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Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
Cash Management awareness among current account holders
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Cash Management awareness among current account holders

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My Summer Project Report of Internship at Reliance Mutual Fund, Lucknow. I have done project under the guidance of Mr Vikas jain ,RM at RMF.

My Summer Project Report of Internship at Reliance Mutual Fund, Lucknow. I have done project under the guidance of Mr Vikas jain ,RM at RMF.

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  • 1. Shri Ram Murti Smarak International Business School FINANCE“Cash Management awareness among Current account holders through Mutual Funds”Ms. Vandna Misra Ravindra kr. Vishwakarma ______________________ 1101074
  • 2. Index• Acknowledgment……………………………………….3• Declaration ……………………………………….4• Executive Summary…………………………………….5• Industry Profile …………………………………….6• Company profile ……………………………………15• Cash management ……………………………………..28• Objective ………………………………………33• In scope ……………………………………...33• Out scope ……………………………………...33• Liquid fund…………………………………………….34• Research Methodology………………..………………57• Questionnaire………………………………………….58• Finding and Analysis………………………………….61• Database Collected……………………………………71• Findings………………………….…………………....76• Recommendations…….………………………………77• Bibliography…………………………………………..78 2
  • 3. AcknowledgementA Successful completion of Project work is a result of well-organized and coordinated teamwork. So at the completion of the project.I take this opportunity to thank all the people who provided me proper guidance and help incompleting this project. First of all I would like to thank “Mr. Mohit Mehrotra “Regional Head atReliance capital asset management ltd. Besides him I am also thankful to Mr. Shashi Ranjan(Cluster Manager), Mr. Alok Srivastava (Regional Operations Manager), Mr. Ankush RoyRegional training manager and all other Relationship Managers, Staff at RCAM who providedme valuable guidance in completing this project.I express a deep sense of gratitude to my corporate mentor and facilitator of this project “Mr.Vikas Jain “who continuously guided me throughout the Project.I would also like to thank my faculty mentor “Ms. Vandna Misra” who provided me guidanceand support for successful completion of the project.Last But not the least I would like to thank all my family members and friends for theircooperation and inspiration for their direct and indirect help without this project could not becompleted. 3
  • 4. DeclarationI hereby declare that the Project work entitled “CASH MANAGEMENT AWARENESSAMONGST CURRENT ACCOUNT HOLDERS THROUGH MUTUAL FUND” submittedby me for the Summer Internship during the Post Graduate Diploma in Management Program toShri Ram Murti Smarak International Business School is my original work and has not beensubmitted earlier either to SRMS IBS or to any other Institution for the fulfillment of therequirement for any course of study. I also declare that no chapter of this manuscript in whole orin part is lifted and incorporated in this report from any earlier/other work done by me or others.Place:Date: Signature of StudentName of Student : Ravindra Kumar VishwakarmaAddress : H.No. 547/681 Jalalpur Kuti, Near A- Block 4
  • 5. Rajajipuram Lucknow. Executive summaryI have undertaken the project titled “Cash Management awareness among Current AccountHolders through Mutual Funds”I have focused on the Reliance liquid Fund- which more effectively manages the short term cashand provides better return than current traditional ways, likes current, savings and FDs, withminimal risk.In this project I have covered the industrial Area of Transport Nagar, Latouche Road, Chowk,and Hazratganj which is huge opportunity to be penetrated for the company as well as can behighly useful for the owners of company to get the benefit of surplus fund due to their businesscycle.The methodology adopted for framing the project was based on Questionnaire, Personalinterview and observation. This projected is restricted to Transport Nagar, Latouche Road,Chowk, and Hazratganj.During this project, I visited the various industries of the Area, and personally met with theowners of the company, and had explained the concept of liquid fund. Their utility over currenttraditional methods like Current and Saving Account.During the conversation I had used the presentation to explain the concept in a better andeffective way. And got their feedback by recording their responses on a Questionnaire.During my meeting with business owners, it was quite difficult to get the correct informationfrom the owners especially regarding the business cycle. Besides this there was difficulty ingetting owner’s attention as they were not willing to spare their time as most of the time during 5
  • 6. survey it was business hours. At some places it was quite difficult to meet owner because he wasrarely present at the place. Thus at some places I had to interact with manager of the place.So under these limitations I have drawn conclusion on the basis of questionnaires andobservations. Industry ProfileThe Indian mutual fund industry is worth around Rs. 6.8 lakh crores which is the total assetsunder management (AUM) as on April 2012. Mutual fund overview Average asset under management- under various Mutual Fund companies 6
  • 7. The origin of Mutual fund industry in India was first introduced by UTI in the year 1963. In thebeginning the growth was slow, but it accelerated from the year 1987 when other private playersentered the industry.In the past decade, Indian mutual fund industry has seen dramatic improvements, both qualitywise as well as quantity wise. Before, the entry of other private players in mutual fund Industrythe total asset under management (AUM) was Rs. 67 crs. The private sector entry to the fundfamily raised the AUM to Rs. 470 crs. in March 1993 and till April 2004, it reached the height of1,540 crs.But despite the growth of Indian Mutual Funds Industry the Total AUM is less than 11% of thetotal deposits held by the Indian banking industry.The main reason of its poor growth is that the mutual fund industry in India is new in thecountry. Most of Indian investors are yet to be made aware of the concept; there is a need ofspreading awareness about the mutual funds among investors. Hence it is the responsibility of allthe Mutual fund companies that they not only just sell mutual funds but also make them realizethe need of investing in mutual funds. 7
  • 8. The mutual fund industry can be broadly put into four phases according to the development ofthe sector. These are as follows:First Phase - 1964-87Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by theReserve Bank of India and functioned under the Regulatory and administrative control of theReserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial DevelopmentBank of India (IDBI) took over the regulatory and administrative control in place of RBI. Thefirst scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6, 700crores of assets under management.Second Phase - 1987-1993This phase was characterized by Entry of Public Sector in mutual funds. SBI Mutual Fund wasthe first followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund(Oct 92). LIC in 1989 and GIC in 1990. The end of 1993 marked Rs.47, 004 as assets undermanagement.Third Phase - 1993-2003With the entry of private sector funds in 1993, a new era started in the Indian mutual fundindustry, giving the Indian investors a wider choice of fund families. Also, 1993 first MutualFund Regulations were introduced. Kothari Pioneer (now merged with Franklin Templeton) wasthe first private sector mutual fund registered in July 1993.The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive andrevised Mutual Fund Regulations in 1996. Mutual fund industry now functions under the SEBI(Mutual Fund) Regulations 1996. 8
  • 9. There was an increase in number of mutual fund companies due to entry of foreign players. Atthe end of January 2003, there were 33 mutual funds with total assets of Rs. 1, 21,805 crores.The Unit Trust of India with Rs.44, 541 crores of assets under management was way ahead ofother mutual funds.Fourth Phase - since February 2003In this phase UTI was divided into two separate entities. One was the Specified Undertaking ofthe Unit Trust of India with AUM of Rs.29, 835 crores (as on January 2003). The SpecifiedUndertaking of Unit Trust of India, functions under the administration and the rules ofGovernment of India and does not come under the purview of the Mutual Fund Regulations.The second was the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It isregistered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation ofthe erstwhile UTI which had in March 2000 more than Rs.76, 000 crores of AUM and with thesetting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and withrecent mergers taking place among different private sector funds, the mutual fund industry hasentered its current phase of consolidation and growth. As at the end of September, 2004, therewere 29 funds, which manage assets of Rs.153108 crores under 421 schemes. 9
  • 10. GROWTH IN ASSETS UNDER MANAGEMENT 10
  • 11. ORIGIN OF MUTUAL FUND INVESTING:-When three Boston Securities executives pooled their money together in 1924 to create the firstmutual fund, they have no idea how popular mutual funds would become. The idea of poolingmoney for investing purposes started in Europe in mid 1800s. The first pooling of money in theUS was created in 1893 for the faculty and staff of Harvard University. On March 21st, 1924 thefirst official mutual fund was born. It was called the Massachusetts Investors Trust. After oneyear the Massachusetts Investor Trust grew from $ 50000 in assets to 3, 92,000 in assets (witharound 200 shareholders). In contrast there are more than 10000 mutual funds in US todaytotaling around $7 trillion (with approximately 83 million individual investors) according to theInvestment Company Institute. 11
  • 12. Concept of Mutual Funds:A Mutual Fund is a trust that pools the savings of a number of investors who share a commonfinancial goal. The money thus collected is then invested in capital market instruments such asshares, debentures and other securities. The income earned through these investments and thecapital appreciations realized are shared by its unit holders in proportion to the number of unitsowned by them. Thus a Mutual Fund is the most suitable investment for the common man as itoffers an opportunity to invest in a diversified, professionally managed basket of securities at arelatively low cost. The flow chart below describes broadly the working of a mutual fund: Mutual Fund Operation Flow Chart 12
  • 13. Organization of Mutual Funds in India:-There are many entities involved and the diagram below illustrates the organizational set up of amutual fund: 13
  • 14. Structure of Mutual Fund in India: • Mutual Fund in India acts as a Unit Trust. • The structure is required to be followed by mutual funds in India as per SEBI regulations, 1996. • It is constituted in the form of Public Trust created under the Indian Trust Act, 1882. • The Trustees hold the Unit holders money in fiduciary capacity i.e. the money belongs to the unit holders and is entrusted to the fund for the purpose of the investment. • The Trustees do not manage the portfolio of securities directly, for this specialist function they appoint the Asset Management Company. • The trust is executed through a document called a Trust deed that is executed by the fund sponsor in favor of the trustees. • The trust deed is required to be stamped as registered under the provisions of Indian Registration Act and registered with SEBI. • The role of Asset Management Company is to act as the investment manager of the trust and must have a net worth of at least Rs. 10 Crores. 14
  • 15. Advantages & Disadvantages of Mutual Funds:The advantages of investing in a Mutual Fund are:• Diversification: The best mutual funds design their portfolios so individual investments will react differently to the same economic conditions. For example, economic conditions like a rise in interest rates may cause certain securities in a diversified portfolio to decrease in value. Other securities in the portfolio will respond to the same economic conditions by increasing in value. When a portfolio is balanced in this way, the value of the overall portfolio should gradually increase over time, even if some securities lose value.• Professional Management: Most mutual funds pay topflight professionals to manage their investments. These managers decide what securities the fund will buy and sell.• Regulatory oversight: Mutual funds are subject to many government regulations that protect investors from fraud.• Liquidity: As compared to other mode of investment, it is easy to get your money out of a mutual fund. You can take out your money through cheque, online request or any other mode.• Convenience: You can usually buy mutual fund shares by mail, phone, or over the Internet.• Low cost: Mutual fund expenses are often no more than 1.5 percent of your investment. Expenses for Index Funds are less than that, because index funds are not actively managed. Instead, they automatically buy stock in companies that are listed on a specific indexDisadvantages of Mutual Fund: • Dilution: It’s possible to have too much diversification. Because funds have small holdings in so many different companies, high returns from few investments don’t make 15
  • 16. much a difference on the overall return. Dilution is also the result of a successful fund getting too big. When money pours into funds that have had a strong success, the manager often has trouble finding a good investment for all the new money. • Taxes: When making a decision about your money, Fund manager don’t consider your personal tax situation. For example, when a fund manager sells a security, a Capital-gain tax is triggered, which effect how profitable is individual from the sale. It might have been more advantageous for the individual to defer the capital gain liability. Reliance Mutual fundReliance Mutual Fund is one of India’s leading Mutual Funds, with Average Assets underManagement (AAUM) of Rs. 78,112 Crores with about 64.65 Lakh investors and about70.99Lakh folios. Reliance Mutual Fund, a part of the Reliance Group, is one of the fastest growingmutual funds in India. RMF offers investors a well-rounded portfolio of products to meet varyinginvestor requirements and has presence in 179 cities across the country. Reliance Mutual Fundconstantly endeavors to launch innovative products and customer service initiatives to increasevalue to investors.Reliance Capital Asset Management Limited (‘RCAM’) is the asset manager of Reliance MutualFund. RCAM a subsidiary of Reliance Capital Limited, which holds 92.93% of the paid-upcapital of RCAM, the balance paid up capital being held by minority shareholders.Reliance Capital Ltd. is one of India’s leading and fastest growing private sector financialservices companies, and ranks among the top 3 private sector financial services and bankingcompanies, in terms of net worth. Reliance Capital Ltd. has interests in asset management, lifeand general insurance, private equity and proprietary investments, stock broking and otherfinancial services.Name of Fund Reliance Mutual FundSponsor : Reliance Capital Limited 16
  • 17. Trustee : Reliance Capital Trustee Co. LimitedInvestment Manager / : Reliance Capital Asset Management LimitedAMCStatutory Details : The Sponsor, the Trustee and the Investment Manager are incorporated under the Companies Act 1956. Company structure 17
  • 18. VISION STATEMENT“To be a globally respected wealth creator, with an emphasis on customer care and a culture ofgood corporate governance” 18
  • 19. MISION STATEMENT“To create and nurture a world-class, high performance environment aimed at delighting theircustomers”ンCORPORATE GOVERNANCECORPORATE GOVERNANCE POLICYReliance Capital Asset Management Ltd. has a vision of being a leading player in the MutualFund business and has achieved significant success and visibility in the market. However, animperative part of growth and visibility is adherence to Good Conduct in the marketplace. InReliance Capital Asset Management Ltd., the implementation and observance of ethicalprocesses and policies has helped the company in standing up to the scrutiny of domestic andinternational investors.MANAGEMENTThe management at Reliance Capital Asset Management Ltd. is committed to good CorporateGovernance, which includes transparency and timely dissemination of information to itsinvestors and unit holders. The Board of Directors of RCAM is a professional body, includingwell-experienced and knowledgeable Independent Members. Regular Audit Committee meetingsare conducted to review the operations and performance of the company.EMPLOYEESReliance Capital Asset Management Ltd. has at present, a code of conduct for all its officers. Ithas a clearly defined prohibition on insider trading policy and regulations. The managementbelieves in the principles of propriety and utmost care is taken while handling public money,making proper and adequate disclosures.All personnel at Reliance Capital Asset Management Ltd are made aware of their rights,obligations and duties as part of the Dealing Policy laid down in terms of SEBI guidelines. They 19
  • 20. are taken through a well-designed HR program, conducted to impart work ethics, the Code ofConduct, information security, Internet and e-mail usage and a host of other issues.One of the core objectives of Reliance Capital Asset Management Ltd. is to identify issuesconsidered sensitive by global corporate standards, and implement policies/guidelines inconformity with the best practices as an ongoing process. Reliance Capital Asset ManagementLtd. gives top priority to compliance in true letter and spirit, fully understanding its fiduciaryresponsibilities.SPONSORSReliance Mutual Fund schemes are managed by Reliance Capital Asset Management Limited., asubsidiary of Reliance Capital Limited, which holds 93.37% of the paid-up capital of RCAM, thebalance paid up capital being held by minority shareholders.”, the sponsor. Reliance MutualFund (RMF) has been sponsored by Reliance Capital Ltd (RCL). The promoter of RCL is AAAEnterprises Private Limited. Reliance Capital Limited is a Non-Banking Finance Company.Reliance Capital Limited is one of the India’s leading and fastest growing financial servicescompanies, and ranks among the top three private sector financial services and bankingcompanies, in terms of net worth.THE AMCRELIANCE CAPITAL ASSET MANAGEMENT COMPANYReliance Capital Asset Management Limited (RCAM), a company registered under theCompanies Act, 1956 was appointed to act as the Investment Manager of Reliance Mutual Fund.Reliance Capital Asset Management Limited (RCAM) was approved as the Asset ManagementCompany for the Mutual Fund by SEBI vide their letter no IIMARP/1264/95 dated June 30,1995. The Mutual Fund has entered into an Investment Management Agreement (IMA) withRCAM dated May 12, 1995 and was amended on August 12, 1997 in line with SEBI (MutualFunds) Regulations, 1996. Pursuant to this IMA, RCAM is authorized to act as InvestmentManager of Reliance Mutual Fund. The net worth of the Asset Management Company includingpreference shares as on September 30, 2007 is Rs.152.02 crores. 20
  • 21. “Reliance Mutual Fund schemes are managed by Reliance Capital Asset Management Limited., asubsidiary of Reliance Capital Limited, which holds 93.37% of the paid-up capital of RCAM, thebalance paid up capital being held by minority shareholders.”Reliance Capital Asset Management Limited (RCAM) was approved as the Asset ManagementCompany for the Mutual Fund by SEBI by their letter no. IIMARP/1264/95 dated June 30, 1995.The Mutual Fund has entered into an Investment Management Agreement (IMA) with RCAMdated May 12, 1995 and was amended on August 12, 1997 in line with SEBI (Mutual Funds)Regulations, 1996. Pursuant to this IMA, RCAM is authorized to act as Investment Manager ofReliance Mutual Fund. The net worth of the Asset Management Company including preferenceshares as on March 31, 2005 is Rs.113.59 crores. SWOT analysisA type of fundamental analysis of the health of a company by examining its strengths(S),weakness (W), business opportunity (O), and any threat (T) or dangers it might be exposed to. 21
  • 22. I. STRENGTHS• Brand Name: Reliance Mutual fund is a part of – Anil Dhirubhai Ambani Group which is a well-known brand in India. It is also one of the fastest growing Mutual fund company in India. Thus it has a strong Brand Image in the minds of Indian consumers. Also RMF being a domestic “brand” plays a significant role in sale of product.• Strategy: As opposed to some of its competitors (e.g. HSBC, DSP Black rock), Reliance ADAG operates on a multi-brand strategy. The company operates under numerous well- known brand names, which allows the company to appeal to many different segments of the market. This makes Reliance more familiar in the minds of Indian Customer.• Fund performances: One of the most important reason for RMF’s popularity is the return that its schemes have given i.e.: the fund performance of RMF. The continuous dividend that the company keeps on declaring is one of the most attractive elements of RMF schemes. The Flagship product of RMF i.e. Reliance vision and Reliance Growth both have given returns approximately more than 50% since its inception. Both the schemes have declared dividend on regular basis. Also some of the schemes have been awarded for their best performances.• Strong channel partner network: Reliance Mutual fund is one of the few mutual funds to pioneer retail investing in the country by reaching out to investors and distributors in over 115 cities through branches and representatives across India. Hence the company’s strong distribution network is playing a great role in making reliance reaching out to maximum number of investors.• Strong Financial Base: Reliance has many sources of income throughout the group, and this diversity within the group makes the company more flexible and resistant to 22
  • 23. economic and environmental changes. Unlike other Competitors they have enough financial strength to handle periods of Economic turmoil & slowdown.• Diverse portfolio: Reliance Mutual fund offers investors a well-rounded portfolio of products to meet varying investor requirements and has presence in 179 cities across the country. It has products to meet the needs of all types of consumers, and provides them greater flexibility and choice to them.• Excellent customer service: Ensures better customer services, convenience and communication by efficient network. It has better and superior customer support service which gives an edge to the company over its competitors. II. WEAKNESS• Emerging markets: Reliance Mutual Fund only covers Indian market and does not have global reach. As there is more investment demand in the United States, Japan and the rest 23
  • 24. of Asia, Reliance should concentrate on these markets, especially in view of low global interest rates. • No Guaranteed Return: Mutual funds are like many other investments without a guaranteed return: there is always a possibility that the value of your investment may depreciate. Unlike fixed-income products, such as bonds and Treasury bills, mutual funds experience price fluctuations along with the stocks that make up the fund. This creates a doubt in the minds of Indian Consumer who generally prefer low risk, low return than high risk and high return. • Fees: In mutual funds, the fees are classified into two categories: shareholder fees and annual operating fees. The shareholder fees, in the forms of loads and redemption fees are paid directly by shareholders purchasing or selling the funds. The annual fund operating fees are charged as an annual percentage – usually ranging from 1-3%. These fees are assessed to mutual fund investors regardless of the performance of the fund. As you can imagine, in years when the fund doesn’t make money, these fees only magnify losses. • Less promotional expenditure: With growing competition there is a need to promote the product, so as increase recall rates in consumer’s mind. At present company do not spends much on advertisements and promotions.III. OPPORTUNITIES 24
  • 25. • Potential markets: The Indian rural market has great potential. All the major market leaders consider the segments and real markets for their products. With Rural market which remains untouched, entry into this market could be highly beneficial. • Rising inflation: In Past few years there has been a continuous increase in inflation rate, which makes traditional investment avenues ineffective. Thus Mutual funds have emerged as more paying avenues. • Small and Medium enterprises: This is the segment which contributes 40% of the industrial output and 35% of direct exports; this sector has achieved significant milestones for the industrial development of India. According to mutual fund experts only 10 % of these invest in mutual funds and rest 90% of these still remains as an untapped market. So along with existing markets their lies an opportunity to expand the base and capture this new market as in the future outlook these current SME segments are expected to turn into big corporates with current boom in the country. So it is essential to catch them young in initial growth cycle as they can turn out to be future large corpus client. • International fund: Investing internationally opens up a huge market which is otherwise left untapped. India’s market at present constitutes only 5% of the world’s Stock market. Several other fund houses have invested in international market like Franklin Templeton and Fidelity International Opportunities fund. Moreover fund houses are now permitted by RBI to invest in ADR/GDR.IV. THREATS 25
  • 26. • Increased Competition: With increasing competition in the industry in terms of more upcoming schemes and better existing performances of mutual fund schemes of other AMCs is the threat posed to RMF. As per the distributors HDFC, Franklin Templeton and SBI mutual fund schemes are giving tough competition to the Reliance Mutual Fund.• High level of volatility in stock market: There is strong relationship between Volatility and market performance. Volatility tends to decline as the stock market rises and increases as the stock market falls. When volatility increases, risk increases and returns decreases. The market is so volatile now a day that no one is able to predict the market. Hence this has become a big threat for AMC.• Possibility of more stringent regulations by SEBI, RBI, and AMFI in future: Due to various scams and fluctuations in Financial sector, there may be chances of amendment of rules, which may hamper the growth of mutual funds in India. 26
  • 27. TYPES OF SCHEMES A. EQUITY/GROWTH SCHEMES: The aim of growth funds is to provide capital appreciation over the medium to long- term. Such schemes normally invest a major part of their corpus in equities. Such funds have comparatively high risks. These schemes provide different options to the investors like dividend option, capital appreciation, etc. and the investors may choose an option depending on their preferences. The investors must indicate the option in the application form. The mutual funds also allow the investors to change the options at a later date. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time. B. DEBT/INCOME SCHEMES: The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures, Government securities and money market instruments. Such funds are less risky compared to equity schemes. These funds are not affected because of fluctuations in equity markets. However, opportunities of capital appreciation are also limited in such funds. The NAVs of such funds are affected because of change in interest rates in the country. If the interest rates fall, NAVs of such funds are likely to increase in the short run and vice versa. However, long term investors may not bother about these fluctuations. C. SECTOR SPECIFIC SCHEMES: These are the funds/schemes which invest in the securities of only those sectors or industries as specified in the offer documents. E.g. Pharmaceuticals, Software, Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the performance of the respective sectors/industries. While these funds may give higher returns, they are more risky compared to diversified funds. Investors need to keep a watch on the performance of those sectors/industries and must exit at an appropriate time. They may also seek advice of an expert. D. GOLD: Gold is seen as a symbol of security and a sign of prosperity. Indian consumers consider gold jewellery as an investment and are well aware of gold’s benefits as a store of value. Gold is also recognized as a form of money in India, a tradable liquid asset. It is one of the foundation assets for Indian households and a means to accumulate wealth from a long 27
  • 28. term perspective. Gold investment has been in the culture of Indian tradition and has been onrise amongst the modern investors as well due to the financial uncertainty and inflationarypressures. 28
  • 29. RELIANCE MUTUAL FUNDEQUITY FIXED INCOME GOLD DIVERSIFIED LARGE CAP LIQUID Reliance Vision fund  Reliance Liquidity Fund ETF Reliance Top 200 Fund  Reliance Liquid Fund-  Reliance Gold Reliance Quant Plus Fund Treasury Plan Exchange Traded Reliance NRI Equity Fund  Reliance Liquid Fund- Fund Reliance Equity Fund Cash Plan: FOF ULTRA SHORT TERM  Reliance Gold INDEX  Reliance Floating Rate Savings Fund Reliance Index Fund-Nifty Fund- Short Term Plan Plan  Reliance Money Manager Reliance Index Fund-Sensex Fund: Plan  Reliance Medium Term Fund DIVERSIFIED MID & SMALL CAP Reliance Growth Fund SHORT TERM Reliance Long Term Equity  Reliance Short Term Fund Fund Reliance Small Cap Fund LONG TERM  Reliance Regular Savings DIVERSIFIED MULTI CAP Fund- Debt Option Reliance Regular Savings  Reliance Income Fund Fund-Equity option Reliance Equity Opportunities Fund DYNAMIC  Reliance Dynamic Bond Fund BALANCED  Reliance Regular Savings Fund- GILT Balanced Option  Reliance Gilt Securities Fund DIVERSIFIED THEME BASED  Reliance Infrastructure MIP Fund  Reliance Monthly  Reliance Natural Income Plan Resources Fund SECTOR  Reliance Banking Fund  Reliance Diversified Power Sector Fund  Reliance Media & Entertainment Fund  Reliance Pharma Fund TAX SAVER  Reliance Tax Saver (ELSS) Fund:  Reliance Equity Linked Savings Fund- ARBITRAGE  Reliance Arbitrage Advantage Fund ETF reliance Banking Exchange Traded 29 Fund
  • 30. CASH MANAGEMENT AWARENESS AMONGST CURRENT ACCOUNT HOLDERS THROUGH MUTUAL FUNDWhat is Cash Management?In most common sense, Cash Management means how an Individual or an organization can useits excess funds/idle funds available to him in a best possible way and get a good return.Cash Management has two aspects: • Identifying the best option to invest the excess cash that could yield maximum return among various alternatives. • Availability of cash in the times of cash crunch.In Cash Management, following things should be managed: – cash flows into and out of the firm, – cash flows within the firm, and – cash balances held by the firm at a point of time by financing deficit or investing surplus cash 30
  • 31. Present Scenario:As per the RBI data (as on Sep 11) the total savings in Current and Saving account is about54000 crs only in Lucknow city. This huge amount remains unutilized and does not provide anyreturn to the person having Current or Savings Accounts.In general, retail Investors i.e. Traders, Business owners, Industries owner etc. have their funds inCurrent, Saving, Fixed Deposit or such other options which They thinks is safe and will helpthem in attaining their objective, whether it is Liquidity or Earning return or something else.Retail investors are generally unaware about other avenues which can provide them bothLiquidity as well as help them in getting a good Return. Such an option is Liquid Fund –which isdebt category mutual fund.Not only does the Liquid Fund offer higher post-tax returns, it also offers a reasonable degree ofsafety in terms of the principal invested. Moreover, these investments are highly liquid. Mostretail investors, though, are either unaware of this or averse to liquid funds owing to concerns ofprobable capital erosion or misconception regarding mutual funds. According to the Associationof Mutual Funds in India (AMFI), of Rs 2.22 trillion assets under management (AUM) in liquidfunds as on April 30, 2011, retail investors constituted less than 1% share while the rest was heldby high net-worth individuals, corporates, banks and financial institutions. On the other hand, thesize of savings bank deposits has continued to grow despite yielding only a nominal rate ofreturn. The quantum of money in savings & current bank accounts in banks is Rs. 4,483,777 cr ason September, 2011, as majority of Indians continue to view savings bank deposits as the safestoption for parking liquid cash.How do Liquid funds offer such high liquidity?The answer to this question lies in the fact that Liquid funds primarily invest in money marketinstruments such as certificates of deposits (CDs), commercial papers (CPs) and governmenttreasury bills. Such a portfolio helps liquid funds provide high liquidity to investors.Accordingly, redemption requests are processed within 24 hours. 31
  • 32. * The interest rate varies with the tenor of the deposit**1-year returns as on April 30, 2011 of CRISIL Mutual Fund Ranked schemes (for quarter ended March 31, 2011)^ plus 3% cess^^ plus 5% surcharge and 3% cess@ 10% without indexation or 20% with indexation whichever is lower plus 3% cess1 RBI data2 Earlier banks calculated interest on savings account at 3.5% p.a. on the lowest available balance between the 11th of themonth till the end of the month. From April 1, 2010, interest is calculated on the available balance on a daily basis. Thisway, savings account holders earn interest on every rupee deposited. Further, from May 2011, the interest rate has beenincreased to 4%3 In the case of most banks, the depositor would receive 1% less for any premature withdrawalWhere do liquid funds stand as compared to other similar options?Although in case of Liquid Fund there is no guarantee of principal invested, but these arerelatively safe instruments as the portfolios of liquid funds mostly comprise ‘P1+’ rated CPs andCDs (highest rating for these types of securities) with a maximum maturity of 91 days. CRISIL’srating of ‘P1+f’ signifies “very strong” protection against losses from credit defaults. However,the marginally higher risk in liquid funds as compared to a savings deposit is compensated bysuperior returns of liquid funds.An analysis of liquid Funds vis-à-vis returns of saving deposits by CRISIL has been shown beenbelow. During the period under review, returns from liquid funds (1-year rolling returns) werealways higher than the interest offered on a savings bank account. Moreover, during periods ofrising inflation, returns from a liquid fund were typically higher, thereby reducing the effect ofinflation. This was not so in the case of a savings bank deposit where the returns were constant.Therefore, during a high inflation cycle, investors have been better off investing in liquid funds. 32
  • 33. * From April 1, 2010, interest is calculated on the available balance on a daily basis. Prior to this, banks calculated interest onsavings account at 3.5% p.a. on the lowest available balance between the 11th of the month till the end of the month.Source: Ministry of Commerce and Industry for Inflation rates, RBI for savings bank deposit rate, CRISIL Mutual Funddatabase for liquid fund returnsThe tax advantageThere are two options of investing in a liquid fund: i) Growth option and ii) Dividend option.The difference between the two options is that there are intermittent cash flows by way ofdividends in the case of the latter, while the growth option is cumulative in nature.The dividend option also has various dividend frequencies, viz daily, weekly, fortnightly,monthly, quarterly and half yearly.In the case of growth option, returns from liquid funds would attract short term capital gains ifredeemed within a year (as per the investor’s income tax bracket) and long term capital gains ifredeemed after a year (10% without indexation and 20% with indexation plus cess). 33
  • 34. In the case of a dividend option, although dividends are tax-free in the hands of the investor,there is a dividend distribution tax (DDT) 4 which is paid by the mutual fund house before thedividend is distributed to unit holders. Investors who are not in need of frequent cash flows canopt for the ‘dividend reinvestment plan’ so that these cash flows are reinvested into the sameliquid fund.Post tax, liquid funds yield better returns vis-à-vis savings deposits, where the interest earned onthe latter would be taxed based on an individual’s tax slab. Investment in a fixed deposit wouldalso attract tax on returns as per the investor’s tax-bracket (maximum of 30% plus cess).4 As per Union Budget 2011-12, the DDT rate in the case of institutional investors has been raised to 30% from 25%(Plus 5% surcharge and 3% cess). This would take effect from June 1, 2011. There would, however, be no impact onRetail investors who would continue to be charged DDT of 25% (plus 5% surcharge and 3% cess). 34
  • 35. Objectives of the study: • To know about the awareness level of current account holders regarding the short term cash management. • To help them provide better avenues to get a return for their short term savings or surplus cash even for a very short period (like 2-3 days). • Ultimately provide company an opportunity of greater penetration in the market through liquid funds. • Focus on the current and Savings Account deposits in Lucknow which is about 54000 cr. annually (as per latest RBI data till September 2011) which is huge opportunity for the Company and the participation of liquid fund is not even 1%. BANKS DEPOSITS(CRORE) SBI and its associates 11,209 Nationalized Banks 42,475 Foreign banks 320 Total 54004In scope:Industrial Areas of Transport Nagar, Kaiserbagh and different areas of Lucknow. Focus onbusiness people like pharmaceuticals distributors, Small and medium enterprise owners andothers. These people have a huge surplus fund due to difference in business cycles i.e.: cashinflow and Cash outflow, which is deposited in current and saving accounts. 35
  • 36. Out scope:In this study we will not cover Service class people both in Government and private sector asthey have regular savings and do not have huge surplus cash LIQUID FUNDBasic ConceptThe term liquid in financial terms, it means an asset which is as good as hard cash. Real estate isthe least liquid of all assets and a savings deposit is the most liquid of all. Similarly, LiquidFunds are a kind of mutual fund or debt fund which can be redeemed in as less as 24 hours.InvestmentsLiquid funds invest in money market instruments. Money market is a market for short termborrowing and lending. This market deals with debt instruments such as certificate of deposits,commercial paper and treasury bills.Basic features  No entry and exit load  Low annual fee of 0.30 to 0.70%  Variable Minimum investment amount according to scheme  Great tax benefit  Easy liquidation  An average 8% p.a return on liquid funds  Liquid funds have the restriction that they can only have 10 per cent or less mark-to- market component, indicating a lower interest rate riskTax benefit 36
  • 37. If you invest in a short-term fixed deposit, the returns are taxable as per the investors tax bracket.Therefore, if you are in the highest tax bracket most of your returns from the fixed deposit wouldbe wiped out. (The tax rate is about 30%)On the other hand with liquid funds, as mentioned before, if the dividend option is taken, thereturns are tax-free in the investors hand. In case of Growth option it is about 27%.Past performanceIn recent years, liquid funds have an average return, between 7.7 per cent and 8.85 per cent.Recent data shows that banks are taking fresh exposures in liquid funds which indicate a highdegree of safety and confidence in liquid funds.This shows that liquid funds are a good product to invest in if you are looking to fulfill someshort-term goals, as well as get good return in case of idle funds.Liquid funds vs. saving accounts:The primary objective of having a savings account with a bank is to ensure that your surplus cashremains safe and completely liquid. Along with this peace of mind you also earn a yearly interestof 3.5 per cent on your funds. Liquid schemes of funds come very close to such accounts.Such schemes are often used by high net worth individuals (HNIs) as savings account. Money ina liquid fund can be redeemed within a day of submission of a withdrawal application.Besides being liquid in nature, these funds offer higher and more tax-efficient returns than yoursavings accounts. While you earn an annual interest of 3.5% on your deposits in savings account,by investing in liquid funds you make on an average 5.5% a year. You can invest in these fundsfor as short a period as one day. No exit load is charged for any withdrawal.Also in case of liquid funds the net asset values (NAVs) are declared even on Saturdays andSundays. This feature makes a good return on the larger amount for the investors. 37
  • 38. RELIANCE LIQUID FUNDReliance Liquid fund is an open ended liquid scheme which invests in money market and othershort term fixed income securities. Categories RMF Schemes Investor Profile Open Ended Reliance Liquidity Fund(RLF) Meant for short term cash Fund Managers management for corporates and is suitable for investors with Amit Tripathi & Anju Chhajer investment horizon between 1 day to 1 month Liquid Funds Reliance Liquid Fund- Treasury Meant for short term cash Plan( RLF-TP ) management and is suitable for investors with investment Fund Manager horizon between 1 day to 1 Prashant Pimple month Reliance Liquid Fund- Cash Plan Suitable to park very short ( RLF-TP ) term investment surplus for a duration ranging from a day to Fund Manager month Amit TripathiKey Benefits: • High liquidity 38
  • 39. • Minimal interest rate risk, • Choice of Investments - Growth Plan or Dividend Plan • No Entry or Exit Load Types of Reliance liquid fund 1) Reliance liquidity Fund 2) Reliance liquid Fund- Treasury plan 3) Reliance liquid Fund – Cash PlanProcedure to invest in Reliance Liquid Funds: 1) For Individuals: For KYC (Know your Customer) form following are the essential required documents: a) Proof of identity: PAN card with Photograph, Unique Identification Number (UID) (Aadhaar) / Passport / Voter ID b) Proof of Address: Passport/Voters Identity Card/Ration Card/, Utility bills like Telephone Bill (only land line), Electricity bill or Gas bill , Bank Account Statement/Passbook 2) For Non Individuals: For KYC (Know your Customer) form following are the essential required documents: a) Proof of identity: PAN card with Photograph, Unique Identification Number (UID) (Aadhaar) / Passport / Voter ID b) Proof of Address: Passport/Voters Identity Card/Ration Card/, Utility bills like Telephone Bill (only land line), Electricity bill or Gas bill , Bank Account Statement/Passbook Additional documents in case of Non individuals are as follows: 39
  • 40. Types of entity Documentary Requirements • Copy of the balance sheets for the last 2 financial years (to be submitted every year) • Copy of latest share holding pattern including list of all those holding control, either directly or indirectly, in the company in terms of SEBI takeover Regulations, duly certified by the company secretary/Whole time director/MD(to be submitted every year) • Photograph, POI, POA, PAN and DIN numbers of whole Corporate time directors/two directors in charge of day to day operations • Photograph, POI, POA, PAN of individual promoters holding control – either directly or indirectly • Copies of the Memorandum and Articles of Association and certificate of incorporation • Copy of the Board Resolution for investment in securities market • Authorized signatories list with specimen signatures Partnership firm • Copy of the balance sheets for the last 2 financial years (to be submitted every year) • Certificate of registration (for registered partnership firms only) • Copy of partnership deed • Authorized signatories list with specimen signatures • Photograph, POI, POA, PAN of Partners 40
  • 41. Trust • Copy of the balance sheets for the last 2 financial years (to be submitted every year) • Certificate of registration (for registered trust only).Copy of Trust deed • List of trustees certified by managing trustees/CA • Photograph, POI, POA, PAN of Trustees HUF • PAN of HUF • Deed of declaration of HUF/List of coparceners • Bank pass-book/bank statement in the name of HUF • Photograph, POI, POA, PAN of KartaUnincorporated Association or a • Proof of Existence/Constitution document body of individual • Resolution of the managing body & Power of Attorney granted to transact business on its behalf • Authorized signatories list with specimen signatures Banks/Institutional Investors • Copy of the constitution/registration or annual report/balance sheet for the last 2 financial years • Authorized signatories list with specimen signatures Foreign Institutional Investors (FII) • Copy of SEBI registration certificate • Authorized signatories list with specimen signatures Army/Government Bodies • Self-certification on letterhead • Authorized signatories list with specimen signatures 41
  • 42. Registered Society • Copy of Registration Certificate under Societies Registration Act • List of Managing Committee members • Committee resolution for persons authorized to act as authorized signatories with specimen signatures • True copy of Society Rules and Bye Laws certified by the Chairman/SecretaryFlowchartInvestment:Step 1: Submission of Application form and KYC of investorStep 2: Issue of unique folio number to investorStep 3: Investing through either RTGS/ NEFT or Cheque before 2 pmStep 4: Amount of mutual fund of equivalent NAV transferredRedemption:Step 1: Request of redemption either to AMC or Registrar before 3 pmStep 2: Amount of money along with interest transferred to the account the next working day 42
  • 43. 43
  • 44. Reliance liquid Fund- Cash Plan(G) Investment objective:To generate optimal returns consistent with moderate level of risk and high liquidity.Accordingly investment shall predominantly be made in Debt and Money market instruments.Allocation of Assets:Under normal circumstances the assets allocation under cash plan will be as follows: INSTRUMENTS Indicative allocations (% of Risk Profile total assets) Maximum Minimum High/ Medium/Low Money Market Instruments 100% 80% Low Debt instruments (Corporate Debt, Financial Institutions & Banking Sector Bonds, Public Low to 20% 0% Sector Bonds, Government Guaranteed Bonds and Medium Related Instruments) Contact detailsScheme details: Load DetailsFund Type Open ended Entry load N.A.Investment Plan Growth Exit Load 0.00%Launch Date Dec 1, 2007 Load Comments N.A.Benchmark Crisil Liquid FundAsset Size(Crs.) 595.80 (Mar-31 2012)Minimum Investment Rs 5,000Last Dividend N.A.Bonus N.A.Fund Manager Amit TripathiNotes N.A. 44
  • 45. Regd. Office: Kamala Mills Compound, trade World, B- Wing ,Senapati Bajapt Marg ,Lower Parel(W), Mumbai,400013Telephone no: 022-30994600Fax no: 91 22 30414899E-mail:response@reliancemutual.comWebsite:www.reliancemutual.comReliance liquid fund- cash Plan (G)NAV as on 1st June 2012- 17.660 (0.03) 45
  • 46. Performance:ReturnsReturns (NAV as on Jun 01 2012) Absolute Returns (in%) 46
  • 47. Source: as per money controlPortfolioPortfoliocomposition: portfolio composition cash/callEquity 0.00% - 3.53%Others 0.00% DEBT-Debt 96.07%Mutual N.A.fundsMoney 0.00%Market 96.07%CashCall 3.93% 47
  • 48. Reliance liquid fund- cash Plan (G)NAV as on 1st June 2012- 17.660 (0.03) Reliance liquid fund- Treasury Plan- IP (G)Investment objective:To generate optimal returns consistent with moderate level of risk and highliquidity. Accordingly investment shall predominantly be made in Debt andMoney market instruments. INSTRUMENTS Indicative allocations Risk Profile (% of total assets) Maximum Minimum High/ Medium/Low 50 0 % % Call Money/ Cash/ Repo and Reverse Repo Low Money Market Instruments (Milbar Linked Instruments, CPs, T-Bills, CDs or other Short Term 95% 0% Low Papers) 48
  • 49. Scheme details: Load DetailsFund Type Open Ended Entry load N.A.Investment Plan Growth Exit Load 0.00%Launch Date Dec 2003 Load Comments N.A.Benchmark CRISIL Liquid FundAsset Size(Crs.) 6176.05( march 31 2012)Minimum Investment Rs. 100,00,000Last Dividend N.A.Fund Manager Prashant PimpleNotes N.A. Contact details Regd. Office: Kamala Mills Compound, trade World, B- Wing ,Senapati Bajapt Marg ,Lower Parel(W), Mumbai,400013 Telephone no: 022-30994600 Fax no: 91 22 30414899 E-mail: response@reliancemutual.com 49
  • 50. Website:www.reliancemutual.com Reliance liquid fund- Treasury Plan-IP-(G) NAV as on 1st June 2012- 26.573 (0.03%)Performance: 50
  • 51. Returns:Returns (NAV as on Jun 01 2012) Absolute Returns (in%)period Returns (%) Rank Year Qtr. 1 Qtr. 2 Qtr3 Qtr. 4 Annual1 mth 0.8 1 2012 2.4 - - - -3 mth 2.5 3 2011 2.0 2.0 2.1 2.2 8.96 mth 5.0 3 2010 1.0 1.1 1.3 1.6 5.21 yr. 9.7 4 2009 1.8 1.3 1.2 -0.2 5.52 yr. 8.3 16 2008 2.0 2.1 2.3 2.4 9.13 yr. 7.1 3 2007 1.9 1.9 1.8 2.0 7.95 yr. 7.5 2Portfolio: 51
  • 52. Reliance liquid fund- cash Plan (G)NAV as on 1st June 2012- 17.660 (0.03)Portfolio composition:Equity 0.00%Others 0.00%Debt 97.19%Mutual N.A.fundsMoney 0.00%MarketCashCall 2.81% 52
  • 53. Investment objective: To generate optimal returns consistent with moderate level of risk and high liquidity. Accordingly investment shall predominantly be made in Debt and Money market instruments. INSTRUMENTS Indicative allocations Risk Profile (% of total assets) Maximum Minimum High/ Medium/Low 50 0 % % Call Money/ Cash/ Repo and Reverse Repo Low Money Market Instruments (Mibor Linked Instruments, CPs, T-Bills, CDs or other Short Term Papers) 95% 0% LowScheme details: Load DetailsFund Type Open Ended Entry load N.A.Investment Plan Growth Exit Load 0.00%Launch Date Mar 22 ,1998 Load CommentsBenchmark CRISIL Liquid FundAsset Size(Crs.) 676.81( Mar 31 2012)Minimum Investment Rs. 5000Last Dividend N.A.Bonus N.A.Fund Manager Prashant PimpleNotes N.A. Regd. Office: Kamala Mills Compound, trade World, B- Wing ,Senapati Bajapt Marg ,Lower Parel(W), Mumbai,400013 53
  • 54. Telephone no: 022-30994600Fax no: 91 22 30414899E-mail:response@reliancemutual.comWebsite:www.reliancemutual.com Reliance liquid fund- Treasury Plan-(G) NAV as on 1st June 2012- 25.932 0.01 (0.02%)Performance: 54
  • 55. Returns:Returns (NAV as on Jun 01 2012) Absolute Returns (in%)period Returns (%) Rank Year Qtr. 1 Qtr. 2 Qtr3 Qtr. 4 Annual1 mth 0.8 35 2012 2.2 - - - -3 mth 2.4 38 2011 2.0 2.1 2.2 2.2 8.66 mth 4.6 32 2010 0.9 1.1 1.3 1.6 5.01 yr. 9.2 25 2009 1.7 1.3 1.2 -0.2 5.32 yr. 8.0 23 2008 1.9 2.0 2.2 2.3 8.83 yr. 6.8 16 2007 1.8 1.8 1.7 1.9 7.65 yr. 7.2 15Portfolio: 55
  • 56. Portfolio Composition:Equity 0.00%Others 0.00%Debt 97.19%Mutual N.A.fundsMoney 0.00%MarketCashCall 2.81% Reliance L iquidity 56
  • 57. Reliance liquid fund- cash Plan (G) NAV as on 1st June 2012- 17.660 (0.03) Reliance L iquidity fund - (G) Investment objective: To generate optimal returns consistent with moderate level of risk and high liquidity. Accordingly investment shall predominantly be made in Debt and Money market instruments. INSTRUMENTS Indicative allocations Risk Profile (% of total assets) Maximum Minimum High/ Medium/Low 35 0 % % Repo and Reverse Repo low Money Market Instruments (Milbar Linked Instruments, CPs, T-Bills, CDs) and other Short Term 100% 65% Low Debt Instruments (Floating Rate Notes, Short Tenor NCDs, PTCs) and /or Less than 1 year maturity G Secs.Scheme details: Load DetailsFund Type Open Ended Entry load N.A.Investment Plan Growth Exit Load 0.00%Launch Date Jun 16 ,2005 Load Comments N.A.Benchmark CRISIL Liquid FundAsset Size(Crs.) 8438.63( Mar 31 2012)Minimum Investment Rs. 5,00,00,000Last Dividend N.A.Bonus N.A.Fund Manager Amit Tripathi/ Anju ChhajerNotes N.A. Contact details 57
  • 58. Regd. Office: Kamala Mills Compound, trade World, B- Wing ,Senapati Bajapt Marg ,Lower Parel(W), Mumbai,400013Telephone no: 022-30994600Fax no: 91 22 30414899E-mail:response@reliancemutual.comWebsite:www.reliancemutual.com Reliance Liquidity Fund-(G) NAV as on 1st June 2012- 16.438 0.0 (0.03%)Performance: 58
  • 59. Returns:period Returns (%) Rank Year Qtr. 1 Qtr. 2 Qtr3 Qtr. 4 Annual1 mth 0.8 2 2012 2.4 - - - -3 mth 2.5 10 2011 2.0 2.1 2.2 2.3 9.06 mth 5.0 5 2010 1.0 1.2 1.4 1.7 5.41 yr. 9.7 5 2009 1.8 1.3 1.2 -0.2 5.52 yr. 8.5 3 2008 2.0 2.1 2.3 2.4 9.23 yr. 7.1 4 2007 2.0 2.0 1.8 2.0 8.25 yr. 7.6 12 59
  • 60. Portfolio:Portfolio composition:Equity 0.00 %Others 0.00 %Debt 91.9 0%Mutual N.A.fundsMoney 0.00Market %CashC 8.09all % 60
  • 61. Research Methodology:Sampling: The study was carried out in different areas of Lucknow amongretail investors like Manufacturing industry owners, Transporters, jewellers,chikan industry owners etc. Since this area is scattered different people fromdifferent areas were selected. The areas selected for this study were transportnagar, Chowk, latouche road and Hazratganj. Due to time and various otherconstraints, the total sample size is 55.Data collection: Data was collected from both primary and secondarysources. Primary data was collected through the field visit to the variousareas. Also I personally interacted with the owners and other concernedpeople of the organization, in order to collect the required information.Secondary data was collected with the help of various resources like Google,Grotal & Just dial to get the addresses of various industries in Lucknow.Tools of data collection: Data was collected by conducting surveyusing various tools like Questionnaire, Interview and Observation. Allpossible efforts were made to interview the owner or such other concernedperson. Questionnaires were designed for this purpose, which werepurely close ended. Random sampling method was used for thequestionnaires to get filledQuestionnaire: As a part of quantitative data collection, a set ofquestionnaire was prepared and accordingly data was collected from ownersof various industries. Effort was made to make questionnaire relevant for thestudy as well as wipe out all the hypothetical words and anomalies. Onlyrelevant questions were included in questionnaire and effort was made tokeep it short and simple. 61
  • 62. QUESTIONNAIRE Name: _________________________ Address: ______________________ ______________________Q1. What is your structure of business? a. Sole proprietorship b. Partnership c. Private ltd. d. Other(please specify)Q2. What is your business cycle i.e.; Cash inflow and outflow? a. 1 days b. 3 days c. Weekly basis d. Fortnightly basis e. Monthly basisQ3. Does your business have any surplus fund? a. Yes b. No. c. SometimesQ4.Where do you invest your savings or surplus fund? a. Current accounts b. Saving accounts c. Any others(please specify)Q5. Are you aware that you can get return while managing your short termfund? a. Yes b. No 62
  • 63. c. Not sureQ6 Are you aware that there are better avenues than current traditional wayof saving and current account? a. Yes b. No c. Not sureQ7. Are you aware that current account surpluses can also earn interest byparking in Mutual Funds even for one day? a. Yes b. No c. MaybeQ8. Are you aware that there is no entry and exit load (charges) in case ofliquid funds? a. Yes b. No c. Not sure Q9.Would you like to know more about the avenues where you can manageyour cash efficiently? a. Yes b. No c. If Yes ,(then when)Q10.Would you like to use this opportunity in near future? a. Yes b. No c. Not sureRecommendations__________________________________________________________________________________________________________________________ 63
  • 64. ______________________________________________________________________________________________________________Interview: Interviews were taken to acquire information mainly fromowners of the business. This tool was used to give the knowledge regardingcash management concept to owners. To convey them how this concept canbe useful for them in earning on the fund that is idle with them for a veryshort duration. Then ultimately get the information regarding their businesson the questionnaire.Field observation: Observation always plays a vital role in the conductionof research. While collecting information on the field it was necessary toobserve the type of business, their working process and similar other things.Constraints: There were various reasons due to which adequate samplingcould not be done and so a sufficient number of target people could not becovered. • The summer season was a big constraint due to which only limited number of industries could be covered. • The accessibility was another reason. At most of the places it was difficult to meet the owner of the business, as they rarely are present at the factory. • Time required to interact with the respondents was not sufficient as they were supposed to be busy the whole day in their work. Sometimes they were not available even to interact. • At many places there was no owner at all, there were only managers or in charge at the place. 64
  • 65. Findings and Analysis:Analysis based on Questionnaire:Question1Ownership Structure:Most of the owners selected for study were Sole proprietor, as they havemore decision making power and are easily available at the concerned place, 65
  • 66. than In case of private and Partnership firms. The other type of firmsincluded Government owned firms, Government contractor, companyowned firms etc. these firms are not allowed to use the funds of companyand are bounded by rules and regulations. It would be beneficial to target thesole proprietors firm and in case of other firms there need to be properappointment with the concerned person and then target them, as they are notdirectly approachable.Question 2Business cycle:Business cycle is very crucial part of business; it is the difference betweenthe Cash Inflow and outflow. This is the main point where liquid fund canplay an important role. The days for which the business fund remains idlecan be utilized through liquid fund. This was the question which most 66
  • 67. owners were unwilling to answer. Most of the firms carry on dailytransactions, but the other firms for which there is business cycle, the liquidfund can play a beneficial role for the company.Question 3Availability of surplus fund:This is the question which helps us to understand whether the businessoperates on cash transaction with surplus fund or depends on Overdraft,Credit or other such facilities. Most of the people were depended onOverdraft, credit limit on Current account and similar other facilities of 67
  • 68. Bank. Very few said that they had surplus or idle fund for short periodswhich they keep for payment, contingencies and such other reasons. Therewere also business people who occasionally had surplus fund. Thus there isample opportunity for fund, with both types of Businesses.Question 4Investment of Surplus fund:This is the question to analyze what are the current avenues which areutilized in business for parking funds. As expected more than half depended 68
  • 69. on Current account alone, while about 11% used both Current and SavingAccount. There were also persons who had saving accounts, but mostly onindividual basis. Other avenue where businessmen parked their funds arefixed deposits, Public provident fund , overdraft , Auto sweep facility ofbanks and even some of them have invested in equity related Mutual Funds.Question 5:Cash Management Awareness regardingShort term: 69
  • 70. Now regarding the awareness part among business owners, whether theyknow if they can get return on their funds even for a very short term periodof 1 -2 days. Most of them were unaware regarding this; As a matter of factthey did not have any knowledge for short term cash management. Aboutone fourth were aware regarding this concept, and others were unsure.Hence about three fourth people were made aware regarding such concept.Question 6:Awareness regarding other avenues thanCurrent & Saving Accounts: 70
  • 71. This question made clear that how corporates, businessmen still rely ontraditional saving and current account for parking funds. This is because oflack of knowledge regarding the modern methods which ensure safety,liquidity as well as help them in getting return. They still think that banksare the safest place for them to park funds. Thus making them aware thatbesides these there are other avenues which are as safe as banks, in additionthey will better earning than banks, was primary purpose.Question 7Awareness regarding daily interest inMutual Funds: 71
  • 72. This question introduces the concept regarding the Liquid funds. The moststriking feature of liquid fund is daily interest, which is not given by anyother product in the market. On the other hand the principal is secured as incase of Current and saving accounts, with extra benefit of high liquidity andearning. Very few were aware, regarding this and most of them were unsureregarding such thing and rest had no idea regarding such facility.Question 8 72
  • 73. Awareness regarding No entry and exitload in Liquid fund:As most people have basic perception that there is some entry and exit loadin case of mutual funds. Therefore it was necessary to make them aware thatthere is no entry and exit load in case of Liquid fund. Most of the people hadno idea about this feature of liquid fund. Only a very few knew about thisfeature of liquid fund. 73
  • 74. Question 9:Willingness to know more about LiquidFund:This is the Question to know whether they wanted to know more about theliquid fund. This could be done by having appointment with the person fromthe Reliance mutual fund, who would provide full and detailed informationabout the liquid Fund and solve all the fund related queries.About one third of people were interested in knowing more about the fundas they found it useful for the business. As far as people who were notinterested in knowing about liquid fund had various reasons like they weremainly dependent on OD, Auto sweep and such other facilities, others didnot have Surplus or idle cash in the business; therefore they had no utility ofthe fund. 74
  • 75. Question 10Willingness to use Liquid Fund in nearFutureIt is the concluding Question to know whether they would like to use thisfund in the future. About one third of them said that they would like to usethis opportunity of near future as it can be useful for their business. Aboutone fifth of them were unsure regarding that whether they would use thisfund in near future. And rest said that they would not like to use due tovarious reasons. 75
  • 76. Findings: 1.) Some Jewelers use only cash for transactions and do not depend on credit. While others who have surplus cash prefer to invest in gold only. 2.) Some owners do not want to disclose, their personal information as they are do not want to be disturbed by calls from company (like Lucknow chikan house, chikan mahal) 3.) People generally view mutual fund as risky, as they generally relate mutual fund with share market and equity related schemes. Hence there is a need of making them aware about different type of schemes. 4.) People find Auto sweep in facility more convenient as it is automatic and they do not have time to manage it. 5.) In company owned business, there is no authority of owner to use the fund for any purpose. All the transactions are carried out from head office only. 6.) Some have suggested it is one of the best funds of the company and should be promoted by the company on a greater scale. 7.) Some people find it complicated to transfer fund from current Account to liquid fund and then back to Current Account (raj transport) 76
  • 77. 8.) In case of Private limited companies, people like it for individual purpose also.Recommendations:1) Reliance should consider entering into the banking sector as most of the people like to have mutual fund and bank of the same company.2) Company should spend more on Advertisement and Promotion part and should especially highlight this fund to make corporate sector aware regarding this fund.3) More awareness should be created about the various types of fund, so that people do not view all fund related to the share market.4) There should take measures to make people aware regarding mutual funds especially in Industrial areas where the owners are less aware. 77
  • 78. Bibliography• http://www.google.com• http://www.grotal.com• http://www.moneycontrol.com• http://www.reliancemutual.com/OurSchemes/Specific- Schemes.aspx?Id=9• http://managementfunda.com/reliance-mutual-fund/• http://www.mutualfundsindia.com/Assets%20_under %20_Management.asp• http://www.mutualfundsindia.com/amc.asp• http://www.moneycontrol.com/mccode/news/article/article_pdf.php? autono=711021&num=0• http://www.scribd.com/doc/25786437/Questionnaire-on-mutual- fund-invetment 78

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