A

PROJECT REPORT
ON

TO STUDY THE BUSINESS OF FINANCIAL ADVISORS FOR MUTUAL FUND IN

BHUBANESWAR

NJ INDIA INVESTS PVT. LTD

In partial fulfillment of the requirements of Award of the degree of

MBA, BPUT

Submitted by:
Name-Anita Priyadarshini
Reg.No-1906300003

Internal Guide External Guide

Prof (Dr) Himanshu S. Moharana Mr. Arvind Kumar Dipak

DEAN ACADEMICS Branch manager
HI-TECH INSTITUTE OFTECHNOLOGY INDIA INVEST PVT.LTD

DECLARATION

1
 I ANITA PRIYADARSHINI do hereby declare that the Project report entitled ‘‘STUDY

THE BUSINESS OF FINANCIAL ADVISORS FOR MUTUAL FUND” submitted by me for

the Summer Internship during the MBA to HI-TECH INSTITUTE OF TECHNOLOGY,

KHURDA is my own original work and has not been submitted earlier to any other Institution for

the fulfillment of the requirement for any course of study.

I also declare that no chapter of this manuscript in whole or in part is lifted and

incorporated in this report from any earlier / other work done by me or others and I adopt the spirit

of self learning and learning from my superiors to meet the objectives of my studies.

Name-Anita Priyadarshini

Regd.No -1906300003

ABSTRACT

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 Training needs analysis is the first stage in the training process and involves a
procedure to determine whether training will indeed address the problem which has been
identified. Training can be described as “the acquisition of skills, concepts or attitudes that result
in improved performance within the job environment”. Training needs analysis looks at each
aspect of an operational domain so that the initial skills, concepts and attitudes of the human
elements of a system can be effectively identified and appropriate training can be specified. This
paper will focus on various aspects of Training need analysis.

The productiveness of an employee is the important factor for the employer,

because the income or profit of the organization and employer is depends on the employees’
productiveness.

Begin by assessing the current status of the company; how it does, what it does
best and the abilities of your employees to do these tasks. This analysis will provide some
benchmarks against which the effectiveness of a training program can be evaluated. The
organization or an employer should know where it wants to be in its long-range strategic plan and
organizational need is a training program to take the organization from current situation to
developed upped step.

Secondly, consider whether the organization is financially committed to support

the training efforts. If not, any attempt to develop a solid training program will fail.

Next, determine exactly where training is needed. It is foolish to implement a

companywide training effort without concentrating resources where they are needed most. An
internal audit will help point out areas that may benefit from training. Also, a skills inventory can
help determine the skills possessed by the employees in general. This inventory will help the
organization determine what skills are available now and what skills are needed for future
development.

In summary, the analysis should focus on the total organization and should
identify where training is needed and where it will work within the organization.

When the organization has a clear idea to where training is needed, concentrate on
the content of the program. Analyze the characteristics of the job based on its description, the
written description of what the employee actually does. Training based on job descriptions should
go into detail about how the job is performed base on a task-by-task. Actually doing the job will
enable you to get a better feel for what is done.

ACKNOWLEDGEMENT

3
 I would like to acknowledge my indebtedness and render my warmest thanks to my Mentor
Prof.(Dr.) Himanshu Sekhar Moharana, Dean Academics, Hi-Tech Institute of Technology,
who made this work possible. His friendly guidance and expert advice have been invaluable
throughout all stages.

I would like to thank HI-TECH INSTITUTE OF TECHNOLOGY who has given me an

opportunity to do internship in NJ India Invest Pvt. Ltd .

I would also express my gratitude towards Mr. Arvind Kumar Dipak (BM) and Mr.
Shakti Ranjan (Company Mentor).As they have played an important role in successfully
completing my summer internship. They have guided me through their experience and supported
as and when required and also thank the employees of NJ India Invest Pvt. Ltd for their
coordination and support.

I also thank to all faculty members without whom this Project would have been a distant
reality.

At last I would like to thank my family and friends who have advice, co-operated and
suggested me for completion of this report.

Name-Anita Priyadarshini

Regd. No.-1906300003

HI-TECH INSTITUT E OF TECHNOLOGY

PROJECT COMPLETION CERTIFICATE

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 This is to certify that ANITA PRIYADARSHINI bearing Registration number-
1906300003 has completed the project work in FINANCE department under the guidance of Mr.
Arvind Kumar Dipak, Branch Manager. During his training he was assigned the project
“MUTUAL FUND AT NJ INDIA INVEST PVT, LTD”. He has completed the training
successfully. His conduct has been found good. I wish him success in professional career.

Name:-Mr. Arvind Kumar Dipak

Signature:-

Designation: - Branch Manager

Plant:-BHUBANESWAR

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PROF (Dr) HIMANSHU S. MOHARANA

B.Sc. (Hons.), ME (Hons.), LL.M (Labor Laws)

MBA (Operations), Ph.D (Engg.),MISTE,MIIE,FIE(I)

(DEAN ACADEMICS)

CERTIFICATE

This is to certificate that ANITA PRIYADARSHINI (REGD. NO.-

1906300003) has completed the project work under the specialization of FINANCE in his final
year MBA Degree under my supervision. During her training, she was assigned the Project
“MUTUAL FUND AT NJ INDIA INVESTS PVT.LTD, BHUBANESWAR”. She has
completed the training successfully and I wish him all success in her future.

Signature of the Student Signature of the Supervisor

Executive Summary

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 This report is prepared with a basis to compare mutual fund and other investment avenue.
This report contains various about mutual fund. What are the merits of mutual fund? The risks and
return involved in mutual fund. What is the structural working in mutual fund industry?

The work of sponsor, trustee and AMC in mutual fund. Information about other investment
products. What is the role of SIP in mutual fund and how it is beneficial for its clients and
advisors. The commission received by advisors. The various schemes offered through SIP’s for
clients. Different employees and professionals that are selected in mutual fund and how they are
selected. Role played by various statutory bodies like SEBI and AMFI.

The company selected for this topic is “NJ INDIA INVESTMENT PRIVATE LTD.”It
deals in mutual fund, f.d,s for short term and long term purpose investment. It has a collaboration
with 44 AMC companies with top companies like HDFC , ICICI involved in it. Thus providing
wide range of investment option with different NAV’s for its clients. A company that is set up in
different parts and regions across India.

Working with latest technology and continuous assessment programs for its clients and
advisors. A unique platform which helps advisors to work from a single online network set up by
its technical team for guidance and control.

Thus working with its sales and marketing department and assisting for the same. This was
done by creating advisors for NJ and filling up of various documents like TADA,OTM, KYC and
some other documents too.

Research Methodology involves techniques and questionnaire for the purpose of comparing
it with other investment products. How mutual fund performed better in terms of risk and return. In
terms of technology too how it served in a better way for its clients. The location which was
chosen and its scope. The limitations which were there during the study.

CONTENTS

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 SL no. Title Page
no.
1 Objective of Study

2 Introduction

3 Concept on Mutual Fund

4 Company Profile

5 Working Methodology

6 Analysis

7 Recommendations/Suggestions

8 Limitations of the project

9 Learning

10 References

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 Objective of Study

1. To analyze the best investing avenue.

2. To know about awareness of wealth advisors for mutual fund.

3. To know the investment product which gives better return to its client.

4. To know about technology growth for different products of investment of advisors.

5. To know about scope of mutual fund advisors in Jamshedpur.

6. To know about advisors working for both mutual fund and LIC in Jamshedpur..

Mutual Fund: An introduction

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 Definition:
It is a pool of money, collected from investors, and is invested according to certain investment
objectives. The ownership of the fund is thus joint or mutual; the fund belongs to all investors.
A mutual funds business is to invest the funds collected, according to the wishes of the
investors who created the pool.
Mutual funds are a vehicle to mobilize moneys from investors, to invest in different markets
and securities, in line with the investment objectives agreed upon, between the mutual fund
and the investors.
Mutual funds seek to mobilize money from all possible investors. Various investors have
different investment preferences. In order to accommodate these preferences, mutual funds
mobilize different pools of money. Each such pool of money is called a mutual fund scheme.
Every scheme has a pre-announced investment objective. When investors invest in a mutual
fund scheme, they are effectively buying into its investment objective.
Mutual fund schemes announce their investment objective and seek investments from the
public. Depending on how the scheme is structured, it may be open to accept money from
investors ,either during a limited period only, or at any time.

Role of Mutual Fund:

Mutual funds perform different roles for different constituencies:
Their primary role is to assist investors in earning an income or building their wealth, by
participating in the opportunities available in various securities and markets.
The mutual fund industry itself, offers livelihood to a large number of employees of mutual
funds, distributors, registrars and various other service providers. Higher employment,
income and output in the economy boost the revenue collection of the government through
taxes and other means. When these are spent prudently, it promotes further economic
development and nation building.
As a large investor, the mutual funds can keep a check on the operations of the investee
company, and their corporate governance and ethical standards.

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History of Mutual Fund
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 of India. The history of mutual
funds in India can be broadly divided into four distinct phases :

First Phase - 1964-1987

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

Second Phase - 1987-1993 (Entry of Public Sector Funds)

1987 marked the entry of non-UTI, public sector mutual funds set up by public sector banks
and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India
(GIC). SBI Mutual Fund was the first non-UTI Mutual Fund established in June 1987
followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89),
Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund
(Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its mutual fund
in December 1990.

Third Phase - 1993-2003 (Entry of Private Sector Funds)

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

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Fourth Phase - since February 2003
In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was
bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of
India with assets under management of Rs. 29,835 crores as at the end of January 2003,
representing broadly, the assets of US 64 scheme, assured return and certain other schemes.
The Specified Undertaking of Unit Trust of India, functioning under an administrator and
under the rules framed by Government of India and does not come under the purview of the
Mutual Fund Regulations.

The second is the UTI Mutual Fund, sponsored by SBI, PNB, BOB and LIC. It is registered
with SEBI and functions under the Mutual Fund Regulations.

Need of Mutual Fund

Opportunity for Wealth Advisors
• GDP Growth has moved from 4% Levels in 80's to 8-9% now

• Took 16 years to reach to $500 bn from 1988

• Accelerated in 2004 to reach $ 1 trillion (Rs. 45 Lac Crore) in 2009-10

• Expected to cross $ 4 trillion by 2020

• 55 % savings are invested in Deposits.

• Indian Households are having less than 3% exposure to Equities.

• Clear Imbalance in savings pattern of investors in India

• Huge opportunity for Growth in Equity Related instruments

The graph indicates the growth of assets over the years.

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.

Prevailing Financial Advisory Industry in India

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Who are the intermediaries in the market
1. Insurance Advisors

2. Postal Agents

3. Mutual Fund Advisors

4. Tax Consultants and CA's

5. Stock Brokers

6. Banks

Types of Mutual Fund

Open-Ended Funds, Close-Ended Funds and Interval
Funds
Open-ended funds are open for investors to enter or exit at any time, even after the NFO.
When existing investors buy additional units or new investors buy units of the open ended
scheme, it is called a sale transaction. It happens at a sale price, which is equal to the NAV.
Although some unit-holders may exit from the scheme,
wholly or partly, the scheme continues operations with the remaining investors. The scheme
does not have any kind of time frame in which it is to be closed. The ongoing entry and exit
of investors implies that the unit capital in an open-ended fund would keep changing on a
regular basis.
Close-ended fund shave a fixed maturity. Investors can buy units of a close-ended scheme,
from the fund, only during its NFO. The fund makes arrangements for the units to be
traded, post-NFO in an stock exchange. This is done through a listing of the scheme in astock
exchange. Such listing is compulsory for close-ended schemes. Therefore, after the NFO,
investors who want to buy units will have to find a seller for those units in the stock
exchange.

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Interval funds combine features of both open-ended and close ended schemes. They are
largely close-ended, but become openended at pre-specified intervals. For instance, an
interval scheme
might become open-ended between January 1 to 15, and July 1 to15, each year. The benefit
for investors is that, unlike in a purelyclose-ended scheme, they are not completely dependent
on the stock exchange to be able to buy or sell units of the interval fund.

Actively Managed Funds and Passive Funds

Actively managed fund sare funds where the fund manager has the flexibility to choose the
investment portfolio, within the broad parameters of the investment objective of the scheme.
Since this increases the role of the fund manager, the expenses for running the fund turn out
to be higher. Investors expect actively managed funds to perform better than the market.
Passive funds invest on the basis of a specified index, whose performance it seeks to track.
Thus, a passive fund tracking the BSE Sensex would buy only the shares that are part of the
composition of the BSE Sensex. The proportion of each share in the scheme’s portfolio
would. also be the same as the weightage assigned to the share in the computation of the BSE
Sensex

Debt, Equity and Hybrid Funds

A scheme might have an investment objective to invest largely inequity shares and equity-
related investments like convertibledebentures. Such schemes are called equity schemes.
Schemes with an investment objective that limits them to investments in debt securities like
Treasury Bills, Government Securities, Bonds and Debentures are called debt funds.

Hybrid funds have an investment charter that provides for are asonable level of investment
in both debt and equity.

Types of Debt Funds

Gilt funds invest in only treasury bills and government securities, which do not have a credit
risk (i.e. the risk that the issuer of the security defaults).

Diversified fund on the other hand, invest in a mix of government and non-government debt
securities.’

15
Junk bond schemes or high yield bond schemes invest in companies that are of poor credit
quality. Such schemes operation the premise that the attractive returns offered by the
investee.

Fixed maturity plans are a kind of debt fund where the investment portfolio is closely aligned
to the maturity of the scheme. AMCs tend to structure the scheme around pre-identified
investments.
Floating rate funds invest largely in floating rate debt securitiesi.e. debt securities where the
interest rate payable by the issue changes in line with the market. For example, a debt
security
where interest payable is described as ‘5-year Government Security yield plus 1%’, will pay
interest rate of 7%, when the 5-year Government Security yield is 6%; if 5-year govt.

Liquid scheme are a variant of debt schemes that invest only in debt securities
where the moneys will be repaid within 91-days. As will be seen later in this Work Book,
these are widely recognized to be the lowest in risk among all kinds of mutual fund schemes.

Types of Equity Funds

Diversified equity fund is a category of funds that invest in adiverse mix of securities that cut
across sector
Sector fund show ever invest in only a specific sector. For example, a banking sector fund
will invest in only shares of banking companies. Gold sector fund will invest in only shares of
gold-related companies.
Thematic funds invest in line with an investment theme. For example, an infrastructure
thematic fund might invest in shares of companies that are into infrastructure construction,
infrastructure toll-collection, cement, steel, telecom, power etc.
Equity Linked Savings Schemes(ELSS), as seen earlier, offer tax benefits to investors.
However, the investor is expected to retain the Units for at least 3 years.

Equity Income / Dividend Yield Schemes invest in securities

whose shares fluctuate less, and therefore, dividend represents alarger proportion of the
returns on those shares. The NAV of such equity schemes are expected to fluctuate lesser
than other categories of equity schemes.

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Arbitrage Fund stake contrary positions in different markets /securities, such that the risk is
neutralized, but a return is earned .For instance, by buying a share in BSE, and
simultaneously selling the same share in the NSE at a higher price. Most arbitrage fund take
contrary positions between the equity market and the futures and options market. (‘Futures’
and ‘Options’ are commonly referred to as derivatives.

Types of Hybrid Funds

Monthly Income Plan seeks to declare a dividend every month. It therefore invests largely in
debt securities. However, a small percentage is invested in equity shares to improve the
scheme’syield. This is ideally done by investing in Zero Coupon Government Securities
whose maturity Is aligned to the scheme’s maturity. (Zero coupon securities are securities
that do not pay a regular interest, but accumulate the interest, and pay it along with the
principal when the security matures).

This is ideally done by investing in Zero Coupon Government Securities whose maturity Is
aligned to the scheme’s maturity. (Zero coupon securities are securities that do not pay a
regular interest, but accumulate the interest, and pay it along with the principal when the
security matures).

As detailed in the following example, the investment is structured, such that the principal
amount invested in the zero-coupon security, together with the interest that accumulates
during the period of the scheme would grow to the amount that the investor invested at the
start.
Suppose an investor invested Rs 10,000 in a capital protected scheme of 5 years. If 5-year
government securities yield 7% at that time, then an amount of Rs 7,129.86 invested in 5-
year zero coupon government securities would mature to Rs 10,000 in 5years. Thus, by
investing Rs 7,129.86 in the 5-year zero-coupon government security, the scheme ensures that
it will have Rs10,000 to repay to the investor in 5 years .After investing in the government
security, Rs 2,870.14 is left over(Rs 10,000 invested by the investor, less Rs 7129.86 invested

17
in government securities). This amount is invested in riskier securities like equities. Even if
the risky investment becomes completely worthless (a rare possibility), the investor is assured
of getting back the principal invested, out of the maturity money sreceived on the
government security.

Some of these schemes are structured with a minor difference –the investment is made in
good quality debt securities issued by companies, rather than Central Government
Securities. Since any borrower other than the government can default, it would be
appropriate to view these alternate structures as Capital Protection Oriented Schemes rather
than Capital Protected Schemes.
It may be noted that capital protection can also be offered througha guarantee from a
guarantor, who has the financial strength to offer the guarantee. Such schemes are however
not prevalent in
the market.

Gold Funds

These funds invest in gold and gold-related securities. They can be structured in either of the
following formats:

Gold Exchange Traded Fund, which is like an index fund that invests in gold. The structure
of exchange traded funds is discussed later in this unit. The NAV of such funds moves in line
with gold prices in the market.

Gold Sector Fundsi.e.the fund will invest in shares of companies engaged in gold mining and
processing. Though gold prices influence these shares, the prices of these shares are more
closely linked to the profitability and gold reserves of the companies.
Therefore, NAV of these funds do not closely mirror gold prices.(Gold Sector Fund is like
any equity sector fund, which was discussed under ‘Types of Equity Funds’. It is discussed
here to highlight the difference from a Gold ETF)

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Real Estate Funds
They take exposure to real estate. Such funds make it possible for small investors to take
exposure to real estate as an asset class .Although permitted by law, real estate mutual funds
are yet to hitthe market in India.

Commodity Funds
Commodities, as an asset class, include:
• food crops like wheat and chana
• spices like pepper and turmeric
• fibres like cotton
• industrial metals like copper and aluminium
• energy products like oil and natural gas
• precious metals (bullion) like gold and silver
The investment objective of commodity funds would specify which of these commodities it
proposes to invest in.

International Funds
These are funds that invest outside the country. For instance, a mutual fund may offer a
scheme to investors in India, with an investment objective to invest abroad .One way for the
fund to manage the investment is to hire there quisite people who will manage the fund.
Since their salaries would add to the fixed costs of managing the fund, it can be justified only
if a large corpus of funds is available for such investment.

An alternative route would be to tie up with a foreign fund (called the host fund). If an
Indian mutual fund sees potential in China, it will tie up with a Chinese fund. In India, it will
launch what is called a feeder fund. Investors in India will invest in the feeder fund. The
moneys collected in the feeder fund would be invested in the Chinese host fund. Thus, when
the Chinese market does well, the Chinese host fund would do well, and the feeder fund in
India will follow suit.
Such feeder funds can be used for any kind of international lin vestment. The investment
could be specific to a country (like the China fund) or diversified across countries. A feeder

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fund can be aligned to any host fund with any investment objective in any part of the world,
subject to legal restrictions of India and the other country.

Fund of Funds

The feeder fund was an example of a fund that invests in another fund. Similarly, funds can
be structured to invest in various other funds, whether in India or abroad. Such funds are
called fund of funds. These ‘fund of funds’ pre-specify the mutual funds whose schemes they
will buy and / or the kind of schemes they will invest in. They are designed to help investors
get over the trouble of choosing between multiple schemes and their variants in the market.
Thus, an investor invests in a fund of funds, which in turn will manage the investments in
various schemes and options in the market.

Exchange Traded Funds

Exchange Traded funds (ETF) are open-ended index funds that are traded in a stock
exchange .A feature of open-ended funds, which allows investors to buy and sell units from
the mutual fund, is made available only to very large investors in an ETF. Other investors
will have to buy and sell units of the ETF in the stock exchange. In order to facilitate such
transactions in the stock market, the mutual fund appoints some intermediaries as market
makers, whose job is to offer a price quote for buying and selling units at all times .If more
investors in the stock exchange want to buy units of the ETF, then their moneys would be
due to the market maker.

The market maker would use the moneys to buy a basket of securities that is in line with the
investment objective of the scheme, and exchange the same for chapters of the scheme
from the mutual fund. Thus, the market maker can offer the units to the investors

.If there is more selling interest in the stock exchange, then the market maker will end up
with units, against which he needs to make payment to the investors. When these units are
offered to the mutual fund for extinguishment, corresponding securities will be released from

20
the investment portfolio of the scheme. Sale of the released securities will generate the
liquidity to pay the unit holders for the units sold by them.
In a regular open-ended mutual fund, all the purchases of units by investors on a day happen
at a single price. Similarly, all the sales of units by investors on a day happen at a single
price. The market however keeps fluctuating during the day. A key benefit of an ETF is that
investors can buy and sell their units in the stock exchange, at various prices during the day
that closely track the market at that time. Further, the unique structure of ETFs, maket
them more cost-effective than normal index funds, although the investor would bear a
brokerage cost when he transacts with the market maker.

Advantages of Mutual Fund

Professional Management
Mutual funds offer investors the opportunity to earn an income or build their wealth
through professional management of their investible funds. There are several aspects to such
professional management viz. investing in line with the investment objective, investing based
on adequate research, and ensuring that prudent investment processes are followed.

Portfolio Diversification
Units of a scheme give investors exposure to a range of securities held in the investment
portfolio of the scheme. Thus, even a small investment of Rs 5,000 in a mutual fund scheme
can give investors a diversified investment portfolio.
The investor is less likely to lose money on all the investments at the same time. Thus,
diversification helps reduce the risk in investment. In order to achieve the same
diversification as a mutual fund scheme, investors will need to set apart several lakh of
rupees. Instead, they can achieve the diversification through an investment of a few thousand
rupees in a mutual fund scheme.

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Economies of Scale

The pooling of large sums of money from so many investors makes it possible for the mutual
fund to engage professional managers to manage the investment. Individual investors with
small amounts to invest cannot, by themselves, afford to engage such professional
management.
Large investment corpus leads to various other economies of scale. For instance, costs related
to investment research and office space get spread across investors. Further, the higher
transaction volume makes it possible to negotiate better terms with brokers, bankers and
other service providers.

Liquidity
At times, investors in financial markets are stuck with a security for which they can’t find a
buyer – worse, at times they can’t find the company they invested in! Such investments
become illiquid investments, which can end in a complete loss for investors. Investors in a
mutual fund scheme can recover the value of the moneys invested, from the mutual fund
itself. Depending on the structure of the mutual fund scheme, this would be possible, either at
any time, or during specific intervals, or only on closure of the scheme.

Tax Deferral
Mutual funds are not liable to pay tax on the income they earn. If the same income were to
be earned by the investor directly, then tax may have to be paid in the same financial year.
Mutual funds offer options, whereby the investor can let the moneys grow in the scheme for
several years. By selecting such options, it is possible for the investor to defer the tax liability.
This helps investors to legally build their wealth faster than would have been the case, if they
were to pay tax on the income each year.

Convenient Options

The options offered under a scheme allow investors to structure their investments in line
with their liquidity preference and tax position.

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Investment Comfort
Once an investment is made with a mutual fund, they make it convenient for the investor to
make further purchases with very little documentation. This simplifies subsequent
investment activity

Regulatory Comfort
The regulator, Securities & Exchange Board of India (SEBI) has mandated strict checks and
balances in the structure of mutual funds and their activities.

Limitations of Mutual Fund

Lack of Customisation:

Some securities houses offer Portfolio Management Schemes (PMS) to large investors. In a
PMS, the investor has better control over what securities are bought and sold on his behalf.
On the other hand, a unit-holder is just one of several thousand investors in a scheme. Once
a unit-holder has bought into the scheme, investment management is left to the fund
manager(within the broad parameters of the investment objective).

Choice Overload:

Over 800 mutual fund schemes offered by 38 mutual funds – and multiple options within
those schemes – make it difficult for investors to choose between them. Greater
dissemination of industry information through various media and availability of professional
advisors in the market should help investors handle this overload.

Issue relating to management of portfolio of Mutual Funds.

No control over costs – However, SEBI has imposed certain limits on the
expenses that can be charged to any scheme.

SEBI
SEBI is the regulatory authority for securities markets in India.
It regulates, among other entities, mutual funds, depositories, custodians and registrars &
transfer agents in the country.

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Mutual Funds are regulated by SEBI only but mutual funds need to comply with RBI’s
regulation sregarding investment in the money market, investments outside the country,
investments from people other than Indians resident in India, remittances (inward and
outward) of foreign currency etc.
Mutual Funds need to comply with the rules of the exchanges with which they choose to
have a business relationship.
Anyone who is aggrieved by a ruling of SEBI, can file an appeal with the Securities
Appellate Tribunal (SAT).

AMFI: Regulatory body of Mutual Fund

AMFI is an industry association, incorporated in 1995, is not aSo-so it can just issue
guidelines to members. It cannot enforce regulations.
 To Define & Maintain high professional, ethical standards in all areas of operation in
MF Industry.
 To recommend best business practice and code of conduct to be followed by the
members and other engaged in various activities.
 To interact with the Securities and Exchange Board of India (SEBI) and represent to
SEBI on all matters concerning the mutual fund industry.
 To represent to the Government, Reserve Bank of India and other bodies on all
matters relating to the Mutual Fund Industry.
 To develop a cadre of well trained agent distributors.
 To undertake nationwide investor awareness programmed to promote better
understanding of the concept & working of mutual funds.

AMFI CODE OF ETHICS:

AMFI Code of Ethics sets out the standards of good practices to be followed by the AMC in
their operations and in their dealings with investors, intermediaries and the public.
SEBI Regulation 1996 requires all the AMC and trustees to abide by the code of conduct.

24
Integrity

Members in business shall observe the high standard of integrity and fairness in all the
dealing done by them. Mutual Fund Scheme shall be organized &Managed and their
portfolios of securities selection should be in the interest of all classes of unit holder and not
in the interest of any associates.

Due Diligence
SEBI has mandated AMCs to put in place a due diligence process to regulate distributors
who qualify any one of the following criteria:

a. Multiple point presence (More than 20 locations)

b. AUM raised over Rs.100 crore across industry in the non institutional category but
including high net worth individuals (HNIs)
c. Commission received of over Rs. 1 Crore p.a. across industry
d. Commission received of over Rs. 50 Lakhs from a single mutual fund.

AMFI’s Code Of Conduct For Intermediaries Of Mutual Funds

_ AMFI has framed a set of guidelines and code of conduct for intermediaries, consisting
of individual agents, brokers, distribution houses and banks.
_ In the event of breach of the Code of Conduct by an intermediary, the following sequence
of steps is provided for:
» Write to the intermediary (enclosing copies of the complaint and other documentary
evidence) and ask for an explanation within 3 weeks.
» In case explanation is not received within 3 weeks, or if the explanation is not satisfactory,
AMFI will issue a warning letter indicating that any subsequent violation will result in
cancellation of AMFI registration.
» If there is a proved second violation by the intermediary, the registration will be cancelled,
and intimation sent to all AMCs.
The intermediary has a right of appeal to AMFI.

25
RETURNS AND RISK IN MF
Equity Schemes
 Securities Analysis Disciplines
 Fundamental Analysis
 Technical Analysis

 A passive fund manager does not need to go through this process of securities analysis, but
securities analysis is an important aspect of actively managed schemes.

Fundamental Analysis

EPS :Total earnings per share=

Net Profit after tax (for equity share holders) /No. of shares outstanding
_ Net profit of the company - Rs. 1000 crores
_ No. of equity shares outstanding - 100 crores
_ EPS = (Rs. 1000 crore / 100 crore ) = Rs. 10
_ This tells investors how much profit the company earned for each equity share that they
own.

Price to Earnings Ratio (P/E Ratio) :

Market value per share / EPS
_ Market Price of the share - Rs. 50
_ Earnings per share - Rs. 10
_ P/E Ratio = (Rs. 50 / Rs. 10) = 5
_ A low P/E is not a buy always, and a High P/E is not a sell always.It is based on the
expectation of future performance of the company

Book value :Value of company’s asset per share that share holders will receive if company
goes into liquidation.
Paid up equity cap + Reserves & Surplus / No. of Shares Outstanding
_ Paid up Capital - Rs. 1000 crore
_ Reserves and Surplus - Rs. 250 crore
_ No. of Outstanding Shares - 100 crores
_ (Rs. 1000 crores + Rs. 250 Crores) / 100 crores = Rs. 12.50

26
Price to Book Value :An indicator of how much the share market is prepared to pay for
each share of the company, as compared to its book value.
Market Price / Book Value per Share

_ Market Price of Share - Rs. 50

_ Book Value per share - Rs. 12.50
_ Price to Book Value - ( Rs. 50 / Rs. 12.50) = 4
_ Most financial indicators cannot be viewed as stand-alone numbers.
_ They need to be viewed in the context of unique factors underlying each company.

Technical Analysis
Technical Analysts believe that price behaviour of a share, and the volumes traded are a
reflection of investor sentiment, which in turn will influence future price of the share.
_ Technical annalists are also called CHARTISTS.
It is generally agreed that longer term investment decisions are best taken through a
fundamental analysis approach, while technical analysis comes in handy for shorter term
speculative decisions, including intra-day trading and even to time the market for decisions
based on fundamental analysis.

Returns
Simple Return
» The Simple Return can be calculated with the following formula:
Later Value minus Initial Value / Initial Value*100
_ Suppose you invested in a scheme, when its NAV was Rs 12. Later, you found
that the NAV has grown to Rs 15. How much is your return?
= [ (15 – 12) / 12] * 100 = 25%

Annualized Return

» The annualized return can be calculated as

Simple Return * 12 / Period of Simple Return (In Months)
_ Continuing with the same example, if the Simple Return is achieved in, say, 8
months, the annualized return would be :

27
= (25% * 12) / 8 = 37.50%

Compound Return

Compound Annual Growth Rate

The formula is same as Compounded Return.

_ But here the frequency of compounding will be annual only.

_ Load will reduce overall return of the portfolio.
_ Mutual funds are not permitted to promise any returns, unless it is an assured returns
scheme. Assured returns schemes call for a guarantor who is named in the offer document.

Drivers of Risk In A Scheme

Portfolio Risk
» This is related to performance of the assets in the portfolio, but there isno certainty

regarding the performance of the selected assets classes by the fund manager .
Portfolio Liquidity
» If assets lying in the portfolio is Liquid, profits can be booked when required.
» SEBI has laid down criteria to identify illiquid investments, and also set a ceiling to the
proportion of such illiquid investments in the net assets of a scheme.

28
» The ceiling is lower for open-ended scheme, which have a greater need for liquidity because
investors can offer their units for re-purchase at any time.

Liquid assets in the scheme :

» Two reasons to keep liquidity:
They believe that the market is over-heated, and therefore prefer to
sell their investments and hold the proceeds in liquid form, until the
next buying opportunity comes up.
_ They want to provide for contingencies such as impending dividend
payment or re-purchase expectations.
Higher the liquid assets in the scheme, lower is the return of the scheme but at the same
time they protect the scheme from any distress sale of investments.

Risk In Equity Funds

In the long run, equity markets are a good barometer of the real economy –
but in the short run, markets can get over-optimistic or over-pessimistic,
leading to spells of greed and fear.

Risk in Debt Funds

There is assured value on maturity, but debt securities fluctuate in value, with changes in
yield in the overall market.
_ A fund manager taking a wrong call on the direction of interest rates can seriously affect
the scheme performance.
_ Because of Illiquidity in Non – Government Debt Market, an element of subjectivity creeps
into their valuation, and therefore the NAV.
_ Short maturity securities (lower modified duration) suffer lesser fluctuation in value, as
compared to the ones with longer tenor (higher modified duration).
Fixed Maturity Plan’s (FMP) yield is relatively more predictable on maturity but in the
interim, the value of these securities will fluctuate in line with the market – and therefore, the
scheme’s NAV too will fluctuate.
_ If the FMP is structured on the basis of investment in nongovernment
paper, then the credit risk is also an issue.

29
Risk In Balanced Funds
_ Balance Schemes :
» It is rare for both debt and equity markets to fare poorly at the same time.
Since the performance of the scheme is linked to the performance of these two distinct asset
classes, the risk in the scheme is reduced.
» It can be based on (i) Fixed Asset Allocation (ii) Flexible Asset Allocation
» Between fixed asset allocation funds and flexible asset allocation funds, the latter carry
higher risk.

_ Monthly Income Plan (MIP) :

» It seeks to combine a large debt portfolio with a yield-kicker in the form of an equity
component.
» In such a structure, it is possible that losses in the equity component eat into the profits in
the debt component of the portfolio.
» If the scheme has no profits to distribute, then no dividend will be declared.

30
 Measures of Risk

Beta – β

_ Beta is a measure of Systematic Risk.

_ Beta of any Index will always be 1.
_ Beta for particular security or portfolio can be 1, More than 1 or Less than 1.
_ Interpretation :
» β = 1 --- Return of security / portfolio = Market Return
» β > 1 --- Return of security / portfolio > Market Return (Aggressive security / portfolio)
» β < 1 --- Return of security / portfolio < Market Return (Defensive security / portfolio)
_ This is relevant to EQUITY only.

_ Un-systematic risk / Specific Risk can be reduced through diversification.

_ Performance of the scheme is compared with Benchmark.
» It should be in synch with the investment objective of the scheme

31
» The benchmark should be calculated by an independent agency in a transparent manner,
and published regularly.
» In case of Index Funds, gaps between the scheme performance, and that of the benchmark,
are called Tracking Errors. Or
» The difference between an index fund’s return and the market
return, as seen earlier, is the Tracking Error.
» Index fund with least Tracking Error is the best.

STRUCTURAL FRAMEWORK OF MUTUAL FUND

32
Example of structural framework

SPONSOR
The application to SEBI for registration of a mutual fund is made by the sponsor/s.
Eligibility of a Sponsor :
» Sponsor should be carrying on business in financial services for 5 years.
» Sponsor should have positive net worth (share capital plus reserves minusaccumulated
losses) for each of those 5 years.
» Latest net worth should be more than the amount that the sponsorcontributes to the capital
of the AMC.

33
» The sponsor should have earned profits, after providing for depreciationand interest, in
three of the previous five years, including the latest year.
» The sponsor needs to have a minimum 40% share holding in thecapital of the AMC.

TRUSTEE
In order to perform the trusteeship role, either individuals may be
appointed as trustees or a Trustee company may be appointed by the sponsorsonly.
Prior approval of SEBI needs to be taken, before a person is appointed as Trustee.
They have a critical role in ensuring that the mutual fund complies with all
the regulations, and protects the interests of the unit-holders.
Eligibility:
» Every trustee has to be a person of ability, integrity and sincerity.
» A person who is guilty of moral turpitude cannot be appointed trustee.
» A person convicted of any economic offence or violation of any securities laws
cannot be appointed as trustee.
The sponsor will have to appoint at least 4 trustees.
» If a trustee company has been appointed, then that company would need to have at least 4
directors on the Board.
» At least two-thirds (2/3) of the trustees / directors on the Board of the trustee company,
would need to be independent trustees i.e. not associated with the sponsor in any way.
»The agreement between Sponsor(s) and Trustees is called ‘Trust Deed’.
»All the schemes belong to trustees and all major decisions are taken by trustee.

AMC: ASSET MANAGEMENT COMPANIES

 Day to day operations of asset management is handled by the AMC.
 The AMC is appointed by the sponsor or the Trustees.
 Prior approval of the trustees is required, before a person is appointed as director on
the board of the AMC.

34
  The AMC has ensure that the investment of funds pertaining to any scheme is not
contrary to the provisions of the SEBI regulations and the trust deed.
 At least 50% of the directors should be independent directors i.e. not associate of or
associated with the sponsor or any of its subsidiaries or the trustees.
 The AMC needs to have a minimum net worth of Rs. 10 crore.

 The agreement between the Trustees and the AMC is known as ‘Investment
Management Agreement’.
 An AMC cannot invest in its own schemes, unless the intention to invest is disclosed
in the Offer Document. Further, the AMC cannot charge any fees for its own
investment in any of the schemes managed by itself.
 The appointment of an AMC can be terminated by majority of the trustees, or by
75% of the Unit-holders. However, any change in the AMC is subject to prior
approval of SEBI and the Unit-holders.

Entities in AMC:
» Chief Investment Officer (CIO) is responsible for overall investments of the fund. Fund
managers assist the CIO.
» As per SEBI regulations, every scheme requires a fund manager, though the same fund
manager may manage multiple schemes.
» Securities Analysts support the fund managers through their research inputs.
»Securities Dealers help in putting the transactions through in the market.
» Chief Marketing Officer (CMO)is responsible for mobilizing money
under the various schemes.
» Chief Operations Officer (COO) handles all operational issues.

35
OTHER SERVICE PROVIDERS
Custodians

 The custodian has custody of the assets of the fund.

 The Custodian is appointed by the mutual fund (Trustees).

 All custodians need to register with SEBI.

 The custodian settles all the transactions on behalf of the mutual fund schemes.
 A ‘Custodial Agreement’ is entered into between the trustees and the custodian.
 More than 50% of the custodian or directors of the custodians should be independent
from the sponsors. So, the custodian and sponsor cannot be the same entity.

R & T Agent

 All RTAs need to register with SEBI.

 The appointment of RTA is done by the AMC.

 The record of investors and their unit-holding may be maintained by the AMC itself,
or it can appoint a Registrar & Transfer Agent (RTA).
 So, it is not compulsory to appoint a RTA. The AMC can choose to handle this
activity in-house.
Examples : CAMS and Karvy

Auditors

 Auditors are responsible for the audit of accounts.

 Accounts of the schemes need to be maintained independent of the accounts of the AMC.
 The auditor appointed to audit the scheme accounts needs to be different from the
auditor of the AMC.
 While the scheme auditor is appointed by the Trustees, the AMC auditor is appointed by
the AMC.

36
Fund Accountant

 performs the role of calculating the NAV.

 There is no need for a registration with SEBI to perform this function.
 The AMC can either handle this activity in-house or canoutsource it.

Distributors

 Distributors need to pass the prescribed certification test, and registerwith AMFI.

Collecting Bankers
 These bank accounts are maintained with collection bankers who are appointed by
the AMC.

KYC Registration Agencies

 SEBI has mandated a unified KYC for the securities market through KYC
Registration Agencies registered with SEBI.
 In-Person Verification (IPV) by a SEBI-registered intermediary is compulsory for all
investors.
 Distributors who have a valid NISM-Series-V-A: Mutual Fund Distributors certificate
and a valid ARN can carry out the In-person verification if they have completed the
KYD process.

37
COMPANY PROFILE:
NJ

38
INTRODUCTION
Mr. NeerajChoksi & Mr. Jignesh Desai are two first generation entrepreneurs who began
the journey of 'NJ' in 1994. The promoters of the NJ Group were friends since their college
years and the bond between Mr. Neeraj& Mr. Jignesh has been instrumental in the success
of NJ. Discussing upon important things before taking any decision, is a habit that they have
followed ever since they shared their hostel room in Vidhyanagar, where Mr. Neeraj was
studying his management courses and Mr. Jignesh was into engineering. They both have a
complementary style of functioning that augurs perfectly well for the business.

Driven by their passion for financial well-being of customers & the mission for transforming
lives, the promoters have successfully put NJ on the forefront of innovation & growth. With
a humble beginning from home, the promoters have successfully shaped the group's forays
into many diversified businesses. Both believe that 'Trust' has played a very important role
in NJ's journey, and in every step that they have taken. The words of the promoters aptly
describes this journey of NJ – 'Built on Trust'.

The NJ Group represents a fast growing, vibrant and dynamic environment driven by a
strong vision. The NJ Group is at the fore-front of innovation, service quality and is well-
known in the industry for its' strong execution capabilities. All of which is because of its
people power. To deserving candidates, NJ represents a strong brand that helps you grow,
not only professionally, but also as a person.

Today NJ family boasts of nearly 1,000 employees in over 100 locations across India and
beyond.

Life & Culture at NJ

Enthusiasm, Enterprise, Education and Ethics form the four pillars for life at NJ.

At NJ one can actually witness the vibrant energy, enthusiasm and the enterprising drive to
excel flowing freely throughout the Group. At NJ, one can also experience the creativity, one-

39
to-one responsiveness, collaborative approach and passion for delivering value. At NJ people
evolve to be more effective, efficient, and result oriented.

NJ understands that the people are the most important assets of the organisation and it is not
the company that grows but the people. NJ strongly believes in 'Learning through
Responsibility' concept which is aptly reflected in its employee demographics.

At NJ we believe in excelling in everything that we do. The culture at NJ reflects this

responsibility and employees are excited and enthused in doing so. Employees are given
ample freedom in their work. The objective is to keep an open, healthy environment with
ample scope for enterprise, improvement, innovations and out-of-the box solutions..

NJ WEALTH FINANCIAL PRODUCTS DISTRIBUTION NETWORK

NJ Wealth - Financial Products Distributors Network is one of India's leading and most
successful network of distributors in the financial services industry.

Started in 2003, the NJ Wealth seeks to reach out to the common man and extend the
opportunity to create wealth through an empowered network of financial product
distributors – the NJ Wealth Partners. To its Partners, NJ Wealth provides a full service,
comprehensive business platform with end-to-end solutions critical for success in financial
products distribution practice. With it's compelling set of offerings covering every area of
distribution practice, NJ Wealth has managed to successfully transform the lives of many
small and big distributors.

To the common man, NJ Wealth offers a comprehensive wealth management platform with a
wide choice of financial and non-financial products. Backed by high levels of excellence in
operational and service standards, NJ Wealth offers customers of its' Partners with solutions
that truly makes a difference.

40
Product basket
 Domestic mutual funds (all AMCs)
 Capital Markets - direct equity and ETFs
 Fixed Deposits of companies
 PMS products (Third party & NJ)
 Government/ RBI/ Infrastructure bonds
 Residential & commercial properties

Partner Services
 Dedicated Relationship Manager
 Marketing & Sales support
 Research support
 Training & Education support
 Dedicated Customer Care / Query management support
 Technological support, including online business / 'Partners Desk' with CRM &
Employee Management modules.

Customer Services:
Online family "Client Desk" enabling single portfolio view of 'entire' wealth portfolio
Trading &Demat Account with online transacting & call-&-trade service in mutual funds,
direct equity & ETF.

INFORMATION TECHNOLOGY

NJ Technologies, is a latest venture by NJ wherein we aim to provide quality technology

solutions to businesses in a wide range of domains.

NJ started its journey in technology with the start of Finlogic Technologies (India) Pvt. Ltd.,
a group company, in year 2000. The idea then was to develop software applications to
support the growing (financial services) distribution business and manage the IT
infrastructure. Over the years, the captive IT team, gained strong domain expertise and

41
skills in diverse areas and technology domains. Today, Finlogic team boasts of over 270+
employees with skills & rich experience in product development, software testing,
infrastructure management, R&D, project management & information security. The entire
NJ Group's internal systems and infrastructure is managed by Finlogic which also has
developed many state-of-the art, proprietary applications that power NJ's businesses.

NJ Technologies now seeks to leverage these in-house skills & expertise to help other
businesses find solutions for their business challenges. At NJ Technologies, we are keen to
adopt the latest and the best practices from the industry in delivering solutions that really
work for businesses.

TRAINING & DEVELOPMENT

The NJ Gurukul is a venture aimed at providing valuable training & education support to
the young, emerging talent pool in India. Started in year 2008, NJ Gurukul today offers a
very wide range of training programs across India in all major cities.

NJ Gurukul is about a vision that aspires to nurture the young talent in India and to
transform them into individuals with knowledge & skills for employment and enterprise.
With special focus on the financial advisors community, NJ Gurukul today, is a leading
provider of training programs in the financial services industry. NJ Gurukul offers a wide
range of training programs by way of part / full time classroom sessions being conducted at
multiple locations across India. NJ Gurukul has an in stitutionalised, process driven
approach to training with focus on delivering uniformity in quality & content.

The NJ Gurukul has a Board of Trainers with over 35 well qualified, professional trainers
empanelled across India for delivering training programs. Within a short time, NJ Gurukul
has trained over 35,000 participants in over 80 locations across India. NJ Gurukul is an
authorised Education Provider (EP) with FPSB India to deliver training for the prestigious
Certified Financial Planner - CFPCM Certification. NJ Gurukul is also amongst the largest
trainers of Mutual Fund Distributors in India.

42
Key Training Programs:

 Mutual Fund Distributors Certification by NISM for prospective NJ Wealth

Distributors
 Certified Financial Planner (CFPCM) Certification by FPSB India

Products:

English4all - a distance learning / home kit for English language

PROWESS =CFP DLP and AMFI DLP

43
Business English Writing - Classroom Session

Duration : 24 hours (3 days – Can be customized)

For whom : For those who feel that expressing themselves impact fully will
enhance their prospects of success, both professionally as well as
personally.

Objective : To enable the participants to master business writings by helping

them to determine the most appropriately suitable manner. We
provide the context and the tools that every professional needs to
succeed in a business world that is rapidly shifting to a
relationship-based model of partnering and association.

Course Content The course covers:

1. Basic Grammar
2. Tenses
3. Correct Business Writings
4. Different Types of business Writings
5. Useful Tips for Business Writings

Focus Our English Language Course stands apart from the regular English
Areas : language courses, as it focusses on the business aspect of knowledge in the
following areas:

1. Subject and Verb agreement

2. Pronouns
3. Adjectives and Adverbs
4. Prepositions & Articles
5. Active and Passive Voice
6. Tenses

44
NJ PRODUCTS
The following is broadly the product basket available to NJ Wealth Partner on
eligibility / registration basis. The NJ Wealth Distributors can engage in active
distribution of the following products to their clientele through NJ...

1. Mutual Funds
2. NJ has tie-ups with all Asset Management Companies (AMCs) and all mutual funds
schemes are part of the product basket. Eligible Partners can offer any mutual fund
scheme to their client from day one of their association with NJ. The customers have a
single window access to any mutual fund product / scheme they would like to access.
3. Capital Market – Direct Equity & ETFs

NJ is a SEBI registered member for NSE & BSE and capital markets. Clients of NJ E-
Wealth A/c service have access to capital market products of direct equity stocks and
Exchange Traded Funds (ETFs). One can undertake transaction online or through
Call & Transact facility.

4. Fixed Income

NJ has also entered into tie-ups with leading companies / institutions for distribution
of fixed income products, namely Non-Convertible Debentures, Infrastructure / RBI
Bonds, Company Deposits, etc. The availability of fixed income products in addition
to mutual funds, makes the product basket even more attractive.

5. Portfolio Management Services (PMS)

NJ has its own PMS offerings with NJ Advisory Services Pvt. Ltd., a group company,
being a PMS service provider. The existing strategies have mutual funds as the
underlying, one of very few in the industry. In addition to this, PMS products by
other leading PMS service providers also regularly form a part of the product basket
with Partners. Clients can subscribe to the PMS products of NJ / other providers
through their Partners. Access to NJ PMS products are exclusively available for NJ
Partners only.

45
Journeywith NJ
Welcome to NJ Wealth - Financial Products Distributor Network:

The journey that promises to be enriching and rewarding in every manner. NJ Wealth
Distributor Network will make sure that your distribution practice gets a perfect start and
achieves great heights of success. NJ's 360° Distribution Platform, would ensure that your
distribution practice stays ahead of the competition, always, and you remain best equipped
to meet the challenges of the business, at any stage of growth. No doubt, the NJ Wealth
Distributors or Partners today are much more successful and enjoy greater customer loyalty
and satisfaction compared to the traditional product distributors.

For Prospective / New Distributors:

NJ Wealth Distributor Network truly offers a complete, end-to-end assistance related to

distribution practice. For new / prospective distributors, there is a promise for continued
support right from training and registering for examination to starting the business,
establishing it and taking your distribution practice to heights of success. Powered by the
360° Distribution Platform, you would have access to the all the products, services and
solutions to present yourself & function as a new age, professional Financial Products
Distributor in the true sense of the term. The related graph shows a simple representation of
your journey with NJ that we foresee...

For Existing Advisers & Distributors:

Existing financial advisers, distributors, insurance agents, equity brokers, tax advisers, and
other professionals have a great opportunity to transform their existing business. In the
existing financial services industry, there is a high dominance and presence of traditional
advisers and distributors. However, the market dynamics are changing and there is a
growing demand for professional distributors who deal in multiple products and offer value-
added solutions on offer. Associating with NJ Wealth Distributor Network will give you that
opportunity to transform and grow your business. Powered by the 360° Distribution
Platform, you would have access to a gamut of products, services and solutions that your
business may ever need. It will also equip you with the right tools to successfully face
competition from traditional and institutional distributors.

46
47
Differences between traditional distributors and Nj wealth partner

Traditional Distributor NJ Wealth Partner

Limited Asset Classes + Products of select Multiple Asset Classes + Products of all
product providers leading product providers

Biased for select products from distribution Unbiased approach in multiple asset
/advisory basket. classes, products

Availability of great value-added services /

Non-availability of any value-added services.
online facilities. Less dependence on
Heavy dependence on physical interaction.
physical interaction.

Quality of servicing, query resolution ability Great efficiency in query resolution. High
in question service standards.

Faces challenge of Customer Acquisition, Enjoys higher Customer conversions,

Retention and Satisfaction Retention and Satisfaction levels

More time spent on servicing, administration. Focus on Customer satisfaction & business
Less time for customer satisfaction and Growth. NJ handles all important admin /
business growth. servicing works.

48
NJ India Invest-Investment Portfolio.

 Axis Asset Management Company Ltd.

 SBI Funds Management Private Ltd.

 Tata Asset Management Ltd

 Religare Asset Management Company Private

Ltd.

 Sundaram Asset Management Company Ltd

 Birla Sun Life Asset Management Company Ltd

 BOI AXA Investment Managers Pvt Ltd

 HDFC Asset Management Company Ltd

 Kotak Mahindra Asset Management Company

49
  BNP Paribas Asset Management India Pvt Ltd

 Edelweiss Asset Management Ltd

 Escorts Asset Management Ltd

 Franklin Templeton Asset Management (India) Pvt

Ltd.

 HSBC Asset Management (India) Pvt. Ltd.

 ICICI Prudential Asset Management Company Ltd.

 ING Investment Management (India) Pvt. Ltd.

 Peerless Funds Management Co. Ltd.

 L&T Investment Management Ltd.

50
  IDFC Asset Management Company Ltd

 JM Financial Asset Management Pvt Limited

 LIC NOMURA Mutual Fund Asset Management

Company Ltd.

 Mirae Asset Global Investments (India) Pvt. Ltd

 Morgan Stanley Investment Management Pvt.Ltd.

 MotilalOswal Asset Management Company Ltd.

SWOT Analysis:

51
Strengths:

 Spread evenly across different part of countries covering more than 22 states.
 High number of diversified professionals
 Regular training and development programmes for advisors and employees.
 Technology support to its client and advisors. E.g.:-MCS
 High growth over the years and offering huge benefits to its partners.
 Leading Distributor of MF in India.

Weaknesses:

 Less knowledge of clients and advisors about mutual fund industry.

 Needs further expansion of market.
 More practical solutions for fulfilling objectives of clients.

Opportunities:

 Investment opportunities in sectors like gold and real estate.

 Target could be high payed clients like CA and government employees.
 Less investment in infrastructure funds.

Threats:

 Banks are tough competitors and some have have large no. of clients than Nj
 Distributors like IIFL and Prudent are also having good growth.
 Different independent investment advisors are taking clients too in different
states of NJ.

CSR ACTIVITIES OF NJ
Blood Camp
On 30th June 2014, a blood donation camp was organised in collaboration with The
SuratRaktadan Kendra, at the corporate headquarters of NJ, located in Surat. NJites have

52
imbibed in their culture that donating blood is not a charity, but it is their responsibility
towards the society, in order to reach out for people in need. The spirited employees of NJ,
zealously contributed 125+ units of blood, making the blood donation camp a big success.
Donating blood is a very easy way to save life, which was clearly reflected in the
contributions of NJ employees during the camp.

Imparting education

NJ was glad to play host a group of nearly 50 students of standards 9th to 12th from
AtulVidyalayaValsad, Gujarat. The occasion was to showcase the work place environment to
the young, enthusiastic students. NJ was also pleased to offer some lessons on India and its
potential & importance of savings & planning in life.

Sustainability

Today India's environmental crisis is no longer an option but a necessity. Environmental

sustainability in real estate should be seen as an enormous opportunity to contribute
significantly in the country's effort to improve environment. There is a growing

consciousness towards environment protection and it something that is increasingly being

adopted in the real estate industry.

We believe that we can working together with all stakeholders towards successfully achieving
improved sustainability performance in our real estate projects. Sustainable real estate
projects are those that aim to minimize the impact on environment in design, construction &
operations through use of appropriate materials, technologies & techniques. For the
consumers too, sustainable real estate projects provide benefits of reduction in operating
costs and reduced carbon footing.

We believe that the shift towards sustainability will increasingly gain momentum in India
and is not just a passing trend. This new way of doing business in real estate could also
provide considerable financial savings. The government too has introduced several schemes

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that encourage sustainability in many ways. By developing, maintaining, owning and
occupying sustainable buildings, we all can have a positive impact environment. We advocate
creation of a more sustainable environment for current and future generations. The
education of all stakeholders on environmental & financial benefits will be integral to the
overall success of sustainability program. After all Environment Matters for us all.

Affordable Housing:The Definition“ the society and makes good economic sense.

The DemandAffordability" concept is very generic and could have different meanings for
different people based on differences in income levels. Affordable housing can be defined
using the following 3 key parameters. First two parameters are independent of each other,
the third parameter is correlated to income and property price, and hence can be termed a
dependent parameter. A further distinction between low-cost housing and affordable
housing is necessary since there is a tendency to often confuse the same.

Affordable housing is not about budget or substandard homes in isolated areas with
compromise on connectivity, surrounding infrastructure or on space space, quality or
facilities as required by the family. Affordable housing is in fact offering all basic amenities
and facilities with quality, lasting construction but at a price point that is affordable by
aspiring customers. Affordable Housing thus cuts across all income segments of

There is a huge demand for affordable & low cost housing in India owing to demographical
and economic conditions prevailing in India. There have been many estimates which suggest
that the shortage of affordable housing is reaching critical proportions.

 KumariShelja, the Hon'able Minister of Housing & Urban Poverty Alleviation

(MoHUPA), quoted a housing deficit of about 2.5 crore for the economically weaker
& LIGs in India with a growth rate of about 3.6 lakh units p.a.
 Report of Technical Group constituted by the MoHUPA, in 2010 reported the total
urban housing shortage including backlog & additional requirement to be 26.53
million dwelling units by the end of the 11th FYP period of which 99% shortfall was
estimated for EWS & LIG segment.

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  A report for NAREDCO by property consultant Knight Frank, 2010, estimated 11.84
million dwelling units required to be built by the end of 2013-14 across all income
segments, in 37 cities. Of this, nearly 90% will be needed for EWS, LIG & MIG.
Delivering >10 million units in affordable housing category in top 37 cities quantifies
to a business opportunity in excess of Rs.5,00,000crore.

The Challenges

The major challenge for implementing affordable housing projects from the developer's
perspective is the availability of land and the cost factor. Easy availability of cheap land in
urban areas is a big challenge. With rapid urbanisation there is a huge pressure on limited
land resources driving up costs. Adding to the worry is also the construction and labour costs
which add up to the overall costs of the project pushing up the cost for the consumer. Good
policy environment and assistance from government in promoting and enabling affordable
housing sector to progress is desired and some positive actions is visible, albeit slowly.

The major challenge in determining the sale of affordable housing projects from the
customer's perspective is the availability of adequate financing sources. Here, traditional
banking channels are not of much help as most of the customers are from the informal sector
and do not have adequate documentation or any form of guarantee. Here the role of micro-
finance institutions in enabling the low income consumers purchase these "Affordable
houses" is of much importance.

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RESEARCH METHODOLGY
A. RESEARCH DESIGN:
Since there is a comparison of mutual fund and other investment
a v e n u e . Therefore the following research design and techniques has been
used to carry research:
♦ Qualitative research
♦ Quantitative research
♦ Indirect research (used in need)

B. COLLECTION OF DATA:

I. PRIMARY DATA has been collected with the help of a questionnaire, prepared
specially for the advisors of mutual fund and other sectors.

II. SECONDARY DATA has been collect from different sources:

 Internet
 Company annual reports
 Research papers
 Govt. Publications
 Past Records And Files
 Journals and periodicals pertaining to different advisory products and
advisors.
C. SAMPLING:

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Sample Design :-
Convenience sampling technique has been used to collect data.Convenience sampling
is a type of sampling where the first available primary data source will be used for the
research without additional requirements. In other words, this sampling method
involves getting participants wherever you can find them and typically wherever is
convenient. In convenience sampling no inclusion criteria identified prior to selection
of subjects. All subjects are invited to participate.

Sample Unit:-
It refers to the advisors who are to be surveyed and different advisory products for which
they have to give their viewpoint

Sample Size:-
The data has been collected by selecting a sample size of 100 advisors.

QUESTIONNAIRE

TOPIC NAME-TO STUDY THE SCOPE OF FINANCIAL ADVISORS FOR MUTUAL FUND IN
ALLAHABAD

Name: Mobile no.- Email.-

1. Gender:- (a) Male (b) Female

2. Age:- (a) 25-35 years (b) 35-45 years (c) 45-55 years (d) 55 years and above
3. Occupation:- (a) Business (b) Service (c) Profession
4. Income Level:- (a)bellow 20000 (b) Rs 20,000-30,000 per month (c) Rs 30,000-40,000 per
month (d) Rs 40,000-50,000 per month (e) Above Rs 50,000
Part-2
1. Are you aware about mutual fund? (a)yes (b)no

2. If you know about NJ in Allahabad? (a)yes (b)no

3. Does technology provide support to financial advisors in Allahabad? (a)yes (b)no

4. Growth of financial advisory in Allahabad? (a)yes (b)no

5. What skills are required by financial advisors in Allahabad?

(a)Communication (b) Knowledge (c) Network (d) Hard Working (e) Competitive

6. Retention of clients by financial advisors in Allahabad? (a) Yes (b) no

7. Is Allahabad a suitable place for financial advisory? (a) Yes (b) no

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8. Is there any difference between financial advisor of NJ and other mutual fund advisors in Allahabad?

(a) Yes (b) no

9. Is there any rise in income after joining financial advisory in Allahabad? (a) Yes (b) no

10. Are you aware about the role of AMFI for financial advisory? (a) Yes (b) no

Analysis

No. of advisors
20

Male
Female

80

According to the given diagram,we have selected 80 males and 20 females from a sample of
100 population.As there was more number of male wealth advisors as compared to females.

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 Age

2 10
22

66

From the above figure,it is clear that between age 21-30 the population is 24,31-40 are 18,41-
50 are 40,50 & more are again 18.

Education

2 8

26

64

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From the above diagram it is clear that for being an agent, he must be a graduate or could
have a higher qualification than that of a graduate.

Awareness of mutual fund

23

77

According to the above, Advisors who want to be a partner of Nj have idea about MF and
those who don’t they are given proper training and guidance of MF.

Nj Awareness

35

65

From the above figure, it reflects that those advisors who want to work in Mutual Fund, they
know about NJ India Invest Pvt. Ltd. And are eager to work for the same.

60
 Technology Support

28

72

From the above diagram, it is clear that those who want to work for Nj know about the
support of technology provided by it And most of them want to receive its benefit provided
through technology.

Growth

32

68

From the above diagram, it is clear that there is good growth of financial advisory in
Allahabad and a reasonable profit is earned in this. If one is willing to work hard, then he
could reap the benefits derived from it.

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 Skills

12
20

16

26

26

From the above diagram it is clear that,for being a good advisor you should have knowledge about
mutual fund and a good network of clients.Then you are bound to succeed in this industry. Then
comes communication, your client should know his benefits and being competitive too.

Clients Retention

42

58

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From the above diagram ,it is clear that .It becomes difficult to retain clients for advisors,
one of the biggest challenge in Mf industry is retaining clients. As they are eager to withdraw
money, as soon as the return received from SIP goes down.

Location

46
54

From the above data,it is clear that Allahabad is a good place.But big cities are the first
preference of financial advisors from which they can receive better benefits.

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 Advantage of being Nj advisor

36

64

From the above diagram, it is clear that most of them think that Nj do have an edge over
other mutual fund companies and provide to them a better platform for working of Mf and
other AMC companies.

Income Appreciation

26

74

From the above diagram, it is clear that there is definitely rise in income for partners after
joining Nj. As the clients would increase, same way their income would rise and definite
growth could be observed for them.

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 Role of AMFI

45
55

From the above diagram, it is clear that most of the advisors are less aware of AMFI.As most
of them are new, so proper knowledge is provided for the same. Then they are ready to enter
in the Mutual Fund Industry.

Recommendations/Suggestions

From the diagrams the following suggestions could be recommended-

 Mutual fund advisors should know the role of AMFI.As they are less aware of it.
 There is increase in demand for mf advisors. As there are large no. of lic agent. And not
half of it are mf advisors. So Mf sector should work on it. NJ is one of the leading
companies in distributorship. It should work towards increasing the number of mf
advisors.
 Advisors should gain knowledge about mutual fund industry and its working. More
details about Mf companies should be provided. As this would help in growth of mutual
fund sector.

 High growth could be used as a powerful weapon to attract more and more clients
towards Mf sector.
 Technology has played a major role in success of Mf.
 The skills required by MF advisors comprises mainly comprises mainly network and
knowledge. Then comes communication and after that competitiveness.

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 Mf advisors do keep in mind location of Allahabad has affected. As they could have
gained better from their clients.
 There is definitely rise in income of Mf advisors after working for mutual fund and they
do consider an edge while working in NJ when being compared to other advisors.
 More training and programmes should be conducted. So that larger no. of Lic agents can
get converted to Mf advisors.
 Weak areas should be analyzed and worked upon so that it can increase its growth.
 Government can work towards increasing the mf industries. As it will provide
employment and can contribute significantly to the economy.

 It is hard to retain clients for advisors. As most of them withdraw their money before

maturity and don’t get its benefits.

Limitations of the project

 The data is collected from various individual advisors who can have different opinion.

 A sample study of just 100 units. So data cannot be made a basis for drawing correct

solutions.

 Time was a concern, as the data was collected in less amount of time.

 The study is based only in Allahabad. So different interpretations could be drawn for

different regions.

 Less support of respondents as they were busy themselves.

 Multiple offices were be visited.

 A thorough study of Mf sector was needed. As advisors had less information

regarding it.

 Other sectors like insurance and real estate had to be studied.

Learnings:-

1) Knowledge about Mf.

2) Knowledge about Nj.

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 3) Partners of Nj.
4) Advantages of being partner in Nj.
5) Different investment products.
6) Advisor’s commission and the risk factors.
7) Development programmes conducted by Nj.
8) The 360 degree platform provided by Nj.
9) How SIP plays a major role in Mf and generating revenue for its clients.

10) Competitors of Nj and how its partners are recruited.

11) Role of statutory and regulatory bodies like SEBI and AMFI.

12)Why mutual fund is a leading sector in financial services.

13) Tests conducted by NISM and how to prepare for the same.

14) How to make partners for Nj.

15) Knowledge about various terms frequently used in Mf.

16) Use of Technology by Nj for its partners and clients.

17) Various schemes in mutual fund and how it is related to financial planning.

18)Difference between Traditional and wealth advisors.

19) Calculation of systematic and unsystematic risk.

20) Calculation of Simple,Compound returns.

21) Role of KYC

References:-

1) www.njtechnologies.in

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2)www.njgurukul.com

3)www.njinsure.in

4)www.njwealth.in

5)www.njgroup.in

6)www.nism.com

7)www.amfi.com

8) www.moneycontrol.com

Thanks & Regards

Anita Priyadarsini

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