N.A 12.93


Birla Sun Life Savings MIP 14.5 13.54 22.37 N.A 18.59
2 Savings-Growth 4

DBS Chola MIP Regular- 15.5 5.54 10.74 14.43 10.89

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Growth 5

FT India Monthly Income 22.4 3.84 7.72 9.22 09.73

Plan 6

HSBC MIP Savings-Growth 1.4 3.56 8.78 N.A 10.99

LICMF MIP-Growth 27.6 7.65 10.67 09.78 09.49


Principal MIP-MIP Growth 15.3 9.67 11.64 N.A 08.96


Reliance MIP 15.6 8.11 10.76 19.89 16.56


Tata Monthly Income Fund 21.4 5.61 13.41 17.41 17.72

(G) 5

Gilt Fund

Scheme Name NAV 1 Year 3 Year 5 Year Since

Annualiz Annualiz Annualiz Inceptio
ed ed ed n

Birla Sun Life Gilt Plus 31.4 07.33 10.68 14.78 12.93
Regular Plan – Growth 0

DSP Blackrock G Sec Plan A 31.9 06.91 11.28 13.65 12.06

Long Duration – Growth 8

DWS Gilt Fund - Regular – 10.9 08.11 16.67 26.41 21.02

Growth 9

Fidelity Flexi Gilt Fund – 11.8 08.98 15.99 29.10 26.09

Growth 7

ICICI Prudential Gilt Fund 31.6 05.82 11.67 18.54 12.91

Investment Plan - Growth 5

Mirae Asset Gilt Fund - 10.3 9.61 18.51 24.61 19.71

Investment Plan - Provident 6

Reliance Gilt Securities 11.9 10.17 19.71 32.76 29.62

Fund -Retail – Growth 2

Templeton India Govt. 32.6 08.45 13.41 18.34 14.72

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Securities Fund - 6
Composite Plan –Growth

Debt (Income) Fund

Scheme Name NAV 1 Year 3 Year 5 Year Since

Annualiz Annualiz Annualiz Inceptio
ed ed ed n

Birla Sun Life Income 33.1 06.47 09.89 10.78 10.18

Fund - Growth 1

Birla Sun Life Income Plus 41.4 05.68 09.18 11.68 11.28
- Growth 1

Canara Robeco Income 18.9 09.73 09.87 10.78 10.20

Scheme - Growth 9

ICICI Prudential Income 29.4 06.44 09.74 08.99 09.18

Fund –Growth 2

IDFC Dynamic Bond Fund 18.7 07.61 07.99 09.98 09.64

- Plan A - Growth 1

Kotak Bond Regular Plan 25.6 08.61 10.61 11.45 10.23

– Growth 4

Reliance Income Fund - 30.8 07.81 09.78 11.28 10.93

Retail - Growth Plan – 9

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Fund Category 5 Yr

DSPML T.I.G.E.R. Fund Equity: Diversified 45.45

Tata Infrastructure Equity: Diversified 44.92

Magnum Contra Equity: Diversified 44.81

Kodak Opportunities Equity: Diversified 44.57

UTI Infrastructure Equity: Diversified 43.14

Reliance Growth Equity: Diversified 42.88

Magnum Multiplier Plus Equity: Diversified 42.76

Sundaram BNP Paribas Select Equity: Diversified 40.64


HDFC Top 200 Equity: Diversified 39.29

BoB Growth Equity: Diversified 38.57

Principal Child Benefit Hybrid: Equity-oriented 36.79

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Magnum Balanced Hybrid: Equity-oriented 31.24

HDFC Prudence Hybrid: Equity-oriented 29.68

Birla Sun Life Income Debt: Medium-term 8.29

ABN AMRO Flexi Debt Plan Debt: Medium-term 7.78

ICICI Prudential Long-term Debt: Medium-term 7.55

Birla Dynamic Bond Retail Debt: Medium-term 7.51

Kotak Flexi Debt Debt: Medium-term 7.47

Sundaram BNP Paribas S... Equity: Diversified 43.35

ICICI Prudential Dynamic Equity: Diversified 43.26

DWS Investment Opportunity Equity: Diversified 43.07

DSPML Equity Fund Equity: Diversified 42.89

DSPML Top 100 Equity Reg Equity: Diversified 41.96

Kotak 30 Equity: Diversified 41.33

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Assets Under Management (AUM) as at the end of July-

2008 (Rs in Lakhs)
Average AUM for the month
Mutual Fund Name Excluding Fund Of Funds

1. ABN AMRO Mutual Fund 640038.55

2. AIG Global Investment Group MF 313127.37

3. Benchmark Mutual Fund 331997.2

4. Bharti AXA Mutual Fund N/A

5. Birla Sun Life Mutual Fund 3590604.4

6. BOB Mutual Fund 7239.32

7. Canara Robeco Mutual Fund 288506.51

8. DBS Chola Mutual Fund 237199.85

9. Deutsche Mutual Fund 1291156.7

10. DSP Merrill Lynch Mutual Fund 1667547.7

11. Escorts Mutual Fund 14333.34

12. Fidelity Mutual Fund 835886.21

13. Franklin Templeton Mutual Fund 2684222.2

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14. HDFC Mutual Fund 4477316.8

15. HSBC Mutual Fund 1488820.1

16. ICICI Prudential Mutual Fund 5432187.1

17. ING Mutual Fund 860829.61

18. JM Financial Mutual Fund 1294474.3

19. JPMorgan Mutual Fund 217099.25

20. Kodak Mahindra Mutual Fund 1807062.8

21. LIC Mutual Fund 1405616.2

22. Lotus India Mutual Fund 792523.55

23. Mirae Asset Mutual Fund 110713.84

24. Morgan Stanley Mutual Fund 320501.42

25. Principal Mutual Fund 1320730.2

26. Quantum Mutual Fund 6353.84

27. Reliance Mutual Fund 9093794

28. Sahara Mutual Fund 17870.15

29. SBI Mutual Fund 2917896.1

30. Standard Chartered Mutual Fund 1273348.5

31. Sundaram BNP Paribas MF 1256370.5

32. Tata Mutual Fund 1967893.3

33. Taurus Mutual Fund 32016.93

34. UTI Mutual Fund 4898281.3

Grand Total 52893559

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Assets under Management (AUM) is a term used by financial services companies in the mutual fund and
money management, investment management, wealth management, and private banking businesses to
gauge how much money they are managing. Many financial services companies use this as a measure of
success and comparison against their competitors; in lieu of revenue or total revenue they use total assets
under management.

By this table I want to show which company has how much money to handle. Asset under management
means the total amount of money that asset management company has to manage in different schemes
that they are having for which they appoint fund manager who has to invest money according to the
objective of the scheme and try to keep portfolio which can give maximum returns to the investors. By
looking at this table we can see total asset under management is 52893559 lakhs. So after looking at this
huge amount we can say lot of people is now started investing in mutual fund.


By looking at this table we can rank various asset management companies on the basis of asset under
management. They are as follows:

1) Reliance mutual fund

2) ICICI prudential mutual fund

3) UTI mutual fund

4) BIRLA sun life mutual fund

5) SBI mutual fund

By looking at this rank we can say that in India people prefer to invest in reliance
scheme and they are having great faith on Reliance Company.

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Mahindra & Mahindra Financial Services ltd

The project has been a great learning experience. It has provided me with practical learning
opportunities in selling and marketing. And these training would be a great help for me to
give shape to my career.

The first phase in this project was to learn about the product it means to have good
knowledge about the mutual fund for that we were given proper training in the company by
the big people from ABN AMRO bank, Kodak Life Insurance etc.

The second phase was to do lot of telephonic calls and try to take appointment from the
people. Once he is ready to give appointment then try to meet him at any suitable place
after meeting him try to give him full knowledge about the product because lot of people
have don’t have any idea of the investment in mutual fund then we try to recognize his
needs and also income level because that help us to give him right product and design his
portfolio well because every person has different needs because some wants to save
money for immediate future. Some wants to save for their children’s education or marriage
and some for tax benefits so we have to plan according to the need of investors. And then I
try to give them that product which are useful for them and try to close the deal.

Another approach that I tried is to meet the HR manager of small companies and try to give
them knowledge about the product by meeting them directly because as a marketing guy
you have to think that anybody can be customer for you so you have to be confident and
try to talk to them properly and try to explain them merit of the products and give them
proper facts that would help you to close the deal

Another approached that I tried is that I began to use my personal network of friends and
asked them to speak to their acquaintances – personal and official and check if they might

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be interested in investments. Even here I got great response from my friends and was able
to fix many appointments to take things further.

And then I also have visited TECH MAHINDRA for two weeks and try to give them knowledge
about the product and help them to invest especially to save their tax.

And then I also try to increase my database in the way that I used to call the same person
who has invested with me previously and ask them whether if any of your friends or
relatives is ready to invest and then try to take their numbers and call them.

But overall it is a wonderful experience because what I learnt in theory during my 1 st and 2nd
semester I am applying them in the real life situation. And I also want to thank my company
guide Mr. T Raghunath sir because he was able to solve all our problems and also
give us proper suggestion whenever needed and guide us through any situation.

And one most important thing is that I have learnt from this training is that what I was
expecting since I am doing my MBA I would be given an executive job but it is not like that
because everybody has to learn basic and start from scratch. But all this things taught me a
lot especially how to remain humble and honest.

Team playing capability

Here in Mahindra finance I have learned working in team with a common

objective with my other colleagues where I have learn coordination , time management ,
and work life balance and also I have developed my convincing , interpersonal and selling
skills also I have experienced what is the work pressure and how to handle that with your
consistent performance

Confidence to interact with company executives and others:-

I have joined Mahindra and Mahindra financial services Ltd. (Fin smart) on 04 th
July 2008; there first we went through training about financial market and how to approach
to the customer by making cold calls and getting reference from them

My first appointment was pretty good where I learned that you should be fully equipped
with the product you want to sell because , after all you have to convince your client and
that is your core job, where my superior helped me in a big time in guiding me ,
educating me and providing necessary inputs. In my process here I interacted with Director

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of the company Mindware, entrepreneurs, software professionals, etc… all together it was
different experience it working in real corporate world

Final findings and observations

From the comparison of various mutual fund schemes, it is

understand that the equity diversified scheme is providing a good return for a longer period
of investment. But the return is wholly depending on the market. So the risk is higher
compare to any other schemes. On the other hand the Gilt fund is investing in Government
securities, treasury bills, bonds, debentures etc. But in this case the return is low. But risk is
very low comparable to an equity diversified scheme. In the ELSS scheme, there is a locking
period of 3 years. Still most of the tax schemes give a good return through dividends also.
But the MIP scheme is not giving a good return. As this scheme is also investing in bonds
and debentures, it gives a continuous return to the investors.


Here I have seen in their operations, company follows a

systematic way. Since the company is in its growing stage and also I feel that company
requires good marketing of its offerings to their investors , so as to support its sales team
other findings and observations are as follows :-

 Company’s structure
 Company is the distributor of different mutual fund.

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 It works as a bridge ,facilitator , and advisor between AMCs and investors

 Work culture of the organization is excellent. Here I did not get unnecessary pressures from the
high authority.


From the comparison of various mutual fund schemes, it is

understand that the equity diversified scheme is providing a good return for a longer period
of investment. But the return is wholly depending on the market. So the risk is higher
compare to any other schemes. On the other hand the Gilt fund is investing in Government
securities, treasury bills, bonds, debentures etc. But in this case the return is low. But risk is
very low comparable to an equity diversified scheme. In the ELSS scheme, there is a locking
period of 3 years. Still most of the tax schemes give a good return through dividends also.
But the MIP scheme is not giving a good return. As this scheme is also investing in bonds
and debentures, it gives a continuous return to the investors.

So if one has to decide what factors to be considered while giving services, following
points to be considered Ease of availability, value added services Reduction of risk ,
transaction cost Variety of funds and Cost involved in the fund because a company should
know its core business ,strengths and weakness here company’s core business is

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Mahindra & Mahindra Financial Services ltd

providing value based services to their customer ,which can be the inferred from the
research , marketing and promotional activities are need of the hour to make full-fledged
market presence and target market specific marketing is required for giving service
effectively for example people in software company do not have enough time to go for
research decide upon investment option so company can provide information and solution
online with personalize service secondly if target customer is required some text in local
language we should provide the same.

Company has good chances to be no.1 in mutual fund distribution house provided
what services is been provided by the company , I think company in services sector cannot
afford to have unhappy customer because success of services sector company depends
on word of mouth publicity of the people and one happy customer will bring ten more
customer and one unhappy customer will stop ten prospective customer , in case if there
has been the cases of service failure, company should take appropriate action while
fixing the problem .


 Company should show its presence in the market by its strong marketing strategies which are as follows
1. Bill boards and hoardings
2. Ads in print and electronic Media
3. Corporate tie-ups
4. Road shows
5. Pamphlets
6. Contests

 Company should provide consistent customer service by time

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1. submission of application forms in prescribed time

2. proper follow-up
3. transparency in the process
4. Providing every possible information about the product
5. Company can also work service recovery process if any of this kind of problem occurs

Failure in Services delivery

In general, services delivery system failures consist of three types of failures

1. Unavailable service

2. Unreasonable slow services

3. Other core service failures

Service recovery is concerned with the process of addressing the failure of the services
here question comes how that can be done or how Mahindra finance has done , for that
there should be complain from investors side or it should reflect in the research done by

Bell and Zemke has proposed five ingredients for recovery which
company can use for its recovery.

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 Apology - a first person apology rather than a corporate apology

 Urgent reinstatement – speed of action coupled with a gallant attempt to put
things right even if it is not possible to correct the situation
 Empathy- a sincere expression of feeling for the customer’s plight
 Symbolic atonement- a form of compensation that might include not
charging for the service or offering future service free or discounted
 Follow up- an after recovery call to ascertain that the consumer is satisfied with
the recovery process

A successful recovery include following four key elements

1. acknowledgement of the problem

2. explanation of the problem
3. apology where appropriate
4. compensation as required


 Marketing management by “ Philip Kotler ”

 Sales Management By Still, Cundiff and Govoni

 Business Policy And Strategic Management by Azhar kazmi

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 Research Methodology by Pannerselvam

 Study material at Mahindra finance

 AMFI Booklet
 Broachers of various fund houses
 Fund fact sheet of various fund houses
 CRISIL report



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