ICICI mutual fund by Sanjay Gupta

Table of Contents Chapter No.

Topic

Page No.

Executive Summary

Introduction

2.1 Concept of Mutual Funds

2.2 Mutual Fund Industry in India

2.3 Growth in assets under management

2.4 Performance of Mutual Fund in India

2.5 Types of Mutual Fund Schemes in India

2.6 The risk return graphs for various funds

2.7 Mutual Fund companies in India

2.8 Facts for growth of Mutual Funds in India

2.9 Net Asset Value (NAV)

2.10 Organization of Mutual Fund in India

2.10.1 Association of Mutual Funds in India (AMFI)

30 31

2.10.2 The objectives of Association of Mutual Funds in India

2.11 Advantages of Mutual Funds

2.12 Drawbacks of Mutual Funds Corporate Profile

3.1 Introduction to ICICI Prudential AMC

3.2 Organizational Hierarchy

3.3 Mutual Fund Structure

3.4 Types of Mutual Fund in ICICI Prudential AMC

3.5 Risk Tolerance

45 1

3.6 Managing Risks

3.7 Types of Risk Project Profile

48 51

Objectives of the study

Research Design

6.1 Introduction

6.2 Review of Literature

6.3 Scope of Study

6.4 Type of Research

6.5 Source of Data

6.6 Data collective Technique

6.7 Questionnaire

6.8 Personal Interview

6.9 Sample Size

6.10 Technique of Analysis

6.11 Statistical Tools used for Analysis

6.12 Limitations Observations

61 62

7.1 How long to keep investment to get maximum returns

7.2 Returns expected in suggested time frames

7.3 Marketing in Mutual Funds

7.4 The Selling Process

7.5 Marketing Strategies

7.6 Strategies for selling and creating Brand Awareness

Analysis and Findings 8.1 SWOT Analysis

8.2 Analysis and findings of survey

8.3 Managerial Implications Learning Outcomes and Conclusion

105 106

9.1 Learning Outcomes

107

9.2 Key Issues and Conclusion

107

10.

9.3 Scope of Future Research Recommendations and Suggestions

109 110

11.

Bibliography

112

12.

Annexure

114

12.1 Feedback Form

115

12.2 List of respondents of Agents

118

12.3 List of respondents of Bankers

119

12.4 List of respondents of National Distributors

121

List of Tables Table No.

Table Description

Page No

3.1

Key Indicators of Investment

3.2

Objectives of various Funds

3.3

Systematic Investment Plan

7.1

How long to keep investment to get maximum returns

7.2

Returns expected in Suggested time frames

List of Figures Table No.

Table Description

Page No

2.1

Working of Mutual Funds

2.2

Mutual Fund Industry in India

2.3

Growth in Assets under Management

2.4

Total Net Assets in 2007 & 2008

2.5

Types of Mutual Fund Schemes in India

2.6

The Risk Return Graph

2.7

Organization of Mutual Funds in India

3.1

Organizational Hierarchy of ICICI Prudential AMC

3.2

Mutual Fund Structure of ICICI Prudential AMC

3.3

Types of Mutual Funds in ICICI Prudential AMC

7.1

Marketing in Mutual funds

7.2

Marketing Process

7.3

Selling Models

8.1

SWOT Analysis

8.2

Survey Results

8.3

Survey Results

8.4

Survey Results

8.5

Survey Results

8.6

Survey Results

8.7

Survey Results

8.8

Survey Results

8.9

Survey Results

8.10

Survey Results

8.11

Survey Results

97-98

8.12

Survey Results

8.13

Survey Results

102

Chapter 1 Executive Summary

Executive Summary The project involves a study of mutual fund industry and evaluating and suggesting measures to improve the services provided by the Representatives of ICICI Prudential AMC to the retail distributors and also to identify the strong as well as the weak points so that an appropriate sales pitch could be developed. The sales pitch highlighted features like its huge distributor base, returns being independent of the market ups and downs, etc. Calls were made to all the different channel distributors across all tiers from companyâ&#x20AC;&#x;s database and appointments were sought. Thereafter a brief questionnaire was filled up by them regarding their perception about ICICI Prudential AMC. A lot of interaction has been done with the distributors about the products and services of ICICI Prudential AMC.A comparative analysis is also done of ICICI prudential AMC, mutual fund with other AMCâ&#x20AC;&#x;s in order to find the market position of the company with respect to services provided by it. It was found that there are many issues that company needs to improve, which are elaborated in further parts of the report. Relationship management (RM) seems to be the buzzterm of the millennium. Companies across most industries are implementing RM programs. The face of business relationships is changing due to expectations shaped by the interactive nature of the internet.

RM is the process of interacting with intermediary and end-user customers, and developing personalized relationships based on their needs. To implement RM, you must give your customers choices, make it easy for them to conduct business, store all collected information in the customer database, and treat customers differently based on their values. In short, develop a customer focus. Gaining clients' confidence and trust in you and your company is key for developing good business relationships. Too often, consultants, sales people or other company representatives go into meetings like 'gangbusters' deluging clients (or potential clients) with too much information and barely drawing breath.

Business Relationship Building is all about the fact that it's 'you they buy' at gut level. Clearly, they are interested in what your company has to offer or you wouldn't be having meetings with them in the first place, but for the duration of those meetings you are the company.

This means that it's less about your product and a whole lot more about how you connect and engage with your client. You need to be a 'safe pair of hands' and at the same time have the skills to engender trust, understand your clients needs and get under the skin of what is going on their company.

Equally important, is the ability to 'suss out' unspoken agendas and to deliver messages the client may not want to hear. What we mean here is that often a client thinks they know what they want and once you dig around a bit you realise that they need something quite different or in addition to.

On the other hand, sometimes clients can be a bit vague and only have a general idea of what they want, so part of business relationship building is to tease out needed information without giving them the third degree.

Whether it's a 'beauty parade', a tender presentation, an informal meeting or a straightforward pitch for business, the better your Business Relationship Building Skills, the better your chances are of convincing them to 'buy you'.

Chapter 2 Introduction

2. Introduction 2.1 Concept of Mutual Funds 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:

Figure 2.1

2.2 Mutual Funds Industry in India

Figure 2.2 The origin of mutual fund industry in India is with the introduction of the concept of mutual fund by UTI in the year 1963. Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered the industry.

In the past decade, Indian mutual fund industry had seen a dramatic improvement, both qualities wise as well as quantity wise. Before, the monopoly of the market had seen an ending phase; the Assets under Management (AUM) were Rs. 67bn. The private sector entry to the fund family raised the AUM to Rs. 470 bn in March 1993 and till April 2004; it reached the height of 1,540 bn.

. 10

Putting the AUM of the Indian Mutual Funds Industry into comparison, the total of it is less than the deposits of SBI alone, constitute less than 11% of the total deposits held by the Indian banking industry.

The main reason of its poor growth is that the mutual fund industry in India is new in the country. Large sections of Indian investors are yet to be intellectuated with the concept. Hence, it is the prime responsibility of all mutual fund companies, to market the product correctly abreast of selling.

The mutual fund industry can be broadly put into four phases according to the development of the sector. Each phase is briefly described as under.

First Phase – 1964-87: Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was delinked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6, 700 crores of assets under management.

Second Phase – 1987-1993 (Entry of Public Sector Funds): Entry of non-UTI mutual funds. SBI Mutual Fund was the first followed by Can bank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC in 1989 and GIC in 1990. Te ehnd of 1993 marked Rs.47,004 as assets under management.

Third Phase – 1993-2003 (Entry of Private Sector Funds): With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the 11

Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996.

The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1, 21,805 crores. The Unit Trust of India with Rs.44, 541 crores of assets under management was way ahead of other mutual funds.

Fourth Phase â&#x20AC;&#x201C; since February 2003: This phase had bitter experience for UTI. It was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with AUM of Rs.29, 835 crores (as on January 2003). The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations.

The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76, 000 crores of AUM and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes.

2.3 GROWTH IN ASSETS UNDER MANAGEMENT

Source: www.finance.indiamart.com

Source: www.mutualfundsindia.com

Figure 2.3

Figure 2.4 13

2.4 Performance of Mutual Funds in India Let us start the discussion of the performance of mutual funds in India from the day the concept of mutual fund took birth in India. The year was 1963. Unit Trust of India invited investors or rather to those who believed in savings, to park their money in UTI Mutual Fund.

For 30 years it goaled without a single second player. Though the 1988 year saw some new mutual fund companies, but UTI remained in a monopoly position.

The performance of mutual funds in India in the initial phase was not even closer to satisfactory level. People rarely understood, and of course investing was out of question. But yes, some 24 million shareholders were accustomed with guaranteed high returns by the beginning of liberalization of the industry in 1992. This good record of UTI became marketing tool for new entrants. The expectations of investors touched the sky in profitability factor. However, people were miles away from the preparedness of risks factor after the liberalization.

The Assets under Management of UTI was Rs. 67bn. by the end of 1987. Let me concentrate about the performance of mutual funds in India through figures. From Rs. 67bn. the Assets under Management rose to Rs. 470 bn. in March 1993 and the figure had a three times higher performance by April 2004. It rose as high as Rs. 1,540bn.

The net asset value (NAV) of mutual funds in India declined when stock prices started falling in the year 1992. Those days, the market regulations did not allow portfolio shifts into alternative investments. There was rather no choice apart from holding the cash or to further continue investing in shares. One more thing to be noted, since only closed-end funds were floated in the market, the investors disinvested by selling at a loss in the secondary market.

The

performance

mutual

funds

India

suffered

qualitatively.

The

1992 stock market scandals, the losses by disinvestments and of course the lack of transparent rules in the where about rocked confidence among the investors. Partly owing to a relatively weak stock market performance, mutual funds have not yet recovered, with funds trading at an average discount of 10 20 percent of their net asset value.

The supervisory authority adopted a set of measures to create a transparent and competitive environment in mutual funds. Some of them were like relaxing investment restrictions into the market, introduction of open-ended funds, and paving the gateway for mutual funds to launch pension schemes.

The measure was taken to make mutual funds the key instrument for long-term saving. The more the variety offered, the quantitative will be investors.At last to mention, as long as mutual fund companies are performing with lower risks and higher profitability within a short span of time, more and more people will be inclined to invest until and unless they are fully educated with the dos and donâ&#x20AC;&#x;ts of mutual funds.

2.5 Types of Mutual Funds Scheme in India Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial position, risk tolerance and return expectations etc. The table below gives an overview into the existing types of schemes in the Industry.

Figure 2.5

By Structure  Open – Ended Schemes  Close – Ended Schemes  Interval Schemes

By Investment Objective  Growth Schemes  Income Schemes  Balanced Schemes  Money Market Schemes  Other Schemes  Tax Saving Schemes  Special Schemes  Index Schemes  Sector Specific Schemes Mutual Funds have specific investment objectives such as growth of capital, safety of principal current income or tax exempt income, one can select one fund or any number of different funds to help one meets ones specific goals. In general mutual fund fall under 3 general categories: 1) Equity fund invest in shares of common stocks. 2) Fixed income funds invest in government or corporate securities, which offer fixed rate of returns. 3) Balanced fund invest in a combination of both stocks and bonds OPEN ENDED SCHEMES: Open-ended schemes do not have a fixed maturity period. Investors can buy or sell units at NAV- related prices from and to the mutual fund on any business day. These schemes have unlimited capitalization, open-ended schemes do not have a fixed maturity, there is no cap on the amount you can buy from the fund and the unit capital keep growing. These funds are not generally listed on any exchange.

Open-ended schemes are preferred for their liquidity. Such funds can issue and redeem units any time during the life of schemes. Hence unit capital of open-ended funds can fluctuate on a daily basis. The advantages of open-ended schemes are: Any time exit option Any time enter option. CLOSED ENDED SCHEMES:Close-ended schemes have fixed maturity periods. Investors can buy into these funds during the period when these funds are open in the initial issue. After that such scheme cannot issue new units except in case of bonus or right issue. However after the initial issue you can buy or sell units of the schemes on the stock exchange where they are listed. The market price of the unit could vary from the NAV of the schemes due to demand and supply factor. AGGRESSIVE GROWTH FUNDS :These funds seek to provide maximum growth of capital with secondary emphasis on dividend or interest income. They invest in common stocks with a high potential for rapid growth and capital appreciation. Aggressive growth funds are suitable for those investors who can afford to assume the risk of potential loss in value of their investment in the hope of achieving substantial and rapid gains. They are not suitable for investors who must conserve their principal or who must maximize their current income. GROWTH FUNDS:Like aggressive growth funds, growth fund generally invests in stocks for growth rather than income. They are considered more conservative in their approach because they usually invest in established companies to achieve long-term growth. Growth fund provides low current income but the investor principal is more stable then it would be in

an aggressive growth fund. While the growth potential may be less over the short term, many growth funds have superior long-term performance records. These funds are suitable for growth oriented investors but not investors who are unable to assume risk or who are dependent on maximizing current income from there investments. GROWTH AND INCOME FUNDS:Growth and income funds seek long-term growth of capital as well as current income. The investments strategies use to reach these goals vary among funds. Growth and income funds have low to moderate stability of principal and moderate potential for current income and growth. They are suitable for investors who can assume some risk to achieve growth of capital but want to maintain a moderate level of current income. FIXED INCOME FUNDS:The goal of fixed income fund is to provide high current income consistent with the level of capital. Growth of capital is of secondary importance. Fixed income funds offer a higher level of current income than money market funds, but a lower stability of principal. Fixed income funds are suitable for investors who want to maximize current income and who can assume a degree of capital risk in order to do so. EQUITY FUNDS:Funds that invest in stocks represent the largest category of mutual fund. Generally the investment objective of this class of fund is long-term capital growth with some income. There are however many type of equity funds. BALANCED FUNDS:The Balanced funds aims to provide both growth and income. These funds invest in both shares and fixed income securities in the proportion indicated in their offer documents. It 19

is an idea for investors who are looking for the combinations of income and moderate growth. MONEY MARKET FUNDS/ LIQUID FUNDS:For the cautious investors these funds provide a very high stability of principal while seeking a moderate to high current income. They invest in highly liquid; virtually risk free, short-term debt securities of agencies of the Indian government, banks and corporation and treasury bills. Because of their short-term investments, money market mutual funds are able to keep a virtually constant unit price; only the yield fluctuates. Money market funds are suitable for those investors who want high stability of principal and current income with immediate liquidity. SPECIALITY / SECTOR FUNDS:These funds invest in securities of a specific industry or sector of the economy such as health care, technology, leisure, utilities or precious metals. The funds enable investor to diversify holding among many companies within an industry, a more conservative approach than investing directly in one particular company. Sector funds offer an opportunity for sharp capital gains in cases where the fund‟s industry is “in favor” but also entail the risk of capital losses when the industry is out of favor. While sectors funds restrict holdings to a particular industry, other specialty funds such as index funds gives investors a broadly diversified portfolio and attempt to mirror the performance of various market averages.

2.6 THE RISK RETURN GRAPHS FOR VARIOUS FUNDS:-

Figure 2.6 The above Graph shows the Risk and Returns generated by different Funds. Liquid Funds are less Risky and also generate less Returns where as Sector Funds are more Risky but generate more Returns by the example of above two Funds it is clear that Risk and Returns are directly proportional to each other. Other Funds like Equity Funds, Balanced Funds and Income Funds are also gives the same percentage of Returns as the Risk involved.

2.7 Mutual Fund Companies in India The concept of mutual funds in India dates back to the year 1963. The era between 1963 and 1987 marked the existence of only one mutual fund company in India with Rs. 67bn assets under management (AUM), by the end of its monopoly era, the Unit Trust of India (UTI). By the end of the 80s decade, few other mutual fund companies in India took their position in mutual fund market.

The new entries of mutual fund companies in India were SBI Mutual Fund, Can bank Mutual Fund, Punjab National Bank Mutual Fund, Indian Bank Mutual Fund, Bank of 21

India Mutual Fund.

The succeeding decade showed a new horizon in Indian mutual fund industry. By the end of 1993, the total AUM of the industry was Rs. 470.04 bn. The private sector funds started penetrating the fund families. In the same year the first Mutual Fund Regulations came into existence with re-registering all mutual funds except UTI. The regulations were further given a revised shape in 1996.

Kothari Pioneer was the first private sector mutual fund company in India which has now merged with Franklin Templeton. Just after ten years with private sector players penetration, the total assets rose up to Rs. 1218.05 bn. Today there are 33 mutual fund companies in India. ABN AMRO Mutual Fund

ABN AMRO Mutual Fund was setup on April 15, 2004 with ABN AMRO Trustee (India) Pvt. Ltd. as the Trustee Company. The AMC, ABN AMRO Asset Management (India) Ltd. was incorporated on November 4, 2003.Deutsche Bank A G is the custodian of ABN AMRO Mutual Fund.

Birla Sun Life Mutual Fund

Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group and Sun Life Financial. Sun Life Financial is a global organization evolved in 1871 and is being represented in Canada, the US, the Philippines, Japan, Indonesia and Bermuda apart from India. Birla Sun Life Mutual Fund follows a conservative long-term approach to investment. Recently it crossed AUM of Rs. 10,000 crores..

Bank of Baroda Mutual Fund (BOB Mutual Fund)

)

Bank of Baroda Mutual Fund or BOB Mutual Fund was setup on October 30, 1992 under the sponsorship of Bank of Baroda. BOB Asset Management Company Limited is the AMC of BOB Mutual Fund and was incorporated on November 5, 1992. Deutsche Bank AG is the custodian.

HDFC Mutual Fund

HDFC Mutual Fund was setup on June 30, 2000 with two sponsors namely Housing Development Finance Corporation Limited and Standard Life Investments Limited.

HSBC Mutual Fund

HSBC Mutual Fund was setup on May 27, 2002 with HSBC Securities and Capital Markets (India) Private Limited as the sponsor. Board of Trustees, HSBC Mutual Fund acts as the Trustee Company of HSBC Mutual Fund.

ING Vysya Mutual Fund

ING Vysya Mutual Fund was setup on February 11, 1999 with the same named Trustee Company. It is a joint venture of Vysya and ING. The AMC, ING Investment Management (India) Pvt. Ltd. was incorporated on April 6, 1998.

Prudential ICICI Mutual Fund

The mutual fund of ICICI is a joint venture with Prudential Plc. of America, one of the largest life insurance companies in the US of A. Prudential ICICI Mutual Fund was setup on 13th of October, 1993 with two sponsors, Prudential Plc. and ICICI Ltd. The Trustee Company formed is Prudential ICICI Trust Ltd. and the AMC is Prudential ICICI Asset Management Company Limited incorporated on 22nd of June, 1993.

Sahara Mutual Fund

Sahara Mutual Fund was set up on July 18, 1996 with Sahara India Financial Corporation Ltd. as the sponsor. Sahara Asset Management Company Private Limited incorporated on August 31, 1995 works as the AMC of Sahara Mutual Fund. The paid-up capital of the AMC stands at Rs 25.8 crore.

State Bank of India Mutual Fund

State Bank of India Mutual Fund is the first Bank sponsored Mutual Fund to launch offshore fund, the India Magnum Fund with a corpus of Rs. 225 cr. approximately. Today it is the largest Bank sponsored Mutual Fund in India. They have already launched 35 23

Schemes out of which 15 have already yielded handsome returns to investors. State Bank of India Mutual Fund has more than Rs. 5,500 Crores as AUM. Now it has an investor base of over 8 Lakhs spread over 18 schemes.

Tata Mutual Fund

Tata Mutual Fund (TMF) is a Trust under the Indian Trust Act, 1882. The sponsors for Tata Mutual Fund are Tata Sons Ltd., and Tata Investment Corporation Ltd. The investment manager is Tata Asset Management Limited and its Tata Trustee Company Pvt. Limited. Tata Asset Management Limited's is one of the fastest in the country with more than Rs. 7,703 crores (as on April 30, 2005) of AUM.

Kotak Mahindra Mutual Fund

Kotak Mahindra Asset Management Company (KMAMC) is a subsidiary of KMBL. It is presently having more than 1,99,818 investors in its various schemes. KMAMC started its operations in December 1998. Kotak Mahindra Mutual Fund offers schemes catering to investors with varying risk - return profiles. It was the first company to launch dedicated gilt scheme investing only in government securities.

Unit Trust of India Mutual Fund

UTI Asset Management Company Private Limited, established in Jan 14, 2003, manages the UTI Mutual Fund with the support of UTI Trustee Company Private Limited. UTI Asset Management Company presently manages a corpus of over Rs.20000 Crore. The sponsors of UTI Mutual Fund are Bank of Baroda (BOB), Punjab National Bank (PNB), State Bank of India (SBI), and Life Insurance Corporation of India (LIC). The schemes of UTI Mutual Fund are Liquid Funds, Income Funds, Asset Management Funds, Index Funds, Equity Funds and Balance Funds.

Reliance Mutual Fund

Reliance Mutual Fund (RMF) was established as trust under Indian Trusts Act, 1882. The sponsor of RMF is Reliance Capital Limited and Reliance Capital Trustee Co. Limited is the Trustee. It was registered on June 30, 1995 as Reliance Capital Mutual Fund which 24

was changed on March 11, 2004. Reliance Mutual Fund was formed for launching of various schemes under which units are issued to the Public with a view to contribute to the capital market and to provide investors the opportunities to make investments in diversified securities.

Standard Chartered Mutual Fund

Standard Chartered Mutual Fund was set up on March 13, 2000 sponsored by Standard Chartered Bank. The Trustee is Standard Chartered Trustee Company Pvt. Ltd. Standard Chartered Asset Management Company Pvt. Ltd. is the AMC which was incorporated with SEBI on December 20,1999.

Franklin Templeton India Mutual Fund

The group, Frnaklin Templeton Investments is a California (USA) based company with a global AUM of US$ 409.2 bn. (as of April 30, 2005). It is one of the largest financial services groups in the world. Investors can buy or sell the Mutual Fund through their financial advisor or through mail or through their website. They have Open end Diversified Equity schemes, Open end Sector Equity schemes, Open end Hybrid schemes, Open end Tax Saving schemes, Open end Income and Liquid schemes, closed end Income schemes and Open end Fund of Funds schemes to offer. Morgan Stanley Mutual Fund India

Morgan Stanley is a worldwide financial services company and itâ&#x20AC;&#x;s leading in the market in securities, investment management and credit services. Morgan Stanley Investment Management (MISM) was established in the year 1975. It provides customized asset management services and products to governments, corporations, pension funds and nonprofit organizations. Its services are also extended to high net worth individuals and retail investors. In India it is known as Morgan Stanley Investment Management Private Limited (MSIM India) and its AMC is Morgan Stanley Mutual Fund (MSMF). This is the first close end diversified equity scheme serving the needs of Indian retail investors focusing on a long-term capital appreciation.

Escorts Mutual Fund

Escorts Mutual Fund was setup on April 15, 1996 with Excorts Finance Limited as its 25

sponsor. The Trustee Company is Escorts Investment Trust Limited. Its AMC was incorporated on December 1, 1995 with the name Escorts Asset Management Limited.

Alliance Capital Mutual Fund

Alliance Capital Mutual Fund was setup on December 30, 1994 with Alliance Capital Management Corp. of Delaware (USA) as sponsored. The Trustee is ACAM Trust Company Pvt. Ltd. and AMC, the Alliance Capital Asset Management India (Pvt) Ltd. with the corporate office in Mumbai.

Benchmark Mutual Fund

Benchmark Mutual Fund was setup on June 12, 2001 with Niche Financial Services Pvt. Ltd. as the sponsored and Benchmark Trustee Company Pvt. Ltd. as the Trustee Company. Incorporated on October 16, 2000 and headquartered in Mumbai, Benchmark Asset Management Company Pvt. Ltd. is the AMC.

Canbank Mutual Fund

Can bank Mutual Fund was setup on December 19, 1987 with Canara Bank acting as the sponsor. Can bank Investment Management Services Ltd. incorporated on March 2, 1993 is the AMC. The Corporate Office of the AMC is in Mumbai. Chola Mutual Fund Chola

Mutual

Fund

d under

the

sponsorship

Cholamandalam

Investment

& Finance Company Ltd. was setup on January 3, 1997. Cholamandalam Trustee Co. Ltd. is the Trustee Company and AMC is Cholamandalam AMC Limited. LIC Mutual Fund

Life Insurance Corporation of India set up LIC Mutual Fund on 19th June 1989. It contributed Rs. 2 Crores towards the corpus of the Fund. LIC Mutual Fund was constituted as a Trust in accordance with the provisions of the Indian Trust Act, 1882. The Company started its business on 29th April 1994. The Trustees of LIC Mutual Fund have appointed Jeevan Bima Sahayog Asset Management Company Ltd as the Investment Managers for LIC Mutual Fund.

. 26

GIC Mutual Fund

GIC Mutual Fund, sponsored by General Insurance Corporation of India (GIC), a Government of India undertaking and the four Public Sector General Insurance Companies, viz. National Insurance Co. Ltd (NIC), The New India Assurance Co. Ltd. (NIA), The Oriental Insurance Co. Ltd (OIC) and United India Insurance Co. Ltd. (UII) and is constituted as a Trust in accordance with the provisions of the Indian Trusts Act, 1882.

2.8 Some facts for the growth of mutual funds in India  100% growth in the last 6 years  Numbers of foreign AMC‟s are in the queue to enter the Indian markets like Fidelity Investments, US based, with over US$1trillion assets under management worldwide  Our saving rate is over 23%, highest in the world. Only channel zing these savings in mutual funds sector is required  We have approximately 29 mutual funds which is much less than US having more than 800. There is a big scope for expansion  'B' and 'C' class cities are growing rapidly. Today most of the mutual funds are concentrating on the 'A' class cities. Soon they will find scope in the growing cities  Mutual fund can penetrate rurals like the Indian insurance industry with simple and limited products  SEBI allowing the MF's to launch commodity mutual funds  Emphasis on better corporate governance  Trying to curb the late trading practices  Introduction of Financial Planners who can provide need based advice

2.9 Net Asset Value (NAV) 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. Net Assets held by the AMC divided by Number of units outstanding gives us NAV. Net Assets =

No. of Units

Where, Net Assets refers to investments plus current assets less current liabilities. Net Assets

Investments

+ Current Assets & other Assets + Accrued Income + Deferred Revenue Expenditure (-) Current Liabilities (-) Other Liabilities (-) Accrued Expenses Sale Price Is the price you pay when you invest in a scheme. Also called Offer Price. It may include a sales load. Repurchase Price Is the price at which a close-ended scheme repurchases its units and it may include a back-end load. This is also called Bid Price.

Redemption Price Is the price at which open-ended schemes repurchase their units and close- ended schemes redeem their units on maturity. Such prices are NAV related. Sales Load Is a charge collected by a scheme when it sells the units. Also called, „Front-end‟ load. Schemes that do not charge a load are called „No Load‟ schemes. Repurchase or ‘Back-end’ Load Is a charge collected by a scheme when it buys back the units from the unit holders. Expense Ratio: A measure of what it costs an investment company to operate a mutual fund. An expense ratio is determined through an annual calculation, where a fund's operating expenses are divided by the average dollar value of its assets under management. Operating expenses are taken out of a fund's assets and lower the return to a fund's investors.

Also know as "management expense ratio" (MER). High expense ratios decrease investors' returns. An example would be two funds that both earned a 10% return before fees. If the first fund has an expense ratio that is 2 percent higher than second fund, you lose an extra 20 percent of your expected returns each year when your money is in the first fund. High expense ratios don‟t mean better results. The expense ratio does not include brokerage costs and various other transaction costs that may also contribute to a fund's total expenses.

2.10 Organization of Mutual Funds in India There are many entities involved and the diagram below illustrates the organizational set up of a mutual fund:

Figure 2.7

2.10.1 Association of Mutual Funds in India (AMFI) With the increase in mutual fund players in India, a need for mutual fund association in India was generated to function as a non-profit organization. Association of Mutual Funds in India (AMFI) was incorporated on 22nd August, 1995.

AMFI is an apex body of all Asset Management Companies (AMC) which has been registered with SEBI. Till date all the AMCs are that have launched mutual fund schemes are its members. It functions under the supervision and guidelines of its Board of Directors. Association of Mutual Funds India has brought down the Indian Mutual Fund Industry to a professional and healthy market with ethical lines enhancing and maintaining standards. It follows the principle of both protecting and promoting the interests of mutual funds as well as their unit holders.

. 30

2.10.2 The objectives of Association of Mutual Funds in India The Association of Mutual Funds of India works with 30 registered AMCs of the country. It has certain defined objectives which juxtaposes the guidelines of its Board of Directors. The objectives are as follows: This mutual fund association of India maintains a high professional and ethical standard in all areas of operation of the industry. It also recommends and promotes the top class business practices and code of conduct which is followed by members and related people engaged in the activities of mutual fund and asset management. The agencies who are by any means connected or involved in the field of capital markets and services also involved in this code of conduct of the association. AMFI interacts with SEBI and works according to SEBIs guidelines in the mutual fund industry. Association of Mutual Fund of India does represent the Government of India, the Reserve Bank of India and other related bodies on matters relating to the Mutual Fund Industry. It develops a team of well qualified and trained Agent distributors. It implements a programmed of training and certification for all intermediaries and other engaged in the mutual fund industry. AMFI undertakes all India awareness programmed for investorâ&#x20AC;&#x;s in order to promote proper understanding of the concept and working of mutual funds. At last but not the least association of mutual fund of India also disseminate information on Mutual Fund Industry and undertakes studies and research either directly or in association with other bodies.

2.11 Advantages of Mutual Funds The advantages of investing in a Mutual Fund are:  Diversification

risk:

The best mutual funds design

their

portfolios

individual investments will react differently to the same economic conditions. For example, economic conditions like a rise in interest rates may cause certain securities in a diversified portfolio to decrease in value. Other securities in the portfolio will respond to the same economic conditions by increasing in value. When a portfolio is balanced in this way, the value of the overall portfolio should gradually increase over time, even if some securities lose value.  Professional Management: Most mutual funds pay topflight professionals to manage their investments. These managers decide what securities the fund will buy and sell.  Regulatory Oversight: Mutual funds are subject to many government regulations that protect investors from fraud. Securities Exchange Board of India (“SEBI”), the mutual funds regulator has clearly defined rules, which govern mutual funds. These rules relate to the formation, administration and management of mutual funds and also prescribe disclosure and accounting requirements. Such a high level of regulation seeks to protect the interest of investors.  Liquidity: It's easy to get your money out of a mutual fund. Write a check, make a call, and you've got the cash. Often, investors hold shares or bonds they cannot directly, easily and quickly sell. Investment in mutual funds, on the other hand, is more liquid. An investor can liquidate the investment, by selling the units to the fund if open-end, or selling them in the market if the fund is close-end, and collect funds at the end of each period specified by the mutual fund or the stock market.  Convenience and flexibility: You own just one security rather than many, yet enjoy the benefits of a diversified portfolio and a wide range of services. Fund managers decide what securities to trade collect the interest payments and see that your dividends on portfolio securities are received and your rights exercised. It also uses the services of a high quality custodian and registrar in order to make sure that your convenience remains at the top of our mind. 32

 Low cost: Mutual fund expenses are often no more than 1.5 percent of your investment. Expenses for Index Funds are less than that, because index funds are not actively managed. Instead, they automatically buy stock in companies that are listed on a specific index.  Personal Service: One call puts you in touch with a specialist who can provide you with information you can use to make your own investment choices. They will provide you personal assistance in buying and selling your fund units, provide fund information and answer questions about your account status. Our Customer service centers are at your service and our Marketing team would be eager to hear your comments on our schemes.  Transparency: You get regular information on the value of your investment in addition to disclosure on the specific investments made by the mutual fund scheme.  Choice of schemes  Tax benefits  Well regulated

2.12 Drawbacks of Mutual Funds Mutual funds have their drawbacks and may not be for everyone:  No Guarantees: No investment is risk free. If the entire stock market declines in value, the value of mutual fund shares will go down as well, no matter how balanced the portfolio. Investors encounter fewer risks when they invest in mutual funds than when they buy and sell stocks on their own. However, anyone who invests through a mutual fund runs the risk of losing money.  Fees and commissions: All funds charge administrative fees to cover their day-today expenses. Some funds also charge sales commissions or "loads" to compensate brokers, financial consultants, or financial planners. Even if you don't use a broker or other financial adviser, you will pay a sales commission if you buy shares in a Load Fund.  Taxes: During a typical year, most actively managed mutual funds sell anywhere from 20 to 70 percent of the securities in their portfolios. If your fund makes a profit 33

on its sales, you will pay taxes on the income you receive, even if you reinvest the money you made.  Management risk: When you invest in a mutual fund, you depend on the fund's manager to make the right decisions regarding the fund's portfolio. If the manager does not perform as well as you had hoped, you might not make as much money on your investment as you expected. Of course, if you invest in Index Funds, you forego management risk, because these funds do not employ managers.  Dilution: It‟s possible to have too much diversification. Because funds have small holdings in so many different companies, high returns from a few investments often don‟t make much difference on the overall return. Dilution is also the result of a successful fund getting too big. When money pours into funds that have had strong success, the manager often has trouble finding a good investment for all the new money.

Chapter 3 Corporate Profile

3.1 Introduction to ICICI Prudential AMC ICICI Prudential Asset Management Company enjoys the strong parentage of Prudential plc, one of UK's largest players in the insurance & fund management sectors and ICICI Bank, a well-known and trusted name in financial services in India. ICICI Prudential Asset Management Company, in a span of just over eight years, has forged a position of pre-eminence in the Indian Mutual Fund industry as one of the largest asset management companies in the country with assets under management of Rs. 65,576.64 Crore (as of May 31, 2009). The Company manages a comprehensive range of schemes to meet the varying investment needs of its investors spread across 230 cities in the country. Key Indicators

Average Assets Under Management Number of Funds Managed

Table 3.1 At inception - May 1998

As on May 31, 2009

Rs. 160 Crore

Rs. 65,576.64 Crore

Source: www.icicipruamc.com

Headquartered in London, Prudential plc and its affiliated companies together constitute one of the world's leading financial services groups. Prudential provides insurance and financial services in a number of markets around the world, including in Asia, the US, the UK, Europe and the Middle East. Founded in 1848, the company has ÂŁ249 billion in funds under management (as of 31 December 2008) and more than 21 million customers worldwide.

Prudential has been writing life insurance in the United Kingdom for 160 years and has had the largest long-term fund in the United Kingdom, for over a century. In the United Kingdom, Prudential is a leading retirement savings and income solutions and life assurance provider. M&G is Prudential's fund management business in the United Kingdom and Europe, with almost ÂŁ140 billion in funds under management (as of 31 December 2008). In the United States, Jackson National Life, which we acquired in 1986, is one of the largest life insurance companies providing retirement savings and income solutions.

In Asia, Prudential is the leading Europe-based life insurer in terms of market coverage and number of top three ranking positions. It is also one of the largest and most successful fund managers in Asia with more top five market rankings than any other regional player. Today, Prudential has life insurance and fund management operations spanning 13 diverse markets in Asia. Prudential plc is incorporated and with its principal place of business in the United Kingdom. It is not affiliated in any manner with Prudential Financial, Inc., a company whose principal place of business is in the United States.

3.2 Organizational Hierarchy

Branch Manager

Retail Channel Head

Relationship Manager

PMS Head

Relationship Manager

Banking Channel Head

Relationship Manager

Corporate Payroll Head

Relationship Manager

Operations Channel Head

Corporate Head

Relationship Mnager

Figure 3.1

3.3 Mutual Fund Structure The SEBI (Mutual Funds) Regulations 1993 define a mutual fund (MF) as a fund established in the form of a trust by a sponsor to raise monies by the Trustees through the sale of units to the public under one or more schemes for investing in securities in accordance with these regulations. These regulations have since been replaced by the SEBI (Mutual Funds) Regulations, 1996. The structure indicated by the new regulations is indicated as under.A mutual fund comprises four separate entities, namely sponsor, mutual fund trust, AMC and custodian. The sponsor establishes the mutual fund and gets it registered with SEBI.The mutual fund needs to be constituted in the form of a trust and the instrument of the trust should be in the form of a deed registered under the provisions of the Indian Registration Act, 1908.

Sponsor Company (e.g. ICICI Prudential)

Establishes the MF as a trust Registers the MF with SEBI

Managed By Board of Trustees Mutual Fund (e.g. ICICI Prudential Mutual Fund))

Hold unit-holders funds in MF Enter into an agreement with SEBI and ensure compliance

AMC (e.g. ICICI Prudential Asset Management Company

Float MF Funds Manages the fund as per SEBI guidelines and AMC agreement

Custodian

Provides Custodial Services Figure 3.2

The sponsor is required to contribute at least 40% of the minimum net worth (Rs. 10 crore) of the asset management company. The board of trustees manages the MF and the sponsor executes the trust deeds in favor of the trustees. It is the job of the MF trustees to see that schemes floated and managed by the AMC appointed by the trustees are in accordance with the trust deed and SEBI guidelines. Mutual funds in India act as a Unit Trust. The structure is required to be followed by Mutual funds in India as per SEBI Regulations, 1996. It is constituted in the form of a Public Trust created under the Indian trust act, 1882. The Trustees hold the unit holders money in a fiduciary capacity i.e. the money belong to the unit holders and is entrusted to the fund foe the purpose of investment. The trustees do not manage the portfolio of securities directly, for this specialist function they appoint the Asset Management Company. The trust is executed through a document called a trust deed that is executed by the fund sponsor in favour of the trustees. The trust deed is required to be stamped as registered under the provisions of the Indian Registration Act and registered with SEBI. The role of the Asset Management Company is to act as the investment manager of the Trust and must have a net worth of at least Rs.10 crores.

3.4 Types of Mutual Funds in ICICI Prudential AMC There are wide variety of Mutual Fund schemes that cater to investor needs, whatever the age, financial position, risk tolerance and return expectations. The mutual fund schemes can be classified according to both their investment objective (like income, growth, tax saving) as well as the number of units (if these are unlimited then the fund is an open-ended one while if there are limited units then the fund is close-ended).

Open-Ended Schemes

Capitalization

Closed Ended Schemes

Growth Funds

Types of Funds Growth and Income Funds

Fixed-Income Funds

Investment Balanced/Equity Income Funds

Money Market Funds/ Liquid

Specialty/Sector Funds

Figure 3.3 ď&#x192;&#x2DC; Open-ended schemes These funds are sold at the NAV based prices, generally calculated on every business day. These schemes have unlimited capitalization, open-ended schemes do not have a fixed maturity - i.e. there is no cap on the amount you can buy from the fund and the unit capital can keep growing. These funds are not generally listed on any exchange.

Open-ended funds are bringing in a revival of the mutual fund industry owing to increased liquidity, transparency and performance in the new open-ended funds promoted by the private sector and foreign players. Open-ended funds score over close-ended ones on several counts. Some of these are listed below: a) Any time exit option: The issuing company directly takes the responsibility of providing an entry and an exit. This provides ready liquidity to the investors and avoids reliance on transfer deeds, signature verifications and bad deliveries. b) Tax advantage: Though Budget 2004 proposals envisage a tax rate of 20.91%(Corporate investors) and 13.06875%(Non-Corporate investors) on dividend distribution made by the Debt funds, the funds continue to remain attractive investment vehicles. In equity plans there is no distribution tax. c) Any time entry option: An open-ended fund allows one to enter the fund at any time and even to invest at regular intervals (a systematic investment plan). The open ended funds offered by ICICI Prudential Mutual Fund are Liquid Plan, Income Plan, Gilt-Treasury, Gilt-Investment, Balanced Fund, Growth Fund, Tax Plan, FMCG Fund, Fund, Monthly Child Care Plan, Power and Short Term Plan ď&#x192;&#x2DC; Close ended schemes Schemes that have a stipulated maturity period, limited capitalization and the units are listed on the stock exchange are called close-ended schemes. These schemes have historically seen a lot of subscription. This popularity is estimated to be on account of firstly, public sector MFs having floated a lot of close-ended income schemes with guaranteed returns and secondly easy liquidity on account of listing on the stock exchanges. The closed-ended fund managed by ICICI Prudential Mutual Fund is ICICI Premier.

Classification according to investment objectives Objectives: Mutual funds have specific investment objectives such as growth of capital, safety of principal, current income or tax-exempt income. In general mutual funds fall into three general categories: Equity Funds invest in shares or equity of companies. Fixed-Income funds invest in government or corporate securities that offer fixed rates of return. Balanced Funds invest in a combination of both stocks and bonds. ď&#x192;&#x2DC; Growth Funds These funds seek to provide growth of capital with secondary emphasis on dividend. They invest in shares with a potential for growth and capital appreciation. Because they invest in well-established companies where the company itself and the industry in which it operates are thought to have good long-term growth potential, growth funds provide low current income. Growth funds generally incur higher risks than income funds in an effort to secure more pronounced growth. These funds may invest in a broad range of industries or concentrate on one or more industry sectors. Growth funds are suitable for investors who can afford to assume the risk of potential loss in value of their investment in the hope of achieving substantial and rapid gains. They are not suitable for investors who must conserve their principal or who must maximize current income. ď&#x192;&#x2DC; Growth and Income Funds Growth and income funds seek long-term growth of capital as well as current income. The investment strategies used to reach these goals vary among funds. Some invest in a 42

dual portfolio consisting of growth stocks and income stocks, or a combination of growth stocks, stocks paying high dividends, preferred stocks, convertible securities or fixedincome securities such as corporate bonds and money market instruments. Others may invest in growth stocks and earn current income by selling covered call options on their portfolio stocks. Growth and income funds have low to moderate stability of principal and moderate potential for current income and growth. They are suitable for investors who can assume some risk to achieve growth of capital but who also want to maintain a moderate level of current income. ď&#x192;&#x2DC; Fixed-Income Funds The goal of fixed income funds is to provide current income consistent with the preservation of capital. These funds invest in corporate bonds or government-backed mortgage securities that have a fixed rate of return. Within the fixed-income category, funds vary greatly in their stability of principal and in their dividend yields. High-yield funds, which seek to maximize yield by investing in lower-rated bonds of longer maturities, entail less stability of principal than fixed-income funds that invest in higher-rated but lower-yielding securities. Some fixed-income funds seek to minimize risk by investing exclusively in securities whose timely payment of interest and principal is backed by the full faith and credit of the Indian Government. Fixed-income funds are suitable for investors who want to maximize current income and who can assume a degree of capital risk in order to do so. ď&#x192;&#x2DC; Balanced The Balanced fund aims to provide both growth and income. These funds invest in both shares and fixed income securities in the proportion indicated in their offer documents. Ideal for investors who are looking for a combination of income and moderate growth. 43

ď&#x192;&#x2DC; Money Market Funds/Liquid Funds For the cautious investor, these funds provide a very high stability of principal while seeking a moderate to high current income. They invest in highly liquid, virtually riskfree, short-term debt securities of agencies of the Indian Government, banks and corporations and Treasury Bills. Because of their short-term investments, money market mutual funds are able to keep a virtually constant unit price; only the yield fluctuates. Therefore, they are an attractive alternative to bank accounts. With yields that are generally competitive with - and usually higher than -- yields on bank savings account, they offer several advantages. Money can be withdrawn any time without penalty. Although not insured, money market funds invest only in highly liquid, short-term, toprated money market instruments. Money market funds are suitable for investors who want high stability of principal and current income with immediate liquidity. ď&#x192;&#x2DC; Specialty/Sector Funds These funds invest in securities of a specific industry or sector of the economy such as health care, technology, leisure, utilities or precious metals. The funds enable investors to diversify holdings among many companies within an industry, a more conservative approach than investing directly in one particular company. Sector funds offer the opportunity for sharp capital gains in cases where the fund's industry is "in favor" but also entail the risk of capital losses when the industry is out of favor. While sector funds restrict holdings to a particular industry, other specialty funds such as index funds give investors a broadly diversified portfolio and attempt to mirror the performance of various market averages. Index funds generally buy shares in all the companies composing the BSE Sensex or NSE Nifty or other broad stock market indices. They are not suitable for investors who must conserve their principal or maximize current income. 44

A summary is presented in the table below of the various funds and their investment objectives. Table 3.2 Scheme type

Objective

Open

Time Horizon

Risk Profile

Typical Investment Pattern

Equity (%)

Debt (%)

Money Market Inst./Others (%)

Money Market

Yes

Short-Term

Low

0-20

80-100

Income

Yes

Medium Long Term

Low to Medium

80-100

0-20

Growth

Yes

Long Term

High

80-100

0-20

Balanced

Yes

Long term

Medium to high

0-60

0-40

0-20

Tax Saving

Yes

Long term

High

80-100

0-20

Source: www.icicipruamc.com

3.5 Risk Tolerance The discussion on investment objectives would not be complete without a discussion on the risks that investing in a mutual fund entails. At the cornerstone of investing is the basic principle that the greater the risk you take, the greater the potential reward. Remember that the value of all financial investments will fluctuate.

Typically, risk is defined as short-term price variability. But on a long-term basis, risk is the possibility that your accumulated real capital will be insufficient to meet your financial goals. And if you want to reach your financial goals, you must start with an honest appraisal of your own personal comfort zone with regard to risk. Individual tolerance for risk varies, creating a distinct "investment personality" for each investor. Some investors can accept short-term volatility with ease, others with near panic. So whether you consider your investment temperament to be conservative, moderate or aggressive, you need to focus on how comfortable or uncomfortable you will be as the value of your investment moves up or down.

3.6 Managing Risks Mutual funds offer incredible flexibility in managing investment risk. Diversification and Automatic Investing (SIP) are two key techniques you can use to reduce your investment risk considerably and reach your long-term financial goals. ď&#x192;&#x2DC; Diversification When you invest in one mutual fund, you instantly spread your risk over a number of different companies. You can also diversify over several different kinds of securities by investing in different mutual funds, further reducing your potential risk. Diversification is a basic risk management tool that you will want to use throughout your lifetime as you rebalance your portfolio to meet your changing needs and goals. Investors, who are willing to maintain a mix of equity shares, bonds and money market securities have a greater chance of earning significantly higher returns over time than those who invest in only the most conservative investments. Additionally, a diversified approach to investing -- combining the growth potential of equities with the higher income of bonds and the stability of money markets -- helps moderate your risk and enhance your potential return. ď&#x192;&#x2DC; Systematic Investment Plan (SIP) The Unit holders of the Scheme can benefit by investing specific Rupee amounts periodically, for a continuous period. Mutual fund SIP allows the investors to invest a 46

fixed amount of Rupees every month or quarter for purchasing additional units of the Scheme at NAV based prices.Here is an illustration using hypothetical figures indicating how the SIP can work for investors: Suppose an investor would like to invest Rs.1,000 under the Systematic Investment Plan on a quarterly basis. Table 3.3 Amount Invested (Rs.)

Purchase Price (Rs.)

No. of Units Purchased

Initial Investment

1000

100

1000

8.20

121.95

1000

7.40

135.14

1000

6.10

163.93

1000

5.40

185.19

1000

6.00

166.67

1000

8.20

121.95

1000

9.25

108.11

1000

10.00

100.00

1000

11.25

88.89

1000

13.40

74.63

1000

14.40

69.44

TOTAL

12,000

1,435.90

Source: www.icicipruamc.com

Average unit cost Rs 12,000/1,435.9 = Rs 8.36 Average unit price 109.6/12 = Rs 9.13 Unit price at beginning of next quarter Rs 14.90 Market value of investment 1435.9 * 14.90= Rs 21,395/The investor liquidates his units and gets back Rs 21,395/Using the SIP strategy the investor can reduce his average cost per unit. The investor gets the advantage of getting more units when the market is turned down.

3.7 Types of Risks All investments involve some form of risk. Even an insured bank account is subject to the possibility that inflation will rise faster than your earnings, lea6ing you with less real purchasing power than when you started (Rs. 1000 gets you less than it got your father when he was your age). Consider these common types of risk and evaluate them against potential rewards when you select an investment. ď&#x192;&#x2DC; Market Risks At times the prices or yields of all the securities in a particular market rise or fall due to broad outside influences. When this happens, the stock prices of both an outstanding, highly profitable company and a fledgling corporation may be affected. This change in price is due to "market risk". ď&#x192;&#x2DC; Inflation Risks Sometimes referred to as "loss of purchasing power." Whenever inflation sprints forward faster than the earnings on your investment, you run the risk that you'll actually be able to buy less, not more. Inflation risk also occurs when prices rise faster than your returns.

 Credit Risks In short, how stable is the company or entity to which you lend your money when you invest? How certain are you that it will be able to pay the interest you are promised, or repay your principal when the investment matures?  Inflation Risks Changing interest rates affect both equities and bonds in many ways. Investors are reminded that "predicting" which way rates will go is rarely successful. A diversified portfolio can help in offsetting these changes.  Effects of loss of key professionals and inability to adapt An industries' key asset is offen the personnel who run the business i.e. intellectual properties of the key employees of the respective companies. Given the ever-changing complexion of few industries and the high obsolescence levels, availability of qualified, trained and motivated personnel is very critical for the success of industries in few sectors. It is, therefore, necessary to attract key personnel and also to retain them to meet the changing environment and challenges the sector offers. Failure or inability to attract/retain such qualified key personnel may impact the prospects of the companies in the particular sector in which the fund invests.  Exchange Risks A number of companies generate revenues in foreign currencies and may have investments or expenses also denominated in foreign currencies. Changes in exchange rates may, therefore, have a positive or negative impact on companies which in turn would have an effect on the investment of the fund.

ď&#x192;&#x2DC; Investment Risks The sectoral fund schemes, investments will be predominantly in equities of select companies in the particular sectors. Accordingly, the NAV of the schemes are linked to the equity performance of such companies and may be more volatile than a more diversified portfolio of equities. ď&#x192;&#x2DC; Changes in Government Policies Changes in Government policy especially in regard to the tax benefits may impact the business prospects of the companies leading to an impact on the investments made by the fund.

Chapter 4 Project Profile

4.1 Project Profile The summer training project with ICICI Prudential AMC involved B2B Relationship Management, Brand Awareness and Brand Equity of ICICI Prudential Asset Management Company Limited in Udaipur region. The whole process involved all the marketing activities right from market research, regarding the services provided by the company to various distribution channels to the best possible services that can be provided to deal with the competition.

In the course of the training I had the privilege of meeting several important people. The training also provided an insight into the actual consumer‟s mind, as what they think, how they perceive new products and concepts. The project started on the 4th May‟09 and the initial week was for induction. An educational training was organized to know more about the company which included its functions, policies, various fund offerings, customer handling, and calls handling. Then there was a practical training about making sales. During this course of time a new product named “Target Returns Fund with Trigger Options” was being launched so there was some learning about sales and promotion of NFO (New Funds Offerings). A regular check was made on the progress of our brokers and dealers, National Distributors, and Bankers regarding the sales they had made.

Learning was made on the factors to be considered while preparing the questionnaire and who should be the respondent. The respondents were the broker, National Distributors and Bankers. So the various factors which were covered under relationship management survey were the standard of our services, frequency and quality of our communication, important factor to increase sales, stationery requests fulfilled resolution of complaints, most preferable schemes.

A secondary syndicated research was carried out to understand the position of the company in the market. The findings of secondary research were the ICICI Prudential holds the third position in the market after HDFC Mutual Funds and Reliance Mutual 52

Funds, the later being on the top. A draft of questionnaire was also prepared under the guidance of my boss. The questionnaire was for our Brokers, National Distributors and Bankers to know their perception about the company and its services. After the completion of the feedback form, personal request was made to our Bankers and National Distributors to fill the feedback form whereas the form was sent by post to the Brokers and they were informed about the same by telephonic calls.

As the project was based on B2B relationship, it started with the secondary research which included the collection of data from various websites about the present position of the company in the market. This also included the collection of data from past records and experience of Brokers, National Distributors and Bankers with the company.

The set of feedback form was prepared under the guidance of the boss to overcome the weakness and to strengthen the strength of the company. The feedback form was divided into two parts: ď&#x192;¨

Personal Details

ď&#x192;¨

Questionnaire in relation with our services and performance

It was very important to understand the company profile so as to decide on match the strengths of the company and overcome the weakness after analyzing the output of the survey. To take corrective decisions it is important to know the mission, vision and goals of an organization. Therefore an understanding on the management perception was important so as to give suggestions to build the gap between management perception and consumer expectations during the analysis. A regular interaction was being made with various distribution channels so as to know their expectations from the company.

Chapter 5 Objective of the Study

5.1 Objective of the study As the title of the project suggests, the objective of the report is to find out the satisfaction level of the Distributors with respect to the services and overall quality provided by the AMC. The following are the sub objectives of the project:  Understanding the attitude and behavior of the distributors towards ICICI Prudential AMC  Find out there preferences parameters for selling various funds.  Understanding the competition for the service provided by different mutual funds company  Finding out ways and means to improve on the services by ICICI Prudential AMC  To understand the needs and requirements of our agents, bankers, brokers, and national and regional distributors  To come up with strategies to maintain better business relationships with our agents, bankers, brokers, and national and regional distributors  To identify and over come the gap between the management perception and the customers expectation  To come with programs to spread brand awareness in Udaipur region and to build Brand Equity

Chapter 6 Research Design

6. Research Design 6.1 Introduction The project consisted of visiting different distributors in Udaipur, Rajasthan chosen for the survey. The reason for choosing these particular distributors is that they have lot of potential. It consisted of three stages: Stage 1: Gathering data from the company and plan schedule to meet the concerned person. Stage 2: Collecting the data by survey method, on the basis of questionnaire. Stage 3: Analyzing and interpreting the primary data collected.

6.2 Review of Literature Study Literature given from the company was studied in order to gain an insight of past market and future prospects of mutual fund industry. Also the requirements of various concepts were understood using the help of internet and various other books.

6.3 Scope of Study The internship was done under ICICI Prudential AMC in Udaipur. The Mutual fund Industry is going for a boom in world market. India is also not away from these developments and there are a lot of organizations in India who are interested in investing their money. This study provides an insight to the current scenario as well as the future trends which may follow. Thus it can help to find out or to predict the future of mutual fund in Indian market. Also this may help to improve the services provided by the company.

6.4 Type of Research It is a framework or blueprint for conducting the marketing research project. The research design used here is Descriptive Research Design which is used for description of something. Here it is used to describe the characteristics of Relationship Managers and Financial Planning Managers with respect to the services expected from ICICI Prudential AMC. For this purpose Primary Data was collected through: Personal Interviews and Questionnaire filled by National Distributors, Bankers and Brokers. Input from employees of the company. It also consisted of Secondary Data analysis through: Internet and Web search Company‟s internal information Details of National Distributors, Bankers and Brokers from the Branch Manager of ICICI Prudential AMC Fact Sheet and annexure collected from ICICI Prudential AMC A research design is the arrangement of condition for collection and analysis of data. Actually, it is the blue print of research project. The research design can be divided into the following: Exploratory Research  Search of secondary data.  Survey of Customers. Conclusive Research  Descriptive Research a. Telephonic survey b. Questionnaire Method

6.5 Source of Data Sound marketing research depends upon the existence of facts or directly related to problem studied. To fulfill aforesaid objective of study, the information gathered from the primary as well as secondary sources. In my study I have used secondary as well as primary data. For this purpose all primary and secondary data were collected.

6.6 Data Collection Technique The survey method of collecting data is based on the questioning of respondents. They were asked variety of questions regarding their behavior, intensions, attitude, awareness and motivations. In Structured data collection, a formal Questionnaire is prepared thus the process is direct. The questionnaire designed for this project consists of questions based on various parameters which a relationship manager would consider before selling a mutual fund. Each question is based on different variables like investment decisions, selling decisions, company policies, serving issues etc.

6.7 Questionnaire: The information needed for the research project can be best collected through Questionnaire method as the information is more clearly defined and it would clearly address all the components of the problem. The questionnaire designed here is based on parameters like: 

Question 1 : This is based on the satisfaction level of the support and services by company.



Question 2-3 : These are based on the standard of services rendered on telephonic calls made by them to the company .



Question 4-6 : These are based on the frequency, quality and regularity of communication by the company.



Question 7 : This is based on the communication style adopted by the company.



Question 8 : This is based on the factors that help increasing sales. 59



Question 9-10 : These are based on the regularity of fulfillment of stationery requirements from the company and time taken for the same.



Question 11 : This is based on the satisfaction level of complaints resolution.



Question 12 : This is based on the most preferred product of the company.



Question 13 : This is an open ended question for suggestions to improve our Business relations



Question 14 : This is also an open ended question for suggestions to improve our services.

6.8 Personal Interviews For this purpose personal interviews were taken along with filling the questionnaire to get detailed information for other products prevailing in the market. Thus varied questions were also asked verbally along with the written questionnaire to find out how do services of other mutual fund companies are different or better than services of ICICI Prudential AMC. Questions like: 1) What are the frequencies of visiting of relationship managers of other companies? 2) In what ways do you find other mutual companies better than ICICI Prudential AMC? 3) What complaints do you have from ICICI Prudential AMC? 4) Do you get sufficient inputs based on knowledge about various funds from ICICI Prudential AMC? 5) Are there any servicing issues like account statements for investors, unavailability of forms, fact sheets etc? 6) Any suggestions for ICICI Prudential AMC to compete with competitors? Questions were asked from respondents to get real picture of what is expected out of ICICI Prudential AMC in order to improve services.

6.9 Sample Size (N=70) The sample size of 70 Distributors of retail channel is taken. 50 were asked to fill questionnaires out of which 23 were bankers, 15 were National Distributors and 12 were brokers from various agencies. 20 were personally interviewed.

6.10 Technique of analysis Percentage analysis was used to analyze the data collected.

6.11 Statistical Tools used for Analysis Pie Charts Percentages

6.12 Limitations: Every research have its own limitation and present research work is no exception to this general rule the inherent limitation of the study are as under:

Questionnaire method, can be used only when respondent are literate and cooperative. Interview method, which was followed in present research work, is relatively more time consuming. In addition to this it is very expensive. To success of questionnaire method, lies more on quality of questionnaire itself. In the present work, the sample size is very small. Research was mainly based on survey of customers, RMs & agents, which sometimes may not represent the true information. Few people refused to give answers. Lack of time.

Chapter 7 Observations

7 Observations and Findings 7.1 How long to keep investment to get maximum returns Technically open-ended funds you can withdraw your investments even within a week, but to get desired returns positive time frame is required are: Table 7.1 Funds

Time Period

Equity Funds

3 Years (plus)

Balanced Funds

18 months to 3 Years

MIPâ&#x20AC;&#x;s

1 Year (plus)

Income Funds

6 months to 1 Year

Liquid Funds

Few days to 6 months

Source: www.icicipruamc.com

7.2 What returns can be expected if one keeps money for suggested time frames Table 7.2 Funds

Returns

Sector funds

22% to 25% p.a

Balance funds

15% to 18% p.a

MIPâ&#x20AC;&#x;s Pension Plans

12% to 15% p.a

Income Funds

10% to 12% p.a

Liquid Funds

7% to 9%

p.a

Source: www.icicipruamc.com

The above-mentioned returns in the table are indicative and not assured. All investments in MUTUAL FUNDS are securities and are subject to market risk and the NAVs of the schemes may go up and down depending upon the factors and forces affecting the security market including the fluctuations in the internal rates .The past performance of the MUTUAL FUNDS is not indicative of future performance.

7.3 Marketing in Mutual Funds

Figure 7.1 Marketing is the process of planning and executing the conception, pricing, promotion, communication and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goals. Through marketing, individuals and groups create and exchange products and services with others in order to create value or satisfy wants and needs.

Figure 7.2 64

From this definition, it should be clear that successful fund marketing creates value for Fund companies, dealers and unit holders so that each is satisfied. The definition goes much deeper than simply “selling something to somebody”. Fund marketers must understand both the “Needs and Wants” side of the equation. Not only marketing must understand both sides of the equation, but it must also effectively communicate the details of each in order to successfully bridge the gap between the two. Every facet of modern marketing has been effectively employed to dramatically grow the Indian mutual fund industry. The fund industry has established an exceptional sales support infrastructure. Fund specialists and fund companies, bank branch subsidiaries and discount brokers are ready to provide answers telephonically to your fund questions all day long. Telephone etiquette is as good as it gets. Wed sites have been established with educational material, guides, charting functions, fund profiles, fees and historical returns in abundance. Descriptive brochures, newsletters and tax guides are readily available to help with your purchase decision. Getting information about a fund for the managers is becoming easier. The business press routinely provides loads of information on which to base informative articles. One can often dial in on the conference calls managers hold regularly with sales representatives. It has a multi-channel distribution system which is broad-based and responsive to general queries or orders by mail, phone, in person or e-mail. The sales service infrastructure is an integral, well-oiled part of the marketing initiative. The essence of professional selling today is building and maintaining of high quality relationships, based on establishing a high level of trust and credibility with the customer by continually investing in maintaining the quality of your relationships. You should approach your clients as consultants and not as vendors and help they achieve their financial goals.

7.4 The Selling Process Selling Models Old Model

New Model

10% RAPPOR T

BUILDING TRUST

20%

30%

QUALIFICA TION

IDENTIFYING NEEDS 20%

40%

30%

PRESENTIN G SOLUTIONS 10%

PRESENTING 40%

CONFIR MING & CLOSING

CLOSING

Figure 7.3 As mentioned earlier, apart from the existing players like ICICI Prudential AMC, Reliance Mutual Fund, Franklin Templeton, HDFC Mutual Fund etc. more and more players like Bharti AXA, JP Morgan, AIG etc. are entering the mutual fund industry and this has given rise to increased competition among the players. To sustain this cut throat competition, the fund houses are developing new marketing strategies and revamping the existing strategies. Thus, the marketing in the mutual funds have assumed an important role like never before.

7.5 Marketing Strategies The marketing strategies that can help the fund houses to hold the market shares are: Product Innovation Devise innovation channels of delivery, i.e. different distribution channels and models. Build brand awareness strong enough to “pull” the investors towards itself. 1) Product Innovation Of late, the marketers have realized the importance of marketing in mutual funds and have come up with product innovation in the category of mutual funds as well. With the marketing mantra – “Customer is the king”, the mutual fund houses understand the importance of innovating need based products. Different segments have different expectations like long term growth, regular income, tax benefits etc. New products are aimed at satisfying one or more objectives. Indian mutual funds have seen many products launched to cater the ever increasing need of the investors. Product innovation in mutual funds is one of the discernable trends that have the potential to change the face of Indian mutual fund industry. The asset management companies are shifting from old plain vanilla schemes towards differentiating themselves by providing innovative options to the investors. For instance; Apart from the plain vanilla schemes, fund houses are offering SECTOR FUNDS, in order to capitalize on the success of sectors like Banking, Power, Media and Entertainment, Pharmaceuticals, etc. Also keeping in mind the different type of risk taking propensity among the investors, fund houses have come up with BALANCED/ HYBRID FUNDS to cater effectively to their investors. 67

2) Distribution in Mutual Funds In the U.S.A, mutual funds are sold through five principal distribution channels: Direct Channels Retirement Plan Channel Advice Channel Institutional Channel Supermarket Channel  The first four channels primarily serve individual investors. In the Direct Channel, investors carry out transactions directly with mutual funds.  In the Advice, Retirement Plan, and Supermarket Channels, individual investors use third parties or intermediaries that conduct transactions with mutual funds on their behalf. Third parties also provide services to fund investors on behalf of mutual funds. The most important feature of the Advice Channel is the provision of investment advice and ongoing assistance to fund investors by financial advisors at full-service securities firms, banks, insurance agencies, and financial planning firms. Advisors are compensated through sales loads of from asset-based fees.  The Retirement Plan channel primarily consists of employer-sponsored defined contribution plans in which employers provide mutual funds and other investments for purchase by plan participants through payroll deductions.  The Supermarket Channel is made up of discount brokers that offer mutual funds from a large number of fund sponsors. Many of the fund offerings are subject to no transaction charges or sales loads. Businesses, financial institutions, endowments, foundations, and other institutional investors use the Institutional Channel to conduct transactions either directly with mutual funds or through third parties. Having looked at the distribution channels in the U.S.A we should understand that there is a growing need for a strong distribution network and models for the mutual fund industry in India as well, to serve the huge untapped market in the country. The intensifying competition and the need to attain economies of scale are forcing industry players to increase their reach in non-metro cities and small towns, where the potential is 68

high, but, penetration is low. This is resulting in fund houses exploring innovative distribution channels. In India, mutual funds are sold through four principal channels viz.: Independent Financial Advisors (IFAs) Direct Channel National Distribution Channel Banks It is very imperative for the fund houses to develop a proper distribution network in order to reach out to the investors effectively. 3) Brand Awareness in Mutual Funds Brand name in mutual funds highlights the inherent benefits and investment objectives and ensures investor loyalty. Brand name and identity is an important marketing aspect because it facilitates product identification at the market place. However, product identification coupled with BRAND AWARENESS will lead to the true success of the brands and the company. High brand awareness leads to high levels of usage and preference. With keen competition today, mutual fund brands need to work harder on the quality of awareness to drive consideration. Creating media noise is just not enough to secure strong brand equity. Indian investors are more sophisticated than ever and are looking at overall comfort levels with the fund houses. To achieve this, the fund house should be able to carve a niche for itself in the mind of the customers by making them aware about their products. A significant amount of brand awareness in the minds of the investors/ customers creates a PULL for the products when the customers walk in and ask for the product by themselves, instead of a third pushing it for the company.

7.6 Strategies for Selling and creating Brand Awareness a) Know your product: Before you start selling mutual funds you need to understand the scheme you are selling. You should not only focus on the specific features of the scheme but focus also on the specific financial goals of the prospect and show how the scheme enables him to get what he really wants. You should keep yourself updated on the track record of the scheme as well as the overall performance of the mutual fund. Thus before recommending an investment you should know: The strength of the Asset Management Company and sponsors of Mutual Fund The various choices/ plans available and their advantages The nature of the scheme The potential of returns and the risk associated with it Tax benefits Operational details b) Know your clients: Clients are different. Their financial needs and choice of investment vary depending upon their age, earning capacity, family commitments and ability to take on risks. Some broad types of clients are given below: Young and accumulating: Typically under 40, seeking to build capital for a long-term goal such as buying a house, childrenâ&#x20AC;&#x;s educating or a family wedding. These clients may take higher risks for higher returns. Middle-aged with family commitments: Typically between 40 and 60, in their prime earning years and with family commitments that require large, periodic expenditures. They may be willing to sacrifice a higher return for a stable investment and lower risks.

Retired: Typically over 60, seeking income to meet their regular expenses and are primarily concerned with safety of their principal. Institutions and high net worth individuals: Corporate, Banks, Trusts and Wealthy investors, who seek an appropriate combination of tax efficient growth and income depending upon their return expectations and risk taking ability. c) Prioritize your clients: To make the most of your time, you must identify the clients with whom you can establish a good business relationship. There are three types of clients- respective, potential and independent minded. The receptive clients are those who will work with you to develop a financial plan, have the discipline to invest regularly and believe in the merits of professional financial advisors. The potential client is one who wishes to become a successful investor, but does not have the discipline or patience to do so. If you work closely with these investors, they could join the ranks of your good receptive clients. The independent minded are those who do not use financial intermediaries and prefer investing directly. Such clients need to be cultivated over time. d) Understand your clients: For you are to be able to recommend a sound financial plan to your clients, you must understand their needs and priorities. Find out you client‟s: Investment Objective: Try to establish what your client‟s real needs are. “I need more money” is not a real need or goal. On the other hand, something specific like “I need money to send my kids to college” or “I need money to retire” is a real need or goal. You must probe your clients so that their real needs come out. Risk Tolerance: Are they willing to take higher risks in anticipation of higher returns or would they prefer to play it safe and accept lesser returns.

Return Expectations: what kind of returns would they like from their investment, how long are they willing to wait and in what do they want it i.e. capital appreciation or regular income. Cash Flow Requirements: How much liquidity they want and when do they want it. Tax Benefits: Are your clients looking for any specific tax benefits on their investments. How important are tax concessions in choosing their investments. e) Help them choose their investments: Having understood your clientâ&#x20AC;&#x;s profile and needs, you now have to advise them on where to invest. It might be a selection of only Mutual Funds or a combination of Mutual Funds and other investments. f) Encourage Regular Investment: Advise your clients to invest early and stick to a regular investment plan. This will help them to make more money because the power of compounding enables your client to earn income and their money to multiply at compounded rates. g) Commit them to invest: The best plans and the best choice of investments are of little use unless your clients act upon them and invest. Ensure that you clients give you the commitment of their investment. Be ready with application forms and other documents and if necessary, help them to complete the paperwork and bank the cheques. h) Provide personalized after sales service: One of the most important responsibilities of a professional agent is to provide prompt, efficient and courteous service. You can build up lasting relationships by providing your clients personalized services such as: Making periodic calls to seel if they need any help with their investments 72

Getting in touch if there is a great deal of fluctuation in market prices which may be of concern to them Assessing any change in their personal circumstances which may call for a review of the financial plan recommended by you Informing them of new schemes and products that could be useful to them Following up with the Mutual Fund if your clients have experienced a service related problem with their investments. Stay in touch with you clients on a regular basis. You will not only get more business from them, but you can also earn the business of their friends and relatives by getting positive The use of advertising is slick and broad-based. Television, radio, newspapers, magazines, bill-boards and even security gate arms at airport parking locations promote fund investment. Colorful innovative brochures are distributed by mail at bank branches and advisor offices. The message is clear and consistent- buy and Buy more. Fund companies quickly learned the folly of marketing just one or two funds, hence the vast variety of funds available. The danger for the fund companies is that if performance goes in the tank than investors exit the funds pulling out tens of millions of dollars. Better to offer many varied funds so that if a few turn cold the others are still cooking and at least some performing ones can be prominently advertised in newspaper. Mutual fund industry has seen a high rate of growth due to exceptional marketing. Over 80 mutual fund companies employs 60,000 salespersons and employs thousands more portfolio managers, administrators, analysts and marketing personnel. Brokers gain substantial transaction business from the funds. Auditors trust firms and advertising agencies make a good living off the funds. Guides, books, newsletters, public speakers, fund gurus, specialist software firms, rating companies and advisors also cash in. The media love to write about the fund industry and their advertising departments gladly receive the lucrative ad revenues. During RRSP season, television advertising becomes so pervasive that one cartoon observed, â&#x20AC;&#x153;The RRSP ads are periodically interrupted by hockey gameâ&#x20AC;?. 73

There are in fact very few organizations or people sufficiently objective to illuminate the disadvantages and shortcomings of mutual funds. Even regulators have moved slowly and cautiously to deal with this powerful and influential industry. The marketing departments of fund companies have rightfully earned a growing share of the â&#x20AC;&#x153;management feeâ&#x20AC;? â&#x20AC;&#x201C; in some cases marketing budgets are actually greater than the budgets for portfolio management. The greatest challenge is to get more retail participation in funds. Tremendous efforts have been made in this direction. About 250 mutual fund outlets, including branches, franchisees and collection centers, were opened across the country last year. Today, in metros and non-metros, there are more than 1000 outlets to provide services to investors. 60 t0 65 percent of the net assets still belong to institutional investors. But even the rest is no mean figure. Mutual funds are still not the most preferred investment vehicle in the country. In our country, people want to buy only sacred assets. Unless this mindset changes, it will be difficult to get investors interested in mutual funds. Government securities and postoffice investments offer 8 percent assured returns, while bank offer 6 percent. So, competition is very high. Only sustained efforts by a trained and qualified distributor class can bring success.

Chapter 8 Analysis and Findings

8.1 SWOT Analysis A scan of the external and internal environment is an important part of the strategic planning process. Environmental factors internal to the firm usually can be classified as Strengths(S) or Weakness (W), and those external to the firm can be classified as Opportunities (O) or Threats (T).Such an analysis of the strategic environment is referred to as SWOT analysis. The SWOT Analysis provides information that is helpful in matching the firmâ&#x20AC;&#x;s resources and capabilities to the competitive environment in which it operates. The following diagram shows how a SWOT analysis fits into an environmental scan:

Figure 8.1

Hence, This SWOT Analysis identifies our company‟s: Strengths – to build on Weaknesses – to cover Opportunities – to capture Threats – to defend against In the initial phase of this project we conducted interviews and distributor‟s surveys by making the telephonic calls and meeting up the relationship managers at various banks to gather the relevant data. By receiving input from the respective relationship managers and distributors we are able to understand ICICI Prudential AMC strengths and weaknesses and to an extent the customer perception about ICICI Prudential AMC as well. This allowed us to form recommendations that are listed at the end of this project. Strengths: 1. Company’s Brand Name: Well run companies have a well known name and reputation and this is the most powerful strength of ICICI Prudential AMC as well. It‟s the company brand name which is giving a hit to another market players when it comes to competing in the market whether it be in terms of coming up with new schemes or tapping the market opportunities. Also ICICI Prudential AMC being a “domestic‟ brand plays a significant role as the distributors find it easy to pitch the ICICI Prudential AMC products to customers. 2. Funds Performances; One of the most important reasons for ICICI Prudential AMC‟s popularity is the return that its schemes have given i.e. the fund performance of ICICI Prudential AMC. The continuous dividend that the company keeps declaring is one of the most attractive elements of its schemes. The products like ICICI Pru infrastructure fund, ICICI Pru Dynamic Growth Plan, ICICI Pru Index Growth Plan have given returns of 77

approximately more than 50% since its inception. Many of the schemes have declared dividends on regular basis. Also some of the schemes have been awarded for their best performances.

8. Strong channel partner network: ICICI Prudential Mutual Fund is one of the few mutual funds to pioneer retail investing in the country by reaching out to investors and distributors in over 230 cities through branches and representatives across India. Also the company has 50+ distributors in Udaipur region itself. Hence the companyâ&#x20AC;&#x;s strong distribution network is playing a great role in making ICICI Prudential AMC reaching out to maximum number of investors.

9. Highly Trustable: Any ICICI Prudential Mutual Fundâ&#x20AC;&#x;s scheme that is launched in the market does well because of the trust that ICICI Prudential AMC enjoys as a fund house. It is the most trusted mutual fund brand in the country according to a survey conducted. 5. Very Innovative: The fund house is considered to be very innovative by the distributors. E.g Equity Target Returns fund NFO was launched in April 2009 and it was unique as it came with a unique feature of trigger options of saving the profits at 12%, 20%, 50% or 100%. The profits made are automatically transferred to liquid account on which the interest is also given. ICICI achieved the target of 800 crs before the opening of its NAV. 6. Aggressive; The fund house is considered to be very aggressive in following term: New Products Marketing and Distribution Services

There are two ways in which a fund house can increase its market share. First, is by increasing the market share in the entire pie (which every fund house does). And second, is by increasing the radius or circumference of that pie. ICICI Prudential AMC believes in the second option. ICICI Prudential AMC has increased the number of investors especially from retail segment. It has been instrumental in converting the FD investors into first time Mutual Fund Investors. 7. Efficient Service Centers: The service centers opened by ICICI Prudential AMC have proved to be very efficient especially during NFOs. The bankers face a lot of concerns regarding replenishment of application forms and also their submission during NFOs. So the services canters, which are strategically located in commercially viable places, have proved to be of great help. 8. Strong Customer Base: ICICI Prudential AMC has the largest customer base of around more than 50 lakhs. Weaknesses: 1. Services: Services provided to the bankers and retailers are the biggest area of concern. The services provided to distributors such as complaints solving, query handling and statements delivery have to be improved opon. The distributors surveyed complain about the queries at times are not followed up properly and the biggest concern is the delivery of account statements. 2. Lack of awareness among investors and the agents about the fund. 3. Weak support systems, when needed at time of crisis company representatives should assure the investors and the bankers 4. Personal attention not given to customers queries

Opportunities: 1. Educational Institutions: The educational institutions turn out to be a great opportunity for ICICI Prudential AMC in terms of obtaining large number of investors and the amount of investments as well. There are few products for employees, which can be tapped for teachers, office staff etc. In addition to the employees their also lies another category i.e. of students of the graduation and the post graduation colleges who start earning either along with their studies or shortly after the completion of their degrees or courses. Also when studied the business model of these institutions it is learnt that the revenue inflows are mainly in month of April, May. June and July – this is generally the lean period for the rest of the industry and hence can be tapped at the beginning of the year. 2. Small and Medium Enterprises: Another segment which can be tapped is of the SME‟s. with a contribution of 40% to the country‟s industrial output and 35% to direct exports, the SME sector has achieved significant milestones for industrial development of India. As discussed with mutual fund industry experts it was found that only 10% of this sector invests in mutual funds and rest 90% still remains as open untapped market. So along with the existing markets their lies an opportunity to expand the base and capture this new market as in future outlook these current SME segment are expected to turn into big corporate with the current boom in the economy. So it is essential to catch them young in their initial growth life cycle as they can turnout to be future large corpus client. As it is known that only 10% of the SME‟s are invested in MF‟s so there lies a need to create the awareness for the same and creating awareness through: (Mass marketing) such as broadcasting ads with special focus on SME‟s, sponsoring events like ICICI CNBC SME awards and giving presentations on cash flow management with mutual funds, giving ads in SME column in ET, participating in trade fairs and meeting corporate personally there, giving presentation in industrial area association meetings.

Households;

Udaipur has around 35 residential locations having huge potential and can be tapped through average 200 houses in each location. And there lies again the efforts to create the awareness for the same. This can be done through conducting group presentations to inform them about the products and the benefits they stand to gain from it. Another method can be stationing of canopies and placing a representative there to inform them about the products and not actually sell but to get leads and spread awareness about the product. Also getting a few local residents to become IFAs first and help them to conduct the presentation or seminar. 4. International Fund: Investing internationally opens up a huge market which is otherwise left untapped. India‟s market at present constitutes only 5% of the world‟s stock market. Several other fund houses have invested in international market like Franklin Templeton and Fidelity international opportunities fund. Moreover fund houses are now permitted by RBI to invest vin ADR/ GDR. Threats: 1. Increased competition; Increased competition in the industry in terms of more upcoming schemes and better existing performances of mutual fund schemes of other AMC‟s is the threat posed to ICICI Prudential AMC. As per the distributors Reliance Mutual Fund. HDFC Mutual Fund, SBI Mutual Fund are giving tough competition to ICICI Mutual Fund. 2. Services; As the services provided by ICICI Prudential AMC fall short of the distributors expectations, hence the improved services provided by competitors sooner will be proving a threat to the company and as per the market view Reliance and HDFC mutual fund companies are considered ahead of ICICI Prudential AMC. 81

3. Recent volatility in stock market: There is a strong relationship between volatility and market performances. Volatility tends to decline as the stock market rises and increases as the stock market falls. When volatility increases, risk increases and returns decreases. The market is so volatile these days that no one is able to predict the market. Hence, this has become a big threat for the AMCs. 4. More redemption due to volatile market rises: Due to the volatility in the market, customers have a fear in their mind of losing money, so more redemption of the applications are taking place.

8.2Analysis and Findings of survey On The basis of the response s given in the questionnaire by the respondent the following analysis can be done: 1) Are you happy with the support/services provided to you by our Relationship Manager?

YES

Agents

YES

Bankers

100%

Total

National Distributors

YES

YES NO

98%

93%

Figure 8.2 83

The overall response of the distributors about the services and support from ICICI Prudential AMC is satisfactory. This may be because of credibility of the company among the customers. By the graphs we can see that: a) All 12 agents and all 23 bankers are satisfied with the support and services provided by us. b) Out of 15 distributors only 1 is not satisfied. c) Overall, out of 50 respondents, only one is not satisfied i.e. 98% of respondents are satisfied. d) Only 2% of overall distributors are dissatisfied. We can see that overall quality of ICICI Prudential AMC is satisfied among the customers. This can be due to following reasons: Greater Distribution Channels Employeesâ&#x20AC;&#x; knowledge about the products. Responsiveness of the employees in resolving queries Individualized attention / personalized services Greater return with less risk Goodwill of the company Quality and regularity of interaction

2) Is the standard of service rendered by phone up to your expectation?

YES

Agents

Bankers

YES

96% 100%

Total National Distributors

YES

96% 93%

Figure 8.3 The overall response of the distributors about the services rendered on phone by ICICI Prudential AMC is satisfactory. This may be because of good operations management system. By the graphs we can see that: a) All 12 agents are satisfied with the services rendered on phone by us. b) Only 1 bankers out of 23, is not satisfied. c) Out of 15 distributors only 1 is not satisfied. d) Overall, out of 50 respondents, only 2 are not satisfied i.e. 96% of respondents are satisfied. e) Only 4% of overall distributors are dissatisfied. 85

We can see that overall quality of services rendered on phone by ICICI Prudential AMC is satisfied among the customers. This can be due to following reasons: Good operations management system Employees with good communication skills When contacted over phone; calls are answered within 2-3 rings. This can be said on the basis of response received from the respondents, as shown below; Within 2-3 rings After 8-10 rings busy Continuously busy

Agents

Bankers

Within 2-3 rings After 8-10 rings busy Continuously busy

25%

13% 75% 87%

Within 2-3 rings After 8-10 rings busy Continuously busy

Total

National Distributors

0% 0%

0% 18%

20% 80%

82%

Figure 8.4 86

3) Are you in receipt of regular communication from ICICI Prudential AMC?

YES

Agents

Bankers 0%

YES NO

100%

Total

National Distributors YES NO

YES NO

98%

93%

Figure 8.5 The overall response of the distributors regarding being in regular receipt of communication by the company is positive. According to the distributors the company takes the effort to communicate the regular updates, it may be regarding new policies or new products. By the graphs we can see that: a) All 12 agents and all 23 bankers are in regular receipt of communication by the company. 87

b) Out of 15 distributors only 1 does not agree to the fact that company updates are communicated regularly. c) Overall, out of 50 respondents, 49 agree to the fact that company updates are communicated regularly. As we can see from the given graphs that the company regularly communicates the updates to its distributors, which acts as one of the strength for the company and is one of the reason of high sales of its products. This also shows the companyâ&#x20AC;&#x;s ability to maintain good business relations with the various distribution channels, which has lead to build goodwill in the market. The frequency of communication was also measured. Daily

Daily

Agents

Weekly

Bankers

Fortnightly

monthly

17%

67% 31%

National Distributors

Daily Weekly Fortnightly monthly

33%

48%

Daily Weekly Fortnightly monthly

Total

10%

6% 36%

48%

60%

Figure 8.6

4) How would you rate the quality and regularity of the communication from ICICI Prudential AMC to you? Delighted

Delighted

Agents

Satisfied

Bankers

Neutral

Dissatisfied

Satisfied

Neutral Dissatisfied

26%

34%

8% 74%

58%

National Distributors

Delighted Satisfied Neutral Dissatisfied

Delighted

Total

Satisfied Neutral

Dissatisfied

26%

20%

70%

73%

Figure 8.7 The overall response of the distributors in relation with the quality and regularity of communication is satisfied. According to the distributors the company maintains the standard of communication and they are satisfied by its quality of communication. By the graphs we can see that: a) Only 4 are delighted and 7 are only satisfied by the regularity and quality of communication by the employees of the company. Where as 1 respondent was neutral about the same in the group of agents. 89

b) In case of 23 bankers, 6 are delighted and 17 are satisfied with the quality of communication by the company. c) Only 3 are delighted and 11 are just satisfied by the quality of communication by the company, 1 is even dissatisfied with the quality of communication. d) Overall, out of 50 respondents, only 13 are delighted, 35 are satisfied, 1 is neutral and 1 is dissatisfied with the quality and regularity of communication by the employees of the company. Measures should be taken to improve the quality of communication in order to convert the satisfaction of the consumers into delight ness. This can help the company for future growth and expansion by increasing the share of market, share of mind and share of heart. Few suggestions for the same: 1. Plan and organize: One should have clear objectives while writing an email or a business letter. It should include everything that you are intended to write to give information to the reader in order to attain your objectives of proper and clear business communication. 2. Build the business communication infrastructure: In business communication through emails, letters and memos write thanks, commendation and genuine statements of good that will build teams and partnership with clients. Use the tone and level of formality that fits the objectives and the reader, and convey your thoughts straight and firmly. 3. Prepare the reader for proper business communication: Write the email or letter subject lines using words that alert the reader to contents, required action or critical information in the email. In the introduction explain everything readers need to know to understand fully why they are receiving the document. Describe all actions the reader is expected to perform, actions you will perform and any critical information that reader is expected to know. Summarize conclusions at the beginning. 90

Write clear statements of contents at the end o introduction so that readers know what to expect and prepare them for reading, which will transform it from just communication to business communication. Not only emails and letters but meetings also play a vital role in business communication. In any organization, meetings are a vital part of the organization of work and the flow of information. They act as a mechanism for gathering together resources from many sources and pooling then towards a common objective. The challenge is to break this mould and to make the meetings effective. As with every other managed activity, meetings should be planned beforehand, monitored during for effectiveness, and reviewed afterwards for improving their management. A meeting is the ultimate form of business communication. One can organize the information and structure of the meeting to support the effective communication of the participants. Thus proper business communication whether through writing or verbal i.e. through meetings can do wonders to the business. All that is needed is a skillful, flawless and effective way of business communication.

5) How will you classify our communication style? Personal Knowledgeable Competitive Co-operative Convincing Ethical

Agents

10%

13%

Bankers

14% 11%

27%

23%

14%

13%

19%

13%

National Distributors

Personal Knowledgeable Competitive Co-operative Convincing Ethical

14%

29%

14%

Personal Knowledgeable Competitive Co-operative Convincing Ethical

Total

13%

14%

11%

14% 11% 14%

36%

19%

14%

29%

Figure 8.8 The above graphs represent the overall response of the distributors regarding communication style by the company. By the above graphs we can that overall results are as follows:

a) 13 % of total distributors feel that we follow Personal communication which is some how beneficial for the company as it helps to maintain professional as well as personal relationship. This may help the company to make more sales in more profit. Therefore itâ&#x20AC;&#x;s very important to improve personal communication. 92

b) It is very important that the interaction should always be constructive as in knowledgeable, in this survey only 30% distributors feel that company‟s communication style is knowledgeable. Therefore this needs to be improved and it can be done by regularly communicating the new policies and products, NAVs, updations and modifications in various products, brokerage benefits. This may help the company to make more profits.

c) Only 14% distributors feel that the company‟s communication style is competitive which is very less. To sustain in the market its very important to fight with competitors and therefore communication style should be competitive. The company should take some efforts to make their communication style competitive as this may reflect the aggressiveness of the company towards their customers. This can be done by showing the potentials and strength of the company over the competitors‟ strength.

d) The biggest asset of the company is cooperation with its customers and according to the survey only 19% of distributors feel that our communication style is cooperative. Thus our company should concentrate on being more cooperative with distributors which may be beneficial for our company in future to increase sales.

e) Apart from cooperation, one needs to be convincing while communicating so that marketing and sales become easier. This can be done by being more innovative. Only 14% of distributors feel that our company has convincing style of communication.

f) Ethics are very essential for the success of any firm and therefore we should try that all the employees follow ethics of the firm so that it can benefit the firm in future n apart from only 14%, all should feel that the company‟s communication style is ethical.

6) According to you, which factor is of utmost important to increase the sales? Brand name Performance Quantity measures services offered

Agents

Brand name Performance Quantity measures services offered

Bankers

20% 7%

47%

16% 37%

73%

Brand name

Total

Performance

National distributors

Brand name Performance

Quantity measures

services offered

44%

13%

41%

15% 41%

26% 5%

15%

Figure 8.9 It is very important to know that which factor influences the sales. According to survey we can see that: a) According to the Agents, 73 % feel that the main factor which influences the sales is Performance i.e. the performance of the firm n the product. None of the agent thinks that quantitative measures can be one of the attractions to make sales. 94

Whereas 20% think that services offered can also help in selling a product and only 7% feel that Brand Name can be one of the factors to increase sales. b) Talking about the Bankers, 46% of them gives importance to the services offered by the company, whereas 38% say that performance of the product and company is important factor which influences the sale. 16% of Bankers feel that sales depend upon the brand name, i.e. the popularity of the company and none of them feel that quantity measures can lead to incremental sales. c) When we surveyed the National distributors regarding the utmost factor which leads to sales, the result was that 44% of them feel that services offered is the most important factor to increase sales. 28% of them give importance to Performance and 16% feel quantity measures are also important to make sales and rest 16% have given importance to brand name. d) Overall, 41% feel services offered by the company can lead maximize the sales. 40% have given importance to performance of the products offered by the company. Only 14% feel the Brand name is also important to make sales and rest 6% have said that even quantity measures can also be beneficial to increase the sales. Therefore, the company should concentrate more on to improve the services offered and the performances of the products so that company can maximize its sales and market share.

7) Are your stationery requirements fulfilled? Always Frequently Sometimes Rarely

Agents

8% 0%

Always Frequently Sometimes Rarely

Bankers 0% 0%

30%

83%

70%

National distributors

Always Frequently Sometimes Rarely

Always

Total

Frequently Sometimes

20%

13%

Rarely

73%

74%

Figure 8.10 When this question was asked in the survey that is their stationery requirements fulfilled the response was quite positive most of them were satisfied with it. The above graph represents the survey results:

a) Out of 12 agents, 10 feel that their stationery requirements are always fulfilled. Only 1 feels that their stationery requirement is frequently fulfilled and just 1 says that it‟s sometimes fulfilled. None of them thinks that it‟s rarely fulfilled. b) Talking about the 23 bankers who were surveyed, 16 of them feels that their stationery requirements are always fulfilled and 7 says that it‟s frequently fulfilled. None of them said that it‟s sometimes or rarely fulfilled which is a good sign for the evaluation of services offered by the company. c) When we consider the opinion of all 15 National Distributors who were surveyed, 11 of them agree to it that their stationery requirements are always fulfilled, 2 were with the opinion that it‟s frequently fulfilled and one says that only sometimes it‟s fulfilled whereas, just one feels that it‟s rarely fulfilled. d) When we consider all 50 respondents from various distribution channels, 37 of them feel that their stationery requirements are always fulfilled whereas 10 of them agree to the opinion that it‟s frequently fulfilled. Only 2 feels that it‟s sometimes fulfilled and just one says that it is rarely fulfilled. This is just not sufficient to evaluate the services. Timely services are very important and to evaluate the services it‟s important to know that whether these requirements are fulfilled on right time or not and therefore another question was asked regarding timely requisite stationery supply and the response is showed in the graphs: 2-3 days

Agents

1 week

2-3 days

Bankers

1 week Only after reminders

Only after reminders

Never at all

0% 0%

0% 8%

92%

91%

2-3 days

Total

1 week

Only after reminders

Never at all

National Distributors

Never at all

0% 20%

0% 7%

12% 86% 73%

Figure 8.11 Most of them feel that their stationery requirements are fulfilled on time i.e. within 2-3 days. Overall most of them receive their requisite on the same day. This shows the efficiency and speedy delivery of all the requirements by ICICI Prudential AMC to various distributors which shows the aggressiveness of the company. This also proves that company feels that distributors play an important role in marketing and sales of the company and therefore itâ&#x20AC;&#x;s beneficial to keep them happy and satisfied in all respect. Therefore the company tries to keep them all happy by providing them with all their requirements on time.

8) Are your complaints / grievances being resolved to your satisfaction? Always

Agents

Always

Bankers

Frequently

Sometimes

Rarely

42% 0%

22%

58%

70%

Always Frequently Sometimes Rarely

National Distributors

Always

Total

Frequently Sometimes Rarely

13% 24%

80% 70%

Figure 8.12 In the survey to come up with a conclusion, it was very important to know whether the complaints of the distributors were handled efficiently or not. This may help us to evaluate the productivity of the employees. It is rightly said that the most important factor for the growth of the company lies in the happiness of its customers and potential customers. Therefore it is very important to know and understand what the customers feel 99

about the company and its employees. According to the survey in relation with the satisfaction level regarding the ability of handling complaints by ICICI Prudential AMC, the results are:

a) Only 7 out of 13 agents feel that their complaints are always handled and rest 5 says that itâ&#x20AC;&#x;s handled frequently. Though none of them feel that their complaints are not handled but it is very important that customers should be happy with how company handles their complaints and the support rendered by the company to them, therefore measures should be taken to improve the services.

b) Out of 23 bankers, 16 agreed to this that ICICI Prudential AMC gives importance to their complaints and their complaints are always handled effectively and efficiently. 5 of them believe that their complaints are handled frequently but not always. 1 of them feels that their complaints are handled only sometimes and 1 thinks that their complaints are solved rarely.

c) According to the 12 distributors out of 15, ICICI Prudential always handles their complaints, 2 of them thinks that their complaints are frequently handled by the company. One of them is not satisfied with the complaint handling system of the company and feels that company handles their complaints rarely.

d) Overall 70% of the respondents feel that ICICI Prudential AMC always handles the complaints whereas only 24% thinks that the company handles the complaints frequently. Only 6% of them are dissatisfied with the complaint handling system of the company and they think that company in not efficient enough in handling their complaints. ICICI Prudential should take efforts to train their employees regarding how to handle customer complaints. First of all it should try that there are no complaints from all the distribution channels i.e. they should not be given an opportunity to complaint about the companyâ&#x20AC;&#x;s products and services. This way company can create goodwill in the minds of customers and which may lead to growth and expansion the company. Even if there are few problems the employees of the company should be trained well to handle their complaints. Following measures can be taken: 100

Frequently calling to all the distributors Communicating and updating them through emails as well as calls Frequent meetings with distributors Interactive sessions with the distributors time to time Regularly updating them about new products and policies Faster response to the queries of the distributors like brokerages, material for promotion etc. Educating the employees about all the products so that they can educate all distributors Training the employees and improving their communication skills and customer handling skills

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9) Which of the ICICI Prudential, Equity schemes do you prefer the most? Dynamic plan- growth Focused equity fund Index Fund Tax Plan Infrastructure power TRF

Agents

Bankers

22%

39%

22%

22% 5%

56%

18%

National Distributors

27%

Dynamic plan- growth Focused equity fund Index Fund Tax Plan Infrastructure power TRF

Total

1% 3% 2%

Dynamic plan- growth Focused equity fund Index Fund Tax Plan Infrastructure power TRF

24% 48% 21%

45% 23%

Figure 8.13 Lastly it was very important to know which products are preferred by the customers so that ICICI Prudential AMC can take initiatives to promote the right product in the right segment and at the right time. It is rightly said by marketing experts that a right decision at right time can give huge benefits to the company and a single wrong step can lead to a great disaster. Therefore my research also included the popularity of the products. ICICI Prudential AMC offers lot of products in the form of various schemes, and so it became important to know which product is in great demand and which products need to be promoted to make it popular. 102

According to the research regarding the popularity of the products the results were as follows: a) According to the Agents, 38% feel the most popular product is ICICI Pru Dynamic Plan- Growth. 22% has given importance to ICICI Pru Infrastructure Plan. Another 22% says that ICICI Pru Focused Equity Fund-Retail Growth is popular fund. 6% of them believe that ICICI Pru Tax Plan-Growth is in demand. 6% also feel that ICICI Pru Power Pan is popular among customers. And rest 6% feel ICICI Pru TRF Plan makes maximum sales. b) According to the Bankers, 55% feel the most popular product is ICICI Pru Dynamic Plan- Growth. 22% has given importance to ICICI Pru Infrastructure Plan. 19% says that ICICI Pru Focused Equity Fund-Retail Growth is popular fund. And only 4% believe that ICICI Pru Index Fund is in demand by customers. c) As per the National Distributors, 45% feel the most popular product is ICICI Pru Dynamic Plan- Growth. 27% has given importance to ICICI Pru Infrastructure Plan. 23% says that ICICI Pru Focused Equity Fund-Retail Growth is popular fund. And rest 5% feel ICICI Pru TRF Plan makes maximum sales. d) And the overall results of survey were, 49% feel the most popular product is ICICI Pru Dynamic Plan- Growth. 24% has given importance to ICICI Pru Infrastructure Plan. Another 21% says that ICICI Pru Focused Equity Fund-Retail Growth is popular fund. And 3% feel ICICI Pru TRF Plan makes maximum sales. 103

1% of them believe that ICICI Pru Tax Plan-Growth is in demand. 1% also feels that ICICI Pru Power Pan is popular among customers. And only 4% believe that ICICI Pru Index Fund is in demand by customers. The company should take efforts to promote unpopular products which have minimum demand. On the other hand, they should not forget the popular products and should come up with better benefits with popular products so that they do not lose their customers and can attract the potential customers. These were the results of the questionnaire. Personal interviews were also conducted to compare the services of ICICI Prudential AMC with other AMCâ&#x20AC;&#x;s so that we can overcome our weaknesses and strengthen our strengths.

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8.3 Managerial Implications  There should be the concentration and timing Tier-3 distributors along with Tier-1 and Tier-2 distributors as there is lot of scope in Tier-3 cities also. Relationship Manager should regularly meet them and update them with the information about the new products by calling them and resolving all their queries. All the complaints and problems should be handled quickly.  All the distributors should be given time to time training on all the products and about various funds like debt and equity as many of them do not have complete knowledge about the same which is one of the hurdles in increment of sales.  The proper training and product knowledge should be given to all the selling person appointment by the distribution channels. They should be taught to follow this: “PUSH THE PRODUCT FIRST, GIVE THEM THE SERVICES THEY WANT AND THEY WILL AUTOMATICALLY PULL TOWARDS YOU”  There should be time to time activity like canopy, training programs, presentations by the Relationship Managers for the distributors so as to maintain the good relationship between them. This will help them to solve their problems and will lead to great interaction with them.  There is a saying that “For the extension of any business, there should be a good customer base.” In the case of retail channel, our business partners are Agents, Bankers and National Distributors working for ICICI Prudential AMC. So there should be great number of distributors working for the company. This can help in expansion of business.  The Relationship Manager should have the idea of the competitive AMCs products‟ strength and weakness so that we can take edge over others by defeating them by their weakness by our strength. Also there should be a proper comparative analysis and financial analysis with other AMCs so as to become the market leader.

105

Chapter 9 Learning Outcomes and Conclusion

106

9.1 Learning Outcomes Two months of Internship Program in ICICI Prudential AMC has definitely increased my learning curve. It has provided me the opportunity to practically apply the theoretical knowledge and understand the various marketing concepts. Working with professionals in the corporate environment has certainly helped me to understand the real corporate world. My learning in ICICI Prudential AMC can be summed up in the following points: Understanding how Market Research is carried out in real time market conditions Understanding the responses given by the respondents and evaluating them Understanding details about the working of B2B markets Understanding how all the departments are connected to one another and also how one decision can change the functions of another At last but not the least, understanding of how important patience and punctuality are for the real world scenario

9.2 Key Issues and Conclusion Based on the above SWOT analysis and study of the available data I have come to the following conclusions: ď&#x192;&#x2DC; Huge Potential All though relatively new entrants in the market, ICICI Prudential AMC is slowly but surely gaining a strong hold at all the branches are very knowledgeable with a lot of experience in the financial markets so under their leadership can definitely expand its base The entire workforce consists of mostly youngsters, which means they can be encouraged and motivated to do good work because they have a long way to go and most of them are eager to climb the ladder. Right now ICICI Prudential AMC is at its nascent stage and will surely grab the major market under its belt very soon like in other fields. ď&#x192;&#x2DC; Huge investments taking place 107

The Stock Market has been very buoyant until now especially in the past 3 years. This particular trend is very favorable because a soaring SENSEX means higher returns, which encourages the investors to invest their money in the market. So in order to make the best the only thing required is to recruit more field staff who should be trained in a proper way to get better results.  Large untapped market In the past few years there has been a tremendous inflow of funds in the Indian market which has lead to the sky rocketing SENSEX. In fact there has been a tremendous response from the investors not only in shares but mutual funds as well.

Based on the above Survey and study of the available data I have come to the following conclusions:  Parameters for selling various funds: Services offered Performance Brand Name Quantitative Measures

 Ways to improve services: Frequent Communication Regularly updating the distribution channels about new products and schemes Timely fulfillment of their requirements Quick resolution of the queries Educating the employees about the product

 Organizing various programs to spread awareness 108

Presentations and training classes for various distribution channels Canopy for interacting with customers Regular emails to customers about new products Reward ceremonies should be organized

9.3 Scope of Future Research The research has been carried out in Udaipur regarding B2B relationship management. The research was conducted to understand the various distribution channels and their expectations from the company. This also helped me to understand the structure and performance of Mutual Fund Industry. This study reflects the major clients and also gives a clear idea of the untapped market in this regard. This research has also helped to understand the factors affecting the purchase of Mutual Fund. A further research can be done on the degrees of effect of each of the factors that are responsible for the purchase of Mutual Funds, other factors can be taken into consideration and assessment about the key decision makers at the customer end in the organizations can also be done.

109

Chapter 10 Recommendations and Suggestions

110

10.1 Recommendation and Suggestions  There should be given more time and concentration on the Tier-3 Distributors.  The resolution of the queries should be fast enough to satisfy the distributors.  Time to time presentation and training classes about the products should be organized for all the distribution channels.  Regular activities like canopy should be done so as to get more interaction with the distributors.  While interacting with the investors I found that most of the customers are unaware about the Mutual fund. Some of the people look upon mutual funds and equity trading as gambling. Thus a mutual fund awareness program can help to increase the penetration of mutual funds in the market.  After sales services and follow up calls are important for getting new references so trained telesales should be appointed for this purpose whose sole work should be to make feedback calls.  Company should have a scheme of rewards and recognition to employees and the field persons to boost their motivation.  Awareness camp should be organized. In this type of camp fund partners & other subbrokers should write their misunderstanding about product or application, they should aware about new product & applications.  According to my survey quality improvement is essential for growth in the market.  Business opportunity programs should be organized time to time because this aspect is very necessary for every company.  It has been seen that there is a major increase in the percentage of young investors who have large amount of disposable income with them and want to invest, these type of prospective clients should be tapped at an early stage.  Small towns, villages are still untapped and can also acts as an business area of very huge potential.  Now even co-operative society can invest up to 10% of their capital in mutual funds which open the door to new and very important client base.

111

Chapter 11 Bibliography

112

9.1 Bibliography  Search Engines Google Yahoo

 Websites www.icicipruamc.com www.icicidirect.com www.mutualfundsindia.com www.amfiindia.com www.valueresearchonline.com www.finance.indiamart.com

 Books ICICI PRU AMC monthly review book ICICU PRU AMC Fact sheet Amfi Booklet Portfolio Management Services book ICFAI Brochures Pamphlets

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Chapter 12 Annexure

114

12.1 Feedback Form Personal Details

Name : Marital Status: Single Married Designation : Organisation : Telephone No. / Mobile :

DOB : Anniversary Date : ARN No. : Email :

Questionnaire

1. Are you happy with the support/services provided to you by your Relationship Manager? Yes No 2. Is the standard of service rendered by phone upto your expectation? Yes No 3. When contacted over Phone; was your call answered? Within 2-3 rings After 8-10 rings Busy Continuously busy 4. Are you in receipt of regular communication from ICICI Prudential AMC? Yes No

5. What is the frequency of communication? Daily Weekly Fortnightly Monthly

115

6. How would you rate the quality and regularity of the communication from ICICI Prudential AMC to you? Delighted Satisfied Neutral Dissatisfied 7. How will you classify our communication style? (tick all appropriates) Personal Knowledgeable Competitive Co-operative Convincing Ethical 8. According to you, which factor is of utmost important to increase the sales? Brand Name Performance Quantity measures Services Offered 9. Are your stationery requirements fulfilled? Always Frequently Sometimes Rarely 10. After giving the request, you receive the requisite stationery within? 2-3 days 1 week Only after reminders Never at all 11. Are your complaints / grievances being resolved to your satisfaction? Always Frequently Sometimes Rarely 116

12. Which of the ICICI Prudential, Equity schemes do you prefer the most? ICICI Pru Dynamic Plan - Growth ICICI Pru Focused Equity Fund â&#x20AC;&#x201C; Retail Growth ICICI Pru Index Fund ICICI Pru Tax Plan - Growth Others(SPECIFY) _______________________

13. What do you recommend to improve our business relationship? 14. How can we serve you better? List any recommendation to improve our services.

117

12.2 List of respondents of Agents: Table 12.1 S. No.

Name

ARN No.

Address

Hasnain Ali RG

45011

11/1 Basti Ram ji ki Bari, Inside Ashwini Bazar, Udaipur

Uma Sharma

21201

H. no. 16, Nijay Marg, Opp. Session Court, Udaipur

Jinendra Porwal

45012

1, Gokul Nagar, Bahra Ganesh Ji Road, Udaipur

Hemant Jain

59090

Hemant Automobiles, opp. Jain colony, University road, Udaipur

Narendra Kumar Garg

10920

9, Behind Bathara, Fatehpura Road, Udaipur

Garima Mehta

71503

312/03, Ashok Nagar, Udaipur

Gautam Rathore

9156

Dhiraj Jain

76927

Gr Portfolio Management Services, 77, 2nd Floor, Opp HDFC BANK, Chetak Circle, Udaipur 227, Sector 11, Hiran Magri, Udaipur

Sapex Bandi

51118

91, jain Agency, Mandi ki naal, Udaipur

10.

Himmat Singh Meena

59617

Road no. 3, Purohito ki Madri, Udaipur

11.

Krishna Das Parakh

68444

3-KA-64, Sector 5, Hiran Magri, Udaipur

12.

Hemant Baya

63882

101, Subhash Marg, Jadiya Street, Udaipur

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12.3 List of respondents of Bankers: Table 12.2 S. No.

Name

Designation

Organization

Address

Ranveer Singh Ranawat

Relations Officer

Kotak Mahindra Bank

Sachin Loonkar

Relationship Manager

Kotak Mahindra Bank

Prashant Mantri

Relationship Manager

Kotak Mahindra Bank

Amit Sharma

HDFC Bank

Dinesh Khatri

Relationship Manager Associate Manager

Anirudh Singh

Sumeet Talesra

Umesh khandelwal

Vinay Parikh

10.

Puneet Gambhir

11.

Neha Bansal

Ground Floor, Trimurti Heights, 8-C, Madhuban Bank street, Udaipur Ground Floor, Trimurti Heights, 8-C, Madhuban Bank street, Udaipur Ground Floor, Trimurti Heights, 8-C, Madhuban Bank street, Udaipur Chetak Circle, Udaipur Verma circle, Bhopalpura, Udaipur Verma circle, Bhopalpura, Udaipur Verma circle, Bhopalpura, Udaipur Verma circle, Bhopalpura, Udaipur Verma circle, Bhopalpura, Udaipur Verma circle, Bhopalpura, Udaipur Verma circle, Bhopalpura, Udaipur

ABN AMRO Bank

Wealth manager

ABN AMRO Bank

Assistant Relationship Manager RM â&#x20AC;&#x201C; NRI

ABN AMRO Bank

119

12.

Indu Keswani

Branch Manager

13.

Bhanushree Upadhyay

CSE

14.

Alok Khanna

Cluster Head

15.

Swati Sharma

Wealth Manager

16.

Gaurav Khandelwal

Wealth Manager

17.

Rohit Bhatnagar

18.

Dushyant Singh

19.

Simrit kaur

20.

Nischal Sharma

21.

Johny Joseph

Branch Manager

22.

Subhash Garg

Branch Manager

23.

Jitin

Boolchandani

Branch Manager

ABN AMRO Bank Verma circle, Bhopalpura, Udaipur ABN AMRO Bank Verma circle, Bhopalpura, Udaipur ICICI Bank Madhuban Bank street, Udaipur ICICI Bank Madhuban Bank street, Udaipur ICICI Bank Madhuban Bank street, Udaipur ICICI Bank Madhuban Bank street, Udaipur AXIS Bank Chetak Circle, Udaipur AXIS Bank Chetak Circle, Udaipur AXIS Bank Chetak Circle, Udaipur The Federal Bank Madhuban Bank street, Udaipur Union Bank Of New Fatehpura, India Udaipur IDBI Bank Chetak Circle, Udaipur

120

12.4 List of respondents of National Distributors: Table 12.3 S. No.

Name

Designation

Organization

Address

Abhinandan Kumar

Relationship Manager

Vikram Singh

Pavan Lodha

Lokesh Seth

Assistant Branch Manager

ICICI Securities Limited ICICI Securities Limited ICICI Securities Limited Wealth Creators

5-C Madhuban, Udaipur 5-C Madhuban, Udaipur 5-C Madhuban, Udaipur Shop no. 213, 2nd floor, Shrinath Plaza, Hospital Road, Udaipur.

Dilip Chawla

Sr. Sales Manager

Birla Sun Life

Manish Mittal

Branch Manager

Religare Finmart

Ravindra Tiwari

Relationship Manager

Religare Finmart

Giriraj Kishore Shrimali

Relationship Manager

Religare Finmart

Jitendra Jain

SRE

NJ India Invest

10.

Gaurav Bhatnagar

Relationship Manager

Prudent

11.

Ankita Agarwal

Branch Manager

Geojit Financial Services

12.

K.C Pandya

Relationship Manager

Anand Rathi

13.

Barkha Singhani

Branch Manager

Karvy Stock Broking

Ground floor, Jyoti Hotel, Surajpole, Udaipur Ground floor, Jyoti Hotel, Surajpole, Udaipur Ground floor, Jyoti Hotel, Surajpole, Udaipur 303, 3rd floor, Akriti complex, Fatehpura, Udaipur 302, 3rd Floor, Madhav Towers, Madhuban, Udaipur G 3-4, Business Centre, 1-C, Madhuban, Udaipur 46- Madhuban, Udaipur 2nd Floor, Madhav Chambers, Madhuban, Udaipur

121

Thank You!

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