KARVY- STOCKBROKING LIMITED SME SEGMENT [pic] Internship Report Submitted By: Aakanksha Rathi SSN: 888940845 In partial fulfillment of the Master’s Program in Business Administration, Ohio University, Athens, USA OHIO University Christ College Academy for Management Education Christ College Campus Hosur Road, Bangalore-29 April 2007 ACKNOWLEDGEMENT I would like to convey my heartiest gratitude to several people, for their support and guidance which helped me complete my Summer Internship.

First and foremost I would like to thank KARVY STOCK BROKING LIMITED, Bangalore for giving me an opportunity to do my internship in their esteemed organization. My special appreciation extends to the Segment Head Mr. Som Shekhar for his constant encouragement throughout this period. I also extend my gratitude to my Guide at KARVY, Wealth Manager – Miss. Sangeetha K, who instructed us with the work procedures and dealt with us with patience at all times. This internship would not be complete without the support of our Director Mr. Shivprakash. I would also like to thank our Internship Co-ordinators, Prof.

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Amalendu Jyotishi and Prof. Girish for their guidance and unflinching support throughout the phases of my Internship. I also thank Prof. Venkatesh Bhagwat for his insightful knowledge, patience and encouragement which gave me the strength and power to perform my best. My special thanks to my co-students and dear friends Ms. Shikha Nagrath, Mr. Sumit Ambastha, Mr. Gaurav Singh and Mr. Mitesh Sonthalia who being a part of the same internship, supported me throughout my Internship and with whose help I could complete my work efficiently and effectively. Their consistent help kept me motivated and going.

Last but not the least, my endless appreciation goes to my family who has stood by my side and given me moral support whenever I was low and boosted my will power. Thank You! CONTENTS PAGE NO. 1) Executive Summary4 2) Introduction5 3) Background6 i) Karvy’s Mission6 ii) Karvy Milestones7 iii) KARVY Credo8 iv) Quality Policy9 4) Achievements10 5) KARVY Wings11 i) KARVY Stock Broking Limited14 6) Organization Structure15 i) Structure of SME Segment16 ii) Process17 7) Product & Services19 i) Products19 a) Mutual Funds19 b) Insurance31 c) Equities35 d) Bonds38 e) Derivatives41 ii) Services43 a) Depository Participants45 ) Distribution of Financial Products46 c) Advisory Services47 d) Private client Group OR CPMS48 8) Marketing Plan50 9) Competitors of KARVY52 10) Learnings 54 11) Bibliography58 EXECUTIVE SUMMARY This internship report consists of the overall experience of working as a part of SME Segment at KARVY STOCKBROKING LIMITED. This experience helped me understand the basic functioning of the particular SME segment where I was inducted. My Internship consisted of the On Job Training as A Relationship Manager. The best learning experience was that I started from the very basics of getting to that position and not from the position itself.

This helped me get useful insight and understanding of various financial products, the market details about them and the benefits provided by them to the customers. Emphasis was given in analysis of the investor behavior of the clients. Another interesting fact was that all these products were suggested to clients not just based on their market performance and returns, but on the client’s financial condition as well as their risk taking capacity. Training sessions were held to give me insights about the various products that KARVY STOCKBROKING deals in like: Mutual Funds, Insurance and Bonds.

Presentations on the same after self study and analysis were a part of this internship session. I provided financial advice and suggestions to the investors for mutual funds which may prove prudent to them. For other products I studied the client’s investing behavior and assisted the wealth manager, who decided the investment options and designed the portfolios. INTRODUCTION KARVY is a premier integrated financial services provider and ranked among the top five in the country in all its business segments.

It services over 16 million individual investors in various capacities and provides investor services to over 300 corporates, comprising who is who of Corporate India. It is a member of all three:- ? National Stock Exchange (NSE) ? Bombay Stock Exchange (BSE) ? Hyderabad Stock Exchange (HSE) Karvy utilized its experience and superlative expertise to capitalize on its strengths and better its service, innovate and provide new ones. It diversified in the process and thus evolved as India’s premier integrated financial service enterprise. Karvy has been a customer centric company since its inception.

It offers a single platform servicing multiple financial instruments in its bid to offer complete financial solutions to the varying needs of both corporate and retail investors, where an extensive range of services are provided with great volume-management capability. KARVY covers the entire spectrum of financial services such as Stock broking, Depository Participants, Distribution of financial products – mutual funds, bonds, fixed deposit, equities, Insurance Broking, Commodities Broking, Personal Finance Advisory Services, Merchant Banking & Corporate Finance, placement of equity, IPOs, among others.

Karvy has a professional management team and ranks among the best in technology, operations and research of various industrial segments. (Karvy. com) BACKGROUND The flagship company, Karvy Consultants Limited was found with the vision and enterprise of a group of practicing Chartered Accountants on a modest scale in 1981 in Hyderabad, where it now has 13 branches. It initiated with just one activity and later carved roads into fields of registry and share accounting as well. From then there was no stopping at all. A decade of commitment, professional integrity and vision helped Karvy achieve a leadership position in its field.

It is known to handle the largest number of issues ever in the history of the Indian stock market in a particular year. Thereafter, Karvy made inroads into a host of capital market services, corporate and retail which proved to be a sound business synergy. Today Karvy has access to millions of Indian shareholders, besides companies, banks, financial institutions and regulatory agencies. Over the past one and half decades, Karvy has involved as a veritable link between industry, finance and people. In January 1998, Karvy became the first Depository Participant in Andhra Pradesh.

An ISO 9002 company, Karvy’s commitment to quality and retail reach has made it an integrated financial services company. A SEBI category 1 registrar, so far Karvy has handled over 675 issues as Registrars to public issues, processed over 52 million applications and is servicing over 16 million investors from various locations spread over 205 cities. Karvy’s Mission: “ Our mission is to be a leading and preferred service provider to our customers, and we aim to achieve this leadership position by building an innovative, enterprising, and technology driven organization which will set the highest standards of service and business ethics ”. Karvy. com) KARVY MILESTONES Karvy has traveled a success route over the past 20 years and positioned itself as an emerging financial service giant in which embeds the confidence and support of enviable patrons across the financial world. Patrons are also of diversified fields which includes over 16 million individual investors in various capacities and 300 corporates comprising the best out of the whole lot . Years of experience of holistic financial services and expertise in this industry has helped it gain the status it enjoys and cherishes today. pic] (Karvy. com) KARVY CREDO Following are the system of principles or beliefs followed by Karvy Group. “Our Clients, Our Focus” “Clients are the reason for our being” Personalized service, professional care; pro-activeness are the values that helps KARVY nurture enduring relationships with their clients. Teamwork ”None of us is more important than all of us” Each team member is the face of Karvy. Together they offer diverse services with speed, accuracy and quality to deliver only one product: excellence.

Transparency, co-operation, invaluable individual contribution for a collective goal, and respect for individual uniqueness within a corporate whole, is what KARVY aims at. Responsible Citizenship “A social balance sheet is as rewarding as a business one. ” As a responsible corporate citizen, KARVY believes that its duty is to foster a better environment in the society where they live and work. To abide by its norms, and to behave in a responsible manner towards the environment, are some of its growing initiatives towards realizing this. Integrity Everything else is secondary” Professional and personal ethics are Karvy’s bedrocks. They take pride in building an environment that encourages honesty and opportunity to learn from failures than camouflage them. They insist on consistency between work and actions. (Karvy. com) QUALITY POLICY: To achieve and retain leadership, Karvy aims for complete customer satisfaction, by combining its human and technological resources, to provide superior quality financial services. In the process, Karvy strives to exceed Customer’s expectations. As per the Quality Policy, Karvy will: Build in-house processes that will ensure transparent and harmonious relationships with its clients and investors to provide high quality of services. • Establish a partner relationship with its investor service agents and vendors that will help it in keeping up to its commitments to the customers. • Provide high quality of work life for all its employees and equip them with adequate knowledge & skills so as to respond to customer’s needs. • Continue to uphold the values of honesty & integrity and strive to establish unparalleled standards in business ethics. Use state-of-the art information technology in developing new and innovative financial products and services to meet the changing needs of investors and clients. • Strive to be a reliable source of value-added financial products, services and constantly guide the individuals and institutions in making a judicious choice of same. • Strive to keep all stake-holders (shareholders, clients, investors, employees, suppliers and regulatory authorities) proud and satisfied. (Karvy. com) ACHIEVEMENTS ? Among the top 5 stock brokers in India (4% of NSE volumes) ? India’s No. Registrar & Securities Transfer Agents ? Among the top 3 Depository Participants ? Largest Network of Branches & Business Associates ? Among top 10 Investment bankers ? Largest Distributor of Financial Products ? Adjudged as one of the top 50 IT uses in India by MIS Asia ? Full Fledged IT driven operations (Karvy. com) KARVY WINGS As discussed earlier, KARVY offers a single platform servicing multiple financial instruments in its bid to offer complete financial solutions to the varying needs of both corporate and retail investors. The range of products and services are provided by the following wings. pic] This is the flagship company of Karvy Group and it controls the organizational affairs, channels of progress, work affairs and pioneering business policies. This was the first business the KARVY group ventured into, but now they have transferred it into a joint venture with computer share limited of Australia, the world’s largest registrar. This company services around 6 lakh customer accounts in a spread of 250 cities/towns in India. [pic] This wing of Karvy is registered with SEBI as a category 1 merchant banker and is also recognized as a leading merchant banker of the country.

It has built its reputation by capitalizing the opportunities as and when it comes, be it in corporate consolidations, mergers and acquisitions or corporate restructuring. Involvement in raising resources for corporate or government undertaking successfully over the past two decades has given it a tremendous confidence boost. [pic] This wing of Karvy has traversed wide spaces to tie up with the world’s largest transfer agent, the leading Australian company Computershare Limited. This company services more than 75 million shareholders across 7000 clients and makes its presence felt in over 12 countries across 5 continents.

It has also entered into a 50-50 joint venture with Karvy. After transferring completely to this new entity it has tried to enrich the financial services industry as a whole. The worldwide network of Computershare helps it to adapt to the international standards in addition to leveraging the best technologies from all over the world. [pic] This is a specialist Business Process Outsourcing unit of the Karvy Group. The legacy of experience in financial services of Karvy Group acts as a big support for entering the global arena with confidence of delivering the best.

This wing offers several models on the understanding of business needs that are unique and therefore only a customized service could possibly fit the bill. Their service matrix has permutations and combinations that create several options to choose from. Its Services meet the most stringent International standards, be it re-engineering and managing processes or delivering new efficiencies. [pic] Karvy Commodities focuses on taking commodities trading to new dimensions of reliability and profitability. They have made commodities trading, an essentially age-old practice, into a sophisticated and scientific investment option.

It helps in enabling trade in all goods and products of agricultural and mineral origin that include lucrative commodities like gold and silver and popular items like oil, pulses and cotton through a well-systematized trading platform. [pic] Karvy Insurance Broking Pvt. Ltd. , provides both life and non-life insurance products to retail individuals, high net-worth clients and corporates. With the opening up of the insurance sector and entry of a large number of private players in the business, it is in a position to provide tailor made policies for different segments of customers. Karvy. com) [pic] KARVY STOCK BROKING LIMITED (KSBL) It is undisputable fact that the stock market is unpredictable and volatile, but despite this KSBL enjoys a high success rate as a wealth management option. Karvy Stock Broking Limited offers services that are much beyond serving just as a medium for buying and selling stocks and shares. Instead it provides multi dimensional and multi focused services. It offers trading facilities for National Stock Exchange, Bombay Stock Exchange and Hyderabad Stock Exchange and tries to make trading safe to maximum possible extent.

For this they are assisted by their in depth research team for constant feedback and sound advices. The Finapolis is the monthly magazine that is published by this wing. It analyzes the latest stock market trends and takes a close look at the various investment options and products available in the market. A weekly report, called Karvy Bazaar Baatein, keeps people informed on the immediate trends in the stock market. In addition, the specific industry reports give more comprehensive information on various industries.

It also offers special portfolio analysis packages that provide daily technical advice on scrips for successful portfolio management. It provides customized advisory services to help the client make right financial moves which specifically suits their portfolios. (Karvy. com) ORGANIZATION STRUCTURE There are various departments and segments in KARVY STOCKBROKING LIMITED. The segment of which I was a part of during my training process is the SME segment. This segment caters especially to the needs of the SMALL & MEDIUM ENTERPRISES.

Small and Medium Enterprises refers to organizations that are larger than SOHOs (Small office/Home office) and smaller than the Fortune 1000. The size is subjective ranging from approximately 25 to 500 employees. The BASVANGUDI branch in Bangalore, where I took my internship is the first branch all over India which has this segment. This segment’s operations were initialized in 2006 to cater to the ever increasing demand and growth of the SME Segment as it was found through a study, that most of the AMCs are getting 55% to 60% of their sales by SMEs alone.

Based on the performance of this segment, plans will be laid down for opening up of such segments in other branches too. An important point to be noted is that The SME segment is emphasizing more on Mutual Funds instead of equity, insurance and other products. This segment concentrates approximately: 60% on Mutual Funds 30% on Equity 10% on Insurance and other products So far, the performance of this segment has been good and it has been a contributing factor in increasing the customer base of KARVY STOCK BROKING LIMITED. Thus plans for opening of SME Segment in other branches are shaping up.

STRUCTURE OF SME SEGMENT: [pic] WHERE: Relates to Back Office RO – Relationship officer SRM – Service Relationship Manager PROCESS: The process of the entire working of the SME segment takes place in the following manner: ? First the data is collected by the ROs, SRMs, Wealth Managers, Main Dealer and the Head himself. This is done at all levels so that the data is collected from all the resources available and is qualitative in terms of conversions. ? Once the data is acquired or sourced it is given to the Tele Marketing or Sales team. They are expected to achieve a target of 60% through their calls.

The main aim of them is to get to the right client and convince him for a meet. ? Then the Tele callers fix appointments and forward the details of the same to the ROs i. e. the Relationship Officers. ? Next the ROs visit the client and inform them about the entire products that would cater to the customer’s needs. His work is not just confined to imparting the information to the client; moreover he has to extract information from the client as well. He has to understand the customer’s needs, risk taking ability and gives the details to the SRM if the client is prospective. Then the SRM meets the prospective clients and catering to the need of them gathers information regarding the financial details of client, his past investments, future investment capability etc. and gives it to the Wealth Manager. ? The Wealth Manager then designs the portfolio for the client based on his analysis, study and advices from the R department and closes the deal. In the whole process mentioned above, there are 4 back office persons, who assist the segment at all times in various works. ? Main Dealer – Equity Desk ? Sub Dealer – Assistant to Main Dealer MF Research – Research on mutual funds ? Sub Back office person – Responsible for sending reports and MIS Reports are sent weekly for Equity and Mutual Funds and monthly for futures and options. This whole process is controlled and managed by the Segment Head. PRODUCT & SERVICES PRODUCTS MUTUAL FUNDS: CONCEPT: A Mutual Fund is a form of collective investment that pools money from many investors, who share common financial goals and invests their money in stocks, bond, short term money market instruments and/or 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: [pic] (amfiindia. com. com) INDIAN MUTUAL FUND INDUSTRY: The rising Indian mutual funds industry probably never had it better, as far as the entry of individual or retail investors is concerned.

The industry’s total AUM in December 2006 stood at a hefty Rs 3, 23,597 crore, with a total of 2. 79 crore depositor folios, of which 2. 31 crore depositor folios had invested in equity schemes. The share of direct investors, on the other hand, has been dropping, stating that more retail investors see mutual funds as a preferred route for investing in the markets. Existing and new market players as well as Exchange Traded Funds are likely to hit the market in the coming months with a flurry of new Mutual Funds schemes.

An action packed first quarter of 2007 was forecasted to witness at least 20 new schemes which are waiting on the sidelines to be launched. (Myiris. com) PERFORMANCE SNAPSHOT!!! The year 2006 scored high in terms of both returns and volatility. The rising Indian mutual funds industry saw its best, as far as the entry of individual or retail investors is concerned. In 2006, out of the 159 diversified equity funds (includes diversified equity, midcap, and equity tax saving schemes): ? 20 funds (13%) out-performed the Sensex ? 50 funds (37%) out-performed the Nifty ? The best returns generated were up to 58. % (Tata Infrastructure Fund) and the worst being a negative 10. 6% ? Equity Diversified funds churned out an average 33. 2% return, which comprise of 72 fund in this category comprising of total 135 funds ? Infrastructure funds stole the limelight this year with the top three performers being Infrastructure Fund. (Myiris. com) TOTAL ASSET MANAGED BY VARIOUS FUND HOUSES: The amount of assets managed by AMCs varies every year. Following is the table that depicts the total amount of asset managed by the well known AMCs in India. It also shows the ranking of AMCs for the year 2007, based on the above mentioned parameter. Fund House |Jan 2007 |Jan 2006 |Dec 2006 | |Reliance MF |39,020 |16,702 |36,928 | |UTI MF |37,535 |25,417 |38,109 | |Prudential ICICI |34,746 |22,635 |33,305 | |HDFC MF |31,425 |18,591 |29,635 | |Franklin Templeton |23,908 |18,153 23,403 | |Birla Sun Life |21,190 |13,797 |17,054 | |SBI MF |17,552 |10,839 |15,086 | |DSP Merrill Lynch |13,440 |8,976 |13,517 | |Tata MF |13,222 |8,649 |12,177 | |Standard Chartered |12,746 |9,480 |12,629 | |Kotak Mahindra |12,674 |7,397 |12,062 | |LIC MF |12,237 |6,386 |11,599 | |HSBC |12,140 |6,288 |10,450 | |Principal |10,333 |6,789 |10,522 | |Figures in Rs Crore |Source: AMFI | Reliance MF has become the top mutual fund house in the country by adding a very impressive Rs2, 092 crore to assets under management. ? Previous Top Fund House UTI MF declined by Rs574 crore and lost its top position to Reliance MF. ? Birla Sunlife was the best performer in January 2007 and added Rs4, 136 crore to its assets ? SBI MF was able to acquire 7th position by an addition of Rs2, 466 crore ? Tata MF gained Rs1, 045 crore and able to secure its position in top 10. BEST EQUITY MUTUAL FUNDS: (As on 27th April, 2007) Following is the ranking of the best mutual funds and their NAVs as on 27th April, 2007. The rankings are based on 1 year returns of the Equity Mutual Funds available in the market. | |1 YR |PRESENT NAV | |S. NO |SCHEME NAME |RETURN (%) | | | | | | | |1 |DSPML Technology. com Fund – Growth |47. 50 |26. 89 | |2 |UTI Banking Sector Fund – Growth |40. 05 |21. 7 | |3 |Magnum IT |36. 06 |28. 49 | |4 |Birla Sunlife New Millennium – Growth |35. 60 |21. 33 | |5 |Banking BeEs |32. 69 |590. 31 | |6 |Prudential ICICI Technology – Growth |32. 59 |15. 99 | |7 |Prudential ICICI Services Industries |32. 07 |16. 2 | | |Fund – Growth | | | |8 |UTI Software – Growth |30. 09 |27. 71 | |9 |Reliance Media & Entertainment – Growth |28. 61 |26. 07 | |10 |Birla Sunlife Frontline Equity – Growth |27. 90 |52. 81 | |11 |Reliance Banking – Growth |27. 81 |39. 0 | |12 |Reliance NRI Equity Fund – Growth |26. 54 |24. 70 | |13 |Franklin Infotech – Growth |25. 95 |52. 62 | |14 |DBS Chola Opportunity |25. 85 |28. 63 | |15 |Reliance Diversified Power Sector – Growth |25. 16 |37. 71 | SOURCE: mutualfundsnavindia. com TYPES OF MUTUAL FUNDS: [pic] (Amfiindia. com) EXPLAINATION: Open ended Mutual Funds:

It is a type of mutual fund where there are no restrictions on the amount of shares the fund will issue. If demand is high enough, the fund will continue to issue shares no matter how many investors there are. Open-end funds also buy back shares when investors wish to sell. Most of the mutual funds available in the marketplace are open-end funds. Open-end funds are generally managed actively and are priced according to their net asset value (NAV). Open-end funds are wide-ranging. Some Open-end funds are more conservative and provide consistent returns with low risk, and some are more aggressive in seeking to make capital gains through constant trading. Close ended Mutual Funds:

When an investment company issues a fixed number of shares in an actively managed portfolio of securities, it is referred to as close ended mutual funds. The shares are traded in the market just like common stock. The main difference with closed-end funds is that market price of the shares is determined by supply and demand and not by net-asset value (NAV). Its stipulated maturity period ranges from 3 to 15 years. Interval Schemes: It is a fund that combines the features of open-ended and closed-ended schemes, making the fund open for sale or redemption during pre-determined intervals. In other words, this is a mutual fund with redemption features in between those of closed-end and open-end funds. Growth Schemes:

It is a diversified portfolio of stocks that has capital appreciation as its primary goal, and it thereby invests in companies that reinvest their earnings into expansion, acquisitions, and/or research and development. Most growth funds offer higher potential growth but usually at a higher risk. Income Schemes: This scheme seeks to provide stable current income by investing in securities that pay interest. Income funds typically invest in utility stocks and blue chips. Balanced Scheme: It is a type of mutual fund that invests its assets into the money market, bonds, preferred stock, and common stock with the intention to provide both growth and income. A balanced fund is geared towards investors looking for a mixture of safety, income, and capital appreciation.

The amount the mutual fund invests into each asset class usually must remain within a set minimum and maximum. It is also known as “Asset Allocation Fund”. Money Market Schemes: Money Market Schemes aim to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer, short-term instruments, such as treasury bills, certificates of deposit, commercial paper and inter-bank call money. Tax Saving Schemes: Tax-saving schemes offer tax rebates to the investors under tax laws prescribed from time to time. Under Sec. 88 of the Income Tax Act, contributions made to any Equity Linked Savings Scheme (ELSS) are eligible for rebate @20% to a maximum of Rs10, 000 per financial year. Index Schemes:

It is a portfolio of investments that is weighted the same as a stock-exchange index in order to mirror its performance. This process is also referred to as “indexing”. Investing in an index fund is a form of passive investing. The primary advantage to such a strategy is the lower management expense ratio on an index fund. Also, a majority of mutual funds fail to beat broad indexes such as the S 500. Sector Specific Schemes: It is an investment fund that makes investments solely in businesses that operates in a particular industry or sector of the economy. Since the holdings of this type of fund are in the same industry, there is an inherent lack of diversification by sector associated with these funds.

These funds tend to increase substantially in price when there is an increased demand for the product or service offering provided by the businesses in which the funds invest. On the other hand, if there is a downturn in the specific sector in which a sector fund invests, the fund will face heavy losses due to the lack of diversification in its holdings. (Amfiindia. com) SELECTION CRITERIA FOR MUTUAL FUNDS: I gave suggestions for Mutual Funds based on the following parameters: ? Investment Objective of the client: Whether the client is looking for long term investment or short, they require high returns or tax savings etc, had to be analyzed. The investment objective of the client should match with that of the particular Mutual Fund Scheme. ? Past performance:

The previous returns of the funds mentioned in the investment brochures were seen and the funds which have performed well and given high returns were preferred and suggested to clients. ? Consistency in returns: The returns are not just expected to be high but a consistency should be observed in the fund’s performance and returns. The previous year return for a particular fund may be high but if it is not consistent in its performance then that is a risky deal. Consistent funds are more suitable for risk averse clients. ? Tax benefits: The investors whose objective was tax saving were advised to invest in Tax saving Mutual Funds. ? Fund Manager:

An investor will trust and invest his money in the funds which are managed by well reputed fund managers. Thus this criterion is also of utmost importance. I made suggestions to the clients after taking into consideration the above mentioned criterions and based on the mutual consent of the client as well, the investment decision was then taken. The procedure for filling forms etc followed. If the investor had already invested in equities but wanted to open a Trading and DMAT account, I had to explain them the charges and procedures for the same. INSURANCE: CONCEPT: Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss.

Insurance is defined as the equitable transfer of the risk of a potential loss, from one entity to another, in exchange for a premium. Insurer, in economics, is the company that sells the insurance. Insurance rate is a factor used to determine the amount, called the premium, to be charged for a certain amount of insurance coverage. Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice. Sum Assured: It is the amount of money an insurance policy guarantees to pay before any bonuses are added. Factors included in the calculation of sum assured are: ? Date of birth ? Gender ? Duration ? Health conditions ? Job profile TYPES OF INSURANCE: [pic] (Wikipedia. com) Life Insurance:

All policies are not the same. Some give coverage for your lifetime and others cover you for a specific number of years. Following are the different types of life insurances: ? Whole life ? Term policy ? Money pack ? Endowment ? Pension plan ? ULIP General Insurance: General insurance typically comprises any insurance that is not determined to be life insurance. It is called property and casualty (P) insurance in the U. S. General insurance policies, including automobile, accidents and homeowner’s policies, provide payments depending on the loss from a particular financial event. Following are the different types of general insurances: ? Property ? Personal Lifestyle ? Package (Wikipedia. com) PRESENT SCENARIO & FUTURE EXPECTATIONS: Expansion, product innovations and reforms are three themes that are and will dominate the life insurance business in 2007. Life insurance companies are expected to record a 100 per cent increase in new business in financial year 2007, and this growth is not going to taper off. According to experts, the industry is confident of maintaining the rate, typical of a flourishing industry. The fundamentals of the economy are good and the life insurance industry is riding this boom. The rise in disposable income of individuals has increased the need for investment options.

With aggressive sales and the two-in-one proposition of unit-linked insurance plans (ULIPs), insurers are swooping in on this opportunity, especially during the period preceding policy changes in ULIPs so as to strengthen their insurance orientation. (Amfiindia. com) EQUITIES: CONCEPT: An equity share, commonly referred to as ordinary share, represents the form of fractional ownership in a business venture. Stockholders’ equity is often referred to as the book value of the company, and it comes from two main sources. The first and original source is the money that was originally invested in the company, along with any additional investments made thereafter.

The second comes from retained earnings that the company is able to accumulate over time through its operations. In most cases, especially when dealing with older companies that have been in business for many years, the retained earnings portion is the largest component. FACTORS THAT INFLUENCE THE PRICE OF THE STOCK: Broadly there are two factors: (1) Stock specific (2) Market specific The stock-specific factor is related to people’s expectations about the company, its future earnings capacity, financial health and management, level of technology and marketing skills. The market specific factor is influenced by the investor’s sentiment towards the stock market as a whole.

This factor depends on the environment rather than the performance of any particular company. Events favorable to an economy, political or regulatory environment like high economic growth, friendly budget, stable government etc. can fuel euphoria in the investors, resulting in a boom in the market. On the other hand, unfavorable events like war, economic crisis, communal riots, minority government etc. depress the market irrespective of certain companies performing well. However, the effect of market-specific factor is generally short-term. Despite ups and downs, price of a stock in the long run gets stabilized based on the stock specific factors.

Therefore, a prudent advice to all investors is to analyze and invest and not speculate in shares. ACQUIRING EQUITY SHARES: There are two methods: ? You may subscribe to issues made by corporates in the primary market. In the primary market, resources are mobilized by the corporates through fresh public issues (IPOs) or through private placements. OR ? You may purchase shares from the secondary market. To buy and sell securities you should approach a SEBI registered trading member (broker) of a recognized stock exchange. (Wikipedia. com) The documents required for opening an account with KARVY are: ? PAN card no. ? Address proof ? Passport size photos ? Cheque (initial one time investment amount) BONDS: CONCEPT:

A Bond is a long term contract under which a borrower agrees to make payments of interest and principal, on specific dates, to the holders of the bond. [pic] The organization that sells a bond is known as the issuer. Of course, no one would loan his or her hard-earned money for nothing. The issuer of a bond must pay the investor something extra for the privilege of using his or her money. This “extra” comes in the form of interest payments, which are made at a predetermined rate and schedule Bonds are known as “fixed-income” securities because the amount of income the bond will generate each year is “fixed,” or set, when the bond is sold. No matter what happens or who holds the bond, it will generate exactly the same amount of money. CLASSIFICATION OF BONDS: [pic]

SLR is the percentage of deposits that has to be invested in certain designated securities. The current SLR is 25%. Also, in SLR Banking system is very important. SLR Bonds constitute of: ? Government securities/ Gilt/GOI (govt. of India) Bonds ? SDL( State Development Loans) ? T- Bills (Treasury Bills) ? Designated SLR Bonds Non SLR Bonds constitute of: Public sector units bonds like: ? IRFC (Indian Railway Finance Corporation) ? Power Finance Corporation ? NHAI ? Bank Bonds ? State Guarantee Bonds Rating of Bonds: Bonds are rated by various rating agencies on the basis of the balance sheet of the companies, macro economic factors, risk of the bonds. On the basis of these ratings, companies set the coupon rate.

High quality bonds have the benchmark index and if the quality of the bonds decreases the return increases because of the higher risk. Following is the Bonds Rating starting from the best quality: AAA AA+ AA A- BB BBB Rating Agencies: CRISIL – Credit Rating Information Services of India Limited ICRA – Indian Credit Rating Agency CARE – Credit Analysis and Research Limited MOODYS – (International Agencies) FITCH – (International Agencies) Some bonds available in the market: |8. 07 GS 2017: 8. 1367 – 8. 1667 |Coupon Interest Rate | |91 day T – Bills |7. 3521 | |182 day T – Bills |7. 487 | |364 day T – Bills |7. 745 | |Call Rates |5. 5 to 9. 45 | DERIVATIVES: CONCEPT As the name suggests, derivative is a financial instrument that offers a return based on the return of some other underlying asset. In this sense, its return is derived from another instrument. The definition states, a derivative’s performance is based on the performance of an underlying asset. This underlying asset is often referred to simply as the underlying. It trades in a market in which buyers and sellers meet and decide on a price; the seller then delivers the asset to the buyer and receives payment.

The price for immediate purchase of the underlying asset is called the cash price or spot price. A derivative also has a defined and limited life: A derivative contract initiates on a certain date and terminates on a later date. Often the derivative’s payoff is determined and/or made on the expiration date, although that is not always the case. In accordance with the usual rules of law, a derivative contract is an agreement between two parties in which each does something for the other. In other words, no money need change hands up front. Types of Derivatives • Over-the-counter (OTC) derivatives are contracts that are traded (and privately negotiated) directly between two parties, without going through an exchange or other intermediary.

Products such as swaps, forward rate agreements, and exotic options are almost always traded in this way. The OTC derivatives market is huge. According to the Bank for International Settlements, the total outstanding notional amount is USD 298 trillion (as of 2005). • Exchange-traded derivatives are those derivatives products that are traded via specialized Derivatives exchanges or other exchanges. A derivatives exchange acts as an intermediary to all related transactions, and takes Initial margin from both sides of the trade to act as a guarantee. There are 3 kinds of Derivative contracts: • Futures Contract • Forward Contract • Options Contract SERVICES

KSBL (KARVY STOCKBROKING LIMITED), offer services that are beyond just a medium for buying and selling stocks and shares. Instead KSBL provide services which are multi dimensional and multi-focused in their scope. There are several advantages in utilizing Karvy’s Stock Broking services, which are the reasons why it is one of the best in the country. Its highly skilled research team, comprising of technical analysts as well as fundamental specialists, secure result-oriented information on market trends, market analysis and market predictions. Crucial information regarding customer individual account balances are given as a constant feedback to them, through daily reports delivered thrice in a day. The Pre-session Report, where market scenario for the day is predicted. ? The Mid-session Report, timed to arrive during lunch break, where the market forecast for the rest of the day is given. ? The Post-session Report, the final report for the day, where the market and the report itself is reviewed. In addition, the specific industry reports prepared by Karvy Stockbroking Limited give comprehensive information on various industries. They also offer special portfolio analysis packages that provide daily technical advice on scrips for successful portfolio management and provide customized advisory services to help investors make the right financial moves that are specifically suited to their portfolio.

These services have increasingly offered customer oriented convenience, which KSBL provides to a spectrum of investors, high-networth or otherwise, with equal dedication and competence. But this is not the final destination and just a pathway to reach there. Over the years KSBL have ensured that the trust of its customers is their biggest returns. Factors such as its success in the Electronic custody business has helped build on its tradition of trust even more. Consequentially its retail client base has expanded very fast. To empower the investor further KSBL have made serious efforts to ensure that their research calls are disseminated systematically to all its stock broking clients through various delivery channels like: e-mails, chat, SMS, phone calls etc.

Their foray into commodities broking has been path breaking and KSBL is in the process of converting existing traders in commodities into the more organized mainstream of trading in commodity futures, both as a trading and risk hedging mechanism. In the future, its focus will be on the emerging businesses and to meet this objective, KSBL has enhanced its manpower and revitalized its knowledge base with enhanced focus on Futures and Options as well as the commodities business. (Karvy. com) DIPOSITORY PARTICIPANTS The onset of the technology revolution in financial services Industry saw the emergence of Karvy as an electronic custodian registered with National Securities Depository Ltd (NSDL) and Central Securities Depository Ltd (CSDL) in 1998.

Karvy has further set standards enabling comfort to the investor by promoting paperless trading across the country and emerged as the Top 3 Depository Participants in the country in terms of customer service. KSBL has established live DPMs (Depository Participant Modules), Internet access to accounts and an easier transaction process in order to offer more convenience to individual and corporate investors. A team of professional and the latest technological expertise allocated exclusively to the demat division including technological enhancements like SPEED-e, makes the response time quick and delivery impeccable. A wide national network makes efficiencies accessible to all. (Karvy. com)

DISTRIBUTION OF FINANCIAL PRODUCTS The paradigm shift from pure selling to knowledge based selling drives this industry today. With its wide portfolio offerings, Karvy occupies all segments in the retail financial services industry. The team of 1600 highly qualified and dedicated professionals, drawn from the best academic and professional backgrounds is committed to maintaining high levels of client service delivery. This has propelled this wing to grab a position among the top distributors for equity and debt issues with an estimated market share of 15% in terms of applications mobilized, besides being established as the leading procurer in all public issues.

To further tap the immense growth potential in the capital markets it has enhanced the scope of its retail brand, Karvy – the Finapolis, thereby providing planning and advisory services to the mass affluent. Here they understand the customer needs and lifestyle in the context of present earnings and provide adequate advisory services that will necessarily help in creating wealth. Judicious planning that is customized to meet the future needs of the customer deliver a service that is exemplary. The market-savvy and the ignorant investors, both find this service very satisfactory. (Karvy. com) ADVISORY SERVICES Karvy’s retail brand ‘Karvy – the Finapolis’, deliver advisory services to a cross-section of customers.

The service is backed by a team of dedicated and expert professionals with varied experience and background of handling investment portfolios. They are continually engaged in designing the right investment portfolio for each customer according to individual needs and budget considerations with a comprehensive support system that focuses on trading customers’ portfolios and providing valuable inputs, monitoring and managing the portfolio through varied technological initiatives. This is made possible by the expertise Karvy has gained in the business over the years. Another venture towards being investor-friendly is the circulation of a monthly magazine called ‘Karvy – the Finapolis’.

It covers the latest market news, trends, investment schemes and research-based opinions from experts in various financial fields. (Karvy. com) PRIVATE CLIENT GROUP OR CUSTOMIZED PORFOLIO MANAGEMNET SERVICES (CPMS) Extending the expertise in personal financial advisory services, KARVY STOCKBROKING LIMITED has now launched CPMS, a discretionary portfolio management service for retail investors. This specialized division is set up to cater to the high net worth individuals and institutional clients keeping in mind that they require a different kind of financial planning and management that augments not just existing finances but their life-style as well.

Each investor is a client who has unique parameters: ? Return goals and objectives ? Time horizon ? Liquidity constraints ? A distinctive tax status ? Personal risk tolerances Thus, the primary focus of CPMS is to provide individualized portfolio management services for clients, personalized portfolios designed to fit a specific investor’s investment parameters. Each portfolio contains individually selected securities, which are not commingled (pooled) with those of other investors, ensuring transparency and flexibility in operations. There is also the benefit of investing in other asset classes to suit client’s needs like Mutual Funds, Derivatives, Insurance and even Real Estate.

A hard-nosed business approach with the soft touch of dedicated customer care and personalized attention is followed here. A comprehensive and personalized service that encompasses planning and protection of finances, planning of business needs and retirement needs and a host of other services, is provided on a one-to-one basis for this purpose. Karvy’s research reports have been widely appreciated by this segment, and have proved to be very useful at the same time. The delivery and support modules have been fine tuned by giving the clients access to online portfolio information, constant updates on their portfolios as well as value-added advice on portfolio churning, sector switches etc.

The investment recommendations given by research team enjoy a high success rate in the cash market. MARKETING PLAN The SME Segment where I interned is at a very nascent stage. It started its operations from 1st March 2006. The main driving force behind setting up of this segment was the fact that the SMEs form the largest customer base for AMCs. TARGET MARKET: The main target customers for this segment are: ? Small and Medium Enterprise ? High Networth Individuals (HNIs) The Small and Medium Enterprises are contacted through e-mails. KARVY keeps updating its database which consists of contact numbers and e-mail addresses of the Financial Heads of the corporates.

Though these it is able to contact the concerned person and send them all the details of the products and services which KARVY deals in and are beneficial to them, from time to time. It also plans Company visits occasionally wherein the Senior Relationship Managers visit the companies and gives presentations on the market updates and the best investment options available to the corporates. The High Networth Individuals are also contacted through e-mails and calls. This includes the ones who already have a fair idea of the investment options and investing as well as the new budding investors who have little knowledge. Marketing in SME Segment: [pic]

This segment has performed well so far and has contributed in increasing the customer base by retaining the old ones and tapping new ones. MARKETING PROBLEMS: The basic problem in marketing for this segment is that though it has a sound customer base it is not taking much efforts or steps to expand it with immediate effects. According to my observation during the tenure of my internship I noticed that the major part of marketing for this segment is from the word of mouth. The satisfied customers refer their peer groups an option to invest with Karvy. SME Segment is able to maintain its customer base but it has scope to increase it. As this is the first segment, not much people are aware of its workings. COMPETITORS OF KARVY

KARVY serves a vast range of all financial products like advisory services, Mutual funds, Bonds, Insurances etc, so all the companies who offer these services are the competitors of the Karvy. There are many competitors for KARVY on this basis and almost all of them offer the services which Karvy offers. Few Major competitors are: 1. India bulls 2. Motilal oswal securities 3. IL & FS investsmart Ltd. 4. SSKI Ltd. (Sharekhan) 5. Bonanza securities 6. Kotak Securities 7. CIL Securities 8. Eastern Financiers To get first hand details about them we visited a few stock broking houses and talked about the financial instruments available with their company, their charges for investments and the documents required by them.

Followings are the list of the companies we visited: ? Anand Rathi Securities ? IL & FS Investsmart ? JRG Securities ? Motilal Oswal Securities ? India bulls Comparative Analysis S. NO |BASIS |KARVY STOCK BROKING LTD |INDIABULLS |IL INVESTSMART |MOTILAL OSWAL SECURITIES LTD |ANANDRATHI SECURITIES LTD | |1 |REACH NO. OF BRANCHES |OVER 200 |OVER 640 |OVER 200 |1160 |132 | |2. 1 |BROKERAGE INTRADAY |5 PAISE |10 PAISE |5 PAISE |4 PAISE |5 PAISE | |2. 2 |BROKERAGE DELIVERY |50 PAISE |50 PAISE |50 PAISE |40 PAISE |50 PAISE | |2. 3 |BROKERAGE FUTURE |5 PAISE |10 PAISE |5 PAISE |4 PAISE |5 PAISE | |3. 1 |DEMAT A/C & TRADING A/C OPENING CHARGE |Rs. 55 |Rs. 900 |Rs 950 |Rs. 500 |Rs 450 | |3. 2 |DEMAT A/C ANNUAL MAINTENANCE CHARGE |NIL |NIL |NIL |Rs. 450 |NIL | |4 |EXPOSURE Intraday Delivery Days Limit |Depends Depends Depends |8 Times 4 Times 7 Days |Depends Depends Depends |2 Times Depends Depends |Depends Depends Depends | |5 |PMS MINIMUM INVESTMENT |Rs. 1 LACS |Rs 5 LACS |Rs 25 LACS |Rs 5 LACS |Rs 25 LACS | |(Self collected Data) LEARNINGS Working at KARVY STOCKBROKING LIMITED was largely an overwhelming experience with gaining insights to a number of new things. The On-The Job experience made it a worthwhile Internship, which gave me a great real time Industry experience.

All is not the same in real life as we read in books and on net about the working methods of different divisions and segments. Each segment in an organization has its own work culture followed by the members and same was the case with SME segment at Karvy Stock Broking Ltd. I had to put in my own efforts and take initiative to learn and gain maximum knowledge possible during this period. Primarily, the description of my work as a Management Trainee was to assist the wealth managers by understanding the needs of the individual investors and corporate houses and expanding the customer base of Karvy- SME Segment where I interned. The work assigned definitely required awareness and nderstanding of the all the financial products Karvy Stockbroking dealt in. It also required me to know the procedures and documents involved in purchase of any product by the client. I just had a basic idea of the products KARVY dealt in prior internship, thus, acquiring knowledge about the same was very exciting. There were training sessions held on various financial products like MF, insurance, and bonds which helped me get more insight in these topics. Interactive session was held by the Mutual Fund expert, which proved quite useful but still Mutual Funds is a vast topic and it is possible to gain full knowledge about it only after practically dealing in it.

Having knowledge about the product was just the initial step which prepared me to face the questions asked by the inquisitive clients we targeted. Every step I had a new lesson to learn. The whole process started with first hand data collection. For this we visited the corporate houses in Kormangala as well as collected data from banks, clubs and other sources. We also collected data from few of our own contacts that we thought could be useful. Getting the data from corporate houses was difficult as no one really entertained visitor from stock broking companies for appointments. Moreover it was difficult to get the contact number of the finance heads of the companies, but we still managed and managed well. The next step was tele-calling on the database collected.

During telecalling, we learnt the art of introducing ourselves and the company to the clients. It taught us how to approach clients and suggest them various investment options. Our main aim was to convince the prospective clients for appointment. We learnt that to understand the client’s mood at that point of time was also important. You had to be polite and confident. If a client wanted to be called back at a specified time, I did so without fail. No negligence was tolerated on this part as first impression is the last impression and I didn’t want to lose out on any prospective client The time given by the client for the meet was given utmost importance.

I and my colleague tried to reach the meeting place in time so that the client didn’t have to wait. The entire experience of meeting the clients, explaining them the products, and based on the questions asked by us, as well as the client, analyzing their risk taking capability and investment capacity was a learning in itself. After gathering above information about the clients, we used to discuss the client’s details with the Wealth Managers. Based on their investment requirement, investment objective, risk taking ability and the investment capability we would come up with suggestions as to where they should invest and how much. If the client had already invested in any of the financial products, we tried gathering details about the same.

If the client had already invested in equities and wanted to invest in safer investment options, we suggested him to go for Income scheme in Mutual Funds or Bonds. There were investors who wanted high returns but didn’t want to take greater risk. To such investors investments in mutual funds rather than equities was suggested. Investors wanting to invest for taxes saving purpose were suggested to invest in Tax Saving Mutual Funds like SBI Magnum Tax Gain, HDFC tax Benefit Scheme. I also gave a presentation on the basis of self study and trainings provided to me on Mutual Funds. This helped me improve my presentation skills and knowledge about the same.

As a student, I have given many presentations but this one gave me a chance to face the corporate heads as evaluators. The feedback for the same was good but scope for improvement always remains. Also the deadlines given to me for completion of assignments and reports helped me experience real time corporate work pressure. My awareness and knowledge on the investment options, which was minimal prior internship has strengthened and expanded post internship. Other than working ‘Live’ at the office I also benefited by assignments given to us such as visiting other competitors of KARVY STOCKBROKING LIMITED and gathering investment advices from their side for new and budding investors.

Usually for new investors they either suggest Insurance (if the client doesn’t have one), Mutual Funds or Equities but for long term. The experience and know-how gained from this internship, has left me in more compliant form and stature in order to fare better in areas of similar interest. With an optimistic view towards future, and with the desire to implement all the knowledge gained, I hereby conclude my report on my Internship at KARVY STOCKBROKING LIMITED- SME Segment, Bangalore. BIBLIOGRAPHY • “Introduction. ” www. karvy. com. 17 April. 2007 http://www. karvy. com/contactus/overview • “History. ” www. karvy. com. 15 April. 2007 http://www. karvy. com/contactus/earlydays • Milestone. ” www. karvy. com. 14 April. 2007 http://www. karvy. om/contactus/milestone • “Achievements. ” www. karvy. com. 12 April. 2007 http://www. karvy. com/contactus/achievements • “Karvy group of Companies. ” www. karvy. com. 15 April. 2007 http://www. karvy. com/contactus/karvygroupofcompanies • “Stock Broking Service. ” www. karvy. com. 2 May. 2007 http://www. karvy. com/contactus/karvygroupofcompanies • “Depository Participants. ” www. karvy. com. 3 May. 2007 http://www. karvy. com/contactus/stockbrokingservice • “Distribution Of Financial Products. ” www. karvy. com. 5 May. 2007 http://www. karvy. com/contactus/karvystockbrokingservice • “Advisory Services. ” www. karvy. com. 2 May. 2007 http://www. karvy. om/contactus/karvystockbrokingservice • “Private Client Group. ” www. karvy. com. 1 May. 2007 http://www. karvy. com/contactus/karvystockbrokingservice • “Karvy Alliance. ” www. karvy. com. 12 April. 2007 http://www. karvy. com/contactus/karvystockbrokingservice • “Quality Policy. ” www. karvy. com. 12 April. 2007 http://www. karvy. com/contactus/overview • “Mutual Funds. ” www. amfiindia. com. 13 April. 2007 http://www. amfiindia. com/showhtml. asp? page=mfconcept • “Mutual Funds. ” www. myiris. com. 13 April. 2007 http://www. myiris. com/showhtml. asp? page=mf • “Mutual Funds. ” www. mutualfundsnavindia. com. 13 April. 2007 http://www. mutualfundsnavindia. om/rankings2007/showhtml. asp? page=mf • “Bonds. ” www. amfiindia. com. 2 May. 2007 http://www. investopedia. com/articles/02/120202. asp • “Insurance. ” www. amfiindia. com. 3 May. 2007 http://www. imfiindia. com/articles/02/120247. asp • “Insurance. ” www. wikipedia. com. 3 May. 2007 http://www. Wikipedia. com/articles/02/120247. asp • “Derivatives. ” www. finpipe. com. 2 May. 2007 http://www. finpipe. com/derivglossary. htm • “Equity. ” www. wikipedia. com. 2 May. 2007 http://en. wikipedia. org/wiki/Equity ———————– Sector Specific Schemes Index Schemes Special Schemes Tax Saving Schemes (ELSS) Income Schemes Balanced Schemes

Money Market Schemes Growth Schemes Open Ended Schemes Close Ended Schemes Interval Schemes By Investment Objective Other Schemes By Structure Types of Mutual Funds Types of Insurance Life Insurance Non Life/ General Insurance -Term -Whole life -Money back -Endowment Assurance -Pension Plan -Unit Linked Product (ULIP) -Property -Personal -Lifestyle -Package Tele Sales Tele Sales RO RO RO RO RO RO RO RO RO RO RO RO SRM SRM SRM SRM SRM SRM Wealth Manager Wealth Manager HEAD MF desk Sub back office person Main dealer Sub dealer NON SLR Non Statutory Liquidity Ratio SLR Statutory Liquidity Ratio BONDS Quality Decreasing E-mails Tele calls Company Visits HNI SME



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