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COMPARITIVE ANALYSIS OF MF AND ULIPS

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1. INDUSTRY PROFILE

HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY

The mutual fund industry in India started in 1963 with the formation of Unit Trust of

India, at the initiative of the Government of India and Reserve Bank. Though the growth was

slow, but it accelerated from the year 1987 when non-UTI players entered

In the past decade, Indian mutual fund industry had seen a dramatic improvement, both

qualities wise as well as quantity wise. Before, the monopoly of the market had seen an ending

phase; the Assets under Management (AUM) was Rs67 billion. The private sector entry to the

fund family raised the amount to Rs. 470 billion in March 1993 and till April 2004; it reached the

height if Rs. 1540 billion.

The history of mutual fund industry in India can be better understood divided into

following phases:

Phase1. Establishment and Growth of Unit Trust of India - 1964-87

Unit Trust of India enjoyed complete monopoly when it was established in the year 1963

by an act of Parliament. UTI was set up by the Reserve Bank of India and it continued to operate

under the regulatory control of the RBI until the two were de-linked in 1978 and the entire

control was transferred in the hands of Industrial Development Bank of India (IDBI). UTIlaunched its first scheme in 1964, named as Unit Scheme 1964 (US-64), which attracted the

largest number of investors in any single investment scheme over the years. UTI launched more

innovative schemes in 1970s and 80s to suit the needs of different investors. It launched ULIP in

1971, six more schemes between1981-84, Children's Gift Growth Fund and India Fund (India's

first offshore fund) in 1986, Master share (India's first equity diversified scheme) in 1987 and

Monthly Income Schemes (offering assured returns) during 1990s. By the end of 1987, UTI's

assets under management grew ten times to Rs 6700 cores.

Phase II. Entry of Public Sector Funds - 1987-1993

The Indian mutual fund industry witnessed a number of public sector players entering the

market in the year 1987. In November 1987, SBI Mutual Fund from the State Bank of India

became the first non-UTI mutual fund in India. SBI Mutual Fund was later followed by Can


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bank Mutual Fund, LIC Mutual Fund, Indian Bank Mutual Fund, Bank of India Mutual Fund,

GIC Mutual Fund and PNB Mutual Fund. By 1993, the assets under management of the industry

increased seven times to Rs. 47,004 cores. However, UTI remained to be the leader with about

80% market share.

Phase III. Emergence of Private Sector Funds - 1993-96

The permission given to private sector funds including foreign fund management

companies (most of them entering through joint ventures with Indian promoters) to enter the

mutual fund industry in 1993, provided a wide range of choice to investors and more competition

in the industry. Private funds introduced innovative products, investment techniques and

investor-servicing technology. By 1994-95, about 11 private sector funds had launched their

schemes.

Phase IV. Growth and SEBI Regulation - 1996-2004

The mutual fund industry witnessed robust growth and stricter regulation from the SEBI

after the year 1996. The mobilization of funds and the number of players operating in the

industry reached new heights as investors started showing more interest in mutual funds.

Investors' interests were safeguarded by SEBI and the Government offered tax benefits to the

investors in order to encourage them. SEBI (Mutual Funds) Regulations, 1996 was introduced bySEBI that set uniform standards for all mutual funds in India. The Union Budget in 1999

exempted all dividend incomes in the hands of investors from income tax. Various Investor

Awareness Programmes were launched during this phase, both by SEBI and AMFI, with an

objective to educate investors and make them informed about the mutual fund industry.

Phase V. Growth and Consolidation - 2004 Onwards

The industry has also witnessed several mergers and acquisitions recently, examples of

which are acquisition of schemes of Alliance Mutual Fund by Birla Sun Life, Sun F&C Mutual

Fund and PNB Mutual Fund by Principal Mutual Fund. Simultaneously, more international

mutual fund players have entered India like Fidelity, Franklin Templeton Mutual Fund etc. There

were 29 funds as at the end of March 2006. This is a continuing phase of growth of the industry

through consolidation and entry of new international and private sector players.


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Mutual Fund Companies in India

The concept of mutual funds in India dates back to the year 1963. The era between 1963

and 1987 marked the existence of only one mutual fund company in India with Rs. 67bn assets

under management (AUM), by the end of its monopoly era, the Unit Trust of India (UTI). By the

end of the 80s decade, few other mutual fund companies in India took their position in mutual

fund market. The new entries of mutual fund companies in India were SBI Mutual Fund, Can

bank Mutual Fund, Punjab National Bank Mutual Fund, Indian Bank Mutual Fund, Bank of

India mutual funds the succeeding decade showed a new horizon in Indian mutual fund industry.

By the end of 1993, the total AUM of the industry was Rs. 470.04 bn. The private sector funds

started penetrating the fund families. In the same year the first Mutual Fund Regulations came

into existence with re-registering all mutual funds except UTI. The regulations were further

given a revised shape in 1996.

Kothari Pioneer was the first private sector mutual fund company in India which has now

merged with Franklin Templeton. Just after ten years with private sector players penetration, the

total assets rose up to Rs. 1218.05 bn. Today there are 33 mutual fund companies in India.

Current Scenario of the Mutual Fund Industries

The face of the domestic Mutual fund industry is undergoing a transformation, withcontinuous shifts in business strategies and models, in order to adapt to changing regulations.

As the Indian mutual fund industry moves up the maturity curve, assets under management

maintain the growth momentum clocking a compounded growth rate of 25% between 2006-

11, reporting a value of Rs 700, 538 core as on March 31, 2011. Given the latent opportunity

in terms of under-penetration of financial products, the programs of outreach in the sector,

looks at various ways to distribute mutual funds in a cost effective manner.

Asset Management companies keep their focus on innovation in products and more use oftechnology so as to take the industry to the next level of growth. In the backdrop of rising

incomes, and increased rate of savings and investment, it is of crucial importance that

products are designed keeping in mind the needs of investors and their appetite for risk.

Industry stakeholders are struggling to build a sustainable distribution model, which will


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enhance reach and penetration to the smaller towns and cities. Industry players keep a keen

eye on evolving regulations, identifying innovative ways to reach the retail consumer.

Taking cognizance of the favorable macro-economic environment, India holds huge prospects

for growth, luring foreign investors. India emerges as one of the most popular destinations forinvestments, opening up multiple avenues and promising higher yields. Asset management

companies in the domestic market look upon this as an opportunity to manage International

funds, as they strategies to modify their distribution model to fit into a global platform. A

resilient distribution strategy and increased scale of operations is required to keep pace with

the global players.

New streams of growth arise not only from an increased flow of funds from Flls, but also

through emerging products like pensions, which are slowly gaining ground. The integration oftechnology in the service delivery models the use of online platforms, which succeed in

reaching out to a larger number of investors, in Tier 3 to Tier 6 towns, riding on well

entrenched mobile net-works, have provided the reins of growth to the Indian mutual fund

industry.

To sum up, some of the challenges plaguing the industry in the current scenario include that

of low retail participation, search for appropriate distribution models, and product innovation

in tune with investor profiles, high costs of transactions and low levels of investor awareness.

Indian EconomyGDP of SBI Mutual Fund

The economy grew at its fastest pace in ten months, clocking a growth of 8.9 per cent in

the second quarter ended September. The numbers bettered industry and government

expectations that GDP growth would run out of steam in the period. Growth was buoyed by a

healthy increase in service sector and farm output.

The Central Statistical Organization (CSO), in data released today, also revised the first-quarter

growth figures from 8.8 per cent to 8.9 per cent on account of the new base year adopted in thecalculation of inflation and industrial output. The growth numbers in the first half have revived

hopes of a 9-per-cent-or-thereabouts growth for the whole financial year higher than the

governments estimate of 8.5 per cent.


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We may be confident that at the end of this year, GDP growth will not be less than 8.7 -8.75 per

cent. It may be more, said Finance Minister Pranab Mukherjee. He added that projections of

over 9 per cent growth by the International Monetary Fund could be correct this time.

A growth of 9 per cent in 2010-11 will be significantly higher than the 7.4 per cent growth

recorded in 2009-10 and 6.7 per cent in 2008-09. The government had projected 9 per cent

growth in 2011-12. The last time GDP grew faster than 9 per cent was in October-December

2007-08 (9.3 per cent).

Asked whether the economy could achieve 9 per cent growth in the current fiscal, Finance

Ministry Chief Economic Advisor Kaushik Basu said, It is not impossible any more. We are

very close to that.

Association of Mutual Funds in India

With the rise in mutual fund companies, a requirement for mutual fund association in

India was experienced to operate as a non-profit organization. This led to the establishment of

Association of Mutual Funds in India in 1995. Association of Mutual Funds in India is an

important organ of all Asset Management Companies that are registered with Securities and

Exchange Board of India. Till today, all the Asset Management Companies with Mutual Fund

schemes are the members of Association of Mutual Funds in India. AMFI operates under the

superintendence of its Board of Directors.Association of Mutual Funds India, also referred to as AMFI, has helped the Indian Mutual Fund

Industry to enter into a healthy and professional market, maintaining the market ethics and

standards. It attempts to promote the interests of both Mutual Funds and unit holders.

Growth of Mutual Funds

Has been gradual and it took really long years to evolve the modern day mutual funds.

Mutual Funds emerged for the first time in Netherlands in the 18th century. Then it got

introduced to Switzerland, then Scotland and then to United States in the 19th century.

The very idea of mutual funds came from the urge to deliver a form of Diversified

Investment Solution. Over the years the idea developed and people received more and more

choices of Diversified Investment Portfolio through the mutual funds.


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When in 1924, Massachusetts Investors Trust first introduced mutual funds in U.S they

found it difficult to gain the trust of the investors. It was very natural that the people took time to

adapt to a new investment idea. There emerged some confusion regarding the Taxation of

Investment Income from mutual funds as there was no Regulation or legislation.

Laws started to came in existence from 1940s. The result was not immediate. The Mutual Fund

Concept achieved warm reception only in the middle of 1950s. By the end of fifties and in first

half of 1960s mutual fund investment triggered up tremendously.

Monetary Funds benefited a lot from the mutual funds. Earlier investors was used to

invest directly in the stock market and many times suffered from loss due to wrong Speculation.

But, with the mutual funds which were handled by efficient Fund Managers, Investment Risks

was lowered by a great extent. The diversified investment structure of mutual funds also

diversified risk and this contributed tremendously in the Growth of Mutual Funds.

Over the years not only the new types of mutual funds emerged, the way, in which mutual funds

were sold also changed. But, the Growth of Mutual Funds has not stopped. It is continuing to

evolve to a better future, where investors will get newer opportunities.

Aims of Association of Mutual Funds in India

The aims of Association of Mutual Funds in India are as follows: Association of Mutual Funds endeavors to maintain high standards in all fields of

operation within the industry.

Association of Mutual Funds maintains an interaction with Securities and ExchangeBoard of India, and functions in accordance with the guidelines established by SEBI

(Securities and Exchange Board of India).

Association of Mutual Funds in India takes up all India awareness program on behalf ofthe investors. This is done to facilitate proper comprehension of the concept and

functioning of Mutual Funds.

At last but not the least association of mutual fund of India also circulate informationrelated to Mutual Fund Industry.


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Association of Mutual Funds in India: Sponsors

Some of the major sponsors of Association of Mutual Funds in India include:

SBI Fund Management Ltd. Benchmark Asset Management Company Pvt. UTI Asset Management Co Pvt. Ltd. JM Financial Mutual Fund Can bank Investment Management Services Ltd.


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2. SBI MUTUAL FUND COMPANY PROFILE

SBI MUTUAL FUND PROFILE

Mutual Fund SBI Mutual Fund

Setup Date Jun-29-1987

Incorporation Date Feb-07-1992

Sponsor State Bank of India

Trustee SBI Mutual Fund Trustee Company Private Limited

Chairman Mr. Pratip Chaudhri

CEO / MD Mr. Deepak Kumar Chatterjee

CIO Mr. Navneet Munot

Compliance Officer Ms. Vinaya Datar

Investor Service Officer Mr. C A Santosh

Assets Managed Rs. 41551.51 core (Dec-31-2011)

Other Details

Auditors Haribhakti & Co / M/S. Chandabhoy & Jassoobhoy

CustodiansBank of Nova Scotia / Citi Bank / HDFC Bank / Stock Holding

Corporation of India

RegistrarsComputer Age Management Services Pvt. Ltd, Computronics

Financial Services (I) Ltd, Datamatics Financial Software Services LtdAddress 191 Maker Tower E, Cuffe Parade, Mumbai - 400005.

Telephone Nos. 022 - 22180221-27

Fax Nos. 02222189663

E-mail [email protected]

SBI Funds Management Pvt. Ltd. is one of the leading fund houses in the country with an

investor base of over 4.6 million and over 20 years of rich experience in fund management

consistently delivering value to its investors. SBI Funds Management Pvt. Ltd. is a joint

venture between 'The State Bank of India' one of India's largest banking enterprises, and

AMUNDI (France), one of the world's leading fund management companies that manages

over US$ 500 Billion worldwide Today the fund house manages over Rs 28500 cores of

assets and has a diverse profile of investors actively parking their investments across 36

active schemes. In 20 years of operation, the fund has launched 38 schemes and
mailto:[email protected]:[email protected]:[email protected]


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successfully redeemed 15 of them, and in the process, has rewarded our investors with

consistent returns. Schemes of the Mutual Fund have time after time outperformed

benchmark indices, honored us with 15 awards of performance and have emerged as the

preferred investment for mil lions of investors. The trust reposed on us by over 4.6 million

investors is a genuine tribute our expertise in fund management

SBI Funds Management Pvt. Ltd. serves its vast family of investors through a network of

over 130 points of acceptance, 28 Investor Service Centers, 46 Investor Service Desks and

56 District Organizers.

SBI Mutual is the first bank- sponsored fund to launch an offshore fund Resurgent India

Opportunities Fund.

Background of the company

The mutual fund industry in India started in 1963 with the formation of Unit Trust of India. SBI

mutual fund, the first bank sponsored mutual fund in India, was incorporated on 29 June,

1987 by state bank of India. Magnum regular income scheme-1987, the fund has launched

40 schemes till date, of which 32 schemes are available currently.

Took over the investment management business from 14th may, 1993, from SBI capital

markets limited. In December 2004, SBI enter into joint venture with AMUNDI and

transferred 37% equity shares to them, in December 2004, the board of trustees appointedby SBI has been replaced by SBI mutual fund trustee company private limited.

CORPORATE PROFILE

With over 24 years of rich experience in fund management, we at SBI Funds Management Pvt.

Ltd. bring forward our expertise by consistently delivering value to our investors. We have a

strong and proud lineage that traces back to the State Bank of India (SBI) - India's largest bank.

We are a Joint Venture between SBI and AMUNDI (France), one of the world's leading fund

management companies.

With our network of over 222 points of acceptance across India, we deliver value and nurture the

trust of our vast and varied family of investors.

Excellence has no substitute. And to ensure excellence right from the first stage of product

development to the post-investment stage, we are ably guided by our philosophy of growth


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through innovation and our stable investment policies. This dedication is what helps our

customers achieve their financial objectives.

Back ground and inception of the company

The mutual fund industry in India started in 1963 with the formation of Unit Trust of India. SBI

mutual fund, the first bank sponsored mutual fund in India, was incorporated on 29 June,

1987 by state bank of India. Magnum regular income scheme-1987, the fund has launched

40 schemes till date, of which 32 schemes are available currently. Took over the

investment management business from 14th may, 1993, from SBI capital markets limited.

In December 2004, SBI enter into joint venture with AMUNDI and transferred 37%

equity shares to them, in December 2004, the board of trustees appointed by SBI has been

replaced by SBI mutual fund trustee company private limited.

NATURE OF THE BUSINESS CARRIED

SBI mutual fund Nature of the business is Fund management, portfolio management. SBIFunds Management Pvt. Ltd. is a joint venture between 'The State Bank of India' one of

India's largest banking enterprises, and AMUNDI(France), one of the world's leading fund

management companies that manages over US$ 500 Billion worldwide.

Today the fund house manages over 33727.90 as on Mar-2012 of assets and has a diverse

profile of investors actively parking their investments across 36 active schemes. In 20

years of operation, the fund has launched 38 schemes and successfully.

VISION AND MISSION

VISION:

To be the most preferred and the largest fund house for are asset classes with a consistent

track record of excellent return and best standards in customers services, product

innovation technology and HR practices


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MISSION:

Constantly evolving fund house which focuses On customer delighttransparency and sustained return

Attracting nurturing and retaining the best talents Leader and not follower targeting to set the benchmark enhance business

effectiveness

Active risk management and global best practices in all business areas Launching a wide range of innovative products

PRODUCTS OF SBI MUTUAL FUND:

Products

1. Equity fundThese funds concentrate mainly on long run gains therefore capital gains.

However they are also exposed to the volatility and attendant risks of stock markets and

hence should be chosen only by such investors who have high risk taking capacities andare willing to think long term. Equity Funds include diversified Equity Funds

Magnum Equity Fund Magnum Global Fund Magnum Index Fund Magnum Midcap Fund SBI Arbitrage Opportunities Fund SBI Blue Chip Fund SBI Infrastructure FundSeries I SBI Magnum Tax gain Scheme 1993 SBI ONE India Fund SBI TAX ADVANTAGE FUNDSERIES I2. Debt fund


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These funds aims of generating and distributing regular income to the members on a

periodical basis. Hence they are safer than equity funds. At the same time the expected

returns from debt funds would be lower. Such investments are advisable for the risk-

averse investor and as a part of the investment portfolio for other investors.

Magnum Children`s Benefit Plan Magnum Gilt Fund

o Magnum Gilt Fund (Long Term)o Magnum Gilt Fund (Short Term)

Magnum Income Fund Magnum Income Plus Fund

o Magnum Income Plus Fund (Saving Plan)o Magnum Income Plus Fund (Investment Plan)

SBI Debt Fund Serieso SDFS 15 Months Fundo SDFS 90 Days Fundo SDFS 13 Months Fundo SDFS 18 Months Fundo SDFS 24 Months Fundo

SDFS 30 DAYS SDFS 370 days SDFS 60 Days Fund SDFS 180 Days Fund SDFS - 370 Days - 7

3. Balance fundThis is also called as income-cum-growth fund. It is nothing but a combination of both

income and growth funds. They provide a good investment opportunity to investors who

do not wish to be completely exposed to equity markets, but is looking for higher returns

than those provided by debt funds.

Magnum Balanced Fund
http://www.sbimf.com/Product_Details.asp?ProductId=55http://www.sbimf.com/Product_Details.asp?ProductId=55http://www.sbimf.com/Product_Details.asp?ProductId=34http://www.sbimf.com/Product_Details.asp?ProductId=35http://www.sbimf.com/Product_Details.asp?ProductId=75http://www.sbimf.com/Product_Details.asp?ProductId=25http://www.sbimf.com/Product_Details.asp?ProductId=25http://www.sbimf.com/Product_Details.asp?ProductId=25http://www.sbimf.com/Product_Details.asp?ProductId=75http://www.sbimf.com/Product_Details.asp?ProductId=35http://www.sbimf.com/Product_Details.asp?ProductId=34http://www.sbimf.com/Product_Details.asp?ProductId=55


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Area of operation- global/national / regional

Branch office

SBI funds management private limited

C/o state bank of India , commercial branch , station road, Bellary - 583101

LL no: 08392 271775

Head office:

SBI Funds Management Pvt. Ltd. (SBIMF) having its corporate office at 191, Maker Tower E,

19th Floor, Cuffe Parade, and Mumbai 400005 is a joint venture between SBI and SGAM

Branches

The fund has a network of 100 collection branches

SBI mutual funds operation partially for globally and fully national

Ownership pattern

Incorporation Date: 29-06-1987

Ownership: Public

Ownership Pattern: Foreign - 37%, Domestic - 63%

Sponsors: State Bank of India, Amundi

Chief Executive: Mr. Deepak Kumar Chatterjee

Chief Investment Officer: Mr. Navneet Munot

Investor Relations Officer: G Kandasubramanian

Total Assets (Cr.): 33727.90 as on Mar-2012

Address: 191, Maker Tower E 19th Floor, Cuffe Parade, Mumbai - 400005


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Telephone: (022) 22180221/ 27

Fax: ((022) 22189663

Email: [email protected]

Website: www.sbimf.com

BOARD OF DIRECTORS - AMC

Mr. Pratip Chaudhuri Chairman & Associate Director

Mr. Deepak Kumar Chatterjee Managing Director

Mrs. Madhu Dubhashi Independent Director

Mr. Jean-Paul Mazoyer Associate Director

Mr. Shyamal Acharya Associate Director

Mr. Thierry Raymond Mequillet Associate Director

Mr. Jayesh Gandhi Independent Director

Dr. H. Sadhak Independent Director

Dr. H. K. Pradhan Independent Director

Mr. Philippe Batchevitch Alternate Director to Mr. Mazoyer

Mr. Shishir Joshipura Independent Director

COMPETITORS OF SBI MUTUAL FUND

Some of the main competitors of SBI Mutual Fund in Dehradoon are asFollows

ICICI Mutual Fund Reliance Mutual Fund UTI Mutual Fund Birla Sun Life Mutual Fund
http://www.sbimf.com/http://www.sbimf.com/AboutUs/Board_of_Directors.aspxhttp://www.sbimf.com/AboutUs/Board_of_Directors.aspxhttp://www.sbimf.com/AboutUs/Board_of_Directors.aspxhttp://www.sbimf.com/AboutUs/Board_of_Directors.aspxhttp://www.sbimf.com/AboutUs/Board_of_Directors.aspxhttp://www.sbimf.com/AboutUs/Board_of_Directors.aspxhttp://www.sbimf.com/AboutUs/Board_of_Directors.aspxhttp://www.sbimf.com/AboutUs/Board_of_Directors.aspxhttp://www.sbimf.com/AboutUs/Board_of_Directors.aspxhttp://www.sbimf.com/AboutUs/Board_of_Directors.aspxhttp://www.sbimf.com/AboutUs/Board_of_Directors.aspxhttp://www.sbimf.com/AboutUs/Board_of_Directors.aspxhttp://www.sbimf.com/AboutUs/Board_of_Directors.aspxhttp://www.sbimf.com/AboutUs/Board_of_Directors.aspxhttp://www.sbimf.com/AboutUs/Board_of_Directors.aspxhttp://www.sbimf.com/AboutUs/Board_of_Directors.aspxhttp://www.sbimf.com/AboutUs/Board_of_Directors.aspxhttp://www.sbimf.com/AboutUs/Board_of_Directors.aspxhttp://www.sbimf.com/AboutUs/Board_of_Directors.aspxhttp://www.sbimf.com/AboutUs/Board_of_Directors.aspxhttp://www.sbimf.com/


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Kotak Mutual Fund HDFC Mutual Fund Sundaram Mutual Fund LIC Mutual Fund ING Vysya Mutual Fund HSBC Mutual Fund Tata Mutual Fund Sahara Mutual Fund Principal Franklin Templeton

For the first time in the history of Indian mutual fund industry, Unit Trust of India Mutual Fund

has slipped from the first slot. Earlier, in May 2012, the Prudential ICICI Mutual Fund was

ranked at the number one slot in terms of total assets.

In the very next month, the UTIMF had regained its top position as the largest fund house in

India. Now, according to the current pegging order and the data released by

Associa t ion of Mutual Funds in India (AMFI) , the Rel i ance Mutual Fund,

wi t h a J anu a ry -e nd AUM o f R s 39,020 core has become the largest mutual fund in India

On t he o t he r hand , UTI MF, w i t h an AUM of Rs 37 ,535 co r e , has gone t o

s ec ond position.The Prudential ICICI MF has slipped to the third position with an AUM of Rs 34,746core.It

happened for the first time in last one year that a private sector mutual fund house has reached to

the top slot in terms of asset under management (AUM). In the last one year to January, AUM of

the Indian fund industry has risen by 64% to Rs 3.39 lakh core. According to the data

released by Association of Mutual Funds in India (AMFI), the combined average AUM

of the 35 fund houses in the country increased to Rs 5,512.99 billion in April compared to Rs

4,932.86 billion

In March Reliance MF maintained its top position as the largest fund house in the country with

Rs74.25 billion jump in AUM to Rs 883.87 billion at April-end. The second-largest fund

house HDFC MF gained Rs 59 .24 b i l l ion in i t s AUM at Rs 638.80 b i l l ion .

ICICI Prudential and state-run UTI MF added Rs 46.16 billion and Rs 57.35 billion

irrespectively to their assets last month. ICICI Prudential`s AUM stood at Rs 560.49 billion at
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the end of April, while UTI MF had assets worth Rs 544.89 billion. The other fund houses

which saw an increase in the i r average AUM in Apr i l inc lude-Canara

Robeco MF, IDFC MF, DSP Blackrock, Deutsche MF, Kotak Mahindra MF and

LICMF.

Infrastructural facilities

All Transactions going on by computerized Good furniture facilities Technology like management information system etc, Good working condition Transaction data base available in system

AWARDS AND ACHIEVEMENTS:

SBI- MUTUAL FUND has been performing excellently since its inception. The fund has

received lot of appreciation for its performance from the mutual fund industry. It has been

awarded by ICRA on line award 8 times, CNBC- TV 18 CRISIL 4 AWARDS, the Lipper

award (year 05-06) and most recently the CNBC TV 18 Crisil Mutual Fund Award of the

year 2007 and 5 award for the schemes.Year Awards

2011 Readers Digest Awards 2011 For Trusted Brand in Fund

Management Category

ICRA Mutual Fund Awards 2011 For Magnum Income

Fund - Floating Rate Plan - Long Term Plan

2010 ICRA mutual fund award

2009 ICRA mutual fund awardLipper award the Indian mutual fund awards

2008 Outlook money NDTV profit award

Outlook money NDTV profit award

ICRA mutual fund award
http://www.sbimf.com/AboutUs/Awards_Achievements.aspxhttp://www.sbimf.com/AboutUs/Awards_Achievements.aspxhttp://www.sbimf.com/AboutUs/Awards_Achievements.aspxhttp://www.sbimf.com/AboutUs/Awards_Achievements.aspxhttp://www.sbimf.com/AboutUs/Awards_Achievements.aspxhttp://www.sbimf.com/AboutUs/Awards_Achievements.aspxhttp://www.sbimf.com/AboutUs/Awards_Achievements.aspxhttp://www.sbimf.com/AboutUs/Awards_Achievements.aspx


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2007 Outlook money NDTV profit award

CNBC awaaz consumer award

Lipper award the Indian mutual fund awards

ICRA mutual fund awardCNBC TV18 CRISIL mutual fund of the year award

2006 CNBC awaaz consumer award

Lipper award the Indian mutual fund awards

CNBC TV18 CRISIL mutual fund of the year

ICRA mutual fund award

SBI Mutual Fund (SBIMF) has been the proud recipient of the ICRA Online Award - 8 times,CNBC TV - 18 Crisil Award 2006 - 4 Awards, The Lipper Award (Year 2005- 2006) and most

recently with the CNBC TV - 18 Crisil Mutual Fund of the Year Award

WORK FLOW MODEL

Passed

back to

Pools money

withInvestor

Returns Fund house

Generates Fund managersinvest inSecurities based onfinancial goal


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This diagram signifies the importance of Mutual Fund. A Mutual Fund is a trust that pools the

savings of a number of investors who share a common financial goal. The money thus collected

is invested by the fund manager in different types of securities depending upon the objective of

the scheme. These could range from shares to debentures to money market instruments. The

income earned through these investments and the capital appreciations realized by the schemes

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 person as it offers an opportunity to invest

in a diversified, professionally managed basket of securities at a relatively low cost. Since small

investors generally do not have adequate time, knowledge, experience & resources for directly

accessing the capital market, they have to rely on an intermediary, which undertakes informed

investment decisions & provides consequential benefits of professional expertise.

The advantage of Mutual Funds to the investors is professional managed, low transaction cost,

liquidity, transparency, well regulated, diversified portfolios & tax benefits. By pooling their

assets through mutual funds, investors achieve economies of scale.

A collected corpus can be used to procure a diversified portfolio indicating greater returns has

also create economies of scale through cost reduction. This principle has been effective

worldwide as more & more investors are going the mutual fund way. This portfolio

diversification ensures risk minimization. The criticality such a measure comes in when you

factor in the fluctuations that characterize stock markets. The interest of the investors is protectedby the SEBI, which acts as a watchdog. Mutual funds are governed by SEBI (Mutual Funds)

regulations, 1996.

Future growth and prospects:

The Future of Mutual Funds in India suggests that the industry has got huge scopes of

development in the times to come. The entry-ban load adversely imported inflow in equity

funds as nearly 85% of inflow in equity schemes come from distributers, who started to

feel the pinch. Because the investors booked profits as the market had gone up.

As such , high revenue generating assets are partly being replaced by asset , which will

start generating revenues only from the second year. In this changed scenario, the banking


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channel has become more important to us and we are working on increasing the overall

share of the banking channel, as this channel is less pricesensitive.

We plan to augment our distribution network to their 3towns and extend the market

coverage in rural markets through SBI business correspondents / facilitators with Micro SIP

options.

The other steps for improving investors services includes increasing the electronic payout

of redemption / dividend for around 90% introduction of centralized management of SIPs

of all associates banks by direct debits for further increase our SIP research and

improve efficiency , increasing e- communication and fine tuning of our contact centre

services and reduce call waiting time. We popularized online investment through net banking

solutions.

Important aspects related to the future of mutual funds in India are -

The growth rate was 100 % in 6 previous years. The saving rate in India is 23 %. There is a huge scope in the future for the expansion of the mutual funds industry.

A number of foreign based assets management companies are venturing into Indianmarkets.

The Securities Exchange Board of India has allowed the introduction of commoditymutual funds.

The emphasis is being given on the effective corporate governance of Mutual Funds. The Mutual funds in India has the scope of penetrating into the rural and semi urban

areas.

Financial planners are introduced into the market, which would provide the people withbetter financial planning.


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The McKinsey 7S Framework

The 7-S model is better known as McKinsey 7-S model. This is because the two persons

who developed this model, Tom Peters and Robert Waterman, have been consultants at

McKinsey & co. at that time. They published their 7-S model in their article Structure is not

organization (1980) and in their books The art of Japanese management (1981) and In search

of excellence (1982).

The model starts on the premise that an organization is not just structure, but consists of seven

elements:

STRATEGY: The direction and scope of the company over the long term.

STRUCTURE: The basic organization of the company, its departments, reporting lines, areas of

expertise and responsibility.

SYSTEMS: Formal and Informal procedures that govern everyday activity, covering everything

from management information systems, through to the systems at the point of contact with the

customer (retail systems, call centre, systems, online systems, etc).


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SKILL: The capabilities and competencies that exist within the company. What it does best.

SHARED VALUES: The values and beliefs of the company. Ultimately they guide employees

towards valued behavior.

STAFF:the Companys people resources and how they are developed, trained and motivated.

STYLE: The leadership approach of top management and the companys overall operating

approach.

1. STRATEGY: At SBI Mutual Fund we know that every investors has unique financialgoals and requires a different set of products.

Each scheme is managed by devising a different strategy which is reflective of the

investors profile and carries with its different risk and rewards.

2. STRUCTURE: Structure tells us in the organization who reports to whom. He / she willdo what and he / she work reported whom this all information helps to take decision making

in the organization this information consider under the structure Below diagram shows to the

organization structure

SBI MUTUAL FUND ORGANISATION STRUCTURE

MD (Mr. Deepak Kumar Chatterjee)

Chief investment officer chief marketing officer chief operating officer(Mr.Navneet Munot) (Mr. R.S. SrinivasJain)

(Mr.K.T.Ravindran)

Risk management team National sales head Chief customer services

(Ms.Aparnanirgude) (Ms. Vinaya Datar) (Mr.C.A.Santosh)

Fund management team Regional manager Chief risk executive

(Mr.Dharmendra Grover) (Mr.Vishal Saraf) (Mr. Philippe batchenitch)

Investment research team Relationship manager & channel head

(Mr.sohini Andani) (G. Kandasubramanian)

3. SKILLS:


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The company employees must to know the new technical skills like online business, &

management information system skills etc. and how to adopted that skills in the organization and

employees must to know the human & ethical skills its necessary because its tells us how to

behave with the customer in corporate word

4. STYLE:

Style includes Leadership style of top management and overall operating style of the

organization. Style impacts the norms people follow and they work and interact with each other

and with customers.

How does the top management make decisionsParticipatory Vs Top Down? How do managers spend their time in informal meetings, informal conversations, etc...?

Style of functioning

Emergency meetings are held where top management and employees collectivelyparticipate- targets for the week is set, responsibilities are delegated, suggestions are

invited.

Personal attention to the project trainees helps in creating a good image in the eyes of thepublic.

Staff has very good informal conversations that develop a sense of loyalist, motivation,dedication within the employee

There is a good cordial relation between the management and the employees which

shows a participatory leadership style is observed

5. STAFF

The staffing procedure mainly includes how the organization has to look into its people, their

backgrounds, and competencies. Staff also includes the organization approaches to recruitment,

selection and specialization. How people are developed, how recruits are trained, socialized and

integrated and how their careers are managed.

The candidates are recruited from diverse fields of commerce like B. Coms, MBAs,ICWAs, CAs and CFAs great opportunity for freshers and post graduates are available.

They are involved in all the required meetings and activities. The Staff are given freedom to use their innovation and creative skills.6. System:


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Systems in their frame work stands for the rules and regulations, procedures and practices that

must be allowed to carry out the tasks in the organization. A good system adds to the efficient

and effective working of the entrepreneur. Management information system helps to organization

and MIS provide the report to organization, head office easy to get the branch office daily

transaction report with the help of MIS

MIS give the various branch office report MIS give the customer transaction data base report Providing statement of account to the investors on request

7. Shared value:

team work, transparency, courage, integrity, trustworthiness this all are the core value of SBI

mutual fund Each individual worker hands hand to common organization goal, crate a culture

of openness internally communicating discloser policy and standards to external word true to self

and to all our stockholder, to take the right decision without any fear or favor in the best interest

of all our stake holders The employees share responsibility and protect the companys name

and integrity. There is no sharing of confidential/ important information with the outsiders. There

is collective responsibility and accountability on the part of its members. This can be said as the

shared values of the employees of the organization.


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SWOT ANALYSIS of SBI MUTUAL FUNDS

SWOT ANALYSIS

A type of fundamental analysis of the health of a company by examining its strengths(S),

weakness (W), business opportunity (O), and any threat (T) or dangers it might be exposed to.

I. STRENGTHS

SBI mutual fund is a sponsored by state bank of India which is the more than the 200 years old,

largest lender in the country and having a massive network of over 13000 branches in India

1. Wide reach: SBI mutual fund strong distribution network throw association banks over13000 branches of state bank of India over 2000 branches of association banks and

distribution of SBI mutual fund products giving a big space and visibility for the products of

SBI mutual funds

2. Services : as services place a dominant role in a financial products SBI mutual funds isproviding standard services throw which branches located in over 445 cities

3. Brand image: as opposed to some of its competitors (e.g. HSBC), operates a multi-brandstrategy. The company operates under numerous well-known brand names, which allows the

company to appeal to many different segments of the market.

4. Distribution channel strategy: SBI is continuously improving the distribution of its products.Its online and Internet-based access offers a combination of excellent growth prospects and

its retail direct business also saw growth of 27% in 2002 and 15% in 2003.5. Large pool of installed capacities.6. Experienced managers for large number of Generics.7. Large pool of skilled and knowledgeable manpower.

II. WEAKNESS

1. Technologically little less advanced : SBI mutual fund technology less advancedcomparing to other mutual fund for eg: HDFC, RELIANCE, this both companies use

the advanced technologies in the business

2. Less publicity: SBI mutual fund its basically public sector company and SBI mutualfund use the less amount for advertisement its not using any brand ambassadors so its

not giving high publicity


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3. Since it is a asset management company it cant quick ever change the market thereminimize the competitors strength of the public

4. Less aggressive5. Comparatively less reach to the investors

III. OPPORTUNITIES

1. State Bank of Indias great brand image helps SBI mutual fund to increase penetrationin to market , there are possibility for SBI mutual fund to get listed in top 3 AMC of

the country, as it is having all potential to reach top position

2. Increasing in liberalization of government policies. In mutual fund industryIV. THREATS

1. Regulatory frame work: due to every changing regulatory frame work in India mutualfund industry is facing the great threat for its inflow and sustainable growth in the

scenario of no entry load it has became very difficult to manage assets management

business

2. Increased Competition: With intense competition by so many local players causingheadache to the current marketers. In addition to this though multinational brands are not

yet established but still they will soon hit the market. Almost 60 to 70% of the revenue is

spending on the management and services.

3.

Lack of sufficient branch-offices for speedy delivery of services.4. Hedge funds: sometimes referred to as hot money, are also causing a threat for mutual

funds have gained worldwide notoriety for bringing the markets down. Be it a crash in

the currency, stock or bond market, usually a hedge fund prominently figures somewhere

in the picture.

5. Inflation: war, natural disaster like Tsunami it effect the crash in Indian capital market thecrash directly impact on mutual funds


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ANALYSIS OF FINANCIAL STATEMENT

Balance sheet As At March 31 2011

Particulars Schedules Rs As at

31.3.2011 Rs

Rs As

31.3.2010 R

Source of funds

Shareholders funds

Capital 1 500,000,000 500,000,000

Reserves and surplus 2 2,275,791,688 1,824,554,40

Total 2,775,791,688 2,324,554,40

Application of funds

Fixed assets 3

Gross block 177,056,599 151,994,567

Less: depreciation 124,447,461 103,764,634

Net block 52,609,138 48,229,933

Capital work in

progress

6,786,254 5,517,305

Investments 4 1,772,969,400 371,464,385

Deferred tax asset(net) 17,670,855 4,822,541

Current assets, loan and

advance

Sundry debtors 5 111,594,460 167,913,529

Cash and bank balance 6 1,100,014,984 2,046,273,249

Other current assets 7 39,081,263 47,651,436

Loans & advance 8 318,013,328 180,964,971

1,568,704,035 2,442,803,185

Less :current liabilities

and provisions

Current liabilities 9 283,739,463 215,407,017


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Provisions 10 359,208,531 332,875,930

642,947,994 548,282,947

Net current assets 925,756,041 1,894,520,23

Total 2,775,791,688 2,324,554,40

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2011

Schedul

es

Rs For the year

ended

31.3.2011 Rs

Rs For the year

ended

31.3.2010 Rs

Income

Management fees

(gross)[tax

deducted at source

Rs.243,393,103

(previous year

Rs.213,099,174)]

2,206,646,200 1,815,674,733

Portfolio advisory

fee [tax deducted at

source Rs.18,059

(previous

yearRs.36,298)]

Portfolio

Management Fee [

Tax deducted at

source Rs.632,588

(Previous year

Rs.1,271,077]

160,936,141

30,022,891

130,489,018

21,964,880

Income from

investments

11 21,678,304 17,948,403


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Other income 12 133,138,577 171,328,916

2,552,422,113 2,157,405,950

EXPENDITURE:

Employee Costs 13 678,305,452 464,355,867

Administrative and

Other Expenses

14 680,632,431 532,397,781

Depreciation on

Fixed Assets

24,436,883 22,196,076

1,383,374,766 1,018,949,724

Profit before tax 1,169,047,347 1,138,456,226

Provision for taxes:

Current Tax (393,420,000) (386,700,000)

Deferred Tax ( refer

note 5)

12,848,314 2,639,864

Fringe Benefit Tax - 2,193,433

Excess Provision

for Tax in respect of

previous years

written back

Excess Provision

for FBT in respect

of

previous years

written back

2,147,720

(380,571,686) (379,718,983)

Profit after tax 788,475,661 758,737,243

Balance brought

forward from

previous year

1,429,363,841 1,031,414,598


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Profit available for

appropriation

2,217,839,502 1,790,151,841

APPROPRIATION

S

Transfer to General

Reserve

78,847,566 80,000,000

Interim Dividend

Proposed Equity

Dividend

290,000,000

-

-

240,000,000

Tax on Proposed

Equity Dividend

48,165,375 -

Excess provision

for Dividend

Distribution Tax of

PY written Back

Surplus carried to

Balance Sheet

-

(927,000)

1,801,753,561

40,788,000

-

1,429,363,841

2,217,839,502 1,790,151,841

Basic and diluted

earnings per share

(Face Value per

Share Rs. 100/-)

157.70 151.75

Interpretation:

Particular

31.3.2011 31.3.2010

Net present value (NPV ) 38.223 35.168

Return on net worth (RONW) 41.088 32.640


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Return on capital employee (ROCE) 51.326 47.979

Current ratio (CR) 3.382 1.289

Fixed assets (FA) 2.437 2.235

Earnings per share (EPS) 157.70 151.75

Dividend per share ( DPS) 40 48

An interim Dividend of Rs. 58 per Equity Share, subject to tax, was declared on 28th March,

2011 on the paid-up equity Share capital of the Company, involving a total outgo of Rs. 3,381.65

lacs on account of dividend inclusive of dividend Distribution tax. The Directors recommend that

the Interim Dividend paid during the year, be declared as the Final Dividend for the year 201011.

During the year under review, the Company has not made any fresh issue of capital. However,

consequent upon AMUNDI and Credit Agricole S.A. entering into an agreement to undertake a

global merger of their fundamental asset management businesses, 18, 50,000 equity shares

constituting 37% of the paid-up equity share capital held bySocit Gnrale Asset Management

have been transferred to AMUNDI India Holding, a wholly owned subsidiary of AMUNDI on

30th May, 2011 after obtaining relevant regulatory approvals

LEARNING EXPERIENCE:


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During this project work, I got the opportunity to study and know exactly the various aspects of

the organization in practical sense. I was able to gain the knowledge of various strategies adopted

by the organization and also to understand the duties responsibilities of various departments and

its functioning. In fact I was exposed to the system followed by the organization the style of

management.

It was a great experience obtained during my project work in SBI MUTUAL FUND. All the

staffs of the company were very co-operative and they provided all the detailed information

about SBI MUTUAL FUNDS, they provide the necessary information for the project. The

internal atmosphere inside the company was cool and friendly. Inside the office every one busy

with they work, most of times managers sir busy with clients and every Saturday sir not available

in the office

I got some information about the mutual funds and how the customers behave with employees

and how to fill the customers needs how to solve the customers problem this all information I try

to know in the office.

This project work a greater extent has helped me to understand the aspects such as different

product services offered by SBI MUTUAL FUND, area of operation, work flow model, overall

organization functioning etc. apart from these things I was also able to understand the

organization in depth with the application of McKenzies 7s frame work with special reference

to organization under study namely structure, skill, style, strategy, system, staff, shared values,and lastly the aspects of SWOT analysis of the organization.

PART A FULL

Documents

Transcript of PART A FULL