PortfolioMgmtServ-project[1]

Motilal Oswal Securities Ltd. Comparative analysis of organizations offering PMS via-a-vis MOSt

ABOUT MOTILAL OSWAL SECURITIES LIMITED

Motilal Oswal Securities Ltd (MOSt) is one of the leading equity research and investment houses of India, with strength in equity research, analysis & recommendation and efficient trade execution for serving the customer. It is known for its strong belief in Value-Investing ideas, which forms the core of its investment philosophy. MOSt provides end-to-end equity solutions to institutional and individual investors. Consistent delivery of high quality advice on individual stocks, sector trends and investment strategy has established Inquire as a competent and reliable research unit amongst leading Indian as well as International investors. Asia Money Broker's Poll 2002 has rated MOSt as one of the best Indian broking house, for research, for the second time since 2000.

MOSt has distinguished itself by its close relationship with some of the leading Foreign and Domestic Institutional Investors like Morgan Stanley, Battery March, EMIC, UTI, LIC, Alliance, ICICI Prudential, HDFC MF, Birla MF etc.

MOSt Mission

The attitude to look for value, to look beyond the realms of stock market, a different mindset that is not influenced by the market trends, but banks on the power of intellect.

MOSt Vision

To become a well respected global financial company by assisting investors create wealth in stock market worldwide.

MOSt Guiding Principles and Core Values

Customer interest is paramount

Ethical and transparent business practices

Respect for professionals, associates and business partners

Research based value investing

Cutting edge technology to ensure world-class customer service

1


INTRODUCTION TO PMS

The Search BeginsWe scour the horizon in search of money-multiplying tools. But after visiting all the usual suspects – savings accounts, fixed deposits, bonds, government instruments like PPF and NSC – we still find our money is just about keeping its head above the water (more so in the low-interest era that is here to stay).So, we broaden our perspective… we explore real estate, precious metals, plantations and timeshares. Alluring as these may seem, they carry risks that often far outweigh the rewards. A few zillion calculations and opinions later we come to the realization that over a period of time, it is only equity that offers us the best investment option… giving the best returns over a length of time – and with the least hassles. But woe is it. Either we don’t have the time that is oh so essential to analyse and invest in the market; or we simply don’t understand how it all works.This is the ticket to the most hassle-free way of managing and growing money. PMS. .

Financial planning process

Patience above all elseIf there is one place where patience is truly a virtue, it is the stock markets! In fact, patience and discipline are the two most non-negotiable values for a winning investor. It has been consistently proven that the wealthiest investors the world over, were the ones who stayed invested over significant lengths of time.

Investment is a trade-off where the odds become better as the investment period increases. Time isn’t just a great healer; it’s also a fantastic multiplier.

2


What is PMS?PMS is nothing but Portfolio Management Service. Where a complement of experienced professionals invest your money in equity markets and other instruments, with the solitary focus of growing your money at an appreciable rate.Think of it as setting out on a long distance journey. You could drive the car yourself or you could leave the job to a skilled and experienced chauffeur. That way, negotiating all those arduous road conditions, tanking up and ensuring the smooth running of the car is transferred to the one who knows better. You reach your destination with complete peace of mind.

Advantage of investing in PMS vis a vis Mutual Fund?

The client has control over the asset allocation which is automatic in a Mutual Fund. The portfolio can be customized to suit the client's risk return profile.

The client has access to the Potfolio Manager which is not possible in a Mutual Fund.

The Portfolio Manager has the flexibility to move into cash as and when required depending on the market view.

The calculations of various charges are more transparent vis-à-vis a Mutual Fund.

3


ENVIRONMENTAL SCANNING

i)INDIA INFOLINE

Corpus – Rs 30 crores

India Infoline was founded in 1995 by a group of professionals with impeccable educational qualifications and professional credentials. At the helm are directors Nirmal Jain and R.Venkataraman.

Nirmal is a Chartered Accountant who has ranked 2nd across India. He is also a Cost Accountant and has to his credit a PGDM from IIM Ahmedabad. Prior to setting up India Infoline, he pursued a successful career at Hindustan Lever where he was, inter alia, handling the commodities exports business. Venkat is a B.Tech from I.I.T Kharagpur and also has a PGDM from IIM Bangalore. He has previously worked with bluechips like ICICI and Barclays among others.

The India Infoline group addresses the entire gamut of investing needs. In addition to its PMS and trading related services through 5paisa, it offers investment avenues such as Mutual Funds, Fixed Deposits, GOI Relief bonds, Post Office savings and Life Insurance, through its other subsidiary companies. In fact, India Infoline is the leading corporate agent of ICICI Prudential Life Insurance Company, which is, in turn, India’s No.1 private sector life insurance company.

India Infoline’s institutional investors include Intel Capital (world’s leading technology company), CDC (promoted by UK government), ICICI, TDA and Reeshanar.

5paisa is the trade name of India Infoline Securities Pvt. Ltd, a wholly owned subsidiary of India Infoline Ltd. (India Infoline). With a strong brand equity in online trading, 5paisa holds membership of both the leading stock exchanges of India, viz. the BSE and the NSE, and is also a depository participant with NSDL.

5paisa offers stockbroking services online through the Internet, as well as offline through Investor Points all over India, adhering to very strict standards of compliance. 5paisa does not take any proprietary positions in any stock. Its internationally acclaimed research is available on www.indiainfoline.com. The site has emerged as the most popular web site on Indian business and finance. A publication, no less than Forbes has recommended it in their ‘Best of the Web’ list under the Asian Investing category.

Investment Philosophy

Investment philosophy is best summarized by the "prudent investor rule,"

4


"Investing requires the exercise of reasonable care, skill, and caution, and is to be applied to investments not in isolation but in the context of the portfolio and as a part of an overall investment strategy, which should incorporate risk and return objectives reasonably suitable".

Members of Investment Committee

Nirmal Jain - CA, IIM Ahmedabad R Venkataraman - IIT Khargapur, IIM Bangalore

Anand Tandon - IIT Kanpur, IIM Ahmedabad

R Venkat Subramanian - CA

Reports

All Portfolio Clients will receive the following reports on a fortnightly basis:

o Model Portfolio Performance Report o Sector Wise Allocation report

o Performance of Portfolios vis a vis the benchmark indices

o Transaction Statement

o Quarterly Review Report

No.of clients- 160

Schemes

5P MomentumThe main objective of this scheme is to generate capital appreciation through short term to medium term investments in equities and equity related instruments. The investment choice will be primarily influenced by technical factors like price and volume indicators, RSI, MACD, and other studies. Secondary factors will be reasonable levels of market capitalisation, good liquidity, competitive position in the industry, sectors with good growth prospects, etc. These investments will seek to achieve optimum returns through investments across companies and sectors that have the potential to generate adequate returns over medium term. The Portfolio Manager may invest in Futures and Options to hedge, to generate returns, to balance the portfolio or otherwise. The scheme is aimed at higher risk taking investors with a short to medium term perspective.

5P GrowthThe main objective of the scheme is to generate capital appreciation through investments in equities with a long term perspective. The scheme will invest in all equity and equity related instruments with emphasis on fundamentally sound, well researched blue chip companies perceived to be undervalued from the point of view of their long term growth prospects. The focus will be on medium to large capitalisation companies which have a proven track record of earnings capability, quality management, leadership status in sectors or potential to achieve

5


such status, etc and that have the potential to deliver growth over the long term. The scheme is aimed at medium risk taking investors willing to invest in companies over a long-term period.

Fee Structure

Rs 5 lacs - Rs 25 lacs

2%p.a.payable qtr+20% profit

sharing0.5% brokerage

for 5P Growth,0.25% brokerage for

5P Momentum> Rs 25 lacs1%p.a.payable qtr+10% profit

sharing

6


7


Figure 1 : Comparative performance of 5P PMS vis-à-vis the indices & top 5

Mutual funds

ii)SSKI – SHAREKHAN

8


Sharekhan, India's leading stockbroker is the retail arm of SSKI, an organization with over eight decades of stock market experience. India's largest distribution network with more than 290 share shops in over 120 cities and a strong presence on the Internet through, India's premier online trading destination, we reach out to customers like no one else. Its research team has been rated as one of the best in the country. Voted four times as the best Top domestic Brokerage house by the Asia money Survey, SSKI is consistently ranked amongst the Top domestic brokerage houses in India.

Mr. Dinshaw Irani who heads Portfolio Management team brings with him over 14 years of experience in investment research and portfolio management business. Prior to joining Share khan, he worked as the Vice president - Equity research with Alliance capital based in Mumbai, India. He earned his graduate degree in accounting from Delhi University with honors and his MBA in finance from IRMA, a leading Indian Management Institute.

Corpus – Rs.120 crs

No.of clients – more than 100

PMS schemes

1.The Blue Chip Scheme - Under this scheme we invest in stocks covering the following criteria:

a. Relative Leaders in their industry b. Strong management track record c. Consistent performers on sales & profit parameters d. Fundamentally strong balance sheets e. Relatively larger market capitalisations f. Lower relative valuations as compared to the peer group

- Ideal for long term investors with a low risk appetite

2. The Aggressive Scheme This scheme brings in high-growth stocks fulfilling any of the following:

a. High growth in profitability expected in the future b. Turnaround expected in the future c. Expected change in the management leading to changed fortunes d. Relatively low valuations e. Mid to small caps

- Ideal for investors looking for above average gains and with a high risk appetite

3. The Balanced Scheme Will invest in: a. A mix of Blue Chips & growth stocks b. Ensuring a balanced portfolio with a relatievely median risk profile

9


c. The mix will depend upon the clients risk profile

- Ideal for investors looking for healthy gains but have a limited risk appetite.

4. The Dividend Yield Scheme Will invest only in stocks fulfilling all of the following: a. Yield to be in excess of 4% b. Should be fundamentally sound c. Past track record equally important d. Sound Industry prospects

- Ideal for investors wanting to deploy idle cash for tax-free returns with limited risk.

Fee Structure

Rs.25 Lacs-50 Lacs

2.5%p.a.+20%profit sharing if

returns>15%0.5%brokerage

>Rs.50 Lacs2%p.a.+20%profit

sharing if returns>15%

0.5% brokerage

Returns

10


11


iii)PRUDENTIAL ICICI

Corpus - Rs 800 crore

No. of clients – 800

Investment Team7 member Investment Committee including 5 Fund ManagersStability in the Investment TeamStrong and robust investment process and risk management guidelinesShahzad Madon – Sr Vice President & Business Head - PMS Heads Portfolio Management ServicesAn MBA, started his career with ICICI LtdAt Prudential ICICI AMC, he has worked in varied roles such as Head of Research and Equities.

Aniket Inamdar – Senior Fund ManagerJoined Prudential ICICI PMS team in September 2003A mechanical engineer and an MBA from IIM AhmedabadExperience in the fund management industry for 8 years

Ashi Anand – Fund Manager Working with Prudential ICICI PMS since October 2002. He is an MBA from Xaviers Institute of Management

Manish Mahore - Fund manager (Structured Products) Has 5 years of industry experience A Mechanical Engineer and MBA in Finance.

Amit Gupta – Fund Manager (Structured Products)Worked with Reliance Treasury for approx 2 yearsHe is an MBA from S P Jain Institute of Management and B Tech (Chemical) from IIT Delhi.

Schemes

12


Prudential ICICI PMS: Aggressive Portfolio

Positioning The Equity Portfolio is a diversified portfolio that endeavours to generate absolute returns.

Investor Profile

The Equity Portfolio is suitable for investors with a medium to high risk appetite and an investment horizon of above 12 to 18 months.

Investment Philosophy / Methodology

While the portfolio would comprise primarily large cap stocks, the flexibility to invest in mid-cap/momentum stocks is retained.

The portfolio is generally well diversified in terms of both stock and sectors. However, aggressive stock or sector positions may be taken at points in time.

The portfolio may be actively traded to take advantage of certain market trends with an endeavour to enhance returns.

In case of a continued decline in markets, active asset allocation (i.e. switching between equity, fixed income and cash) may be undertaken in an attempt to preserve the clients capital. Derivative instruments may also be utilised towards this end.

13


Features Domestic Clients

Non-Resident Indians

Minimum Portfolio Size

Rs. 50 lacs Rs. 100 lacs

Management fee (% p.a. on the average daily portfolio value, payable quarterly)

2.5 % p.a. 3.0% p.a.

Entry / Exit Load Nil Nil

Lock-in Period Nil Nil

Services Offered

Daily reporting of portfolio statement, transaction details, performance summary etc. over a password protected website.

Transaction details provided before all advance tax payment dates.

Annual audited portfolio statement and transaction details.

14


Prudential ICICI PMS: Dividend Yield Portfolio

Positioning The Dividend Yield portfolio endeavours to achieve growth in the clients portfolio through a combination of dividend income and capital appreciation

Suitability The Dividend Yield Portfolio is suitable for investors with a medium risk appetite with an investment horizon of above 18 to 24 months.

Investment Philosophy / Methodology

The Dividend Yield Portfolio will invest primarily in companies that are quoting at an attractive dividend yield.

Companies quoting at a high dividend yield are generally attractively valued on other parameters such as price / earnings, price/book, price/cash flow and have strong fundamentals. This provides the potential for capital appreciation as the market begins to realise the attractiveness of these companies.

The abovementioned rerating (if any) tends to happen in a non-linear fashion. The performance of the Dividend Yield portfolio may thus not move in line with the overall markets, and could significantly under or outperform the markets at various points in time.

A decline in the share price for high dividend yield stocks increases the yield, making investments even more attractive. This tends to limit the downside on such stocks.

Both quantitative and qualitative parameters will be considered in the investment decision. These include the dividend track record, sustainability of dividend payouts, management quality, industry fundamentals, liquidity etc.

The portfolio will comprise both large and mid cap companies with the endeavour to strike a balance between liquidity and the potential for higher returns.

Investments will be made with a long-term perspective. Churning is thus expected to be low.


15


16


Features Domestic Clients Non-Resident Indians

Minimum Portfolio Size Rs. 50 lacs Rs. 100 lacs

Management fee (% p.a. on the average daily portfolio value, payable quarterly

2.5 % p.a. 3.0% p.a.

Entry / Exit Load

Nil Nil


17


Services Offered




Prudential ICICI PMS: Deep Value Portfolio

Positioning The objective of the portfolio is to generate capital gains over the long term, by investing in a diversified portfolio of undervalued stocks.

18


Suitability The Deep Value Portfolio is suitable for investors with a medium to high-risk appetite and an investment horizon of above 18 to 24 months.

Investment Philosophy/ Methodology

The aim is to invest in companies that are significantly undervalued. Various parameters may be used to judge the degree of undervaluation of the stocks including, but not limited to, price/earnings (p/e), price/book (p/book), dividend yield (DY), price/cash flow, replacement cost, valuations relative to history/sector/markets, etc.

Due attention will be paid to qualitative parameters such as management quality, industry prospects, liquidity etc.

Companies that are significantly undervalued have the potential of being rerated as the markets begin to realise the extent of their undervaluation. However, any such rerating tends to happen in a non-linear fashion. The performance of the Deep Value Portfolio may thus not move in line with the overall markets, and could significantly under or outperform the markets at various points in time.

The portfolio may have a significantly higher weightage in mid cap stocks.


19


FeaturesDomestic Clients Non-Resident

Indians

Minimum Portfolio Size Rs. 50 lacs Rs. 100 lacs

Management fee (% p.a. on the average daily portfolio value, payable quarterly)

2.5 % p.a. 3.0% p.a.

Entry / Exit Load Nil Nil


Services Offered




20


PMS Quarterly Performance Analysis as on 16-May-05 TimeFrame PMS Deep

ValueS&P CNX Nifty Relative

Performance

Absolute returns since inception

228.1% 76.7% 151.3%

CAGR since inception 91.5% 36.5% 55.0%For the year 2003 Q3, 2003 (17 July - 30 Sep 2003)

32.1% 21.5% 10.6%

Q4 ,2003 60.7% 34.3% 26.5%YTD 2003 performance 112.3% 63.2% 49.1%For the year 2004 Q1, 2004 -17.8% -5.7% -12.1%Q2, 2004 3.9% -15.0% 19.0%Q3, 2004 28.4% 15.9% 12.4%Q4, 2004 34.0% 19.2% 14.8%YTD 2004 performance 46.9% 10.7% 36.2%For the year 2005 Q1, 2005 5.2% -2.2% 7.3%Q2, 2005 6.1% -1.1% 7.2%YTD 2005 performance 11.6% -3.3% 14.8%

21


PMS Quarterly Performance Analysis as on 16-May-05 TimeFrame PMS Dividend

YieldS&P CNX

NiftyRelative Performance

Absolute returns since inception 278.4% 88.9% 189.5%CAGR since inception 81.6% 33.0% 48.6%For the year 2003 Q1, 2003 (20 Feb - 31 Mar 2003) -2.6% -8.2% 5.6%Q2 , 2003 47.9% 15.9% 32.0%Q3, 2003 33.1% 23.4% 9.7%Q4, 2003 47.5% 34.3% 13.2%YTD 2003 performance 183.0% 76.4% 106.6%For the year 2004 Q1, 2004 -7.6% -5.7% -1.9%Q2, 2004 -4.7% -15.0% 10.4%Q3, 2004 19.1% 15.9% 3.2%Q4, 2004 25.3% 19.2% 6.1%YTD 2004 performance 31.5% 10.7% 20.8%For the year 2005 Q1, 2005 -3.6% -2.2% -1.5%Q2, 2005 5.5% -1.1% 6.7%YTD 2005 performance 1.7% -3.3% 5.0%

22


PMS Quarterly Performance Analysis as on 16-May-05

23


TimeFrame PMS Aggressive S&P CNX Nifty

Relative Performance

Absolute returns since inception

389.1% 62.0% 327.0%

CAGR since inception 43.6% 11.6% 32.0%For the year 2000 Q4, 2000 (22 Dec - 31 Dec 2000)

1.7% 1.7% -0.1%

YTD 2000 performance 1.7% 1.7% -0.1%For the year 2001 Q1, 2001 -0.2% -9.1% 9.0%Q2, 2001 5.8% -3.5% 9.3%Q3, 2001 -11.1% -17.5% 6.4%Q4, 2001 22.0% 15.9% 6.1%YTD 2001 performance 14.5% -16.2% 30.7%For the year 2002 Q1, 2002 23.6% 6.7% 16.9%Q2, 2002 4.2% -6.4% 10.6%Q3, 2002 -14.1% -9.7% -4.4%Q4, 2002 19.6% 14.5% 5.1%YTD 2002 performance 32.3% 3.3% 29.1%For the year 2003 Q1, 2003 -4.6% -10.5% 6.0%Q2 , 2003 30.3% 15.9% 14.3%Q3, 2003 30.8% 23.4% 7.3%Q4, 2003 46.1% 34.3% 11.8%YTD 2003 performance 137.4% 71.9% 65.5%For the year 2004 Q1, 2004 -3.7% -5.7% 2.1%Q2, 2004 -10.9% -15.0% 4.1%Q3, 2004 19.9% 15.9% 4.0%Q4, 2004 24.7% 19.2% 5.5%YTD 2004 performance 28.3% 10.7% 17.7%For the year 2005 Q1, 2005 1.6% -2.2% 3.8%Q2, 2005 2.5% -1.1% 3.7%YTD 2005 performance 4.2% -3.3% 7.5%

MODEL PORTFOLIO FOR DIVIDEND YIELD PORTFOLIO AS ON

1-May-05

SECTOR STOCKS MARKET RATE

STOCK WEIGHT

SECTOR WEIGHT

AUTO 5.26%

24


1 ASHOK LEYLAND 23 3.08% 1 HERO HONDA MOTORS LTD 504 2.18% CAPITAL GOODS 14.82%1 HINDUSTAN CONSTRUCTION

COMPANY LIMITED 581 4.50%

1 BLUE STAR LTD 282 4.15% 1 ALFA LAVAL LIMITED 693 3.66% 1 THERMAX LIMITED 634 2.51% CHEMICAL 5.20%1 ICI INDIA LIMITED 225 2.92% 1 GUJARAT NARMADA VALLEY

FERTILIZERSCOMPANY 72 2.28%

FINANCE 13.80%1 INDIAN OVERSEAS BANK 71 4.89% 1 UNION BANK OF INDIA 97 4.76% 1 VIJAYA BANK 57 4.15% FMCG 4.89%1 GLAXOSMITHKLINE

CONSUMER HEALTHCARE LTD.

340 3.05%

1 GODREJ CONSUMER PRODUCT LTD.

279 1.84%

OIL & GAS 12.81%1 OIL AND NATURAL GAS

CORPORATION LIMITED 811 3.90%

1 CHENNAI PETROLEUM CORPORATION LTD

220 3.77%

1 HINDUSTAN PETROLEUM LIMITED

303 2.01%

1 BONGAIGAON REFINERY AND PETROCHEMICALS LTD

93 1.59%

1 KOCHI REFINERIES LIMITED 154 1.54% OTHERS 18.38%1 ADOR WELDING LIMITED 137 4.34% 1 SALORA INTERNATIONAL 123 3.39% 1 HEG LTD 126 3.08% 1 BALAJI TELEFILMS LIMITED 100 2.88% 1 POLYPLEX CORPORATION

LIMITED 165 2.77%

1 FINOLEX CABLES LIMITED 215 1.92%

SHIPPING 7.43%1 VARUN SHIPPING COMPANY

LIMITED 39 3.98%

1 G. E SHIPPING 162 3.45% TECHNOLOGY 8.56%

25


1 HCL INFOSYSTEMS LIMITED 755 5.49% 1 HCL TECHNOLOGIES LTD 335 3.07% 28 TOTAL EQUITY POSITION 91.15% CASH POSITION 8.85%

MODEL PORTFOLIO FOR DEEP VALUE PORTFOLIO AS ON 1-May-05


STOCK WEIGHT

SECTOR WEIGHT

AUTO 4.96%1 CEAT LTD 93 2.88% 1 BHARAT GEARS LIMITED 65 2.08% CAPITAL GOODS 13.98%1 TEXMACO 314 5.16% 1 HINDUSTAN CONSTRUCTION


1 GREAVES LTD 130 3.44% 1 TORRENT CABLES LIMITED 116 1.90% CEMENT 12.86%1 BIRLA CORPORATION LTD 167 3.68% 1 KESORAM INDUSTRIES

LIMITED 119 3.38%

1 INDIA CEMENTS LIMITED 68 3.16% 1 JAIPRAKASH ASSOCIATES 181 2.64% CHEMICAL 3.83%1 GUJARAT ALKALIES AND

CHEMICALS 138 2.27%

1 GUJARAT NARMADA VALLEY FERTILIZERSCOMPANY

72 1.44%

1 INDO GULF FERTILIZERS LIMITED

114 0.12%

FINANCE 2.77%1 STATE BANK OF INDIA 585 2.77% METAL 6.80%1 UTTAM GALVA STEEL LTD 50 2.35% 1 TATA SPONGE IRON LTD 184 2.23% 1 GUJARAT MINERAL

DEVELOPMENT CORPORATION LIMITED

316 2.22%

OIL & GAS 2.82%1 CHENNAI PETROLEUM

CORPORATION LTD 220 2.82%

26


OTHERS 30.49%1 SINTEX INDUSTRIES LIMITED 500 4.31% 1 NATIONAL RAYON 48 4.16% 1 SALORA INTERNATIONAL 123 3.60% 1 MAN INDUSTRIES INDIA

LIMITED 140 3.39%

1 UPPER GANGES SUGAR 194 3.13% 1 SIEL SUGARS LIMITED 70 3.00% 1 ORIENT PAPER AND

INDUSTRIES LTD 131 2.90%

1 POLYPLEX CORPORATION LIMITED

165 2.50%

1 SURYALAKSHMI COTTON MILLS LTD

162 2.33%

1 RAJVIR INDUSTRIES LTD 162 1.17%

PHARMA 1.09%1 IPCA LABORATORIES

LIMITED 321 1.09%

SHIPPING 3.72%1 VARUN SHIPPING COMPANY

LIMITED 39 3.72%

TECHNOLOGY 1.87%1 MASTEK LTD 337 1.87% 31 TOTAL EQUITY POSITION 85.19% CASH POSITION 14.81%

MODEL PORTFOLIO FOR AGGRESSIVE PORTFOLIO AS ON

1-May-05


STOCK WEIGHT

SECTOR WEIGHT

AUTO 4.63%1 MAHINDRA AND MAHINDRA 443 2.42%

27


LIMITED1 CEAT LTD 93 2.21% CAPITAL GOODS 17.87%1 BHARAT HEAVY ELECTRICALS

LIMITED 792 4.12%

1 VOLTAS LIMITED 243 3.28% 1 SIEMENS LTD 1,831 3.02% 1 HINDUSTAN CONSTRUCTION


1 TEXMACO 314 2.71% 1 GREAVES LTD 130 1.94% CEMENT 10.76%1 ULTRATECH CEMCO LIMITED 334 3.03% 1 GRASIM INDUSTRIES LIMITED 1,163 2.26% 1 INDIA CEMENTS LIMITED 68 2.11% 1 JAIPRAKASH ASSOCIATES 181 1.75% 1 BIRLA CORPORATION LTD 167 1.61% CHEMICAL 5.35%1 RELIANCE INDUSTRIES

LIMITED 528 3.53%

1 GUJARAT ALKALIES AND CHEMICALS

138 1.82%

FINANCE 10.53%1 STATE BANK OF INDIA 585 5.58% 1 HDFC LIMITED 731 2.72% 1 VIJAYA BANK 57 1.82% 1 INDIAN OVERSEAS BANK 71 0.41% FMCG 3.60%1 I T C LIMITED 1,438 3.60% METAL 4.09%1 TATA IRON AND STEEL


1 HINDUSTAN ZINC LTD 155 1.26% OIL & GAS 5.57%1 OIL AND NATURAL GAS

CORPORATION LIMITED 811 3.47%

1 KOCHI REFINERIES LIMITED 154 2.10%

OTHERS 12.99%1 RADICO KHAITAN LIMITED 316 2.84% 1 NDTV 170 2.29% 1 BALRAMPUR CHINI MILLS LTD 57 2.28% 1 WELSPUN INDIA LIMITED 116 1.93% 1 BALLARPUR INDUSTRIES

LIMITED 103 1.89%

28


1 POLYPLEX CORPORATION LIMITED

165 1.76%

PHARMA 3.48%1 DISHMAN 676 1.96% 1 IPCA LABORATORIES LIMITED 321 1.52% SHIPPING 1.70%1 VARUN SHIPPING COMPANY

LIMITED 39 1.70%

TECHNOLOGY 7.95%1 IFLEX SOLUTIONS LIMITED 604 3.16% 1 INFOSYS TECHNOLOGIES

LIMITED 1,887 2.87%

1 MASTEK LTD 337 1.92% 36 TOTAL EQUITY POSITION 88.52% CASH POSITION 11.48%

iv)KOTAK SECURITIES

Corpus – Rs. 2000 crores

No. of clients – 675

29


Kotak Infinity Klassic Conservative Discretionary Portfolio Management Service The investment decisions, market timing and logistics management are all handled by KS. Broad Based Participation in Equity Markets by Creating a Well Diversified & Balanced

Equity Portfolio. Company weightage - Maximum of 20 - 30 stocks in the ratio of 7:3 in Frontline and mid

cap stocks. Fund Manager:Nikunj Doshi

Kotak Select Portfolio Aggressive Discretionary Portfolio Management Service Investments are made in the chosen stocks by the Fund management team at KS Company weightage - Maximum of 10 - 12 stocks, more of mid cap stocks. Fund Manager: Nikunj Doshi

Principal Guard Portfolio The objective of the scheme is to endeavour to preserve the investment and also

generate reasonable investment returns. It invests 60% of your money in fixed income instrument & the balance 40% is

invested in buying Nifty Options. The investments in options will be actively managed buy the Fund Management

Team with an attempt to take advantage of the volatility in the markets to earn higher return

Fund Manager:Sanjay Tantia

Dividend Yield Portfolio The objective of the scheme is to generate returns through a combination of

dividend income and capital appreciation through a optimally diversified portfolio.

Target stocks offering high dividend yield Focus on companies that have received huge cash inflow due to either asset sale

or hiving off businesses Fund Manager:Shashank Khade

Kotak Assist Non - Discretionery portfolio Management Service (i.e. discretion is with the

investor & not with the fund manager) Kotakstreet Assist Integrates your Trading, Demat and Bank Accounts for

convenience and Ease Unique Investment Service in - Equity; Derivatives ; Mutual Fund ; IPO's ;

Insurance ; Bonds Flexibility of allocating any amount of funds to an instrument depending on

changing market situations

30


Fund Manager:Nikunj Doshi

v)IL&FS INVESTSMART

Total Corpus : Rs 80 cr

No of clients : 555

About IL & FS Investsmart Ltd.

Promoted by IL&FS, one of India’s most innovative institutions. Equity stake and support by E*Trade and Soft Bank.

31


Pan-India presence across 16 states through over 30 branches and 90 franchisees. Strong retail brand franchise.

The Investment Management TeamThe average experience of the team members five years plus

Investment Philosophy

1.Generate absolute positive investor returns irrespective of market conditions.2.Buy businesses growing faster than market rates but trading below intrinsic worth.3.Focus on key investment principles such as high average RoCE, modest dividend payouts.4.Invest in sustainable long term under-researched/emerging investment opportunities ahead of the market.5.Use Cash as an effective money management tool.

Investment Methodology

Adopt Model Portfolios to guide investments across products. Adopt a bottom-up approach to stock picking. Portfolio composition of between 20-30 stocks to provide sharper sector focus while

providing adequate diversification. Use balance sheet analysis, macro-analysis, sector research. Regular interactions with

corporate managements and monitor performances on quarterly basis. Combine domestic market focus with a global perspective.

32

Head – IAS & PMS

ManagerPMS

Database MF

MIS

Investment Analyst

(4)Mutual Fund

Analyst

Jr, Analyst+

Database

ChiefDealer

Technical AnalystF & ODealer


IIL PMS Products

•High Risk : Dynamically managed product to capture medium term upsides from cyclical factors, mis-pricing opportunities in the market. •Medium Risk : Combines growth/value styles of investing in long term growth opportunities across sectors and market caps. •Low Risk : Endeavors to minimize risk and yet offer stable and modest returns, through judicious mix of defensive stocks usually large cap, with modest dividend yields and growth prospects.

•Tenure – No lock-in period– Tenure to be stipulated in advance (min. 1 year)– Recommended period of investment (1 - 3 years)•Minimum Portfolio Size – ICP : Cash or stock option.– Cash or Existing securities of Rs. 5 lakhs

•Management Fee :ICP – 2 % p.a. of the total portfolio value.Performance linked fee.–10% p.a. of the returns on the portfolio–20% p.a. of the returns on the portfolio (On special products as per client needs)•Brokerage Upto 1% per transaction•Other Expenses Depository and CustodianR&T and other charges

IIL-PMS : Other operating features

•Agreement between the client and IIL•POA for operating bank account, DP account and effecting investment transactions.•Separate bank account to be opened with the UTI Bank.•Separate DP account with IL&FS DP.•All costs, expenses and charges incurred in managing the portfolio to be charged to a/c on actual basis.•Portfolio manager will send monthly Performance Review Report to keep clients updated on the portfolio•There is also be a facility for real-time monitoring the portfolio through our website

33


IIL-PMS : NRI Clients• Management Fees - 2% p.a. of the total portfolio value• Minimum corpus - Rs. 10 lakhs• Trading in only cash segment• TDS will be deducted in all cases while crediting sale proceed

PMS Scheme Performance As on 30 April 2005

Absolute Returns (%)

Particulars 3 Mth 6 Mth 1 Yr

Very High Risk 1.49% 18.06% 27.08%

High Risk 11.78% 11.93% 31.67%

Moderate Risk 0.55% 16.35% 18.12%

Low Risk -2.18% 18.17% 13.33%

Very Low Risk -3.27% 14.95% 10.07%

Indices 3 Mth 6 Mth 1 Yr

Sensex -6.07% 7.90% 8.86%

Nifty -7.64% 5.83% 5.94%

vi)BIRLA SUN LIFE

Corpus – Rs.1700 Cr

No. Of clients - 100

Birla Sun Life has tied up the back end with Deutche Bank for the custody, settlement of trades and portfolio accounting in a comprehensive service package.

Schemes

1.Value plus Growth Portfolio

34


Investor Profile : Designed & created for investors seeking moderate to high returns with lower volatility and risk.Minimum size : Rs.50 lacs per individual accountObjective : Moderate to high capital appreciation and reasonable income in the form of dividends from a common standard portfolio across all clientsDesired Tenor : A minimum of one to three yearsApproach : Invest in those stocks which are grossly undervalued yet offer high potential in terms of forward earning growth i.e.stocks that offer a combination of value+growth.Key benefits : 1.Strategically designed and diversified 2.Access to value+growth investment style

2.Growth or Emerging Opportunities PortfolioInvestor Profile : Designed and created for investors seeking higher returns with moderate volatility and risk.Minimum size : Rs.50 lacs per individual accountObjective : Higher level of capital appreciation from a common standard portfolio across all clientsDesired Tenor : A minimum of two to three yearsApproach : Invest in stocks of those companies which can compete globally and can deliver goods and services comparable to the best in the world;which look at international market for growth and derive appropriate revenues.Key benefits : 1.Invest in growth oriented companies 2.Reasonably higher growth in portfolio valuations

3.Value or High Dividend Yield PortfolioInvestor Profile : Designed and created for investors seeking moderate returns with low volatility and risk. Minimum size : Rs.50 lacs per individual accountObjective : Moderate to high income from dividend and reasonable capital appreciation from a common standard portfolio across all clients.Desired Tenor : A minimum of one to three yearsApproach : Invest in stocks of those companies which are inexpensive relative to the overall market,peers and historical standards and possess high quality managements, accelerating earning growth and healthy balance sheets.Key benefits : 1.Invests in attractive dividend yield companies 2.Higher revenue stream in the form of dividends

35


4.Customised PortfolioInvestor profile : Designed and created for investors seeking tailor made portfolio to meet specific investment preference.Minimum size : Rs.250 lacs per individual account Objective : Seeks a level of capital appreciation with or without income by way of dividends in sync with the individual client risk profile.Desired Tenor : A minimum between one and three yearsApproach : Investments would be guided by the investor risk profile in terms of expectation of returns, investment horizon, preferences or concerns over certain sectors or stocks and overall appetite for market risks and therefore, could be a combination of any of the portfolio options 1,2 and 3 or as agreed with the investor.

Key benefits : 1.Flexibility to tailor your portfolio to meet your specific investment preference. 2.Total customization. 3.Higher level of portfolio reviews.

Indicative Current fees structure chargeable to the client account

Particulars Fee Description Charged on

Fixed Management fees

Return linked variable fee

1.25 % p.a.

20 % on returns above 15%.

Daily average of portfolio account value.

Year-end valuations.

Quarterly

As on 31st March

Fund Accounting Fee 10 basis points subject to minimum of Rs. 3500 per month.

Fixed Quarterly

Custody and Transaction charges:

The custody charges (linked to the portfolio value), transaction settlement cost (linked to the volume of trades) will be on actual and debited to the client account on a monthly/quarterly basis. Appropriate statements will be provided as supporting to the clients. These charges and costs are over and above BSLAMC’s fixed fees.

Brokerage for Buy/Sell Trades:

The current brokerage rate is around 0.15 % - 0.25% for the trade value of every `buy’ and `sell’ transaction. Such costs either get added to (in case of `buy’) or reduced from (in case of `sale’) trade value.

36


vii)GEOJIT

Corpus : Rs.20 Cr.

No.of clients: 125

Mr. Ajay Sheth who heads the research wing at Mumbai and is a Chartered accountant, who is there in the capital market for the last 20 years manages fund. He gives advice to others like Mutual Funds and one FII

Geojit Financial Services Ltd. has extensive experience in capital market operations having been in the broking business for two decades and is a SEBI registered Portfolio Manager with authorisation to manage an investor's funds for better returns.

37


Scheme - Equities

Minimum investment is Rs.10 lakhs

There are two structures for the PMS fee –

1.Flat fee of 3% per annum charged in 4 equal instalments ie;0.75% every quarter, on the average value of investments at the beginning and ending NAV of the quarter eg; if the amount invested is Rs.10 lakhs and the NAV at the end of the first quarter is Rs.12 lakhs, a fee of 0.75% is charged on Rs.11 lakhs ie; Rs. 8250/- on that quarter.

2.Flat fee of 1% per annum charged in 4 equal instalments ie; 0.25% every quarter, on the average value of investment at the beginning and ending NAV of the quarter and on completion of one year the return on investment is more than 12% of the investment, 20% of the gains over and above 12% is charged as performance fee. For example, if a client invests Rs. 10 lakhs and after completion of one year his investment value is Rs.12 lakhs, then the charges will be 1% flat fee charged quarterly and the performance fee will be 20% of Rs.80,000 (which is the gain over and above 12% of the investment of Rs.10 lakhs ie; Rs.1,20,000/-) which is Rs.16,000/-.

There is no entry load or exit load.

Weighted average Return

2001 - 2002 - Plus 42.60%

2002 - 2003 - Plus 22.4%

2003 - 2004 - Plus 79.62%

2004 - 2005 - Plus 56.38%

38


viii)FORTIS

Corpus : Rs.55 Cr.

No. of clients : 110

Schemes

A. Tortoise

Launch date : 7th Sept'04

Returns since inception : 50%Tortoise scheme aims to provide a balance between growth, safety and returns. The fund aims

to invest in mix of debt and equity the proportion of which will depend upon market conditions

of respective segments as well as the availability of individual investments opportunities.

39


Particulars Fees / Charges Mode of Payment

Management Fees2% per annum of the average daily value of Portfolio

Payable quarterly

Brokerage 0.25% of Market Price of the Securities purchased/sold in Secondary Market.

Payable with trade done

B. Panther

Launch date : 7th Sept'04

Returns since inception : 50%Panther scheme is aimed at high return with certain level of risk appetite. The fund aims to invest in equity with diversification. The objective of the scheme is to achieve high return by way of aggressive position depending upon market conditions and will not shy away from taking exposure with relative caution in mid cap and less traded stocks at times.

Option I



Payable quarterly

Brokerage 0.25% of Market Price of the Securities purchased/sold in Secondary Market



Management Fees (Fixed)

0.75% per annum of Investment Amount. 50% payable at the time of investment and balance at the

time of redemption or at the expiry of 12

months which ever is earlier.

Management Fees (Profit sharing)

Return on Portfolio Profit Sharing Payable at the time of profit realization

40


Up to 12% Return - Nil

Fr 12% - 18% - 10% of Total Profit


Above 24% - 20% of Total Profit



OR Option II

C. Hawk Eye Launch date : 7th Sept'04

Returns since inception : 36%

The fund is aimed at introducing discipline within the overall fund management approach. The scrip for investing will be selected on the basis of existing fundamental and growth prospects. However to take care of two most important emotional factors of stock market ‘greed and fear’ the fund will follow a book profit / cut loss strategy. The fund will book profit in any stock after a set target is reached and the same will be followed if the price of the stock goes below and breaches a particular level from the purchase price.

Option I



Payable quarterly



OROption II


Management Fees (Fixed)

0.75% per annum of Investment Amount. 50% payable at the time of investment and balance at the

41


time of redemption or at the expiry of 12

months which ever is earlier.

Management Fees (Profit sharing)

Return on Portfolio Profit Sharing

Up to 12% Return - Nil



Above 24% - 20% of Total Profit

Payable at the time of profit realization



ix)JM MORGAN STANLEY

Corpus : Rs.20 Cr.

No.of clients : 20

Schemes :

1.Core Portfolio

Investment philosophy : Diversified equity portfolio with investment largely in large cap stocks and small portion is invested in mid caps

Investment horizon : Long term

2.Voyager

Investment philosophy : Diversified equity portfolio with investment largely in Mid cap stocks.

42


Investment horizon : Short to medium term

Common fees for both schemes :

1.Fixed 2%p.a.OR2.1.25%p.a. + 20% profit sharing if returns>10%

x)ASK RAYMOND JAMES

Management Structure

43

Bharat shah, CEO & CIO

Head, Marketing (15 people in

mumbai for Mktg)

Investment team(10 Invt Analyst)

Strategic A/c team (3 people)

Servicing team(4 people)

Delhi (3 people in Mktg)

Bangalore(2 people in Mktg)

Kolkatta(Yet to start)


Total AUM

Rs 1100 Crores (Inclusive of off-shore fund)

Products

1.The Eagle Portfolio

Objective:

- The Eagle Portfolio aims to deliver exceptional long-term returns. The core of the concept is an uncompromising value-based stance on misappraised investment opportunities. The approach is expected to do two things: deliver superior returns and ensure a high margin of safety.

Investment strategy: 10 : 10- The whole amount would be invested in 10 stocks with ratio or 1/10 of the portfolio i.e. 10%

Investment horizon & Returns:

- 3 years and returns are decent, so that the portfolio doubles in 3 years.

Corpus / AUM: Rs 110 Crores

Ticket size: Rs 3 crores (thru direct channel) and Rs 1 crore (thru alternate channel i.e. Stan chart)

2.Growth Portfolio

Objective:

The Growth Portfolio seeks to buy growth at value prices. The focus is on companies that offer favorable long-term prospects.

Investment strategy: The whole amount would be invested in 15 stocks

Investment horizon & Returns: Long term and returns would be around 15 – 20% p.a.


44

DubaiRepo office


Ticket size: Rs 1 crore (thru direct channel) and Rs 50 lacs (thru alternate channel i.e. Stan chart)

Fees: 2.5% Fix or 1.5% fix and 15% profit sharing

3.The Lighthouse Infrastructure Portfolio

Objective- The Lighthouse Infrastructure Portfolio (LIP) aims to be a proxy to India's economic growth by participating in infrastructure and infrastructure-related businesses.

Investment strategy: The whole amount is invested in companies involved in infrastructure




4.The Kingfisher Portfolio

Objective:

- The Portfolio aims to deliver superior returns by investing in companies with a proven track record. It follows an active process driven method of profit booking.

Investment strategy: The whole amount would be invested in 15 stocks

Investment horizon: Short to medium term

Performance: Not doing well as compare to other schemes



5.Dividend Yield PortfolioObjective:

45


- The objective of the Portfolio is to invest in fundamentally strong companies run by honest and capable managements but only at a price representing an attractive valuation. Attractive valuation would mean the price at which the downside is minimal, the yield is higher than 4% and there is a scope for capital gains.

Investment strategy: The whole amount would be invested in 10 - 15 stocks

Investment horizon: long term

Corpus / AUM (Dividend yield & King fisher): Rs 55 Crores



PMS OF MOTILAL OSWAL SECURITIES LTD.

Schemes – i) Value PMS Fund manager: - Mr.Raamdeo AgrawalMinimum portfolio size: - Rs.50 lacs cash/approved stocks per individual or groupFee structure: - 1%p.a. fixed fees + 10% profit sharing OR 2.5%p.a.fixed feesObjective: - i) Long term investments ii) Capital preservation iii)Maximum post tax returnsPerformance :-Feb’03 – Feb’05 Weighted Return % Portfolio 228.13 Sensex 105.94 Nifty 101.15

Jan’04 – Feb’05

46


Portfolio 61.32 Sensex 20.03 Nifty 18.80

ii)Bull’s EyeFund Manager :- Mr.Sagar TannaMinimum portfolio size :- Rs.25 lacs cash/approved stocks per individual or groupFee structure: - 1%p.a. fixed fees + 10% profit sharing OR 2.5%p.a.fixed feesObjective :- i) Medium term investmentsPerformance :- 1st Sept’04 – 16th Mar’05 Portfolio 41.80 Sensex 29.48

COMPARATIVE ANALYSIS

INDIA INFOLINE :

1. Returns given by the schemes are excellent i.e.5P Growth has given 62.8% returns & 5P Momentum has given 93.5% returns for 6 months ended 1st April’05.2. Minimum amount to be invested is less i.e.Rs.5lacs which attracts small investors.3. Option is given to investors to make their customized portfolio.4. Company is listed on BSE as well as NSE also its financial results are very good which increases investor confidence.5. Option is given to investors as to whether they want to remain invested for medium term or long term. Accordingly they can select the scheme.5P Momentum is for medium term,5P Growth is for long term.6.In addition to comprehensive reports i.e.each transaction, charges levied, performance of the PMS plan vis a vis benchmark indices, its website ‘indiainfoline.com’ which has been honoured as ‘must read for investors’ by Forbes magazine provides in-depth information about the market as well as companies.

SHAREKHAN:

47


1.Sharekhan provides 4 schemes i.e. Blue Chip Scheme, Aggressive scheme, Balanced scheme, Dividend Yield scheme. Investor can choose any of the above depending on his/her risk taking ability.2.Strong presence in over 120 cities.3.Churning has been very low i.e.0.7 times. This helps generate wealth over a period of time.4.Voted four times as the best Top domestic Brokerage house by the Asiamoney Survey, SSKI is consistently ranked amongst the Top domestic brokerage houses in India. 5.Returns given by their schemes since 13th May’04 are as follows – Blue Chip scheme - 50%Aggressive scheme - 55%Balanced scheme - 66.16%

PRU ICICI :

1. Option of 3 schemes i.e.Aggressive portfolio, Dividend yield portfolio & Deep value portfolio. Investors can choose any of the above depending on their risk appetite.2. Flexibility to use derivative instruments in all the schemes.3. Each scheme has more than 20 stocks from all sectors thereby reducing risk.4. Strong brand name of ICICI imbibed on the minds of investors by ICICI Bank by aggressive advertising.5. Returns given by their schemes are as follows-Dividend Yield (since 20th Feb’03) – 278.4%Aggressive (since 22nd Dec’00) – 389.1%Deep Value (since 17th July’03) – 228.1%

KOTAK :

1. Minimum amount is Rs.10 lacs for all schemes, which is attractive for medium net worth investors.2. Strong brand name supported by repetitive advertising through various channels.3. Various schemes like Kotak Infinity Klassic, Kotak Select Portfolio, Principal Guard Portfolio, Dividend Yield Portfolio, Kotak Assist .4. Principal Guard Portfolio invests 60% money in fixed income instrument & balance 40% is invested in buying Nifty Options.5. Option is given to investors to make their customized portfolio.

IL & FS INVESTSMART:

1. Low tick size i.e. Rs.10 lacs.2. Various schemes to suit investors risk profile.3. Presence across 16 states through over 30 branches & 90 franchisees4. Strong retail brand franchise.

48


BIRLA SUN LIFE:

1. Variety of schemes including Customised Portfolio 2. Aditya Birla Group - One of the largest & most respected industrial groups in India.3. No conflict of interest – neither into broking nor investment banking.4. Value + Growth Portfolio has given 201.81% returns since 26th June’02.5. Back end fully outsourced to Deutche Bank

GEOJIT:

1. Low tick size i.e.Rs.10 lacs.2. Equity scheme has given 53% annualized returns for the financial year ended 31-3-2005.3. Over 200 offices across the country.

FORTIS:

1. Variety of schemes i.e. Tortoise, Panther, & Hawk Eye suitable for investors with differing risk taking abilities.2. Use of derivatives in all schemes.

0

1

2

3

4

5

6

Organisations

No

.of

sc

he

me

s

Kotak

Pru ICICI

Birla Sunlife

ASK RaymondJames

Motilal Oswal

Figure 2: No.of schemes offered by organisations

49


0

1000000

2000000

3000000

4000000

5000000

6000000

1

Organisations

Am

ou

nt

in R

s.

Pru ICICI

Kotak

India Infoline

Motilal Oswal

Figure 3 – Minimum investment in PMS schmes

RECOMMENDATIONS :

1. Minimum amount should be reduced to Rs.10 lacs which is investible amount for small investors.

2. MOSt is well known in corporate sector but there is little awareness at the customer level. Even a layman knows Kotak but is unaware of Motilal Oswal. Aggressive advertising should be done to reach out to small investors.

3. MOSt should start ‘Customised scheme’. Many organizations are offering this scheme. This scheme will attract rather choosy clients.

4. There should be least investment in turnaround companies.

5. There should be at least one stock in each scheme giving dividend yield more than 4%.

6. 90% of portfolio should consist of dividend paying companies as dividend paying capability indicates consistent cash flow as well as honesty & investor friendliness of management.

50


7. No stock should be chosen at a 52 week high level except the stocks which give more than 8% dividend yield. In the present scenario there are some stocks which give more than 8% dividend yield. Bongaigaon Refinery gives more than 12% dividend yield at present price of 95-96(Dividend declared by company for FY 2004-05: Rs.12 per share) Aarti industries gives more than 9% dividend yield at present price of 106-107(Dividend declared by company for FY 2004-05: Rs.10.10 per share).

8. Health care sector and gas companies should be given preference while choosing stocks for Value PMS as demand for these sectors will increase in future.Health care sector – Apollo Hospitals Enterprise Ltd.Gas – Gail(I), Indraprastha Gas, Gujarat gas company.

Appendix

Questionnaire used for collecting information-

1.What are the schemes offered?2.What is the fee structure?3.What is the year of launch of each scheme?4.How much returns did each scheme give?5.Who are the fund managers?6.How much is the corpus?7.How many clients do you have?

51


52

PortfolioMgmtServ-project[1]

Documents

Transcript of PortfolioMgmtServ-project[1]