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Analysing Investment Alternatives for Uninor
1. UNINOR
“Analysing the alternatives of investment”
for Uninor
In partial fulfillment for the Award of Master of Business Administration
To
IILM INSTITUTE OF HIGHER EDUCATION
And
UNINOR
Submitted by :
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TABLE OF CONTENTS
Chapter Description Page
Acknowledgement 4
Industry study 5-12
Uninor profile 13-19
Chapter 1 Introduction 20
1.1 Introduction to Investment 21
1.2 What is investment? 21
1.3 Factor which influence the decision to invest 22
1.4 Types of investment 23-24
Chapter 2 Mutual fund 25
2.1 Mutual funds 26
2.2 Working of mutual fund 27
2.3 Regulatory authority 28
2.4 Advantages of mutual fund 29-30
2.5 Limitations 31
2.6 Types of funds 31-36
2.7 Types of returns 36-37
2.8 Performance measures of mutual funds 37-39
2.9 Analysis of different mutual fund schemes 39-58
Chapter 3 Government securities 59
3.1 Government securities 60
3.2 Features of government securities 60-61
3.3 Benefits 62
3.4 Important considerations 62-63
3.5 Types of government securities 63
3.5.1 Treasury bills 63-65
3.5.2 Dated securities 66-68
3.5.3 State development loans 69-70
3.6 List of government securities outstanding 71-75
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Chapter 4 Bonds 76
4.1 Bonds 77
4.2 Assessing risk for bonds 77-80
4.3 Types of bonds 80
4.3.1 Corporate bond 80-81
4.3.2 Government bond 82
4.3.3 Municipal bonds 82-83
4.3.4 Public sector undertaking bonds 83
Chapter 5 Money market 84
5.1 Money market 85
5.2 Benefits and functions 85
5.3 Money market instruments 85
5.3.1 Certificate of deposit 85-87
5.3.2 Commercial paper 87-88
5.3.3 Treasury bills 88-89
5.3.4 Inter corporate deposit 89
Conclusion 90-93
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ACKNOWLEDGMENT
The present work is an effort to throw some light on the ―Investment opportunities‖ for
uninor.
I have taken efforts in this project. However, it would not have been possible without the kind
support and help of many individuals and organizations. I would like to extend my sincere
thanks to all of them.
My deep sense of gratitude to Mr. Neerav Jain, for giving me the opportunity to work on this
project.
I would like to express my sincere gratitude to Mr Amar T.G, Mr Sanjay Pant, Mr Mahendra
Dwivedi and Mr Sunil Aggarwal. I was privileged to experience a sustained enthusiastic and
involved interest from their side.
I would also like thank my college faculty Mrs. Vandana Mehrotra and my mentor Mr. Vinay
Chirania. The supervision and support that they gave truly help the progression and
smoothness of the internship program. The co-operation is much indeed appreciated.
My thanks and appreciations also go to my colleague in developing the project and people
who have willingly helped me out with their abilities.
I also extend my heartfelt thanks to my family and well wishers.
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Industry study
What is Telecommunications?
Telecommunications is the communication of information by electronic means usually over
some distance.
Telecommunication is the transmission and reception of messages over long distances. Visual
signaling with flags, lamps or smoke was the earliest form of telecommunication. Today, the
term refers to a wide variety of electrical and electronic communication systems used
throughout the world. Modern telecommunication systems send and receive sound, printed
materials, and visual images in a fraction of a second.
Most telecommunication systems transmit messages by wire, radio or satellite. Many
telegraph messages and telephone conversations, as especially local calls, travel over wires
that are laid underground in cables. Cables on the sea floor handle such communications that
travel overseas. Television and radio broadcast are sent through the air by radio waves. Radio
waves called microwaves transmit television signals over extremely long distances.
Microwaves are also used in most long distance telephone communication.
Background
Indian telecommunications sector has undergone a major process of transformation through
significant policy reforms, particularly beginning with the announcement of NTP 1994.
Historically, the process of expansion of the network was rather slow, being owned and
managed by the Government under the assumption that telecommunications was a natural
monopoly best run as a state-owned monopoly. By the early 1990s, this concept of a natural
monopoly was increasingly challenged in many countries by technological changes,
especially in the wireless field and by laudable success in several countries in lowering the
cost of services for common man. Policy makers in our country began process of reforms in
the 1990s that led to gradual ushering in competition for greater consumer welfare,
particularly in terms of lowering of tariffs and improvement in quality of service.
First Phase - The Eighties
Telecom reforms in India began in the 1980s with the launch of a ―Mission Better
Communication‖ program. Private manufacturing of customer premise equipment was
allowed in 1984 and the Center for Development of Telematics (C-DOT) was established for
the development of indigenous technologies. Private franchises were freely given for public
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call offices (PCOs) that offered local, domestic and international calling services. Two large
corporate entities were spun off from the Department of Telecommunications, e.g.
Mahanagar Telephone Nigam Limited (MTNL) for Delhi and Mumbai and Videsh Sanchar
Nigam Limited (VSNL) for all international services. Significantly, this began the process of
corporatisation of services that had hitherto been under a government department. A high-
powered Telecom Commission to direct telecommunications policies was set up in 1989 with
full powers of the Government.
Second Phase - The Early Nineties
The second phase of reform commenced with the general liberalisation of the economy in the
early 1990s and announcement of a New Economic Policy (NEP)-1991. Telecom equipment
manufacturing was delicensed in 1991 and value-added services were declared open to the
private sector in 1992, following which radio paging, cellular mobile and other value added
services were opened gradually to the private sector. National Telecom Policy was
announced in 1994, with a major thrust on universal service and qualitative improvement in
telecom services and also, opening of private sector participation in basic telephone services.
An independent statutory regulator was 6 established in 1997. Progressively there was growth
in private sector provision of telecom services in the country.
Third Phase - The late Nineties
The most important landmark in telecom reforms, however, came with the New Telecom
Policy 1999 (NTP-99) which can be termed as the new, or third, generation of reforms. Its
first qualitative difference was the acceptance by the government that telecommunications
was a sufficiently important for common man whereas earlier it had been viewed as a ―cash
cow‖. For example, the private sector had earlier been asked to bid for licenses to provide
telecom services through a sealed bid auction in which the bidder paid a fixed fee. This
proved unaffordable to the private sector owing to unrealistic calculations of the revenue
potential of a license, resulting in a near zero rollout of lines. Rather than insisting on the
prior fulfillment of its revenue obligations, NTP-99 allowed private providers to ―migrate‖
from fixed license fee regime to a revenue sharing regime. The second qualitative difference
was that the regulator was strengthened, domestic long distance services were opened to the
private sector, and the state-owned basic service provider under the Department of
Telecommunications was corporatized.
Current scenario of the Indian Telecom Industry:
Telecom industry in India has undergone a revolution during the past few years with
tremendous growth in the telecom subscriber base. Additionally, the country’s telecom
industry is one of the fastest growing and one of the largest telecommunication networks in
the world. With the ongoing investments into infrastructure deployment, the country is
projected to witness high penetration of Internet, broadband, and mobile subscribers in near
future.
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According to the new analytical study on the sector ―Indian Telecom Analysis (2008-
2012)‖, mobile telephony continues to fuel growth in the Indian telecom sector with mobile
subscriber base projected to grow at a CAGR of around 6.6% during 2011-12 - 2014-15.
Other segments of the industry, like Internet are also anticipated to witness strong growth in
terms of both subscriber addition and network infrastructure deployment during the forecast
period. Moreover, with the launch of 3G services, the country is expected to witness rapid
surge in the broadband subscribers’ base during the coming years.
Tele-density in India has significantly improved during the past few years and has covered
large portion of the country’s population owing to the improving network infrastructure.
Further, launch of advanced telecom services, such as 3G and IPTV will also drive growth
in the Indian telecom subscriber base during the forecast period. Moreover, mobile handset
market is expected to register robust growth in near future.
Currently, both public sector players as well as the private sector players are actively
catering to the rapidly growing telecommunication needs in India. Private participation is
permitted in all segments of the telecom industry, including ILD, DLD, basic cellular,
internet, radio paging, et al. The broad structure of the telecom industry (in terms of service
providers) is depicted in the diagram below:
Public Sector:
After the privatisation of VSNL in 2002, only two premier PSUs, MTNL and BSNL operate
in India and provide various telecom services. As noted earlier, MTNL operates in Delhi and
Mumbai and BSNL provides services to the remaining country. In the post-liberalisation era,
these PSUs not only have made significant progress but also have provided stiff competition
to their private counterparts.
Private Sector:
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Private operators have played a very crucial role in the growth of the telecommunication
industry, primarily in the mobile services. With the liberalisation of the telecom industry, the
private sector has been increasing its foothold in the telecom services space. After the
introduction of NTP-99, the contribution of private players towards telecom services has
witnessed rapid strides. While the private sector is instrumental in providing both fixed line
as well as wireless services, it is mainly active in the wireless segment. The fixed lines
account for only about 2% of private sector's total subscriber base. While some private
players have a pan-India presence, there are many regional players that cater to only certain
service areas.
Telecom industry subscriber 2011 growth rate
The range of largest subscriber including the metropolitan cities according to the recent data
counting of 2011 shows the rate of growing subscribers in the telecom industries.
Subscriber Population Mobile Phones per Thousand
State
Base (01/03/2011) population
Uttar Pradesh 106,192,054 199,581,477 532
Maharashtra 94841692 112,372,972 844
Tamil Nadu 68,168,580 72,138,958 945
Andhra
59,364,339 84,665,53 701
Pradesh
West Bengal 60,928,561 91,347,736 667
Bihar 52,100,177 103,804,637 502
Karnataka 48,465,542 61,130,704 793
Gujarat 45,881,267 60,383,628 760
Rajasthan 42,380,958 68,621,012 618
Madhya
44,256,394 72,597,565 610
Pradesh
Delhi 16,753,235 37,539,635 2,241
Kerala 30,954,858 33,387,677 927
Punjab 27,817,459 27,704,236 1,004
India 791,381,574 1,210,193,422 654
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List of mobile network operators in India
Rank Operator Subscribers Ownership
Bharti Enterprises (64.76%)
155.75 Singapore
1 Airtel
(January 2011) Telecommunications (32%)
Vodafone (4.4%)
127.36 Vodafone (67%) & Essar
2 Vodafone
(January 2011) Group (33%)
Reliance 128.87 Reliance (67%) & Public
3
Communication (January 2011) (26%)
Aditya Birla Group
84.28 (January
4 Idea Axiata Group Berhad
2011)
(19.1%)
83.59 (January
5 BSNL State-Owned
2011)
Tata DoCoMo
Tata Indicom
Virgin Mobile 86.05 (January
6 Tata-Teleservices
(CDMA) 2011)
Virgin Mobile
(GSM)
Maxis Communications
51.83 (January
7 Aircel (74%)
2011)
Apollo Hospital (26%)
Unitech Wireless
20.3 (January
8 Uninor Telenor (67.25%)
2011)
Unitech Group (32.75%)
6.01 (January
9 Videocon Videocon
2011)
5.15 (January
10 MTNL State-owned
2011)
Essar Group (8.0%)
3.06(January
11 Loop Mobile Santa Trading Pvt Ltd
2011)
(85.75%)
9.09 (January Sistema (73.71%) & Shyam
12 MTS
2011) Group (23.79%)
2.51 (January Siva Group (51%)
13 S Tel
2011) Batelco (49%)
1.28 (January
14 Ping Mobile HFCL Infotel Limited
2011)
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0.45 (January Etisalat
15 Cheers Mobile
2011) Dynamix Balwas Group
The number of telephone subscribers in India increased from 723.28 million in Sep-10 to
787.28 million at the end of Dec-10, registering a sequential growth of 8.85% over the
previous quarter as against 7.68% during the QE Sep-10. This reflects year-on-year (Y-O-Y)
growth of 40.05% over the same quarter of last year. The overall Teledensity in India has
reached 66.16 as on 31st December 2010.
Telecom Financial Data (for the QE Dec-10)
Gross Revenue during the quarter ` 42,916.81 Crore % change in GR over the previous
quarter 2.44% Share of Public sector undertaking's in GR 15.90% Adjusted Gross Revenue
(AGR) ` 29,925.37 Crores % change in AGR over the previous quarter 0.64% ARPU for
Access Services ` 107
Subscription in Urban Areas grew from 487.07 million in Sep-10 to 527.50 million at the end
of Dec-10, taking the Urban Teledensity from 137.25 to 147.88. Rural subscription increased
from 236.21 million to 259.78 million, and the Rural Teledensity increased from 28.42 to
31.18. The share of Rural subscribers has increased to 33.00% in total subscription from
32.66% in Sep-10. Wireline subscriber base further declined from 35.57 million at the
end of Sep-10 to 35.09 million at the end of Dec-10, bringing down the wireline Teledensity
from 3.00 in Sep-10 to 2.95 at the end of Dec-10.
Average Revenue Per User (ARPU) for GSM service declined by 4.38%, from `110 in QE
Sep-10 to `105 in QE Dec-10, with Y-O-Y decrease of 27%. Gross Revenue (GR) and
Adjusted Gross Revenue (AGR) of Telecom Sector for the QE Dec-10 has been `42,916.81
Crore and `29,925.37 Crore respectively. There has been an increase of 2.44% and 0.64% in
GR and AGR respectively as compared to previous quarter. The year-on-year (Y-O-Y)
growth for Dec-10 over the same quarter in last year has been 7.95% and 2.75%. Passthrough
charges accounted for 30.27% of the GR for the quarter ending Dec-10. The quarterly and the
year-on-year (Y-O-Y) growth rates of pass-through charges for QE Dec-10 are 6.84% and
22.20% respectively.
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Wireline Subscribers Base (in million)
Service QE Dec QE Mar QE Jun QE Sep QE Dec
Provider 2009 2010 2010 2010 2010
BSNL 28.10 27.83 26.94 26.22 25.65
MTNL 3.49 3.50 3.49 3.47 3.47
Bharti 2.99 3.07 3.15 3.22 3.26
Tata 1.10 1.16 1.20 1.23 1.27
Reliance 1.16 1.18 1.19 1.21 1.22
Quadrant 0.17 0.17 0.18 0.18 0.19
(HFCL)
Sistema 0.05 0.05 0.04 0.04 0.04
Wireless Subscriber Base (in million)
Service QE Dec QE Mar QE Jun QE Sep QE Dec
Provider 2009 2010 2010 2010 2010
Bharti 118.86 127.62 136.62 143.29 152.50
Reliance 93.80 102.42 110.81 117.34 125.65
Vodofone 91.40 100.86 109.06 115.55 124.26
BSNL 62.86 69.45 72.70 78.32 86.71
Tata 57.33 65.94 72.53 79.07 84.23
Idea/Spice 57.61 63.82 68.89 74.21 81.78
Aircel/Dishnet 31.02 36.86 41.68 46.52 50.17
Unitech 1.21 4.26 6.02 11.27 18.51
Sistema 2.99 3.78 5.10 6.64 8.43
Videocon - 0.03 1.942 4.48 7.32
MTNL 4.88 5.09 5.21 5.31 5.40
Loop 2.65 2.84 2.93 2.98 3.04
S Tel 0.14 1.01 1.33 1.64 2.32
Quadrant 0.34 0.33 0.67 1.02 1.61
Etisalat - 0.00 0.0182 0.057 0.26
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Subscribers (Rural & Urban) and Market share
Service Subscriber Market
Provider base(millions) Share
in dec 2010 Dec-10
Bharti 155.75 19.78%
Reliance 126.87 16.12%
Vodafone 124.26 15.78%
BSNL 112.36 14.27%
Tata 85.50 10.86%
IDEA/Spice 81.78 10.39%
Aircel/Dishnet 50.17 6.37%
Unitech 18.51 2.35%
MTNL 8.86 1.13%
Sistema 8.47 1.13%
Videocon 7.32 0.93%
Loop Mobile 3.04 0.39%
S Tel 2.32 0.29%
Quadrant 1.80 0.23%
Etisalat 0.26 0.03%
Bharti is the leading operator in Access segment in terms of number of subscribers as well as
net additions during the quarter. In terms of growth rate, relatively new market entrants have
attained higher rates, which can be mainly attributed to the low base effect.
Access Services – Service Provider wise Gross Revenue
(` in Crore)
Service QE Sep-10 QE Dec-10 % Change
Aircel 1395.06 1438.00 3.08
Bharti 9164.86 9507.77 3.74
BSNL 4520.52 4294.59 -5.00
Etisalat 0.57 2.18 283.80
Quadrant 39.40 44.27 12.35
Idea 3717.27 4055.59 9.10
Loop 167.26 179.81 7.51
MTNL 865.59 786.24 -9.17
Reliance 3253.67 3155.71 -3.01
S Tel 17.82 26.90 50.96
Sistema Shyam 149.60 195.57 30.73
Tata 2402.36 2559.48 6.54
Unitech 148.08 301.14 103.36
Videocon - 99.86 -
Vodafone 6161.09 6462.84 4.90
Grand Total 32003.14 33109.95 3.46
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COMPANY PROFILE
Uninor: Ab Mera Number Hai
Introduction
Unitech Wireless (Tamilnadu) Pvt Ltd, (hereinafter referred to as ―Uninor‖ or the
―Company‖) is a joint venture between Telenor ASA, Norway and Unitech Group. Uninor
was incorporated on August 2007 for the purpose of venturing into the telecom services
industry. The company obtained UAS (Unified Access Services) licenses in January 2008
from Department of Telecom (DoT), Government of India (GoI), for providing telecom
services in all the 22 circles in India. Uninor has since been allocated start-up spectrum in 21
out of the 22 circles of the country with spectrum for the Delhi circle expected to be allocated
in near future.
Services have been rolled out in the following 13 circles:
8 Circles commercially launched in Andhra Pradesh , Karnataka, Tamil Nadu,
Dec’2009 Kerala, UP (E), UP (W), Bihar and Orissa
5 Circles commercially launched in Mumbai, Kolkata, Gujarat, Maharashtra and
June’2010 West Bengal
Telenor has since inducted Rs.6,135 Crore towards fresh equity in Uninor making it the
majority shareholder (67.25% stake).
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Subscriber Base details of Uninor: (in million)
Period 31-Dec- 30-Jun- 31-Dec-
ending 09 31-Mar-10 10 30-Sep-10 10 31-Mar-11 30-Apr-11
Opening
Sub Base - 1.21 4.26 6.02 11.27 18.51 22.79
(nos)
Additions 1.21 3.06 1.76 5.24 7.24 4.28 1.45
Closing
Sub Base 1.21 4.26 6.02 11.27 18.51 22.79 24.24
(nos)
Board of Directors
The list of Board of Directors of Uninor is as under:-
S.No. Name
1 Mr. Sanjay Chandra
2 Mr. Sigve Brekke
3 Mr. Richard Olav Aa
4 Mr. Nirjhar Goel
Mr. Jan Edvard
5
Thygesen
6 Mr. Jayesh Desai
7 Mr. Yogesh Malik
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Key Management
Brief profiles of the key executives are given in the table below:
Name Position held
Mr. Sigve Brekke Managing Director
Mr. Yogesh Malik Executive Vice-President, Operations
Mr. Vivek Sood Executive Vice-President, Finance
Ms. Elisabeth Stene Executive Vice-President, P&O (People &
Organisation)
Mr. Rajiv Bawa Executive Vice-President, Corporate Affairs
Telenor Group Profile
Telenor originally came into existence in the year 1853 as the Norwegian Telegraph
Administration. In the course of over 150 years of its existence, the entity progressively
underwent transformations including its conversion into a public corporation in the year 1994
and to acquiring its present name, Telenor, in the year 1995.
Headquartered in Oslo, Norway, Telenor is presently one of the top ten telecommunications
services provider in the World in terms of number of subscribers. Ministry of Trade and
Industry, Government of Norway owns 54% stake in the flagship company of the group,
Telenor ASA.
Revenues of the Telenor Group for the 12 months period ending December 2010 were
approximately NOK 94.84 billion (i.e. Rs. 78,622 Crore; 1 NOK = 8.29 INR) , with net
profit of NOK 14.80 billion (i.e. ~ Rs. 12,269 crore) while Net Worth as on December 31
2010 amounted to NOK 96.21 Bn (i.e., ~Rs 79,758 Crore)
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Telenor Group provides tele, data and media services in the Nordics, Central and Eastern
Europe and Asia. At present, its business interests include Telecom services (both fixed and
wireless), Broadband services, Satellite services, Cable TV and other Voice and Data
services. Among the various service areas, telecom forms over 85% of Telenor’s total
revenues. Telenor is one of the top performers on Dow Jones Sustainability Indexes and one
among the top 500 global companies by market value.
Global Presence
Telenor’s operations are divided into three geographic areas: The Nordic countries, Central
Eastern Europe and Asia. Of all the countries in these regions, Telenor’s businesses in Nordic
countries and Russia offer both mobile and fixed telecommunication services, while the other
businesses offer mobile telecommunication services. In the countries of its operations,
Telenor has a strong footprint in Central Eastern Europe and Asia and a leading Nordic
position in mobile, broadband and TV services.
Unitech Limited Group Profile
The Indian co-sponsor of Uninor, Unitech Group is one of the real estate majors in India with
its activities spread across the Residential, Commercial and Retail sectors. It is also engaged
in activities such as Construction, Infrastructure Development, Hospitality, Development of
Entertainment Space, Manufacturing of Electrical Transmission Towers, etc. Besides, the
Group has business interests in Special Economic Zone (SEZ) development and Telecom.
The core business viz., real estate development contributes over 80% of the total revenues of
the Unitech Group. Unitech Limited is the flagship company of the Group.
Corporate office: Unitech Wireless (Tamil Nadu) Pvt. Ltd
Ground Floor, Masterpiece,
Sector 54, DLF Golf Course Road, (opp Hotel Ibis), Gurgaon 122002, Haryana, India
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Investment portfolio of uninor
Public Banks
State Bank of India (SBI)
Punjab National Bank (PNB)
Bank of India (BOI)
Canara Bank
Vijaya Bank
Central Bank of India (COI)
Private Banks
Housing development finance corporation (HDFC)
Foreign Banks
Deutsche Bank
Standard Chartered
Some CSR activities and initiatives by uninor
Uninor wins the prestigious Green Globe Award for its “Green
Initiative Opex Model”
Best Contribution from the private sector
Uninor was awarded the prestigious Green Globe Foundation Award 2011 at the
TERI organized Delhi Sustainable Development Summit 2011 for Best Contribution
by a Corporate/Business Enterprise – Private Sector. The category honours initiatives
by private companies which have had a direct positive impact on the environment
and/or conservation of natural resources.
Green Initiative Opex Model
Uninor’s entry was an assessment report of one of its pilot projects, the Green
Initiative Opex Model. The model includes green initiatives like implementation of
free cooling units, fuel catalysts and solar power equipment at Uninor tower sites. Due
to unreliable power supply to many telecom towers in India, a majority of towers are
today heavily dependent on diesel generators for uninterrupted service. Uninor’s pilot
project showed not only a reduction in carbon footprint, but also savings of up to 30%
on the operating cost.Uninor plans to implement 8 000 free cooling units, 10 000 fuel
catalysts and 200 solar powered base transceiver stations (BTS) across India. ―Uninor
is committed to responsible and sustainable business practices. Environment and
climate will be important considerations in our business decisions. Under the new
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Climate Strategy for 2011, we hope to launch many new initiatives that will reaffirm
our intent. This is just the beginning,‖ said Rajiv Bawa, EVP, Corporate Affairs,
Uninor; while receiving the award.
Part of a comprehensive Environment and Climate Strategy
Uninor has developed an Environment and Climate Strategy, building on the
ambitions of the Telenor Group. The objective is to make sure that sustainability is an
inherent part of how the company doesbusiness.The strategy has three focus areas that
are central in achieving Uninor’s long term ambitions as a sustainable business:
operational efficiency, responsible business practice and accountability.
Good for the environment and good for business
Operational efficiency is more than a CR effort. Reducing fuel consumption,
streamlining operations and ensuring that environmental properties are given weight
in procurement and sourcing activities has been a key focus for Uninor’s Operations
function.―Our operations already have a significant impact on the environment, and
on our operational costs. Being a lean and low-cost operation, we are working closely
with our partners to find environmentally and economically sound solutions that
reduce our impact to the greatest extent possible. This award is a great
encouragement,‖ says Yogesh Malik, EVP Operations in Uninor.
Uninor works with GSMA to bridge mobile gender gap in India
New campaign launched to educate women on how mobile phones can improve
quality of life
In November 2010, a village in Uttar Pradesh banned unmarried women from using
mobile phones. Here, and elsewhere in this region, mobile phones are seen as
unwelcome tools that enable women to step beyond the confines of traditional roles
and social mores. Mobile penetration among women in many developing markets is
consistently low, with just 28% of Indian women in possession of a mobile phone.
In an effort to bridge the mobile gender gap in India, Uninor joined forces with the
GSM Association’s mWomen advocacy campaign. Together they launched ―Mera
Mobile, Mera Saathi‖, which means ―My Mobile, My Companion‖. This campaign
aims to bring the life-transforming benefits of mobile phones to more women across
all of India.
Uninor’s call centre creates new opportunities for women
In collaboration with a local ngo, uninor’s bihar and jharkand circles set up an
outbound call center that creates sustainable job oppourtunities for young
women from patna slums. Now the concept may expand to other circles.
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Uninor’s Bihar and Jharkhand circle, in eastern India, has established an outbound
call centre to promote and upsell products and services. Through cooperation with a
local NGO, Gram Prodyogik Vikas Sansthan (GPVS), Uninor transformed this new
call centre into a new way of life for the women of the Patna slums.
GPVS currently runs an AIDS awareness programme, giving them the necessary
experience and contacts needed to set up an outbound call centre. Through close
partnership, Uninor and GPVS developed a business model for the call centre that
would provide opportunities for women through communication, while
simultaneously solving a business challenge in the Bihar and Jharkhand circle.
Uninor’s new call centre business model is strongly aligned with the Telenor Group
CR strategy, which is based on the concept of creating shared value for both the
Group and for society. Through these innovative concepts, the Telenor Group can
enable opportunities for communities and make a sustainable and positive impact in
people’s lives.
Life skills and business skills for women
A group of 20 women were chosen through references from the local slums of Patna.
For the first few days, they were taught about basic health, hygiene and grooming.
After that they underwent rigorous training on soft skills and then graduated to
communications, computer applications and product knowledge. The women were put
on a three-day mock call session where they engaged in outbound calling to Uninor
customers.
The training has not stopped there. On a regular basis, forums are initiated to discuss
the social and personal issues faced by the women. The initiative also features social
awareness programs and provides personal counselling to the women.
Uninor and hand in hand joined forces
Working together to bring the internet to more people of India
Uninor has teamed up with Hand in Hand to reduce the digital divide in India. Hand
in Hand is a public charitable trust founded in India in 2002; its purpose is to work to
eliminate poverty. Part of its mission is to support India’s Right to Information Act
that promises IT and Web access to rural and semi-urban parts of the country.
The first step in the Uninor – Hand in Hand partnership is to set up Citizen Centres.
These centres will bring Internet access to people in rural areas, addressing the
communications needs of people who have previously been unconnected. Each centre
will be equipped with a computer, Internet connection and a small library with
newspapers. Residents of rural areas can visit their local centres and register to vote,
apply for a passport, sign petitions and access a wealth of information on the Web.
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1.1 INTRODUCTION TO INVESTMENT
Investment is the commitment of money or capital to purchase financial instruments or other
assets in order to gain profitable returns in the form of interest, income, or appreciation of the
value of the instrument. Investment is related to saving or deferring consumption.
It helps you meet your longer term needs and larger financial goals. There is some level of
risk attached to all types of investments and this is what determines the returns on your
investments. The higher the risk, the greater the chances of a higher return.
Investment may be defined as an activity that commits funds in any financial form in the
present with an expectation of receiving additional return in the future. The expectations
bring with it a probability that the quantum of return may vary from a minimum to a
maximum. This possibility of variation in the actual return is known as investment risk. Thus
every investment involves a risk and return.
Investment is an activity that is undertaken by those who have savings. Savings can be
defined s the excess of income over expenditure. An investor earns/ expects to earn additional
monetary value from the mode of investment that could be in the form of financial assets.
1.2 WHAT IS INVESTMENT?
Plain and simple investing money is the proactive use of your money to make more. Even
more basic, investing can be defined as: putting your money to work for you. It is an act of
committing money or capital to an endeavor with the expectation of obtaining an additional
income or profit. Investing is the proactive use of your money to make more money or, to say
it another way, it is your money working for you.
Investing is different from saving. Saving is a passive activity, even though it uses the same
principle of compounding. Saving is more focused on safety of principal (the amount you
start out with) and less concerned with return. The idea behind investing is that money is put
to use in such a way that it is likely to turn into more money. It is important to note that
because money can be invested, the value of a given amount of money changes over time.
The longer that a given amount of money is under your control, the longer you have to invest
it and make more money from it. For this reason, it is almost always preferable to have
money sooner rather than later. The name given to this concept is the "time value of money";
that is, the idea that a rupee now is worth more than a rupee in the future, because a rupee
now can accrue value through interest or other appreciation until the time at which the rupee
in the future would be received.
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1.3 FACTORS WHICH INFLUENCE THE DECICION TO INVEST
Risk appetite: - The ability to tolerate risk differs from person to person. It depends on
factors such as your financial responsibilities, your environment, your basic personality, etc.
Therefore, understanding your capacity to take on risk becomes a crucial factor in investment
decision making.
Investment horizon: - How long can you keep the money invested? The longer the time-
horizon, the greater are the returns that you should expect. Further, the risk element reduces
with time.
Investible surplus: - How much money are you able to keep aside for investments? The
investible surplus plays a vital role in selecting from various asset classes as the minimum
investment amounts differ and so do the risks and returns.
Investment need: -How much money do you need at the time of maturity? This helps you
determine the amount of money you need to invest every month or year to reach the magic
figure.
Expected returns: -The expected rate of returns is a crucial factor as it will guide your
choice of investment. Based on your expectations, you can decide whether you want to invest
heavily into equities or debt or balance your portfolio.
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1.4 TYPES OF INVESTMENTS
There are various investment types along the risk-return spectrum.
Financial Instruments
Equities
Equities are a type of security that represents the ownership in a company. Equities are traded
(bought and sold) in stock markets. Alternatively, they can be purchased via the Initial Public
Offering (IPO) route, i.e. directly from the company. Investing in equities is a good long-term
investment option as the returns on equities over a long time horizon are generally higher
than most other investment avenues. However, along with the possibility of greater returns
comes greater risk.
Mutual funds
A mutual fund allows a group of people to pool their money together and have it
professionally managed, in keeping with a predetermined investment objective. This
investment avenue is popular because of its cost-efficiency, risk-diversification, professional
management and sound regulation. You can invest as little as Rs. 1,000 per month in a
mutual fund. There are various general and thematic mutual funds to choose from and the risk
and return possibilities vary accordingly.
Bonds
Bonds are fixed income instruments which are issued for the purpose of raising capital. Both
private entities, such as companies, financial institutions, and the central or state government
and other government institutions use this instrument as a means of garnering funds. Bonds
issued by the Government carry the lowest level of risk but could deliver fair returns.
Deposits
Investing in bank or post-office deposits is a very common way of securing surplus funds.
These instruments are at the low end of the risk-return spectrum.
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Cash equivalents/ Money market instruments
These are relatively safe and highly liquid investment options. Treasury bills and money
market funds are cash equivalents.
Government securities
Government security means a security created and issued by the Government for the purpose
of raising a public loan or any other purpose as notified by the Government in the Official
Gazette. Government securities offer the benefit of safety, liquidity and attractive returns for
a long duration to the investors.
Non-financial Instruments
Real estate
With the ever-increasing cost of land, real estate has come up as a profitable investment
proposition.
Commodities
The items that are traded on the commodities market are agricultural, metals, energy and
industrial commodities. These items need to be standardized and must be in basic, raw and
unprocessed state. The trading of commodities is associated with high risk and high reward.
Trading in commodity futures require specialized knowledge and in-depth analysis.
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2.1 Mutual funds
A mutual fund is just the connecting bridge or a financial intermediary that allows a group of
investors to pool their money together with a predetermined investment objective. The
mutual fund will have a fund manager who is responsible for investing the gathered money
into specific securities (stocks or bonds). When you invest in a mutual fund, you are buying
units or portions of the mutual fund and thus on investing becomes a shareholder or unit
holder of the fund.
Mutual funds are considered as one of the best available investments as compare to others
they are very cost efficient and also easy to invest in, thus by pooling money together in a
mutual fund, investors can purchase stocks or bonds with much lower trading costs than if
they tried to do it on their own. But the biggest advantage to mutual funds is diversification,
by minimizing risk & maximizing returns.
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2.2 Working of Mutual Fund
The idea behind a MF is that investors lack time, inclination or skills to manage their own
investments. Professional managers, acting on behalf of the MF, manage the investments
for the benefit of investors in return for a management fee. The organization that manages
the investment is the Asset Management Company (AMC). In India, the operations of the
AMC are supervised by a Board of Trustees/Trustee company.
Mutual Fund investments are Collective Investment Schemes, which collect contribution
from the subscribers and invest them in a variety of transferable assets such as ordinary
shares and bonds.
These Trusts are run by experienced Investment Managers who use their knowledge and
expertise to select individual securities, which are classified to form portfolios that meet
predetermined objectives and criteria. These portfolios are then sold to the public.
Thus a Mutual Fund is a trust that pools the savings of a number of investors who share a
common financial goal. The money thus collected is invested by the fund manager in
different types of securities depending upon the objective of the scheme. These could range
from shares to debentures to money market instruments. The income earned through these
investments and the capital appreciations realized by the scheme are shared by its unit
holders in proportion to the number of units owned by them. Thus a Mutual Fund is the
most suitable investment for the common man as it offers an opportunity to invest in a
diversified, professionally managed portfolio at a relatively low cost. The small savings of
all the investors are put together to increase the buying power and hire a professional
manager to invest and monitor the money. Anybody with an investible surplus of as little as
a few thousand rupees can invest in Mutual Funds.
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Source: Association of mutual Fund India
2.3 Regulatory Authority
To protect the interest of the investors, SEBI formulates policies and regulates the mutual
funds. It notified regulations in 1993 (fully revised in 1996) and issues guidelines from time
to time. MF either promoted by public or by private sector entities including one promoted by
foreign entities is governed by these Regulations.
SEBI approved Asset Management Company (AMC) manages the funds by making
investments in various types of securities. Custodian, registered with SEBI, holds the
securities of various schemes of the fund in its custody.
According to SEBI Regulations, two thirds of the directors of Trustee Company or board of
trustees must be independent.
The Association of Mutual Funds in India (AMFI) reassures the investors in units of mutual
funds that the mutual funds function within the strict regulatory framework. Its objective is to
increase public awareness of the mutual fund industry.
AMFI also is engaged in upgrading professional standards and in promoting best industry
practices in diverse areas such as valuation, disclosure, transparency etc.
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2.4 Advantages of mutual funds for investors
Professional Management: Mutual funds offer investors the opportunity to earn an
income or build their wealth through professional management of their investible
funds. These are managed by investing in synchronization with the investment
objective, investing based on adequate research and ensuring that prudent investment
processes are followed.
Portfolio Diversification: The units of scheme provide the investors an exposure to a
variety of securities held in the investment portfolio of the scheme. Hence with
diversification the investor is less likely to be exposed to the risks.
Economies of Scale: The pool of money makes it possible for mutual fund to engage
professional managers to manage the investment. Individual investors with small
amounts to invest cannot afford to engage such professional management by
themselves. Large corpus leads to various other economies of scale. For instance,
costs related to investment research and office space get distributed across the
investors. Further the greater transaction volume makes it possible to negotiate better
terms with brokers, bankers and other service providers.
Liquidity: Sometimes the investors in the financial markets are stuck with a security
for which they cannot find any buyers or they even cannot find the company they
invested in. Hence such investments become illiquid which can lead to huge losses to
the investors. The investors in mutual fund scheme can recover the value of the
money invested from the mutual fund itself.
Tax deferral: Mutual funds are not liable to pay tax on the income they earn. Mutual
funds offer options whereby the investor can let the money grow in the scheme for
several years. By choosing for such options it becomes possible for the investor to
defer tax liability.
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Tax benefits: Certain schemes of mutual funds provide the investors the benefits of
deduction of the amount invested, from their income that is liable to tax. This reduces
their taxable income, and hence the tax liabilities.
Convenient options: The options offered under a scheme allow investors to structure
their investments in line with their liquidity preference and tax position.
Investment comfort: Once an investment is made in a mutual fund, they make it
easy for the investor to further purchase with very little documentations. Hence this
simplifies subsequent investment activities.
Regulatory comfort: The Securities and Exchange Board of India (SEBI) has
mandated strict checks and balances in the structure of mutual funds and their
activities. The benefits of the investors are hence protected.
Systematic approach to investments: Mutual funds also offer facilities that help the
investor to invest and withdraw amounts on a regular basis or to move money among
different types of schemes through Systematic Investment Plan (SIP), Systematic
Withdrawal Plan (SWP) and Systematic Transfer Plan (STP) respectively. Such
approaches impart an investment discipline.
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2.5 Limitations of mutual funds
Lack of portfolio customization: Mutual funds offer Portfolio Management
Schemes (PMS) to a large number of investors. But the unit-holder is merely one of
the several investors in a scheme. The investment management is purely made as per
the nature of the fund manager, who may be highly risk averse or risk taking. Thus an
individual unit holder cannot influence as to where the investments should be made.
Choice Overload: A huge number of mutual fund schemes are available in the
market. Over 800 mutual fund schemes are offered by 38 mutual funds, further there
are multiple options available within the schemes. This choice overload makes it
difficult for the investors to choose between these wide varieties.
2.6 Types of funds
The mutual funds can be classified into following categories:
Open-Ended Funds: These are open for investors to buy or sell or in other words enter
or exit at any time of the year, even after the NFO period is over.
Closed-Ended Funds: These have a fixed maturity. Investors can buy units of closed
ended scheme, from the fund, only during NFO period. Further the units are traded over a
stock exchange, post NFO.
Interval Funds: These funds combine the features of both open ended and closed ended
schemes. These schemes remain close ended largely, but they become open ended at pre-
determined time intervals.
The aforementioned schemes are classified as per the structure of the scheme.
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Growth Schemes: These schemes tend to provide optimal returns through capital
appreciation. These schemes majorly invest in the equities so there may be a decline in
their value for a short period of time but they do deliver results in long run.
Income Schemes: These schemes provide regular and steady returns. The investments
made by these schemes are generally in the fixed income securities like bonds and
debentures. Their returns are certainly lesser than the growth schemes but they are
comparatively less risky.
Balanced Schemes: Balanced schemes give the investor the best of growth and income
schemes as it invests both in equities and in fixed income securities. Their returns are less
volatile than the equity schemes.
Tax Saving Scheme: These schemes offer deduction from gross total income to the
investors under Sec. 80C of Income Tax Act. The investment made to any ELSS i.e
Equity Linked Saving Scheme are eligible for deduction up to Rs.1,00,000/- every fiscal
year. Theses schemes are growth oriented and have a major part invested in equities.
The aforementioned schemes are classified on the basis of the objective of the schemes.
Actively Managed Funds: Here the fund manager has the liberty to choose the
investment portfolio in line with the investment objective of the scheme. Such schemes
therefore incur higher expenses in the course of running. These schemes are expected to
perform better in than the market.
Passive Funds: These schemes invest as per the specific index, the performance of
which it seeks to track. Hence here a particular market would buy only those securities
which compose its index. The proportion of the shares would also be the same as assigned
to the shares in the computation of the index. Thus the performance of these schemes
reflects the performance of the index concerned. Hence they are said to be Index
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Schemes. These have a low cost of operation unlike the actively managed schemes
because here the portfolio is determined by the index only and the fund manager has a
minimal role to play.
Equity Schemes: These schemes invest the bulk of their corpus in equity shares and in
the equity related investments namely, convertible debentures. The equity schemes may
fall in the following categories:
Diversified Equity Fund: These are the funds that invest in a diverse mix of
equity stocks across the sectors.
Sector Funds: The investments made here are sector specific. For example,
IT sector, Gold sector etc.
Thematic Funds: These funds invest in line with an investment theme, like
infrastructure, cement, steel, telecom etc.
Equity Linked Saving Schemes (ELSS): These schemes offer tax benefits to
the investors. However the investor should retain the units for at least three
years.
Equity Income / Dividend Yield Schemes: Here the investments are made in
such securities whose shares fluctuate less; hence the dividend is a
representative of a large proportion of the returns on those shares.
Arbitrage Funds: These funds take contrary positions in different markets /
securities, such that the risk is neutralized but the return is earned.
Debt Schemes: These schemes invest typically in the debt securities like treasury bills,
Government securities, bonds and debentures. The debt funds may fall into following
categories:
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Gilt Funds: These schemes invest only in the treasury bills and government
securities. These instruments do not have any credit risk attached to them.
Diversified Debt Funds: These schemes invest in a mix of government and non-
government debt securities. So here there is a diversification of debt securities in
the investment portfolio.
Junk Bond Schemes / High Yield Bond Schemes: These schemes invest in the
companies that are of poor credit quality. Such schemes operates on the
philosophy that the attractive returns offered by the investee companies make up
the losses incurred out of defaulting companies.
Fixed Maturity Plan (FMP): Here the investment portfolio is closely with the
maturity of the scheme. AMCs tend to structure the scheme around the pre-
identified investments. Like close ended schemes these do not accept any
investments post NFO period.
Floating Rate Funds: These funds invest in the debt securities where the interest
rate payable by the issuer changes as per the market.
Liquid Schemes / Money Market schemes: These schemes invest in the debt
securities where the money will be repaid in 91 days. These are known to have the
lowest risk among all kinds of mutual fund schemes.
Hybrid Schemes: These schemes invest in debt and equity instruments both. The hybrid
funds are of following types:
Monthly Income Plan: These schemes have an exposure of 70-90% to debt and
an exposure of 10-30% to equity. These seek to declare a dividend every month.
Hence it invests largely in debt securities. However a small percentage is invested
in equity shares just to improve the yield.
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Capital Protected Scheme: These are close-ended schemes and they ensure that
whatever the market conditions be, the investor would get his principle back. This
is done by investing in Zero Coupon Government Securities. The scheme’s
maturity and the coupon security have a lined up maturity time.
Gold Funds: These funds invest in gold and gold related securities. They can be
structured in the following formats:
Gold Exchange Traded Fund: It is like an index fund which invests in gold.
The NAV of these funds moves as per the gold prices in the market.
Gold Sector Funds: It invests in the shares of the companies that are involved in
gold mining and processing. The NAV of these funds do not reflect the gold
prices because the prices of these shares are linked with the gold reserves and the
profitability of the companies.
Real Estate Funds: These funds make it possible for the retail investors to get the
exposure of the real estate.
Commodity Funds: Commodities as an asset group include food crops, spices, fibres,
industrial metals, energy products like oil and natural gas and precious metals like gold
and silver. The investment objective will determine which commodities to invest in.
International Funds: These are the funds that invest outside of the country. The
domestic investments are invested abroad. Alternatively, a tie up a foreign fund, said to
be the Host Fund, is made and a Feeder Fund will be launched domestically. The
domestic investors will invest in the feeder fund and this collection will in turn be
invested in the host fund. Thus when the foreign market does well, the host fund will do
well and hence the feeder fund will follow the suit domestically. The investments can be
specific to a country or can be diversified across the nations.
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Fund of Funds: Funds that are structured to invest in various other funds are said to be
the Fund of Funds. These funds can invest in the funds within the country or abroad as
specified.
Exchange Traded Funds (ETF): These are open ended index funds that are traded over
a stock exchange. But the feature of an open ended fund to trade the units from the mutual
fund is made available only to very large investors in an ETF. Others will have to do the
trading over the stock exchange.
Index Fund: These funds invest in a portfolio that replicates the portfolio of a particular
index like the BSE sensitive index. S&P NSE Nifty 50 index. These invest in the
securities in the same weights as comprising of an index. Hence the Index Scheme
appreciates or depreciates the same way as the index. The main objective of this scheme
is to give returns in line with the index.
Sector Specific Fund: These take an advantage of upturn or expected upturn in a
particular sector or industry by investing in them. The returns of these schemes are purely
dependent on the performance of the particular sector or industry as the case may be.
Though these funds give optimal returns but they are riskier than the diversified equity
funds that invest across sectors.
2.7 Types of returns
There are three ways, where the total returns provided by mutual funds can be enjoyed by
investors:
Income is earned from dividends on stocks and interest on bonds. A fund pays out
nearly all income it receives over the year to fund owners in the form of a
distribution.
If the fund sells securities that have increased in price, the fund has a capital gain.
Most funds also pass on these gains to investors in a distribution.
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If fund holdings increase in price but are not sold by the fund manager, the fund's
shares increase in price. You can then sell your mutual fund shares for a profit. Funds
will also usually give you a choice either to receive a check for distributions or to
reinvest the earnings and get more shares.
2.8 Performance Measures Of Mutual Funds
Return alone should not be considered as the basis of measurement of the performance of a
mutual fund scheme, it should also include the risk taken by the fund manager because
different funds will have different levels of risk attached to them. Risk associated with a
fund, in a general, can be defined as variability or fluctuations in the returns generated by it.
The higher the fluctuations in the returns of a fund during a given period, higher will be the
risk associated with it. These fluctuations in the returns generated by a fund are resultant of
two guiding forces. First, general market fluctuations, which affect all the securities, present
in the market, called market risk or systematic risk and second, fluctuations due to specific
securities present in the portfolio of the fund, called unsystematic risk. The Total Risk of a
given fund is sum of these two and is measured in terms of standard deviation of returns of
the fund. Systematic risk, on the other hand, is measured in terms of Beta, which represents
fluctuations in the NAV of the fund vis-�-vis market. The more responsive the NAV of a
mutual fund is to the changes in the market; higher will be its beta. Beta is calculated by
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relating the returns on a mutual fund with the returns in the market. While unsystematic risk
can be diversified through investments in a number of instruments, systematic risk cannot.
By using the risk return relationship, we try to assess the competitive strength of the mutual
funds vis-�-vis one another in a better way.
Beta
Beta, also known as the "beta coefficient," is a measure of the volatility, or systematic risk,
of a security or a portfolio in comparison to the market as a whole. Beta is calculated
using regression analysis, and you can think of it as the tendency of an investment's return to
respond to swings in the market. By definition, the market has a beta of 1.0. Individual
security and portfolio values are measured according to how they deviate from the market.
Conservative investors looking to preserve capital should focus on securities and fund
portfolios with low betas, whereas those investors willing to take on more risk in search of
higher returns should look for high beta investments.
Standard Deviation
Standard Deviation is a measure of how much the actual performance of a fund over a period
of time deviates from the average performance.
Since Standard Deviation is a measure of risk, a low Standard Deviation is good.
Treynor
Developed by Jack Treynor, this performance measure evaluates funds on the basis of
Treynor's Index. This Index is a ratio of return generated by the fund over and above risk
free rate of return (generally taken to be the return on securities backed by the government,
as there is no credit risk associated), during a given period and systematic risk associated
with it (beta). Symbolically, it can be represented as:
Treynor's Index (Ti) = (Ri - Rf)/Bi.
Where, Ri represents return on fund, Rf is risk free rate of return and Bi is beta of the fund.
All risk-averse investors would like to maximize this value. While a high and positive
Treynor's Index shows a superior risk-adjusted performance of a fund, a low and negative
Treynor's Index is an indication of unfavorable performance.
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Sharpe
In this model, performance of a fund is evaluated on the basis of Sharpe Ratio, which is a
ratio of returns generated by the fund over and above risk free rate of return and the total risk
associated with it. According to Sharpe, it is the total risk of the fund that the investors are
concerned about. So, the model evaluates funds on the basis of reward per unit of total risk.
Symbolically, it can be written as:
Sharpe Index (Si) = (Ri - Rf)/Si
Where, Si is standard deviation of the fund.
While a high and positive Sharpe Ratio shows a superior risk-adjusted performance of a
fund, a low and negative Sharpe Ratio is an indication of unfavourable performance.
2.9 Analysis of different mutual fund schemes, category wise as on may
2010
Different categories of Open ended schemes are as follow:
Liquid funds
Gilt funds- short and long
Debt funds
Equity sector funds
Balanced funds
Debt (short term) funds
Debt (MIP)
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Now for all the categories top 5 schemes from last 5 years:
Liquid funds
RANK SCHEMES NAV(Rs) LAST 5 SINCE
YEARS INCEPTION
Escorts Liquid Plan - 15.04 7.79 7.55
1 Growth
Sahara Liquid Fund - 1811.14 7.4 7.27
Variable Pricing
2 Option - Growth
ICICI Prudential 146.36 7.29 7.2
Liquid - Super
3 Institutional Plan -
Growth
Sahara Liquid Fund - 1796.37 7.25 6.55
4 Fixed Pricing Option
- Growth
LIC Nomura MF 18.09 7.25 6.68
5 Liquid Fund -
Growth
Scheme performance % as on May, 2011/ Return
Months/year 1month 3month 6month 1year 3year 5year
Escorts Liquid Plan 0.83 2.41 4.92 8.32 7.83 7.79
- Growth
Sahara Liquid Fund 0.76 2.31 4.29 7.31 7.22 7.40
- Variable Pricing
Option - Growth
ICICI Prudential 0.69 2.07 4.00 7.00 6.77 7.29
Liquid - Super
Institutional Plan -
Growth
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Sahara Liquid Fund 0.75 2.28 4.25 7.27 7.12 7.25
- Fixed Pricing
Option - Growth
LIC Nomura MF 0.67 2.00 3.82 6.81 6.81 7.25
Liquid Fund -
Growth
Graph
9
Escorts Liquid Plan - Growth
8
7
6 Sahara Liquid Fund - Variable
Pricing Option - Growth
5
4 ICICI Prudential Liquid - Super
Institutional Plan - Growth
3
2 Sahara Liquid Fund - Fixed
1 Pricing Option - Growth
0
LIC Nomura MF Liquid Fund -
1month 3month 6month 1year 3year 5year Growth
Risk
schemes Mean Standard sharpe beta treynor
deviation
Escorts Liquid Plan - 0.81 0.02 3.77 0.01 14.61
Growth
Sahara Liquid Fund - 0.17 0.02 3.73 0.09 0.73
Variable Pricing
Option - Growth
ICICI Prudential 0.16 0.02 2.37 0.02 2.34
Liquid - Super
Institutional Plan -
Growth
Sahara Liquid Fund - 0.16 0.02 3.52 0.09 0.68
Fixed Pricing Option
- Growth
LIC Nomura MF 0.17 0.02 2.59 0.04 1.55
Liquid Fund -
Growth
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Interpretation
As beta of Escorts Liquid Plan - Growth and ICICI Prudential Liquid - Super Institutional
Plan - Growth is 0.01 and 0.02 respectively; therefore they are not much related to market
risk hence it is less risky. Vice-versa for Sahara Liquid Fund - Variable Pricing Option -
Growth and Sahara Liquid Fund - Fixed Pricing Option - Growth schemes.
Escorts Liquid Plan - Growth, Sahara Liquid Fund - Variable Pricing Option - Growth and
Sahara Liquid Fund - Fixed Pricing Option - Growth have positive and high ratio as
compared to ICICI Prudential Liquid - Super Institutional Plan - Growth and LIC Nomura
MF Liquid Fund - Growth therefore they have a superior risk adjusted performance.
Escorts Liquid Plan - Growth scheme has very high trey nor as compared to other schemes,
hence it has superior risk adjusted performance. Sahara Liquid Fund - Variable Pricing
Option - Growth schemes has low risk adjusted performance.
Gilt fund- short and long term
RANK SCHEMES NAV(Rs) LAST 5 SINCE
YEARS INCEPTION
ICICI Prudential Gilt 19.28 11.87 9.17
1 Fund Investment
Plan - PF Option -
Growth
ICICI Prudential Gilt 33.33 9.6 10.81
Fund Investment
2 Plan - Growth
Escorts Gilt Plan - 21.77 8.66 8
Growth
3
JM G Sec Regular 31.16 8.66 10.28
4 Plan - Growth
Birla Sun Life Govt 28.54 8.43 9.51
5 Securities Fund -
Long Term -
Growth
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Scheme performance % as on May, 2011/ return
Months/year 1month 3month 6month 1year 3year 5year
ICICI Prudential -0.80 0.49 1.81 4.80 14.32 11.87
Gilt Fund
Investment Plan -
PF Option -
Growth
ICICI Prudential -0.45 0.99 2.54 5.40 11.07 9.60
Gilt Fund
Investment Plan -
Growth
Escorts Gilt Plan - -0.12 2.55 3.23 5.77 12.04 8.66
Growth
JM G Sec Regular 0.41 1.61 2.75 3.05 12.06 8.66
Plan - Growth
Birla Sun Life Govt 0.36 1.14 2.53 5.68 12.83 8.43
Securities Fund -
Long Term -
Growth
Graph
16
14 ICICI Prudential Gilt Fund
Investment Plan - PF Option
12 - Growth
ICICI Prudential Gilt Fund
10
Investment Plan - Growth
8
Escorts Gilt Plan - Growth
6
4
JM G Sec Regular Plan - Growth
2
0 Birla Sun Life Govt Securities
1month 3month 6month 1year 3year 5year Fund - Long Term - Growth
-2
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Risk
schemes mean Standard Sharpe beta trey nor
deviation
ICICI Prudential Gilt 0.75 2.10 0.31 1.47 0.44
Fund Investment
Plan - PF Option -
Growth
ICICI Prudential Gilt 0.59 1.93 0.25 1.35 0.36
Fund Investment
Plan - Growth
Escorts Gilt Plan - 0.59 1.61 0.30 0.69 0.70
Growth
JM G Sec Regular 0.55 1.32 0.34 0.73 0.61
Plan - Growth
Birla Sun Life Govt 0.46 1.81 0.30 0.35 1.00
Securities Fund -
Long Term -
Growth
Interpretation
As Birla Sun Life Govt Securities Fund - Long Term - Growth scheme and Escorts Gilt Plan
- Growth has lower beta therefore it is less related with the market fluctuations and hence
lower the risk.
Vice versa for ICICI Prudential Gilt Fund Investment Plan - PF Option - Growth and ICICI
Prudential Gilt Fund Investment Plan – Growth, beta is high so risk involve is also high as
compared to the other schemes.
Almost all the schemes have positive and high ratio therefore it is a indication of favourable
performance.
Birla Sun Life Govt Securities Fund - Long Term - Growth scheme has highest trey nor so it
is a superior risk adjusted performer as compared to others schemes
44
45. UNINOR
Debt funds
RANK SCHEMES NAV(Rs) LAST 5 SINCE
YEARS INCEPTION
Escorts Income 29.77 11.59 8.7
1 Bond - Growth
Reliance Monthly 21.81 10.73 11.2
Income Plan -
2 Growth
HDFC Monthly 23.06 10.56 11.99
Income Plan - Long
3 Term Plan - Growth
Canara Robeco 20.79 10.33 8.84
4 Income Scheme -
Growth
Canara Robeco 29.6 9.98 6.79
5 Monthly Income
Plan - Growth
Scheme performance % as on May, 2011/ return
Months/year 1month 3month 6month 1year 3year 5year
Escorts Income -0.54 -3.12 -13.60 25.58 12.97 11.59
Bond - Growth
Reliance Monthly 0.19 3.62 -0.11 6.51 14.71 10.73
Income Plan -
Growth
HDFC Monthly -0.43 3.49 -0.49 7.75 11.99 10.56
Income Plan - Long
Term Plan –
Growth
Canara Robeco 0.36 1.68 3.13 5.24 12.94 10.33
Income Scheme -
Growth
Canara Robeco -0.02 2.62 0.84 6.06 10.59 9.98
Monthly Income
45
46. UNINOR
Plan - Growth
Graph
30
25
20 escorts Income Bond
- Growth
15
Reliance Monthly Income
10 Plan - Growth
HDFC Monthly Income Plan
5
- Long Term Plan - Growth
0 Canara Robeco Income
Scheme - Growth
-5 1month3month6month 1year 3year 5year
Canara Robeco Monthly
-10 Income Plan - Growth
-15
-20
Risk
schemes mean Standard sharpe beta treynor
deviation
Escorts Income 0.04 0.69 -0.10 0.06 -1.19
Bond - Growth
Reliance Monthly 0.43 1.53 0.21 1.15 0.28
Income Plan -
Growth
HDFC Monthly 0.13 1.48 0.01 1.27 0.02
Income Plan - Long
Term Plan - Growth
Canara Robeco 0.56 0.79 0.57 4.77 0.09
Income Scheme -
Growth
Canara Robeco 0.17 1.67 0.04 0.21 0.31
Monthly Income
Plan - Growth
46
47. UNINOR
Interpretation
Escorts Income Bond - Growth and Canara Robeco Monthly Income Plan - Growth has a
low beta hence lower the risk involves as compared to others.
Escorts Income Bond - Growth has a negative Sharpe and treynor therefore it is an indicator
of unfavourable performance whereas Canara Robeco Income Scheme - Growth has a high
Sharpe and Canara Robeco Monthly Income Plan - Growth scheme has high treynor as
compared to others.
EQUITY
RANK SCHEMES NAV(Rs) LAST 5 SINCE
YEARS INCEPTION
Reliance Banking 101.99 24.06 33.87
1 Fund - Growth
Reliance Pharma 54.85 20.63 27.83
Fund - Growth
2
UTI Banking Sector 42.43 19.82 22.32
Fund - Growth
3
IDFC Premier 31.71 18.15 22.81
4 Equity Fund - Plan
A - Growth
Reliance Diversified 69.33 17.32 31.82
5 Power Sector Fund -
Growth
47
48. UNINOR
Scheme performance % as on May, 2011/ return
Months/year 1month 3month 6month 1year 3year 5year
Reliance Banking -6.43 7.69 -18.65 19.09 22.58 24.06
Fund - Growth
Reliance Pharma 0.08 7.49 -5.60 11.31 32.31 20.63
Fund - Growth
UTI Banking -6.60 8.16 -17.08 15.17 17.60 19.82
Sector Fund -
Growth
IDFC Premier -3.28 11.85 13.84 11.41 14.32 18.15
Equity Fund - Plan
A - Growth
Reliance -5.54 6.01 -22.27 -12.49 2.13 17.32
Diversified Power
Sector Fund -
Growth
Graph
40
30
Reliance Banking Fund -
20 Growth
Reliance Pharma Fund -
Growth
10
UTI Banking Sector Fund
- Growth
0
IDFC Premier Equity Fund
1month 3month 6month 1year 3year 5year - Plan A - Growth
-10 Reliance Diversified Power
Sector Fund - Growth
-20
-30
48
49. UNINOR
Risk
schemes mean Standard sharpe beta treynor
deviation
Reliance Banking -0.09 6.37 -0.03 0.99 -0.20
Fund - Growth
Reliance Pharma -0.13 4.01 -0.06 0.87 -0.27
Fund - Growth
UTI Banking Sector -0.10 6.92 -0.03 1.08 -0.19
Fund - Growth
IDFC Premier Equity -0.51 4.49 0.14 0.69 -0.89
Fund - Plan A -
Growth
Reliance Diversified -0.53 4.66 -0.14 0.75 -0.85
Power Sector Fund -
Growth
Interpretation
As equity schemes are highly risky therefore beta in these schemes are relatively high as we
can see in the above schemes.
Sharpe is also negative in three and treynor is also negative for all the schemes which mean
unfavourable performance of funds.
EQUITY SECTOR FUNDS
RANK SCHEMES NAV(Rs) LAST 5 SINCE
YEARS INCEPTION
Reliance Banking 101.99 24.06 33.87
1 Fund - Growth
Reliance Pharma 54.85 20.63 27.83
Fund - Growth
2
UTI Banking Sector 42.43 19.82 22.32
Fund - Growth
3
Reliance Diversified 69.33 17.32 31.82
4 Power Sector Fund -
Growth
49
50. UNINOR
Franklin Pharma 62.66 14.97 16.35
5 Fund - Growth
Scheme performance % as on May, 2011/ return
Months/year 1month 3month 6month 1year 3year 5year
Reliance Banking -6.43 7.69 -18.65 19.09 22.58 24.06
Fund - Growth
Reliance Pharma 0.08 7.49 -5.60 11.31 32.31 20.63
Fund - Growth
UTI Banking -6.60 8.16 -17.08 15.17 17.60 19.82
Sector Fund -
Growth
Reliance -5.54 6.01 -22.27 -12.49 2.13 17.32
Diversified Power
Sector Fund -
Growth
Franklin Pharma 0.17 6.14 -4.70 14.40 29.71 14.97
Fund - Growth
Graph
40
30
Reliance Banking Fund -
Growth
20
Reliance Pharma Fund -
Growth
10
UTI Banking Sector Fund
- Growth
0
Reliance Diversified Power
1month 3month 6month 1year 3year 5year
Sector Fund - Growth
-10
Franklin Pharma Fund
- Growth
-20
-30
50
51. UNINOR
Risk
schemes mean Standard sharpe beta treynor
deviation
Reliance Banking -0.09 6.37 -0.03 0.99 -0.20
Fund - Growth
Reliance Pharma -0.13 4.01 -0.06 0.87 -0.27
Fund - Growth
UTI Banking Sector -0.10 6.92 -0.03 1.08 -0.19
Fund - Growth
Reliance Diversified -0.53 4.66 -0.14 0.75 -0.85
Power Sector Fund -
Growth
Franklin Pharma -0.16 3.16 -0.08 0.72 -0.36
Fund - Growth
Interpretation
Franklin Pharma Fund - Growth and Reliance Diversified Power Sector Fund - Growth
schemes has relatively lower beta which means risk is lass associated with these funds as
compared to UTI Banking Sector Fund - Growth and Reliance Banking Fund - Growth.
Sharpe and treynor are low and negative which is an indicator of unfavourable performance.
Equity diversified
RANK SCHEMES NAV(Rs) LAST 5 SINCE
YEARS INCEPTION
IDFC Premier 31.71 18.15 22.81
1 Equity Fund - Plan
A - Growth
Reliance Regular 30.02 17.06 20.36
Savings Fund -
2 Equity - Growth
UTI Dividend Yield 32.24 15.69 21.69
Fund - Growth
3
Quantum Long- 21.87 15.58 16.37
4 Term Equity Fund -
Growth
Quantum Long- 278.81 15.13 22.55
51
52. UNINOR
5 Term Equity Fund -
Growth
Scheme performance % as on May, 2011/ return
Months/year 1month 3month 6month 1year 3year 5year
IDFC -3.28 11.85 -13.84 11.41 14.32 18.15
Premier
Equity Fund
- Plan A -
Growth
Reliance -2.96 6.46 -15.15 4.51 9.46 17.06
Regular
Savings
Fund -
Equity -
Growth
UTI -3.07 7.68 -9.72 11.94 15.88 15.69
Dividend
Yield Fund
- Growth
Quantum -4.29 5.09 -10.66 12.73 15.25 15.58
Long-Term
Equity Fund
- Growth
Quantum -2.60 8.68 -11.59 15.58 17.03 15.13
Long-Term
Equity Fund
- Growth
Graph
52
53. UNINOR
20
15 IDFC Premier Equity Fund -
Plan A - Growth
10
Reliance Regular Savings
Fund - Equity - Growth
5
UTI Dividend Yield Fund
0 - Growth
Quantum Long-Term Equity
1month 3month 6month 1year 3year 5year
-5 Fund - Growth
Quantum Long-Term Equity
-10 Fund - Growth
-15
-20
Risk
schemes mean Standard sharpe beta treynor
deviation
IDFC Premier Equity -0.51 4.49 -0.14 0.69 -0.89
Fund - Plan A -
Growth
Reliance Regular -0.55 5.26 -0.13 0.88 -0.75
Savings Fund -
Equity - Growth
UTI Dividend Yield -0.24 3.93 -0.09 0.65 -0.53
Fund - Growth
Quantum Long-Term -0.42 4.64 -0.11 0.77 -0.69
Equity Fund -
Growth
Quantum Long-Term -0.34 5.28 -0.08 0.87 -0.51
Equity Fund -
Growth
Interpretation
In the entire schemes beta is high which means they are associated with market risk, which
make them risky funds.
Sharpe and treynor are low and negative which is an indicator of unfavourable performance.
53
54. UNINOR
Balanced
RANK SCHEMES NAV(Rs) LAST 5 SINCE
YEARS INCEPTION
HDFC Prudence 212.39 16.36 19.45
1 Fund - Growth
Reliance Regular 22.06 14.58 14.29
Savings Fund -
2 Balanced - Growth
Birla Sun Life 95 - 308.35 12.88 23.48
Growth
3
HDFC Balanced 55.8 12.8 17.49
4 Fund - Growth
DSP BlackRock 65.5 12.5 17.01
5 Balanced Fund -
Growth
Scheme performance % as on May, 2011/ return
Months/year 1month 3month 6month 1year 3year 5year
HDFC Prudence -1.89 7.90 -7.35 13.75 17.21 16.36
Fund - Growth
Reliance Regular -1.72 5.73 -11.72 6.46 15.78 14.58
Savings Fund -
Balanced - Growth
54
55. UNINOR
Birla Sun Life 95 - -2.73 5.28 -7.14 9.31 12.62 12.88
Growth
HDFC Balanced -0.47 9.98 4.16 16.64 16.01 12.80
Fund - Growth
DSP BlackRock -2.08 6.33 -8.81 7.54 9.96 12.50
Balanced Fund -
Growth
Graph
20
15
HDFC Prudence Fund -
Growth
10
Reliance Regular Savings Fund
- Balanced - Growth
5
Birla Sun Life 95 - Growth
0
HDFC Balanced Fund - Growth
1month 3month 6month 1year 3year 5year
-5
DSP BlackRock Balanced Fund
- Growth
-10
-15
Risk
schemes mean Standard sharpe beta treynor
deviation
HDFC Prudence -0.31 3.80 -0.11 0.94 -0.45
Fund - Growth
Reliance Regular -0.07 4.35 -0.04 1.08 -0.16
Savings Fund -
Balanced - Growth
Birla Sun Life 95 - -0.21 3.54 -0.09 0.83 -0.39
55
56. UNINOR
Growth
HDFC Balanced -0.26 3.68 -0.10 0.91 -0.40
Fund - Growth
DSP BlackRock -0.34 2.92 -0.15 0.72 -0.16
Balanced Fund -
Growth
Interpretation
In the entire schemes beta is high which means they are associated with market risk, which
make them risky funds.
Sharpe and treynor are low and negative which is an indicator of unfavourable performance.
Debt short term
RANK SCHEMES NAV(Rs) LAST 5 SINCE
YEARS INCEPTION
JM Short Term Fund 19.4 9.05 7.75
1 - Growth
Templeton India 1585.55 8.98 8.47
Short Term Income
2 Plan - Institutional
Plan - Growth
Templeton India 1972.32 8.83 7.6
Short Term Income
3 Plan - Growth
ICICI Prudential 20.53 8.74 7.74
4 Short Term
Institutional Plan -
Growth
HDFC High Interest 19.45 8.66 7.45
5 Fund - Short Term
Plan - Growth
Scheme performance % as on May, 2011/ return
Months/year 1month 3month 6month 1year 3year 5year
JM Short Term 0.84 2.29 4.01 6.91 9.41 9.05
Fund - Growth
Templeton India 0.67 2.35 3.42 5.80 9.15 8.98
56
57. UNINOR
Short Term Income
Plan - Institutional
Plan - Growth
Templeton India 0.65 2.30 3.32 5.58 8.99 8.83
Short Term Income
Plan - Growth
ICICI Prudential 0.46 2.22 3.04 5.00 8.97 8.74
Short Term
Institutional Plan -
Growth
HDFC High 0.13 1.88 2.53 4.51 8.49 8.66
Interest Fund -
Short Term Plan -
Growth
Graph
10
9 JM Short Term Fund -
Growth
8
7 Templeton India Short
Term Income Plan -
6 Institutional Plan - Growth
5 Templeton India Short
Term Income Plan - Growth
4
3 ICICI Prudential Short Term
Institutional Plan - Growth
2
1 HDFC High Interest Fund -
Short Term Plan - Growth
0
1month 3month 6month 1year 3year 5year
Risk
schemes mean Standard sharpe beta treynor
deviation
JM Short Term Fund 0.29 0.48 0.39 0.80 0.23
- Growth
Templeton India 0.21 0.22 0.45 0.73 0.14
Short Term Income
Plan - Institutional
Plan - Growth
57
58. UNINOR
Templeton India 0.20 0.22 0.44 0.73 0.13
Short Term Income
Plan - Growth
ICICI Prudential 0.32 0.57 0.38 1.78 0.12
Short Term
Institutional Plan -
Growth
HDFC High Interest 0.25 0.31 0.47 1.08 0.14
Fund - Short Term
Plan - Growth
Interpretation
ICICI Prudential Short Term Institutional Plan - Growth and HDFC High Interest Fund -
Short Term Plan – Growth has relatively higher beta which means they are more riskier then
JM Short Term Fund - Growth, Templeton India Short Term Income Plan - Institutional
Plan - Growth and Templeton India Short Term Income Plan - Growth.
Sharpe and treynor ratios has positive values for all the schemes which shows a superior risk
adjusted performance of a funds.
ASSET UNDER MANAGEMENT AND FOLIOS - CATEGORY WISE -
AGGREGATE - AS ON March 31, 2011
Types of Investor AUM(Rs.cr) % to total No of folios % to total
schemes classification
Liquid/ Corporate 57132.60 76.48 11598 6.00
Money
Market
Bank/ FIs 12749.77 17.07 387 0.20
Gilt corporate 2656.31 75.74 3135 10.74
Bank/ FIs 17.14 0.49 27 0.09
Debt Corporate 178458.49 60.66 83366 1.94
oriented
Bank/ FIs 10317.33 3.51 1288 0.03
Equity corporate 21088.30 10.67 22777 0.58
Oriented
Bank/ FIs 2194.82 1.11 9943 0.03
Balanced corporate 2144.29 12.22 17036 0.61
Bank/ FIs 42.30 0.24 76 0.00
58
60. UNINOR
3.1 GOVERNMENT SECURITIES
Government securities (G-secs) are sovereign securities which are issued by the Reserve
Bank of India on behalf of Government of India, in lieu of the Central Government's market
borrowing programme.
Such securities can be short term (usually called Treasury Bills, with original maturities of
less than 1 year) or long term (usually called Government bonds or dated securities with
original maturity of one year or more). In India, the Central Government issues both
Treasury Bills and bonds or dated securities while the State Governments issue only bonds
or dated securities, which are called the State Development Loans (SDLs). Government of
India also issue savings instruments (Savings Bonds, National Saving Certificates (NSCs),
etc.) or special securities (Oil bonds, FCI bonds, fertiliser bonds, power bonds, etc.) but they
are usually not fully tradable.
Government securities, also called the gilt edged securities or G-secs or risk-free
instruments, are not only free from default risk but also provide reasonable returns.
The term Government Securities includes:
Central Government Securities
State Government Securities
Treasury bills
Reserve Bank of India manages and services these securities through its public debt offices
located in various places as an agent of the Government.
3.2 Features of Government Securities
Nomenclature
The coupon rate and year of maturity identifies the government security.
Example: 6.90% GOI 2019 indicates the following:
6.90% is the coupon rate, GOI denotes Government of India (which is the borrower),
2019 is the year of maturity.
Eligibility
All entities registered in India like banks, financial institutions, Primary Dealers,
firms, companies, corporate bodies, partnership firms, institutions, mutual funds,
Foreign Institutional Investors, State Governments, Provident Funds, trusts, research
60