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SUMMER TRAINING REPORT SUBMITTED TOWARDS THE PARTIAL FULFILLMENT OF POST GRADUATE DEGREE IN INTERNATIONAL BUSINESS

ROLE OF THIRD PARTY IN MANAGING INVESTMENT STRATEGIES OF INVESTORS

SUBMITTED BY: NIKHIL BALANA
MBA-IB (2009-20011) Roll No. : A1802009158

INDUSTRY GUIDE FACULTY GUIDE MR. DEEPAK BANGA MS. NAVLEEN KAUR BRANCH SALES MANAGER DESTIMONEY ENTERPRISES PVT. LTD.

AMITY INTERNATIONAL BUSINESS SCHOOL, NOIDA AMITY UNIVERSITY ± UTTAR PRADESH

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Company Certificate

DESTIMONEY ENTERPRISES PVT. LTD.
TO WHOM IT MAY CONCERN

This is to certify that Nikhil Balana, a student of Amity International Business School, Noida, undertook a project on ³Role Of Third Party in Managing Investment Strategies of Investors ´ at Destimoney Enterprises Pvt. Ltd. from 03/05/2010 to 30/06/2010. Mr. Nikhil Balana has successfully completed the project under the guidance of Mr. Deepak Banga. He is a sincere and hard-working student with pleasant manners. We wish all success in his future endeavours.

Mr. Deepak Banga, Branch Sales Manager Destimoney Enterprises Pvt. Ltd.

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CERTIFICATE OF ORIGIN
This is to certify that Mr. Nikhil Balana, a student of Post Graduate Degree in MBA - IB, Amity International Business School, Noida has worked in the Destimoney Enterprises Pvt. Ltd., under the able guidance and supervision of Mr. Deepak Banga, Branch sales Manager, Destimoney Enterprises Pvt. Ltd. The period for which he was on training was for 8 weeks, starting from 03/05/2010 to 30/06/2010. This Summer Internship report has the requisite standard for the partial fulfillment the Post Graduate Degree in International Business. To the best of our knowledge no part of this report has been reproduced from any other report and the contents are based on original research.

Signature Ms. Navleen Kaur

Signature Nikhil Balana

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ACKNOWLEDGEMENT
I express my sincere gratitude to my industry guide Mr. Deepak Banga, Branch Sales Manager, Destimoney Enterprises Pvt. Ltd. for his able guidance, continuous support and cooperation throughout my project, without which the present work would not have been possible. I would also like to thank the entire team of Destimoney Enterprises Pvt. Ltd., for the constant support and help in the successful completion of my project. Also, I am thankful to my faculty guide Ms. Navleen Kaur of my institute, for his continued guidance and invaluable encouragement.

Signature Nikhil Balana

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INDEX

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Chapter No. Ch. # 1.0 Ch. # 2.0 2.1 2.2 2.3 2.4 2.5 2.6 Ch. # 3.0 Ch. # 4.0

Subject

Page No.

Executive Summary«««««««. 7 Research Methodology««««««10 Primary Objective(s)««««.11 Hypothesis««««««««11 Research Design««««««12 Sample Design««««««..12 Scope of the Study«««««.13 Limitations««««««««.14 Critical Review of Literature«««.15 Company Profile ««««««««.39 4.1 Industry Profile««««««..44 4.2 SWOT Analysis«««««««.53 Data«««««««««««««..56 5.1 Primary Data««««««««57 5.2 Secondary Data«.«««««..57 Findings & Analysis«««««««.58 Recommendations««««««««73 Bibliography««««««««««.73 Annexure«««««««««««..78 Case Study««««««««««..83 Synopsis of the project«««««««.93

Ch. # 5.0

Ch. # 6.0 Ch. # 7.0 Ch. # 8.0 Ch. # 9.0 Ch. # 10.0 Ch. # 11.0

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Chapter 1

Executive Summary

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Indian investor had to endure a sluggish economy, the steep market declines prompted by deteriorating revenues, alarming reports of scandals ranging from illegal corporate accounting practices like that of Satyam to insider trading to make investment decisions. By the time Indian economy has shown a remarkable improvement since the last year¶s recession. As a result of that stock market is able to attract large number of Indian investors from past one year or so. Stock market has been subjected to speculations and inefficiencies, which are beached to the rationality of the investor. Traditional finance theory is based on the two assumptions. Firstly, investors¶ make rational decisions; and secondly investors are unbiased in their predictions about future returns of the stock. However financial economist have now realized that the long held assumptions of traditional finance theory are wrong and found that investors can be irrational and make predictable errors about the return on investment on their investments. This empirical study on Individual Investors¶ Behavior is an attempt to know the profile of the investor and also know the characteristics of the investors so as to know their preference with respect to their investments. The study also tries to unravel the influence of demographic factors like gender and age on risk tolerance level of the investor. This project is an attempt to analyze the characteristics of the Indian individual investors and makes an attempt to discover the relationship between the investment behaviour & various available investment instruments in the financial service market. This study is also an attempt to understand the concept of investment patterns & strategic plans proposed to the individual investor by the third party financial service provider.

Indian investors are high income, well educated, salaried, and independent in making investment decisions and conservative investors. From the research it was found that irrespective of gender, most of the investors (41%) are found have low risk tolerance level and many others (34%) have high risk tolerancelevel rather than moderate risk tolerance level. It is also found that there is a strong negative correlation between Age and Risk tolerance level of the investor. Television is the media that is largely influencing the investor¶s decisions.
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Hence, this study can facilitate 1. The investment product designers to design products which can cater to the investors who are low risk tolerant. 2. The third party service providers to increase their level of service quality approach through efficient portfolio management in order to compete in the perfect service market.

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CHAPTER 2

RESEARCH METHODOLOGY

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2.1

PRIMARY OBJECTIVES

1. To identify the objective of investment plan of an Indian individual investor. 2. To study the role of third party financial service provider in managing investments of investors. 3. To know the preferred investment avenues of the Indian individual investor segregated in terms of financial literacy. 4. To know the risk tolerance level of the individual investor in order to suggest a suitable investment portfolio. 5. To identify the preferred sources of information influencing investment decisions. 6. To study the dependence/independences of the demographic factors (Gender and Age) of the investor and his/her risk tolerance level.

2.2

HYPOTHESIS

H01: Investors are 100% aware of presence of third party in investment
maket. H02: Investment habit is found in most of the people to participate in the study. H03: Investors take help of third party to take investment management. H04: Third party financial service provider play a significant role in investment decision.

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2.3

RESEARCH DESIGN

TYPE OF RESEARCH:
A research work is done in order to discover the relationship between dependent variable i.e. Risk tolerance level and independent variables such as Age, Gender of an individual investor on the basis of the survey. To study the role of third party financial service provider in investment management.

DATA SOURCES: The research is supported by collective interpretation of primary data and secondary data sources. DATA COLLECTION METHOD: Data collection method used is totally based on customer interaction. Individual meetings were conducted with different investors. Every meeting was followed by taking inputs on the designed questionnaire, provided in the annexure. METHODOLOGY: Based on the responses of the questionnaire, analysis has been carried out.

DATA ANALYSIS: The questionnaire consists of 16 questions of which consists of demographic characteristics of the investor, role of third party service providers/intermediaries, investment details, risk tolerance level of the investor and were focused to accomplish the other objectives of the study.

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2.4

SAMPLE DESIGN

POPULATION OF THE STUDY: The population for the study included the investor¶s different economic sectors/zones like service class investors, small investors, self employed, chartered accountants, property dealers etc. in Delhi and NCR region in order to understand the necessary aspects of an individual investor. SAMPLING TECHNIQUES: Many investors were reluctant to reveal their investment details especially the amount of money invested so; referral sampling method is used for this empirical study.

SAMPLE SIZE: Research has been carried out with a sample size of 100 investors with which one can easily represent the population properly.

2.5

SCOPE OF THE STUDY

The study is totally based on role of third party financial service provider in managing investments of investors and perception about investments considering the current scenarios in the equity market. The biggest concern with the service providers is the quality maintenance on sale and after sale of financial products. This research is on present market scenarios as it is supported by latest data and the outcomes are taken as an input source in filling up the gaps.

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2.6

LIMITATIONS

1. TIME CONSTRAINT: This research is performed in a period of 40 days, so time spent on the study might have an impact on actual findings. 2. GEOGRAPHICAL LIMITATIONS: This study is done in selective areas of Delhi & NCR regions. 3. LACK OF HOMOGENOUS DATA: The data collected is not homogeneous. Different investors with different demographics with different perceptions are selected. So homogeneity is difficult to achieve.

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Chapter 3

CRITICAL REVIEW OF LITERATURE

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Stock market has been subjected to speculations and inefficiencies, which are beached to the rationality of the investor. Traditional finance theory is based on the two assumptions. Firstly, investors¶ make rational decisions; and secondly investors are unbiased in their predictions about future returns of the stock. However financial economist have now realized that the long held assumptions of traditional finance theory are wrong and found that investors can be irrational and make predictable errors about the return on investment on their investments. This empirical study on Individual Investors¶ Behavior is an attempt to know the profile of the investor and also know the characteristics of the investors so as to know their preference with respect to their investments. The study also tries to unravel the influence of demographic factors like gender and age on risk tolerance level of the investor. Literature suggests that major research in the area of investors¶ behavior has been done by behavioral scientists such as Weber (1999), Shiller (2000) and Shefrin (2000). Shiller (2000) who strongly advocated that stock market is governed by the market information which directly affects the behavior of the investors. Several studies have brought out the relationship between the demographics such as Gender, Age and risk tolerance level of individuals. Of this the relationship between Age and risk tolerance level has attracted much attention. It was suggested that one¶s biological, demographic and socioeconomic characteristics; together with his/her psychological makeup affects one¶s risk tolerance level. It was also suggested that an individual¶s risk tolerance is related to his/her household situation, lifecycle stage and subjective factors. Mittra (1995) discussed factors that were related to individuals risk tolerance, which included years until retirement, knowledge sophistication, income and net worth. Most of the scientists concluded that males are more risk tolerant than females. Wallach and Kogan (1961) were perhaps the first to study the relationship between risk tolerance and age. It is found that risky asset fraction of the portfolio to be positively correlated with income and age and negatively correlated with marital status. Morin and Suarez found evidence of increasing risk aversion with age although the households appear to become less risk averse as their wealth increases. They found that the change in the risky asset holdings were not uniform. He found individuals to
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increase their investments in risky assets throughout their working life time, and decrease their risk exposure once they retire. Lewellen et.al while identifying the systematic patterns of investment behavior exhibited by individuals found age and expressed risk taking propensities to be inversely related with major shifts taking place at age 55 and beyond. Indian studies on individual investors' were mostly confined to studies on share ownership, except a few. The RBI's survey of ownership of shares and enquiry into the ownership pattern of Industrial shares in India were a few in this direction. The NCAER's studies brought out the frequent form of savings of individuals and the components of financial investments of rural households. The Indian Shareowners Survey brought out a volley of information on share owners. Rajarajan V (1997, 1998, 2000 and 2003) classified investors on the basis of their demographics. He has also brought out the investors' characteristics on the basis of their investment size. He found that the percentage of risky assets to total financial investments had declined as the investor moves up through various stages in life cycle. Also investors' lifestyles based characteristics has been identified. The above discussion presents a detailed picture about the various facets of risk studies that have taken place in the past. In the present study, the findings of many of these studies are verified and updated.

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ROLE OF THIRD PARTY IN INVESTMENT MANAGEMENT

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Introduction to Third Party Financial Services Provider
Overview Planning for a secure financial future is not easy. Yet increasingly, individuals are in charge of their own financial futures. Most are aware that planning is critical, yet don¶t the have time or the expertise to develop a plan and make the needed financial decisions. So there arises a need for FINANCIAL SERVICE PROVIDER to manage the individual¶s wealth and the whole process of managing this wealth is known as Wealth Management. There are a number of financial advisors offering a diverse portfolio of services to suit different financial requirements of their clients. In order to accomplish the task, these companies provide the assistance of professional financial advisors. These Third Party Fnancial Service Providers help individuals or corporate manage their wealth appropriately through: 1. Investment Solutions: The financial planner helps the individuals diversify their portfolio through alternative investment plans, mutual funds, equities, and even save for retirement through annuities. 2. Financial Planning: Financial Planning is an exercise aimed to ensure availability of right amount of money at the right time to meet the individual¶s financial goals. Financial planners plan individual¶s current expenditures and save for future short-term or long-term goals by analyzing different options available. 3. Retirement Planning: The financial planner guides their clients in planning for their financial requirements after retirement, by helping them identify goals, researching and analyzing different opportunities to secure funds and make investments to suits their needs. 4. Wealth Management: It is a comprehensive service to optimize, protect and manage the financial well-being of an individual, family or corporation. Its basic definition covers advice on loans, investments and insurance to give a broad picture of how
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individuals should best deploy their financial resources. A broader picture may include tax advice, estate planning, business planning, charity foundations and other financial needs. Even though one of the most significant factors in our life is the state of our personal finances, we rarely spend time on managing them since unlike businesses. The reason being, we are not accountable to any one for our personal financial goals and results. As a result we tend to get careless in our financial matters. I know we all understand the importance of savings but let us not get confused between savings and investment. Mere savings (putting aside a portion of earnings) do not insure or guarantee achievement of future financial goals. It is important to save but more important is to invest your money. By merely stashing away money into that neighborhood bank's savings account, you are neither making any more money, nor preserving its value. The inflation rate at around 4-5 per cent p.a. in excess of your bank savings account rate at 3.5 per cent p.a. mercilessly erodes your wealth to that extent. The purchasing power of rupee keeps depreciating. So, to fight against such depreciation one has to invest the money saved in assets that will help it work for you and earn more than the erosion in value through inflation over a period of time. That's just one of the primary reasons why each individual should invest. Another more definitive reason is the 'Power of Compounding'. Put simply, it means that "Interest on Interest is Interesting". Let me explain this by means of a simple example.

Financial Planner (Wealth Planner / Financial Advisor)

The financial planner helps identify various taxable and non-taxable investments. This is not a comprehensive list of services. They may differ from one financial management company to another. One can select the services according to their requirements, be it personal or professional. A financial planner work begins with a consultation with the client, from whom the planner obtains information on the client¶s finances and financial goals. The planner then develops a comprehensive financial plan that identifies problem areas, makes recommendations for improvement, and selects appropriate investments compatible with the client¶s goals, attitude
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toward risk, and expectation or need for a return on the investment. Financial planners usually meet with established clients to update them on potential investments and to determine whether the clients have been through any life changes²such as marriage, disability, or retirement²that might affect their financial goals. Finding clients and building a customer base is one of the most important for a third party service provider, because referrals from satisfied clients are an important source of new business. Many planners also contact potential clients by giving seminars or lectures or meet clients through business and social contacts. Need for a financial service provider: Holistic in outlook: CFPs consider all circumstances, family needs, goals, values, and aspirations, while making recommendations. Professionals: CFPs protect privacy, strive to maintain the highest ethical standards and continually enhance skills and credentials through continuing education. Educational in nature: CFPs guide one through options and explain the clearly to help make the best choices. Committed to success: Holistic financial planning is a process, not an event, and commit to adjusting plan as life goals change.

Role of Financial Planner¶s

a) Defining Goals - A planner will take note of and record all your financial goals. You save for a variety of reasons: to buy a house and a car, to educate your children, to set them up in business, to get them married, to go on vacations, and, finally, to give yourself a comfortable life in retirement. But not all of us get around to defining what µcomfortable¶ retirement means or µgood¶ education means in money terms. The planner will help you work out the money value for each of your goals. You might want Rs.30 lakh for a house today, Rs.5 lakh for a car next year, Rs.10 lakh for your child¶s education in 10 years, Rs.5 lakh for his marriage in 15 years and Rs.50 lakh
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for your retirement in 20 years. Additionally, you¶ll set aside money for contingencies±medical and other emergencies±all your life, perhaps in cash or virtually as liquid. You also need insurance for yourself, your family and your property. b) Saving for them - Once these goals are written down, you can clearly see what you need to save today to meet these goals. The concept of µsavings¶ changes± from µsomething that¶s left over¶ to µsomething that you target every month¶. The planner helps with your budgeting by making you write down your income and expenses in great detail. He helps you rationalize wasteful expenses and establish a system of generating surpluses every month. Once you see the magnitude of your investment goals and the need to save properly, the desire for the latest in everything diminishes. In other words, planning is about creating wealth±and managing it efficiently. c) Covering Risk - The planner then assesses your insurance needs, which varies from person to person and from age to age. As a young bachelor with no dependants, you¶ll need disability insurance rather more than life insurance, but the minute you get married and you have a stay-at-home wife whom you support, you need life insurance as well. When the kids come along and your old parents too become your dependants, the outlay on your life insurance will have to increase, as will that on disability. The planner will help you identify your insurance needs, quantify them and then suggest policy options. d) Planning for Retirement - The planner then looks at your retirement needs and plans for the time when you¶ll no longer be earning. Your contributions to your EPF and PPF accounts will, of course, help you on that count±provided you¶ve been disciplined and not made withdrawals from these accounts halfway through. A planner will help you quantify in money terms the µcomfortable¶ retirement you dream of. He¶ll then work out how much you need to save every month and at what rate it needs to grow to hit the target. More important, the planner will work with you to keep your short-term financial needs in check so that you don¶t touch your retirement funds at all. His job is to make you understand that retirement funds are only for the future, when you have no other source of income, and that dipping into it prematurely is very risky.

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e) Making It Happen - The planner has taken so long just to establish what you want out of life in money terms; even now, the actual investment is two steps away. The planner will now assess your µrisk profile¶. This is just a way to see what level of risk you¶re comfortable with. It would depend on your age and your family circumstances. For example, a person in his mid30s can take far greater risk than a man in his 60s. Based on the goals, the savings and the risk profile, the planner will then chart an µasset allocation¶ strategy±that is, help you decide the percentage of your total portfolio you want to put in different instruments: property, equity, debt, or funds that invest in these assets. f) Total Financial Solutions - A planner has a µbig picture¶ vision and is able to see the inter-linkages of all your goals, expenses and investments. For example, if a person is earning well and has a non-working wife with two kids, there¶s no problem if he takes a home loan and a car loan. But what if he dies next year? His life insurance will take care of his family¶s living expenses, but how will his family pay off the loans? A planner would make provisions for such an eventuality and increase the insurance amount to cover the debt as well. The planner will also help you figure out what impact reducing a Rs.15,000 home loan EMI to Rs.10,000 would have on your retirement kitty. And what impact downgrading a Corsa to a Santro would have on your child¶s education corpus. g) The Balancing Act - A planner¶s responsibility doesn¶t, however, end with your buying a product. He still has to hand-hold you, for instance, when the stock market tanks or tops. Imprudent investors tend to buy when the market is high and sell in a slump. The planner educates you on the merits of a long-term approach and regular investing and helps you rebalance your portfolio. For example, you may have agreed on a 60:40 equity-debt allocation, but a steady rise in the stock market over a couple of years, which may increase the value of your stocks portfolio, may skew your asset mix to 70:30 in favour of equity. That high an exposure to equity may not be good for you, but left to yourself, you might get carried away and withdraw completely from debt and hike the equity component of your portfolio. The planner will step in to remind you of your risk profile, your investment goals and your long-term approach. In rising markets, financial planners do the work of circuit-breakers in the stock market: they temper their clients¶ unrealistic expectations and keep them on track.

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1. Financial Planning µFinancial planning¶ is the process of charting out the money course of your life. It¶s like having a financial roadmap that guides your every step till you pass on the baton to the next generation. In other words, it is a process in which an individual sets long-term financial goals through investments, tax planning, asset allocation, risk management, retirement planning and estate planning. Most of us approach our financial lives like the disorganized traveler who gets to his destination eventually and perhaps even enjoys the rough ride. We think we have a clear roadmap in mind, but our financial lives are marked by ad-hoc decisions and capitulation to the temptations of the flavors of the financial season. Benefits of Financial Planning A sound and meticulous Financial Planning will have following enumerated benefits: ‡ Sophisticated financial advice to cope with changing life situation ‡ Non-biased opinion on one¶s insurance needs ‡ Help dealing with one¶s retirement planning ‡ Optimum asset allocation and investment strategy formulation ‡ Efficient tax strategy and estate planning Scope of Financial Planning Sometimes it so happens that when one consulted with a financial advisor in the past he felt that he was asked to buy something he didn¶t fully understand. Maybe he felt that products were recommended without consideration for his overall financial situation. In cases like this, comprehensive, holistic, fee-only financial planning eliminates such concerns. A person receives objective advice targeted to his needs and goals. One of the myths regarding financial planning is that only rich individuals and HNIs can undertake this. This perception exists because most players in the market target these people, as they are very profitable customers. However, anyone can use financial planning. In fact, individuals should use effective financial planning to build their wealth over the years. There are financial planners who service small individuals too. However, individuals need to remember the financial planners charge for the services they render, so they should be ready to pay for the advice.
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2. Investments

Overview The money you earn is partly spent and the rest is saved for meeting future expenses. Instead of keeping the savings idle you may like to use savings in order to get return on it in the future. This is called Investment. In other words, Investment is µthe act of committing money or capital to an endeavor with the expectation of obtaining an additional income or profit.¶ It's actually pretty simple: investing means putting your money to work for you. Essentially, it's a different way to think about how to make money. There are many different ways you can go about making an investment. This includes putting money into stocks, bonds, mutual funds, or real estate (among many other things), or starting your own business. Sometimes people refer to these options as "investment vehicles," which is just another way of saying "a way to invest." Each of these vehicles has positives and negatives, which will be discussed later in the thesis. The point is that it doesn't matter which method you choose for investing your money, the goal is always to put your money to work so it earns you an additional profit. Even though this is a simple idea, it's the most important concept in the current scenario to understand.

Basic Investment Objectives Investing is a conscious decision to set money aside for a long enough period in an avenue that suits your risk profile. The options for investing our savings are continually increasing, yet every single investment vehicle can be easily categorized according to three fundamental characteristics - Safety, Income and Growth - which also correspond to types of investor objectives. While it is possible for an investor to have more than one of these objectives, the success of one must come at the expense of others. Here we examine these three types of objectives, the investments that are used to achieve them and the ways in which investors can incorporate them in devising a strategy.

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a) Safety Perhaps there is truth to the axiom that there is no such thing as a completely safe and secure investment. Yet we can get close to ultimate safety for our investment funds through the purchase of government-issued securities in stable economic systems, or through the purchase of the highest quality corporate bonds issued by the economy's top companies. Such securities are arguably the best means of preserving principal while receiving a specified rate of return. The safest investments are usually found in the money market and include such securities as Treasury bills (T-bills), certificates of deposit, commercial paper or bankers' acceptance slips; or in the fixed income (bond) market in the form of municipal and other government bonds, and in corporate bonds. It is important to realize that there's an enormous range of relative risk within the bond market: at one end are government and highgrade corporate bonds, which are considered some of the safest investments around. At the other end are junk bonds, which have a lower investment grade but possessing more risk than some of the more speculative stocks.

b)Income However, the safest investments are also the ones that are likely to have the lowest rate of income return, or yield. Investors must inevitably sacrifice a degree of safety if they want to increase their yields. This is the inverse relationship between safety and yield: as yield increases, safety generally goes down, and vice versa. Most investors, even the most conservativeminded ones, want some level of income generation in their portfolios, even if it's just to keep up with the economy's rate of inflation. But maximizing income return can be an overarching principle for a portfolio, especially for individuals who require a fixed sum from their portfolio every month.

c)Growth of Capital Growth of capital is most closely associated with the purchase of common stock, particularly growth securities, which offer low yields but considerable opportunity for increase in value. Blue-chip stocks, by contrast, can potentially offer the best of all worlds by possessing reasonable safety, modest income and potential for growth in capital generated by long-term increases in corporate revenues and earnings as the company matures.
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Secondary Objectives a) Cost of Inflation One needs to invest wisely to meet the cost of Inflation. Inflation causes money to lose value because it will not buy the same amount of a good or a service in the future as it does now or did in the past. For example, if there was a 6% inflation rate for the ext 20 years, a Rs.100 purchase today would cost Rs.321 in 20 years. Remember to look at an investment¶s µreal¶ rate of return, which is the return after inflation. The aim of investments should be to provide a return above the inflation rate to ensure that the investment does not decrease in value. For example, if the annual inflation rate is 6%, then the investment will need to earn more than 6% to ensure it increases in value. b) Tax Minimization An investor may pursue certain investments in order to adopt tax minimization as part of his or her investment strategy. A highly-paid executive, for example, may want to seek investments with favorable tax treatment in order to lessen his or her overall income tax burden. Making contributions to an IRA or other tax-sheltered retirement plan can be an effective tax minimization strategy. By far, tax-saving is the most compelling reason for investors to set aside money for the long term. c) Marketability / Liquidity Common stock is often considered the most liquid of investments, since it can usually be sold within a day or two of the decision to sell. Bonds can also be fairly marketable, but some bonds are highly illiquid, or nontradable, possessing a fixed term. Similarly, money market instruments may only be redeemable at the precise date at which the fixed term ends. d) Retirement Anyone who will retire needs to plan for it. There is more than one reason to save for retirement. The all important reason is the rising cost of living. It¶s called inflation. If you start planning for retirement early on, you can bridge the gap between what you have in your hand today and what you would like to have when you retire. If you begin saving for retirement early on in your life, you can set aside smaller amounts. You can also take on more risk by investing larger amounts in equities i.e., stocks and equity funds. If you delay saving for retirement, you will have to invest larger sums of money to
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save for the same amount; also the share of equity investments as a portion of your retirement savings will have to be lower. The older you are when you start, the more risk averse you will have to be. Your retirement portfolio will actually be a mix of stocks, debt securities, index funds and other money market instruments. This mix will change as you do, moving increasingly toward low-risk guaranteed investments as you age. Unless planned well, retirement phase will be a downhill ride. How to Make Investments Having appreciated the need, objectives and types of investment, it is now time to shift focus to the actual process of investing. ‡ Set investment objectives ‡ Access risk-profile ‡ Get the right asset allocation ‡ Select an financial service provider 3. Types of Investments 3.1. Overview There are many ways to invest your money. Of course, to decide which investment vehicles are suitable for you, you need to know their characteristics and why they may be suitable for a particular investing objective. ‡ Debt Market ‡ Bonds ‡ Mutual Funds ‡ Equity Market ‡ Insurance ‡ Cash ‡ Gold ‡ Real Estate ‡ Home Loans

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Table 3.1: Types of Investments

3.2. Debt Instruments Debt instruments protect your capital, therefore the importance of a solid debt portfolio. This not only gives stability, but also offers you optimal returns, liquidity and tax benefits. Debt products, besides safeguarding your capital, can be used to meet short, medium and long-term financial needs.

3.2.1. Short-Term Options: They are good for short term goals, you can look at liquid funds, floating rate funds and short-term bank deposits as options for this category of investments. Liquid funds have retuned around 5% post-tax returns as compared to 5.6% post-tax that your one-year 8% bank fixed deposit gives you. So, if you have funds for investment for over a period of one year, it is better to go in for bank deposits. However, liquid funds are better, if your time horizon is less than one-year, say around six months. This is because the bank deposit rates decrease proportionately with lower periods, while liquid funds will yield the same annualized returns for any period of time. Short-term floating rate funds can be considered at par to liquid funds for short term investments.

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3.2.2. Medium & Long-Term Options: These options typically offer low or virtually no liquidity. They are, however, largely useful as income accumulation tools because of the assured interest rates they offer. These instruments (small savings schemes) should find place in your long-term debt portfolio.

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3.3. Mutual Funds 3.3.1. Overview A mutual fund is a body corporate registered with SEBI that pools money from the individuals/corporate investors and invests the same in a variety of different financial instruments or securities such as Equity Shares, Government Securities, Bonds, Debentures, etc. 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. Mutual fund units are issued and redeemed by the Asset Management Company (AMC) based on the fund¶s net asset value (NAV), which is determined at the end of each trading session. Mutual funds are considered to be the best investments as on one hand it provides good returns and on the other hand it gives us safety in comparison to other investments avenues. Figure3.4 below describes broadly the working of a mutual fund:Figure 3.1: Working of a Mutual Fund

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3.3.2. Types of Mutual Funds Mutual fund schemes may be classified on the basis of its structure and its investment objective. a) By Structure : i . Open-Ended Funds In an open-ended fund, investors can buy and sell units of the fund, at NAV related prices, at any time, directly from the fund. This is called an open ended fund because the pools of funds is open for additional sales and repurchases. Open ended funds have to balance the interest of investors who come in, investors who go out and investors who stay invested. ii. Closed-Ended Funds A closed ended fund is open for sale to investors for a specific period, after which further sales are closed. Any further transaction for buying the units or repurchasing them, happen in the secondary markets, where closed end funds are listed. In a closed ended fund, thus, the pool of funds can technically be kept constant. Investors in closed end funds receive either certificates or depository receipts, for their holdings in a closed end mutual fund. iii. Interval Funds Interval funds combine the features of open-ended and closeended schemes. They are open for sale or redemption during pre-determined intervals at NAV related prices.

b) By investment objective i. Growth Funds The aim of growth funds is to provide capital appreciation over the medium to long- term. Such schemes normally invest a majority of their corpus in equities. It has been proven that returns from stocks, have outperformed most other kind of investments held over the long term. Growth schemes are ideal for investors having a long-term outlook seeking growth over a period of time.
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ii. Income Funds The aim of income funds is to provide regular and steady income to Investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures and Government securities. Income Funds are ideal for capital Stability and Regular Income. iii. Balanced Funds The aim of balanced funds is to provide both growth and regular income. Such schemes periodically distribute a part of their earning and invest both in equities and fixed income securities in the proportion indicated in their offer documents. iv. Money Market Funds The aim of money market funds is to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer short-term instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank call money. Returns on these schemes may fluctuate depending upon the interest rates prevailing in the market. v. Load Funds A Load Fund is one that charges a commission for entry or exit. That is, each time you buy or sell units in the fund, a commission will be payable. Typically entry and exit loads range from 1% to 2%. vi. No-Load Funds A No-Load Fund is one that does not charge a commission for entry or exit. That is, no commission is payable on purchase or sale of units in the fund.

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3.4. Equity 3.4.1. Overview Equities are often regarded as the best performing asset class vis-à-vis its peers over longer time frames. However equity-oriented investments are also capable of exposing investors to the highest degree of volatility and risk. There are a number of factors, which affect the performance of equities ad studying and understanding all of them on an ongoing basis, can be challenging for most. Stock markets have always been a draw for investors for their ability to generate wealth over the long-term. Fear, greed and a short-term investment approach act as hurdles that frustrate the investor from achieving his/her investment goals. You need to keep in mind the risk associated with the stocks. You also need to diversify your equity portfolio i.e., include more stocks and sectors. This helps you diversify your investment risk, so even if something were to go wrong with a stock/industry in your portfolio, other stocks/industries should help you shore up your portfolio. Two important resources that are critical to investing directly in stock markets are quality stock research and a reliable and inexpensive stock broker. The first one ± research on stocks is the most critical input that investors need to identify before they begin investing in stock markets. This is because even while you may have the risk appetite for equities, you still need credible, stock market related research that can help you make the right investment decision. The other important service provider for you is the stockbroker; he is the one who helps you execute the transaction over the stock exchange. The good thing about the Indian market, riding on the back of an economy that has grown by over 7% in the last two years, is that you can¶t miss being part of growth if you invest in the stock markets carefully. The bad part is the CHOICE! Of the listed 4,758 stocks on BSE and the NSE, how do you even get close to taking a call? Here comes the need of a financial advisor who can make your investment decisions and monitor your funds. Clearly, as Indians earn more, save more and accumulate more, financial advisors will play a crucial role in helping individuals create, protect and manage wealth. The wealth managers are all set to shepherd your financial future.
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3.5. Insurance 3.5.1. Overview Life insurance has traditionally been looked upon pre-dominantly as an avenue that offers tax benefits while also doubling up as a saving instrument. The purpose of life insurance is to indemnify the nominees in case of an eventuality to the insured. In other words, life insurance is intended to secure the financial future of the nominees in the absence of the person insured. The purpose of buying a life insurance is to protect your dependants from any financial difficulties in your absence. It helps individuals in providing them with the twin benefits of insuring themselves while at the same time acting as a compulsory savings instrument to take care of their future needs. Life insurance can aid your family on a rainy day, at a time when help from every quarter is welcome and of course, since some plans also double up as a savings instrument, they assist you in planning for such future needs like children¶s marriage, purchase of various household items, gold purchases or as seed capital for starting a business. Traditionally, buying life insurance has always formed an integral part of an individual¶s annual tax planning exercise. While it is important for individuals to have life cover, it is equally important that they buy insurance keeping both their long-term financial goals and their tax planning in mind. This note explains the role of life insurance in an individual¶s tax planning exercise while also evaluating the various options available at one¶s disposal. Life is full of dangers, but with insurance, you can at least ensure that you and your dependents don¶t suffer. It¶s easier to walk the tightrope if you know there is a safety net. You should try and take cover for all insurable risks. If you are aware of the major risk buy the right product, you can cover quite a few bases. The major insurable risks are as follows:

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‡ Life ‡ Health ‡ Income ‡ Professional Hazards ‡ Assets ‡ Outliving Wealth ‡ Debt Repayment 3.5.2. Types of Insurance Policies: a) Term Plans A term plan is the most basic type of life insurance plan. It is the most cost-effective life insurance product. Unlike other plans that come with an investment or savings component, term plans are products that cover only your life. This means your dependents or nominees get the sum assured on your death. A term plan offers life cover at a very nominal cost. This is due to the fact that term plan premiums include only mortality charges and sales and administration expenses. There is no savings element. b) Money Back Plan A money back plan aims to give you a certain sum of regular intervals; simultaneously it also provides you cover. Money back plans are especially useful in case money at regular intervals for your child¶s education, etc. c) Unit Linked Insurance Plans (ULIPs) ULIPs basically work like a mutual fund with a life cover thrown in. They invest the premium in market-linked instruments like stocks, corporate bonds and government securities (gsecs). The basic difference between ULIPs and traditional insurance plans is that while traditional plans invest mostly in bonds and gsecs, ULIPs¶ mandate is to invest a major portion of their corpus in stocks. However, investments in ULIP should be in tune with the individual¶s risk appetite. ULIPs offer flexibility to the policy holder ± the policy holder can shift his money between equity and debt in varying proportions.
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money at with life you need marriage,

d) Pension / Retirement Plans Planning for retirement is an important exercise for any individual. A retirement plan from a life insurance company helps an individual insure his life for a specific sum assured. At the same time, it helps him in accumulating a corpus, which he receives at the time of retirement.

e) Endowment Plans Individuals with a low risk appetite, who want an insurance cover, which will also give them returns on maturity could consider buying traditional endowment plans. Such plans invest most of their money in specified debt instruments like corporate bonds, government securities (gsecs) and the money market. 3.6. Home Loans 3.6.1. Overview A home loan helps one to buy more than just a home. Buying a property is perhaps the single largest investment decision an individual has to make in his lifetime. Therefore, he needs to plan for his finances well before he decides to invest a significant amount of money in buying a home. However, the availability of home loans has made life a lot easier for individuals today. Housing property qualifies as a long-term asset for most individuals. It is usually only once that an individual buys a house for himself after putting much thought behind it. Property rates have risen dramatically in the last couple of years. It therefore becomes imperative that individuals begin planning for their property during the early stages in their careers. At a time when the cost of housing has gone up, it is becoming increasingly difficult to fund the purchase of property entirely out of one¶s own finances. A home loan allows individuals to continue with

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their life and build an asset without compromising too much on their lifestyle. Tax benefits are also available on home loan repayments. Principal repaid up to Rs.1,00,000 p.a. is eligible for tax benefits under Section 80C. The interest portion up to Rs.1,50,000 p.a. is also eligible for tax deduction under Section (B). The cost of living in any metropolis is very high. A lot of job aspirants migrate to metros in search of better opportunities and live in rented houses paying anything between Rs.5000 to Rs.15000 per month, accounting for 20-30% of their monthly income, if not more. We will consider an example to compare the two options along with some assumptions.

4. Financial Service Providers in the Market A well-renowned financial service provider would work with a customer to prepare his financial plan. A financial service provider combines the objectivity and trust, developed through years of experience and expertise in planning one¶s personal finance. The kinds of services offered can vary widely. Some financial service provider assess every aspect of one¶s financial life, including saving, investments, insurance, taxes, retirement, and estate planning and help one develop a detailed strategy or plan for meeting all financial goals. The major players in the market are as follows: y Unicon securities Limited y Religare Enterprises Limited y Way2Wealth y Bajaj Capital y RR Investors y Angle Broking

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CHAPTER 4

COMPANY PROFILE

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ABOUT DESTIMONEY Destimoney¶s origins can be traced back to the City of London over 80 years ago. At that time called Dawnay Day, it entered India in 2006, was purchased by New Silk Route in 2008, and under its new share holders and management was renamed Destimoney. NSR (New Silk Route) had acquired 100% stake in the business. Vivek Vig is the CEO of Destimoney group. He is former Country Head of Centurion Bank of Punjab. He also worked as the Country Head of Citibank in Saudi Arabia, Turkey Business Head in Taiwan and Poland. Currently, Destimoney has a network of over 130 branches spread in over 70 locations in 20 states across the country. With an unrelenting focus on twin values of "Integrity" and "Client First" Policy, Destimoney, with the help of over 3000 employees and a strong IT infrastructure, provides advisory services to individuals and institutional clients in India and abroad. Key Management y y y y y y y Vivek vig - MD & Group CEO Brijesh Parnami ± Director ± Retail Distribution Saurabh Shukla ± CEO ± Broking Sandeep Mehta ± Director ± Seminar Marketing Kartik Bansali ± Head ± Institutional Broking K.Giri ± Group CFO J.K. Vakeel ± Creative Director

FUNDING PARTNER ± NEW SILK ROUTE New Silk Route is a leading Asia-focused growth capital firm founded in 2006 with over $1.4 billion under management, focused on the Indian subcontinent, as well as other rapidly growing economies in Asia and the Middle East. NSR have made 9 Investments to date in sectors of Consumer Services, Telecom, Manufacturing, Financial Services and Infrastructure. They have a team of 16 Investment Professionals working out of 4 offices; New York, Mumbai, Dubai, and Bangalore.

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FINANCIAL SERVICE DOMAIN Destimoney is one of India¶s leading retail financial services and distribution companies, a world-class customer-centric services enterprise that fulfils the financial needs of µMiddle India, with global processes and a focus on profitable growth. Destimoney distributes all financial products, and manufactures a select few. They develop individually structured financial products for their customers - from universal real life needs for family, security, health assurance and education to wealth creation and home ownership; on to lifestyle and business requirements, and continuing along the road to retirement and estate planning, ALLINANCES & PARTNERSHIPS y Strategic partnership with PNB to acquire up to a 49% stake in its housing finance subsidiary. y Destimoney recently entered into a partnership with Dhanlaxmi Bank to enable the Bank¶s customers to trade on Destimoney¶s online e-broking platform. y Under the new partnership with Artha Money, Artha money¶s customers will be able to seamlessly access and use Destimoney¶s online equity trading platform, while Destimoney¶s customers will be able to use Artha Money¶s online commodity trading platform.

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DESTIMONEY GROUP

The Destimoney Group at present has 4 business lines; y Destimoney India Services Pvt. Ltd, which provides portfolio management services. y Destimoney Enterprises Pvt. Ltd, which provides financial advisory services and distributes o Insurance products  Bajaj Allianz Life Insurance.  Royal Sundram Health Cover.
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o Loans  Personal loans.  Home loans (In partnership with Punjab National Bank.)  LAP (Loan against property). o Fixed deposits, mutual funds, structured products. y Destimoney Securities Pvt. Ltd., which deals with broking of stocks & shares. y Decimal Point Analytics, which is into global research outsourcing businesses. VISION Destimoney vision is to build a world class customer centric financial services enterprise that fulfils the financial needs of ³Middle India´ with ³Global Processes´ and focuses on profitable growth. Destimoney plans to do this, by distributing all financial products and manufacturing a select few and building an organization that unlocks the potential across four dimensions, viz. individual, team, customer and market place. MISSION Organization¶s mission is to forge strong, sustained relationships with the clients by creating value for them within a transparent and controlled investment process.

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INDUSTRY PROFILE

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FINANCIAL SERVICES INDUSTRY IN INDIA SPECIAL PREFERENCE TO MUTUAL FUND INDUSTRY In last few years, India has emerged as the one of the most rapidly growing economies in the world. India has been categorized with nations like Brazil, Russia and China (BRIC Nations) who are going to be the prime drivers of world economy in next few decades. Even if we take the case of recovery form economic downfall last year, India has managed to perform far better than other nations. Right from banking system to financial regularities, the country has thrived on discipline and out-performance. The booming Indian economy resulted in widespread growth and arrival of new industries. The most sparkling phenomenon is in form of financial market of India. Financial services in India has taken a giant leap from the days of standing in banks queue for several hours for opening a saving account or trying to get some fixed deposits (FD) done. The financial services have increased manifold and now people have the choice to choose the one that most suitably fits the bill. There are several services like broking firms, investment services, financial consulting, evergreen national banks, numerous private banks, mutual funds, car and home loans, equity market and other banking services. Services are many and offered by blue chip names of the industry. Most of the companies in financial segment offer taxation services, project consultancy services and all the services of wide financial gamut. Whether it¶s taking a car loan or booking your favorite house, going for pension plan or getting your child insured, numerous attractive financial services are available at affordable costs. Personal banking services have acquired an altogether new meaning. Now customers have multiple choices to choose from. One can find all the financial services on the internet that are just a call away.

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THE MUTUAL FUND INDUSTRY Mutual fund is a common pool of money in to which investors with common investment objective place their contributions that are to be invested in accordance with the stated investment objective of the scheme. The investment manager would invest the money collected from the investor in to assets that are defined/ permitted by the stated objective of the scheme. For example, an equity fund would invest equity and equity related instruments and a debt fund would invest in bonds, debentures, gilts etc. Mutual Fund is a 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. MUTUAL FUND HISTORY INDIA Unit Trust of India (UTI) was the first mutual fund set up in India in the year 1963. In early 1990s, Government allowed public sector banks and institutions to set up mutual funds. UTI has an extensive marketing network of over 40,000 agents all over the country. In the year 1992, Securities and exchange Board of India (SEBI) Act was passed. The objectives of SEBI are ± to protect the interest of investors in securities and to promote the development of and to regulate the securities market.

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In 1995, the RBI permitted private sector institutions to set up Money Market Mutual Funds (MMMFs). They can invest in treasury bills, call and notice money, commercial paper, commercial bills accepted/co-accepted by banks, certificates of deposit and dated government securities having unexpired maturity up to one year. As far as mutual funds are concerned, SEBI formulates policies and regulates the mutual funds to protect the interest of the investors. SEBI notified regulations for the mutual funds in 1993. Thereafter, mutual funds sponsored by private sector entities were allowed to enter the capital market. The regulations were fully revised in 1996 and have been amended thereafter from time to time. SEBI has also issued guidelines to the mutual funds from time to time to protect the interests of investors. All mutual funds whether promoted by public sector or private sector entities including those promoted by foreign entities are governed by the same set of Regulations. There is no distinction in regulatory requirements for these mutual funds and all are subject to monitoring and inspections by SEBI. The risks associated with the schemes launched by the mutual funds sponsored by these entities are of similar type TYPES OF MUTUAL FUNDS A mutual fund scheme can be classified into open-ended scheme or closeended scheme depending on its maturity period.

Open-ended Fund An open-ended Mutual fund is one that is available for subscription and repurchase on a continuous basis. These Funds do not have a fixed maturity period. Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices which are declared on a daily basis. The key feature of open-end schemes is liquidity. Close-ended Fund A close-ended Mutual fund has a stipulated maturity period e.g. 5-7 years. The fund is open for subscription only during a specified period at the time of launch of the scheme. Investors can invest in the scheme at the time of the initial public issue
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and thereafter they can buy or sell the units of the scheme on the stock exchanges where the units are listed. In order to provide an exit route to the investors, some close-ended funds give an option of selling back the units to the mutual fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor i.e. either repurchase facility or through listing on stock exchanges. These mutual funds schemes disclose NAV generally on weekly basis. Fund according to Investment Objective: A scheme can also be classified as growth fund, income fund, or balanced fund considering its investment objective. Such schemes may be open-ended or closeended schemes as described earlier. Such schemes may be classified mainly as follows: Growth / Equity Oriented Scheme The aim of growth funds is to provide capital appreciation over the medium to long- term. Such schemes normally invest a major part of their corpus in equities. Such funds have comparatively high risks. These schemes provide different options to the investors like dividend option, capital appreciation, etc. and the investors may choose an option depending on their preferences. The investors must indicate the option in the application form. The mutual funds also allow the investors to change the options at a later date. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time. Income / Debt Oriented Scheme The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures, Government securities and money market instruments. Such funds are less risky compared to equity schemes. These funds are not affected because of fluctuations in equity markets. However, opportunities of capital appreciation are also limited in such funds. The NAVs of such funds are affected because of change in interest rates in the country. If the interest rates fall, NAVs of such funds are likely to increase in the short run and vice versa. However, long term investors may not bother about these fluctuations.

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Balanced Fund The aim of balanced funds is to provide both growth and regular income as such schemes invest both in equities and fixed income securities in the proportion indicated in their offer documents. These are appropriate for investors looking for moderate growth. They generally invest 40-60% in equity and debt instruments. These funds are also affected because of fluctuations in share prices in the stock markets. However, NAVs of such funds are likely to be less volatile compared to pure equity funds. Money Market or Liquid Fund These funds are also income funds and their aim is to provide easy liquidity, preservation of capital and moderate income. These schemes invest exclusively in safer short-term instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank call money, government securities, etc. Returns on these schemes fluctuate much less compared to other funds. These funds are appropriate for corporate and individual investors as a means to park their surplus funds for short periods. Gilt Fund These funds invest exclusively in government securities. Government securities have no default risk. NAVs of these schemes also fluctuate due to change in interest rates and other economic factors as is the case with income or debt oriented schemes. Index Funds Index Funds replicate the portfolio of a particular index such as the BSE Sensitive index, S&P NSE 50 index (Nifty), etc. These schemes invest in the securities in the same weightage comprising of an index. NAVs of such schemes would rise or fall in accordance with the rise or fall in the index, though not exactly by the same percentage due to some factors known as "tracking error" in technical terms. Necessary disclosures in this regard are made in the offer document of the mutual fund scheme. There are also exchange traded index funds launched by the mutual funds which are traded on the stock exchanges.

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THE INDUSTRY CURRENT STATE The Indian mutual fund industry has evolved from a single player monopoly in 1964 to fast growing, competitive market on the back of strong regulatory framework.

AUM (Assets under Management) Base and Growth Relative To the Global Industry

Despite clocking growth rates that are amongst the highest in the world, the Indian mutual fund industry continues to be a very small market; comprising 0.32 percent share of the global AUM of USD 18.97 trillion.

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Industry Structure

The Indian mutual fund industry currently consists of 38 players that have been given regulatory approval by SEBI. The industry has witnessed a shift has changed drastically in favour of private sector players, as the number of public sector players reduced from 11 in 2001 to 5 in 2009.

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The public sector has gradually ceded market share to the private sector. Public sector mutual funds comprised 21 percent of the AUM in 2009 as against 72 percent AUM share in 2001.

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SWOT ANALYSIS

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STRENGTHS

y Destimoney Enterprises Pvt. Ltd. is a leading financial service provider under Asia¶s leading non financial organization ³New silk Route´ with Strategic partnership with PNB to acquire up to a 49% stake in its housing finance subsidiary. y Destimoney recently entered into a partnership with Dhanlaxmi Bank to enable the Bank¶s customers to trade on Destimoney¶s online e-broking platform. y Under the new partnership with Artha Money, Artha money¶s customers will be able to seamlessly access and use Destimoney¶s online equity trading platform, while Destimoney¶s customers will be able to use Artha Money¶s online commodity trading platform. y Destimoney¶s product mix comprises established and renowned companies for investments like Bajaj Allianz, Royal Sundram etc. y Destimoney¶s biggest strength is in its efficiency in sale and advisory of financial investment instruments.

WEAKNESSES

y Destimoney is very new brand for investors in the market. So it is struggling to make its name in the market due to intense completion. y Till now company hasn¶t done much in terms of promotional activities to attract the customers from the market. y Company¶s online service is only for its own products like mutual funds and DMAT accounts.

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y Company¶s online service approach is not very effective as it does not provide any kind of information about product and investment details accept its business domain. y Company is also struggling in acquiring new customers. The customer acquisition rate is a bit slower as compare to its competitors. y Company does not have its own products as life insurance and mutual funds

OPPORTUNITIES y Company is concentrating on middle class investors under its ³middle India´ Plan. But still there are other segments which can be targeted simultaneously. y Although company has done well in order to establish new partnerships with financial & non financial institutions but still company may expand its domain by involving new product series in its product mix.

y Destimoney is also going to launch its own product line along with currently available DMAT facility. So it will provide a good opportunity to the company to promote it self not as a third party service provider but also as a leading financial service company. THREATS y As the company is new in the market, it is very selective in its approach whether it is related to sale or to its partners. But due to intense competition in the market, company is finding it difficult to establish a brand value against the companies like India Bulls, Religare, and Standard Chartered etc. y Aggressive promotional strategies by close competitors may hamper Destimoney¶s acceptance by new clients. y The lack in technical knowledge about the products & instruments among sales staff is not a cost effective venture for the company.

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CHAPTER 5

DATA COLLECTION

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5.1. PRIMARY DATA The primary data are those which are collected afresh and for the first time, and thus happen to be original in character. We collect primary data during the course of doing experiments in an experimental research but in case we do research of the descriptive type and perform surveys, whether sample surveys or census surveys, then we can obtain primary data either through observation or through direct communication with respondents in one form or another or through personal interviews. In my research I personally organized the meetings & interviews with individual customer and gathered the inputs in a questionnaire designed for the same purpose. The questionnaire used for the purpose is shown in the ANNEXURE.

5.2. SECONDARY DATA The secondary data, on the other hand, are those which have already been collected by someone else and which have already been passed through the statistical process. Secondary data used in the report is based on initial search on internet for various similar empirical studies and journals by various behavioral scientists and is being highlighted in the ANNEXURE.

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CHAPTER 6

FINDINGS AND ANALYSIS

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1. Please specify your employment details ² Salaried ² Business ² Retired ² Others Employment Status Salaried Business Retired (Others) Total No. 65 29 6 100

Employement Status
6% 29% Salaried Business 65% Retired (others)

In Indian market nearly 65% of the investors belong to the salaried class, 29% were business class and the rest were retired.

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2. Please select your age group. ² Below 30 ² 30-60 ² 60 & above

Age (in Years) Below 30 30-60 60 & above Total

No. 36 54 10 100

Age
60 50 40 30 20 10 0 Below 30 30-60 60 & Above 10 36 54

When it comes to age, it was found that 36% are young and significant number 54% of them is in the age group of 35 to 60.

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3. Please specify your gender. ² Male ² Female

Parameter Gender Male Female Total

Number of Respondents 80 20 100

Gender
20%

Male 80% Female

Above table shows, that 80% of the investors are men and the rest 20% are females. Generally males bear the financial responsibility in Indian society, and therefore they have to make investment (and other) decisions to fulfill the financial obligations.

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4. Would you like to mention your annual earnings? ² Up to 100000 ² 100000-500000 ² 500000 & above Annual Earnings(Rs.) Up to 100000 100000 - 500000 500000 and above Total No. 9 73 18 100

Annual Earnings
80 70 60 50 40 30 20 10 0 73

18 9

Up to 100000

100000-500000

500000 & above

73% of People who invest in the market are in the annual earning range of 100000-500000.

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5. Please rate (1 to 5) your investment avenues in the order of preference? (Please write your rating against the options) Fixed Deposits/PPF/Bonds Insurance Schemes Mutual fund schemes Equities Commodities/Derivatives Real Estate

Table 5: Preferred investment avenues Investment Avenues Fixed Deposits/PPF/Bonds Insurance Schemes Mutual Fund Schemes Equities Commodities/Derivatives Real Estate Rank I II IV III V VI

From table 5, it can be concluded that the investors prefer FD¶s/Bonds/PPFs avenues than insurance schemes next to Equities and Mutual Funds. It was interesting to know that Indian individual investors still prefer to invest their surplus amount in risk free investment avenues next to insurances schemes. Table 5 confirms that Indian investors are conservative investors. Although the investors are not very sure about investing their amount in equity market because of the its risky nature. Still they have a clear point of view that MFs are the best available instruments to invest the money in equity market through AMC¶s.

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6. FINANCIAL LITERACY: When investors were queried about their financial literacy i.e. their ability or knowledge about financial terms or aspects of investments, it was found that most of the investors are financial illiterates. And the responses are shown in table.

Financial Literates Financial Illiterates Total

Frequency 37 63 100

Financial Literacy

Financial Literates Financial Illiterates

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Table 7: Other Characteristics of Sample Investor

Parameter Investment Decisions are based on Taken on own initiative Own initiative but with the help of expert Made by expert on investors behalf Total Regularity of Investment Decisions Frequently Not so frequently Total

No.of respondents 74 18 8 100

59 41 100

INTERPRETATION: The study has attempted to enquire about other characteristics of investor such as the investment decisions of the Investors. From table 7, One may infer that most investors tend not to depend upon expert advice and help while making investment decisions. However, the majority of the investors (74%) make investment decisions without the help and advice from experts; only (18%) investors consult some experts, for advice in investment decisions. And (8%) of the investors allow the expert to take decision on their behalf. Most of the investors (59%) make investment decisions on a regular basis.

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OBJECTIVE OF INVESTMENT PLAN: When investor was queried about his/her objective behind any investment, given that all the available investment avenues available to him will assure safety, liquidity and tax benefit, the objective of investment plan of the investors is shown in the following table.

Table 8: Objectives of investment plan

Parameter Number of Respondents Objective of Investment Plan Capital appreciation 42 Balance of capital appreciation & 44 current income Supplement of current income 14 Total 100

Based on table 8, we can conclude that the investors¶ objective of investment plan is capital appreciation or balance of capital appreciation and current income. It is clear that investors invest to accumulate wealth rather as an avenue to supplement their income.

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SOURCES OF INVESTMENT INFORMATION: When investors were asked to rank their various sources of investment information, the following Weighted Mean Values were obtained which are given in table. Table 9: Sources of investment information Sources of Investment Information Rank News Papers/Magazines II Electronic Media (T.V.) I Peer group/Friends III Broker/Financial Advisor IV Internet V Most of the investors get their information related to investment through electronic media (TV- NDTV Profit, CNBC and some business news channels) next to print media (News paper/ Business news paper/ Magazines). This could be because Print/Electronic media is easy and readily accessible investment information when compared to the other sources of investment information.

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Role of Third Party Financial Service Provider: When the investors were asked about their experience with third party service providers like Religare, Sherkhan, India Bulls & Destimoney. The responses were analysed, interpreted & tabulated as under in table. Table 10: Role of service providers/intermediaries

Parameter Investment through service provider Yes No Total

Number of Respondents 3
rd

party 72 28 100

Knowledge about third party service providers/intermediaries Very Low Low Moderate High Total Basis of choosing a service provider/broker Less brokerage charges or commission Effective fund allocation After sale service Transparency Brand Total

22 12 44 22 100

24 38 8 10 20 100

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Amount invested through 3rd party service provider (10 ± 20) % (20 ± 50) % (50 ± 80)% Full Amount Total Mutual Funds ± Better returns with moderate risk Disagree Somewhat disagree Somewhat Agree Completely Agree Total Met the return expectations with third party service providers Not At all Somewhat Yes Fully satisfied Total

16 12 28 44 100

6 10 16 68 100

12 10 46 32 100

It¶s very clear from table that 72% of people like to invest through third party service providers because of inadequate knowledge about the instruments as well as due to lack of experience. More than 40% investors supported to invest full amount through the intermediaries. 68% of investors prefer mutual funds as the best instrument to minimize the risk in equity market. All in all investors are satisfied/OK with the services being provided by these service providers.

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GRAPHICAL PRESENTATION OF PRESENCE OF THIRD PARTY FINANCIAL SERVICE PROVIDER

Investment through 3rd party

YES NO

Knowledge about third party service providers/intermediaries to investors

22

22 Very Low Low 12 Moderate High 44

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Amount invested through 3rd party service provider
16 44 12 (10 20) % (20 50) % (50 80)% 28 Full amount

Met the return expectations with third party service providers
12 32 10 NOT AT ALL SOMEWHAT YES FULLY SATISFIED 46

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FINDINGS: y The study reveals that male investors dominate the investment market in India. y Most of the investors possess higher education like graduation and above. y Most investors read two or more sources of information to make investment decisions. y The investors¶ decisions are based on their own initiative. y The investment habit was noted in a majority of the people who participated in the study. y The objective of investment was either capital appreciation or balance of capital appreciation and current income. y Investors prefer to park their funds in avenues like PPF/FD/Bonds next to Equities and Mutual Funds Scheme. y Most of the investors get their information related to investment through electronic media (TV) next to print media (News paper/ Business news paper/Magazines). y Most of the investors are financial illiterates. y Gender and the risk tolerance level of the investor are independent attributes of the investor. y Increase in age decreases the risk tolerance level. y Third party financial service providers are playing a significant role in investment market. y Most of the investor wish to invest their money through third party financial service provider. y Investors invest 70%-80% of their money through third party financial service provider. y Most of the investors are satisfied with the return expectations with third party financial service providers.

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Chapter 7

Recommendations & Suggestions

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This study serves the purpose of developing a service quality model for the third party financial service provider. The service gaps can be shortened through the following outcomes of the study: y Third party financial service should continuously design suitable schemes to meet the needs of adequate returns, safety and liquidity in a balanced proportion. y Since the investor¶s need for liquidity is found to be high, we suggest that more of the new schemes opening for subscription be Open-ended. y The individual investor can be in turn divided into various segments such as Young Families with small or no children, Middle-aged People saving for retirement and Retired People looking for steady income. Suitable products such as Growth and Balanced schemes for young families and Income schemes with sure and steady returns for retired people can be marketed. y By proper segmentation and by targeting the right product to the right customer, seevice providers can hope to win the confidence of their customers and 'own' them for a lifetime. y Negative perceptions about MFs & ULIPs require to be tackled through appropriate investor education measures by providing Investor Education Programmes. y Financial service providers should develop investor education literature specially tailored to suit the regional needs to create/increase the awareness level of the investors.

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y Employers can influence the investment decision of the employees by providing financial education as a benefit to employees. Employers can be objective in hiring an independent financial advisor to conduct an education programme on long-term investment strategies. Employers have ready access to employees and the cost can be spread over many employees.

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Chapter 8

Bibliography

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BIBLIOGRAPHY: http://www.destimoney.com/ https://www.dawnaydayavsecurities.com/ http://www.ripublication.com/ http://www.wikipedia.com/ http://www.morningstar.com/ http://www.investopedia.com/ http://www.financeindia.org/ BOOKS: ³Research Methodology´ by Kothari C. R. 2nd Edition, New Age International Publishers. ³Business Statistics´ by Gupta S P & Gupta M P, 2000, 12th Ed. Sultan Chand & Sons

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Chapter 9

Annexure

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INVESTOPEDIA 1. Please specify your employment details ² Salaried ² Business ² Retired ² Others 2. Would you like to mention your annual earnings? ² Up to 100000 ² 100000-500000 ² 500000 & above 3. What do you say about regularity of your investment decisions? ² Frequently ² Not so frequently 4. Please rate (1 to 5) your investment avenues in the order of preference? (Please write your rating against the options) Fixed Deposits/PPF/Bonds Insurance Schemes Mutual fund schemes Equities Commodities/Derivatives Real Estate 5. Your investment decisions are based on ² Taken on own initiative ² Own initiative but with the help of expert ² Made by expert on investors behalf

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6. What is your level of financial knowledge about the various investment avenues in the market? ² Excellent____________________________________1 ² Good_______________________________________2 ² Moderate____________________________________3 ² Not much___________________________________4 ² Very low____________________________________5 7. What are the various sources of investment information for you? ² Newspapers/Magazines ² Electronic Media (T.V.) ² Peer group/Friends ² Broker/Financial advisor ² Internet 8. What is your risk tolerance level for short term fluctuations in your invested money in case of equity investments? ² Very low____________________________________1 ² Low________________________________________2 ² Moderate____________________________________3 ² High_______________________________________4 ² Very high__________________________________ 5

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9. What is your attitude towards the following Financial Instruments, in the Indian Capital Market? (Please mark the suitable option)
Highly Favourable Favourable Some What Favourable Not Very Favourable Not at all favourable

a) Shares b)Debentures c)Mutual Funds d)Bonds

10. Generally you prefer (Please Rank from 1 - first preference to 6 - last preference) ² Growth Schemes ² Balanced Schemes ² Tax Saving Schemes ² Income Schemes 11. What is your purpose of investment? ² Education of Children ² Retirement benefit ² Future Contegencies ² Profit Earning 12. Would you recommend investing your money in through intermediaries/third party service providers? ² No ² Yes

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13. What is your knowledge level about different service providers in the financial service market? ² Very low__________________________________ 1 ² Low______________________________________ 2 ² Moderate__________________________________ 3 ² High______________________________________4 14. On what basis you choose a particular financial service provider? ² Less brokerage charges ² Effective fund allocation ² After sale service ² Transparency ² Brand 15. How much would you like to invest in equity market through third party service providers? ² (10-30)% ² (30-60)% ² (60-100) 16. Are you able to meet your return expectations through your third party investor /service provider? ² Not at all ² Some what ² Yes ² Completely satisfied

Name: _______________________________________________ Contact Details: ______________________________________
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CHAPTER 10

CASE STUDY

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DESTIMONEY GROWTH PATH SINCE INCEPTION

About Destimoney
Destimoney¶s origins can be traced back to the City of London over 80 years ago. At that time called Dawnay Day, it entered India in 2006, was purchased by New Silk Route in 2008, and under its new share holders and management was renamed Destimoney. In addition to well experienced teams of Insurance Advisors and Distributors, we cater to virtually every financial need, from loans, mutual funds and equity broking to wealth advisory, with a full-time employee base of over 3000 in 137 branches in 72cities.With over 497 Distribution Partners across India

Funding Partner ± New Silk Route
New Silk Route is a leading Asia-focused growth capital firm founded in 2006 with over $1.4 billion under management, focused on the Indian subcontinent, as well as other rapidly growing economies in Asia and the Middle East. The firm is led by Rajat Gupta - Chairman, Victor Menezes ± Senior Advisor, Parag Saxena CEO, each of whom has a track record of building and leading global organizations. NSR have made 9 Investments to date in sectors of Consumer Services, Telecom, Manufacturing, Financial Services and Infrastructure. They have a team of 16 Investment Professionals working out of 4 offices; New York, Mumbai, Dubai, and Bangalore . NSR New Silk Route Partners is a growth capital firm dedicated to private equity investments in India, South Asia, Middle East and other emerging or, rapidly growing economies of Asia. Founding General Partners Parag Saxena and Rajat Gupta have raised a pool of $1.4 billion growth capital from a blue-chip roster of Limited Partners for the firm¶s first fund NSR PE Asia Fund I L.P. The credentials of New Silk Route's Founding Partners and its strategy to create a unique Asia-focused investment platform received strong support from the

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investment community. Fundraising for our first fund - New Silk Route PE Asia Fund LP - completed quickly and received commitments of US$1.4 billion from a blue chip roster of Limited Partners. New Silk Route invests across rapidly-emerging economies in Asia and the Middle East, in rapidly growing or transforming sectors, and across the life-cycle of companies. The firm follows both a top-down approach focusing on macroeconomic investment themes, and bottom-up analysis which focus on evaluating potential portfolio companies based on their competitive position, track records, management teams and ability to execute a business plan and growth strategy.

Key People:
y y y y y y y Vivek vig - MD & Group CEO Brijesh Parnami ± Director ± Retail Distribution Saurabh Shukla ± CEO ± Broking Sandeep Mehta ± Director ± Seminar Marketing Kartik Bansali ± Head ± Institutional Broking K.Giri ± Group CFO J.K. Vakeel ± Creative Director

ALLIANCES & PARTNERSHIPS
y Strategic partnership with PNB to acquire up to a 49% stake in its housing finance subsidiary. y Destimoney recently entered into a partnership with Dhanlaxmi Bank to enable the Bank¶s customers to trade on Destimoney¶s online e-broking platform. y Under the new partnership with Artha Money, Artha money¶s customers will be able to seamlessly access and use Destimoney¶s online equity trading platform, while Destimoney¶s customers will be able to use Artha Money¶s online commodity trading platform.

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Steps Towards Customer Relationship Management Integrity & Value for Clients:
Destimoney differentiates itself through a unique client-centric philosophy and an ethos of integrity. Rigorous processes and training ensure that every decision and interaction at the Firm embodies our principles. These fundamental values enable us to take a longer, and often contra-cyclical, view to investments, a strategy that, we believe, creates greater value for clients.

Sound Research & Advice:
A fundamental, ground-up approach is paired with world-class proprietary research, differentiating Destimoney from its peers. Importantly, consistent and documented processes allow our clients and investors unprecedented transparency into our investment methodology. Destimoney believes in seeking out organizations and investment opportunities that reflect our own ethos: an uncompromising focus on values and people.

Value Investments:
Destimoney believes in longer-term investment horizons and identifying deepvalue opportunities. In practical terms this equates to acquisition of assets which are off their fundamental or historic valuations, often against the current, shortterm market cycle. This investment philosophy is reflected in the various services offered by our Wealth and Portfolio Management advisors. Destimoney¶s proprietary research provides its investment advisors additional resources with which to identify these opportunities.

Building Value for a Lifetime:
Destimoney's fundamental business goal is to create value for our customers and to establish a lifetime of mutual respect and loyalty. We believe that this is possible only if we run our business with integrity and honesty. We promise our clients, shareholders, principles and employees that we will conduct all our interactions with overarching considerations:

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Integrity:
We will act ethically in all our dealings. We will keep our commitments and follow both the spirit and letter of the law.

"Client First" Policy:
All our processes, systems, staffing, and business interactions are designed to be client-centric. Consequently, our leadership and employees are uncompromisingly dedicated to our values, clients and reputation.

Destimoney buys 26% stake in PNB Housing
The country¶s second largest state-run lender Punjab National Bank (PNB) sold 26% stake in its wholly owned housing finance subsidiary, PNB Housing Finance (PNBHFL), to the US-based Destimoney Enterprises. The US company was earlier known as Dawnay Day. Though the stake sale announcement was done on 9th December 2009 , the decision by the bank's board on the move was taken in May. The bank sold 78 lakh shares of PNBHFL at Rs 101.5 each. The total value of the deal was Rs 217 crore. While the sum of Rs 79.16 crore has been paid to the bank by the company, the balance of Rs 137 crore would be converted to unsecured loan. The idea behind the alliance was to grow PNBs housing finance arm into a bigger company as we have got a much better vision for the company. Accordingly, the definitive agreements in this regard have been executed by the bank, PNBHFL and Destimoney Enterprises (the investor). Destimoney Enterprises also has an option to increase their shareholding in PNBHFL up to 49% of the share capital of PNBHFL. This debt will get converted into equity at Rs 101.50 per share as per the capital requirement of the housing finance company over a period of two years. Therefore,

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Destimoney will increase its stake up to 49%. However, PNB will retain majority share holding at 51%. Destimoney is a specialised retail financial services company headed by its CEO Vivek Vig. It has four business lines namely retail broking, distribution of financial products, wealth management and portfolio management services. It has a network of 133 branches across 72 cities with over 3,000 employees. PNB believes that the tie up with Destimoney will yield a more focused strategy which will result in a sharp growth in business. The board of the new housing finance company that is being reconstituted and includes GN Bajpai, ex-chairman Sebi & Life InsuarnceCorporation Ltd and PK Gupta, ex-chairman of National Housing Bank. PNB had promoted its housing subsidiary in November 1988. Since then, PNB Housing's total loan assets for the year ended March 31, 2009 have grown to over Rs 2,300 crore and after tax profit to Rs 53 crore. The company operates with a network of 30 branches across the country.

Dhanlaxmi Bank inks pact with Destimoney to launch online Broking service platform
On Feburauy 10th, 2010 Dhanlaxmi Bank and Destimoney announced a mutually beneficial strategic alliance. Dhanlaxmi Bank, known for its rich array of banking services and its very strong customer franchise is widening its suite of products targeted at increasingly investment savvy customers. It has partnered with Destimoney to offer to its consumers a 3 in 1 account, a service that bundles the features of a savings account, a demat account an Online Trading and Investment account. Dhanlaxmi Bank customers will be able to operate the savings and demat account seamlessly and use their funds and securities for investing in capital market products such as equities, derivatives, mutual funds and the like. Destimoney is a world-class customer-centric services enterprise that fulfils the financial needs of 'Middle India, with global processes and a focus on profitable

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growth. They have a strong footprint in over 70 unique locations with over 133 branches. Destimoney brings to the table universal real life financial products structures according to individual needs. A unique feature of this product offering is that the customer does not have to move funds for trading, thereby losing interest on the savings account, but has the facility of earmarking the funds for investment. Upon a successful transaction, only the funds required to complete the transaction will be transferred by the system from the customer's account. This will provide the best of both features for customers, and is a unique offering of the bank. Amitabh Chaturvedi, MD and CEO of the Dhanlaxmi Bank said, "This offering further reinforces Dhanlaxmi's strategic direction, offering services that look beyond conventional banking products. The Bank puts the customer at the centre of all its offerings, making available products that participate in the entire investment flows of the Bank, be it a cheque written "to" the Bank or "through" the Bank." Vivek Vig, Managing Director of Destimoney said "We are delighted with this alliance because of the world class talent of Dhanlaxmi Bank's management team. Their determination to make the customer their focus in every possible way and the remarkable speed of their expansion. Destimoney brings to their customers the very latest and best of advanced technology" Dhanlaxmi Bank's unique offering will be a win win for the customer and the bank with customer becoming increasingly net savvy and investment savvy. The online trading platform will offer a suite of advanced technical tools and access to high quality research reports.", said Dhanajaya D.A, Head Online Broking and Fund Distribution Business Dhanlaxmi Bank.

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Destimoney enters into a strategic alliance with Artha Money

On March 29, 2010 Destimoney, a retail financial services company, and Artha Money, the country¶s first financial super market, announced a strategic partnership. This will give customers access not only to a world-class equity broking platform, but to value-added wealth management features, including budgeting and money management. Destimoney is noted for being a full-service financial services enterprise catering to all the investment and borrowing needs of individuals. Operating from over 70 locations with more than 133 branches, Destimoney recently entered into a similar partnership with Dhanlaxmi Bank to enable the Bank¶s customers to trade on Destimoney¶s online e-broking platform.

On the announcement of the new partnership between Destimoney and Artha Money, Mr. Vivek Vig, Managing Director and CEO, Destimoney, said, ³This new development is in line with our strategy to grow with our partnerships. In December, we forged a strategic partnership with PNB to acquire upto a 49% stake in its housing finance subsidiary. Then in February, we entered into partnership with Dhanlaxmi Bank, to offer broking services to its customers - and now we have a strategic partnership with Artha Money. We look forward to many more partnerships, each of which brings us closer to our objective of reaching Tier II and Tier III cities in India and offer our value add services .³ Under the new partnership, Artha Money and its customers will be able to seamlessly access and use Destimoney¶s online equity trading platform, while Destimoney¶s customers will be able to use Artha Money¶s online commodity trading platform. Each of these products are leaders in their own right, and the partnership is seen as a strategic move to leverage and complement strengths, in order to give the customer a holistic, world-class trading experience. Welcoming the partnership, Venkatesh Vaidyanathan, Group COO, Artha Financial Services, said, ³Artha Money was set up with the promise of helping customers make friends with money. Our recently launched Money Manager online service goes a long way in doing exactly that, by providing our customers with unparalleled convenience in budgeting and analysis. The partnership with

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Destimoney will help us offer a more rounded offering to our customers, with not just analysis, but transaction thrown in as well´. Echoing the sentiment, Saurabh Shukla, CEO ± Broking, Destimoney, added, ³I am extremely enthusiastic about with this strategic partnership, and warmly welcome customers of Artha Money into our fold. The new Strategic Partnership goes beyond Broking. For instance, the Artha Money Manager Platform will be offered to all existing and new customers of Destimoney as an additional facility, the features and capabilities of which will be of immense practical use to Destimoney¶s customers. In addition under the new pact, Destimoney will refer Loan Customers in search of a property to Artha Money, who will in turn refer property-seekers in search of a loan to Destimoney.´ About 45% of Destimoney¶s equity trading volumes come from their online platform, which is another synergy between Artha Money and Destimoney. About Destimoney: Destimoney is one of India¶s leading retail financial services and distribution companies, a world-class customer-centric services enterprise that fulfils the financial needs of µMiddle India, with global processes and a focus on profitable growth. They have a strong foot print in over 70 locations, with over 133 branches. Destimoney distributes all financial products, and manufactures a select few. They develop individually structured financial products for their customers - from universal real life needs for family, security, health assurance and education to wealth creation and home ownership; on to lifestyle and business requirements, and continuing along the road to retirement and estate planning, About Artha Financial Services Artha Financial Services was set up in January 2008 by a group of professionals from the Banking and Financial Services Industry, led by Suresh Rangarajan. Suresh has over 15 years¶ banking and professional experience, including a decade with Citigroup. In his erstwhile role as President of TimesofMoney Ltd. Suresh was responsible for launching India¶s first online money transfer service, Remit2India.com. Artha Financial Services operates two broad businesses ± online financial services (Artha Money) and real estate services (Artha Property). Artha Money recently launched India¶s first online money management service, Money Manager that has seen over 50,000 customers sign up in the four months
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since its launch. In addition to online money management, Artha Money also lets customers compare and purchase general insurance and loan products online. Artha Property is the country¶s first professional, branded real estate service and enables customers to compare and choose from the best choice of properties to buy or invest in. Both Artha Money and Artha Property were recently conferred the status of ³Power Brand´ by the prestigious BrandFinance Institute in UK. The company maintains its corporate office in Bangalore and has offices in Mumbai, Hyderabad and Chennai.

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Chapter 11

Synopsis

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INTRODUCTION Stock market has been subjected to speculations and inefficiencies, which are beached to the rationality of the investor. Traditional finance theory is based on the two assumptions. Firstly, investors¶ make rational decisions; and secondly investors are unbiased in their predictions about future returns of the stock. However financial economist have now realized that the long held assumptions of traditional finance theory are wrong and found that investors can be irrational and make predictable errors about the return on investment on their investments. This empirical study on Individual Investors¶ Behavior is an attempt to know the profile of the investor and also know the characteristics of the investors so as to know their preference with respect to their investments. AIM The study tries to unravel the influence of demographic factors like gender and age on risk tolerance level of the investor. This study also signifies the role of third party in order to minimize the risk of direct investments in the market. OBJECTIVES 1. To study the dependence/independences of the demographic factors (Gender and Age) of the investor and his/her risk tolerance level. 2. To know the preferred investment avenues of the Indian individual investor segregated in terms of financial literacy. 3. To study the role of third party financial service provider in investment management. 4. To know the risk tolerance level of the individual investor in order to suggest a suitable investment portfolio.
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5. To identify the preferred sources of information influencing investment decisions.

SCOPE OF THE STUDY The study is totally based on investor¶s behavior and perception about investments considering the current scenarios in the equity market and role of third party financial service provider in managing investment strategies of investors. The biggest concern with the service providers is the quality maintenance on sale and after sale of financial products. This research is on present market scenarios as it is supported by latest data and the outcomes are taken as an input source in filling up the gaps. RESEARCH METHODOLOGY The methodology of data collection is based on primary as well as secondary data. The following research methodology is proposed to be adopted for the course of research to achieve the objective of the study: Primary Data Primary research is an investigation which involves collection of original data, using accepted research methodology. To understand the investor¶s demographics and investment strategies, research will include 1. Questionnaires. 2. Semi structured interviews with agents and financial advisors. Secondary Data The secondary data will be purely based on company sources, financial reports, books & internet.

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CONCLUSION
This study confirms the earlier assumptions regarding the role of third party financial service provider in investment management. It was observed that people do invest their money after consulting with financial service provider, but investors have moderate knowledge of third party financial service provider present in the market. The individual investor still prefers to invest in financial products which give risk free returns. This confirms that Indian investors even if they are of high income, well educated, salaried, independent are conservative investors prefer to play safe. The investment product designers can design products which can cater to the investors who are low risk tolerant and can motivate investors to invest in mutual funds to eliminate equity market risks.

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