Page 1 of 35 KARVY STOCK BROKING LIMITED PORTFOLIO MANAGEMENT SERVICES DISCLOSURE DOCUMENT [As required under Regulation 14 of SEBI (Portfolio Managers) Regulation, 1993] 1. This document supercedes the Disclosure document dated February 18, 2019 , filed with Securities and Exchange Board of India (SEBI) on February 18, 2019 2. This Disclosure Document has been filed with SEBI along with the certificate from independent chartered accountant in the prescribed format in terms of Regulation 14 of the SEBI (Portfolio Managers) Regulations, 1993 as amended till date. 3. The purpose of this Disclosure Document is to provide essential information about the portfolio management services offered by Karvy Stock Broking Limited in such manner as to assist and enable the investors in making informed and considered decision for engaging Karvy Stock Broking Limited as a Portfolio Manager. 4. This document contains the necessary information about the Portfolio Manager required by an investor. 5. Karvy Stock Broking Limited is permitted to provide Portfolio Management Services pursuant to its registration as a portfolio manager with SEBI vide Registration number INP000001512 dated November 1, 2005 which registration shall be valid unless it is suspended or cancelled by SEBI and is subject to payment of renewal fees to SEBI from time to time. 6. Investors should carefully read this entire document before making a decision to avail portfolio management services from Karvy Stock Broking Limited and retain this document for future reference. Any other relevant information may be provided upon request. 7. No person has been authorized to give any information or to make any representations not confirmed in this Disclosure Document in connection with the services proposed to be provided by the Portfolio Manager, and any information or representations not contained herein must not be relied upon as having been authorized by the Portfolio Manager. 8. The Principal Officer designated by Karvy Stock Broking Limited, the Portfolio Manager is: Name of the Principal Officer VIKAS RAJPAL* Tel No: 022 61491606 Email : [email protected]Address: 701, Hallmark Business Plaza, Sant Dnyaneshwar Marg, Bandra (E), Mumbai 400 051
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KARVY STOCK BROKING LIMITED
PORTFOLIO MANAGEMENT SERVICES
DISCLOSURE DOCUMENT
[As required under Regulation 14 of SEBI (Portfolio Managers) Regulation, 1993]
1. This document supercedes the Disclosure document dated February 18, 2019 , filed with
Securities and Exchange Board of India (SEBI) on February 18, 2019
2. This Disclosure Document has been filed with SEBI along with the certificate from independent
chartered accountant in the prescribed format in terms of Regulation 14 of the SEBI (Portfolio
Managers) Regulations, 1993 as amended till date.
3. The purpose of this Disclosure Document is to provide essential information about the
portfolio management services offered by Karvy Stock Broking Limited in such manner as to
assist and enable the investors in making informed and considered decision for engaging Karvy
Stock Broking Limited as a Portfolio Manager.
4. This document contains the necessary information about the Portfolio Manager required by an
investor.
5. Karvy Stock Broking Limited is permitted to provide Portfolio Management Services pursuant
to its registration as a portfolio manager with SEBI vide Registration number INP000001512
dated November 1, 2005 which registration shall be valid unless it is suspended or cancelled by
SEBI and is subject to payment of renewal fees to SEBI from time to time.
6. Investors should carefully read this entire document before making a decision to avail portfolio
management services from Karvy Stock Broking Limited and retain this document for future
reference. Any other relevant information may be provided upon request.
7. No person has been authorized to give any information or to make any representations not
confirmed in this Disclosure Document in connection with the services proposed to be
provided by the Portfolio Manager, and any information or representations not contained
herein must not be relied upon as having been authorized by the Portfolio Manager.
8. The Principal Officer designated by Karvy Stock Broking Limited, the Portfolio Manager is:
Ii Complete disclosure in respect of transactions with related
parties as per the standards specified by the Institute of
Chartered Accountants of India as on March 31,2019
20 -24
8 Financial Performance of Portfolio Manager, Karvy Stock Broking
Limited
24 – 25
9 Portfolio Management Performance of the Portfolio Manager for
last 3 years
25 – 28
10 Nature of Expenses 28 – 29
11 Taxation 29
12 Accounting Policies 32 – 34
13 Investor Services 34
14 Grievances Redressal 34 - 35
15 Dispute Settlement Mechanism 35
16 General 35
Page 4 of 35
Section 1: DISCLAIMER
This document has been prepared in accordance with the Securities Exchange Board of India (Portfolio
Managers) Regulations, 1993, as amended from time to time and other circulars issued by SEBI from
time to time and has been filed with SEBI. This Document has neither been approved nor disapproved
by SEBI nor has SEBI certified the accuracy or adequacy of the contents of this Document.
This information is not for public distribution and has been furnished to you solely for your information
and may not be reproduced or redistributed to any other person.
Section 2: DEFINITIONS
In this Agreement, unless otherwise clearly indicated by or inconsistent with the context, the following
expressions shall have the meaning assigned to them hereunder respectively:
“Act” – means the Securities and Exchange Board of India Act, 1992.
“Agreement” means the agreement entered between Karvy Stock Broking Limited, the Portfolio
Manager and the client for the management of funds or securities of the client in terms of Regulation
14 of the SEBI (Portfolio Managers) Regulations, 1993 and SEBI (Portfolio Managers) Amendment
Regulations, 2002 issued by the Securities and Exchange Board of India and as may be modified from
time to time and shall include all schedules and annexures thereto and shall also include all
modifications, alterations, additions or deletions made thereto in accordance with the terms thereof.
“Board” means the Securities and Exchange Board of India.
“Bank Account” means one or more bank accounts opened, maintained and operated by the Portfolio
Manager in the name of clients or a pool account in the name of the Portfolio Manager in which the
funds handed over by the client shall be held by the Portfolio Manager on behalf of the Client.
“Chartered Accountant” means a chartered accountant as defined in clause (b) of sub-section (1) of
section 2 of the Chartered Accountants Act, 1949 (38 of 1949) and who has obtained a certificate of
practice under sub-section (1) of section 6 of that Act.
“Client” means any body corporate, partnership firm, Limited Liability Partnership, individual, HUF,
association of person, body of individuals, trust, statutory authority, or any other person who enters
into agreement with the Portfolio Manager for availing the Portfolio Management Services
“Custodian” means any person who carries on or proposes to carry on the business of providing
custodial services in accordance with the regulations issued by SEBI from time to time.
“Depository” means Depository as defined in the Depositories Act, 1996 (22 of 1996) and currently
includes National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited
(CDSL).
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“Depository Account” means any account of the client or for the client with an entity registered as
depository participant under sub-section 1A of Section 12 of the Act or any other law for the time being
relating to registration of depository participants in which the securities comprising part of the
Portfolio of the Client are kept by the Portfolio Manager.
“Discretionary Portfolio Management Services” means the discretionary portfolio management
services rendered to a Client by the Portfolio Manager pursuant to the terms and conditions contained
in the Portfolio Management Services Agreement, where under the Portfolio Manager exercises
absolute and unfettered discretion, with regards to the investments and management of the portfolio
of securities or the funds of the client, as the case may be.
“Disclosure Document” means this disclosure document for offering Portfolio Management Services.
“Financial year” means the period of twelve months commencing on 1st April every year and ending on
31st March of the following year.
“Funds” means the monies placed by the Client with the Portfolio Manager and any accretions thereto
and also includes any further monies placed by the client with the Portfolio Manager to be managed
pursuant to the Agreement, the proceeds of the sale or realization of the portfolio and any other
monies so long as the same is being managed by the Portfolio Manager.
“Funds managed” means the market value of the Portfolio of the Client as on date.
“Fund Manager” (FM) means the individual/s appointed by the portfolio manager who manages,
advises or directs or undertakes on behalf of the client (whether as a discretionary portfolio manager
or otherwise) the management or administration of a portfolio of securities or funds of the client, as
the case may be.
“Initial Corpus” means the value of the funds and the market value of securities brought in by the
client and accepted by the Portfolio Manager at the time of registering with the Portfolio Manager for
the portfolio management services. The Initial corpus brought in by the Client in the form of securities
shall be valued at the closing market price of such securities, prevailing on recognised stock exchange
[NSE/ BSE (only if security is not listed on NSE)] on the previous working date of activation of client’s
portfolio management account by the Portfolio Manager or of the previous working day of the transfer
of such securities from client’s account to the Depository account whichever is later. The Portfolio
Manager shall not accept from the client/ client(s) , in case of joint holding funds or securities worth
less than Twenty five lakh rupees.
“Investment Advisory Services” means the non exclusive, non binding services, where the Portfolio
Manager advises Clients on investments in general or gives specific advice required by the Clients as
agreed upon in the Agreement. Advice, whether general or specific is non-binding in nature and it is
entirely at client’s discretion to follow the advice
“Non-Discretionary Portfolio Management Services” means the non-discretionary portfolio
management services to be rendered to a Client by the Portfolio Manager on the terms and conditions
pursuant to the Agreement, where under the Portfolio Manager invests and manages the Funds of the
Client based on the instructions of the Client.
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“Net Asset Value” or “NAV” means the market value of the Assets managed by the Portfolio Manager,
as calculated by the Portfolio Manager from time to time, depending on the Strategy chosen by the
Client.
“Person directly or indirectly connected” means Related Parties as defined under section 2(76) of the
Companies Act, 2013 - “Related Party” with reference to a company, means—
(i) a director or his relative;
(ii) a key managerial personnel or his relative;
(iii) a firm, in which a director, manager or his relative is a partner;
(iv) a private company in which a director or manager is a member or director;
(v) a public company in which a director or manager is a director or holds along with his relatives, more than two per cent. of its paid-up share capital;
(vi) any body corporate whose Board of Directors, managing director or manager is accustomed to act in accordance with the advice, directions or instructions of a director or manager;
(vii) any person on whose advice, directions or instructions a director or manager is accustomed to act:
Provided that nothing in sub-clauses (vi) and (vii) shall apply to the advice, directions or instructions given in a professional capacity;
(viii) any company which is—
A. a holding, subsidiary or an associate company of such company; or
B. a subsidiary of a holding company to which it is also a subsidiary;
(ix) such other person as may be prescribed;
“Portfolio” means the total holdings of securities and / or funds belonging to the client.
“Portfolio Manager” (PM) means Karvy Stock Broking Ltd., a company incorporated under the
Companies Act, 1956 and registered with SEBI as a Portfolio Manager in terms of SEBI (Portfolio
Managers) Regulations 1993 vide registration No.INP000001512 and having its Registered Office at
Karvy House, 46, Avenue 4, Road No.10, Banjara Hills, Hyderabad and its PMS dealing office at 701,
Hallmark Business Plaza, Sant Dnyaneshwar Marg, Bandra (E), Mumbai 400 051[ but may add more
dealing offices in future] and who pursuant to a contract or arrangement with a client, advises or
directs or undertakes on behalf of the client (whether as a discretionary Portfolio Manager or
otherwise) the management or administration of a portfolio of securities or the funds of the client, as
the case may be.
“Portfolio Management Services” means the Discretionary Portfolio Management Services, and/or the Non-Discretionary Portfolio Management Services, and/or the Investment Advisory Services, as the case may be. “Portfolio Value” means the aggregate of the Portfolio Funds and Value of Portfolio Securities.
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“Principal Officer” means a director/an employee of the portfolio manager who is responsible for the
activities of portfolio management and has been designated as principal officer by the portfolio
manager.
“Regulations” – means the Securities and Exchange Board of India (Portfolio Managers) Regulations,
1993, as amended by SEBI from time to time and includes Securities and Exchange Board of India
(Portfolio Managers) Amendment Regulations, 2012, and rules, guidelines or circulars issued in relation
thereto from time to time.
“Strategy” means any of the Portfolio Investment categories mentioned herein or that may be
introduced by the Portfolio Manager from time to time. The Term Strategy may be interchanged with
Plans/Products/Options.
“SEBI” means the Securities and Exchange Board of India established under sub-section (1) of Section 3
of the Securities and Exchange Board of India Act, 1992.
“Securities” means and includes shares (whether dematerialized or otherwise), derivatives (futures
Note: Portfolio Management performance of Resident Individual and Non Resident Indian have been
shown separately above effective April 1, 2011.
Section 10: NATURE OF EXPENSES
The following are the general costs and expenses to be borne by the Client availing the services by the
Portfolio Manager. However, the exact nature of expenses relating to each of the following services is
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provided in the annexure to this Risk Disclosure Document and in the Schedule of Charges signed by
the client in respect of each of the services provided.
(i) Portfolio Management and Advisory Fees
This fee relates to the portfolio management services offered by Portfolio Manager (including advisory
services) to the clients. The fee may be a Fixed Charge on the quantum of the funds being managed
(or) charges linked to portfolio return (or) combination of both. For details kindly refer the annexure to
this Risk Disclosure Document.
(ii) Premature Redemption Charges
If the redemption is done prematurely at the option of the client, the Portfolio Manager shall levy the
Premature Redemption Charges. For details kindly refer the annexure to this Risk Disclosure Document.
(iii) Custodian/Depository Participant fee
The charges relating to opening and operation of demat accounts, custody and transfer charges for
shares, bonds and units, dematerialization and rematerialization, pledge and removal of pledge, etc.
will be as per the actual charged by the Depository Participant/Custodian. For details kindly refer the
annexure to this Risk Disclosure Document.
(iv) Registrar and transfer agent fee
Charges payable to the Registrar and Share Transfer Agents in connection with effecting transfer of
securities and bonds, units, etc. including stamp charges, cost of affidavits, notary charges,
postage/courier charges and other related charges will be recovered on actual. For details kindly refer
the annexure to this Risk Disclosure Document.
(v) Placement fee :
A Placement fee will be charged as a percentage of corpus over and above the fixed management fee
and performance fee. The placement fee shall also be charged each time corpus is infused/ brought in
by the client during the lifetime of the portfolio investment. The placement fee shall be computed as a
percentage of the initial corpus brought in by the client and if subsequent to account opening,
additional corpus brought in by such client then it shall be computed as a percentage of the additional
corpus brought in. The Placement fee shall be deducted upfront from the Client’s portfolio immediately
on receiving the corpus from the client. For details kindly refer the annexure to this Risk Disclosure
Document.
(vi) Brokerage and transaction cost
The Brokerage and other charges like Goods and Services Tax, Stamp duty, Security Transaction
Tax, SEBI Fees, Bank charges, Turnover tax, and other charges (if any), as per the rates existing from
time to time, will be charged on actual. For details kindly refer the annexure to this Risk Disclosure
Document.
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The investment by Portfolio Manager will be done through Karvy Stock Broking Limited {Stock Broker}
or through any SEBI Registered stock broker only and would as per the rates negotiated between
Portfolio Manager and such stock broker. The charges relating to brokerage as per the related party
transactions charged by Karvy Stock Broking Limited or through any SEBI Registered stock broker will
be recovered on actual by the Portfolio Manager
(vii) Securities Lending Charges
If utilized, the charges pertaining to lending of securities, costs associated with transfer of securities
connected with lending transfer operations, Depository Participant Charges, Share Transfer Agent
Charges, etc. would be recovered on actual. For details kindly refer the annexure to this Risk Disclosure
Document.
(viii) Certification Charges or Professional Charges
Any charges payable for outsourced professional services like accounting, taxation, auditing, and any
legal services, notarizations, etc., incurred on behalf of the Client by the Portfolio Manager, will be
charged from the client on actual. For details kindly refer the annexure to this Risk Disclosure
Document.
(ix) Incidental Expenses
Charges in connection with day to day operations like courier charges incurred in providing physical
reports relating to client’s portfolio / welcome letter / other communication to clients , stamp duty,
Goods and Services Tax, postal, telegraphic expenses, opening and operation of bank and demat
accounts or any other out of pocket expenses incurred by the Portfolio Manager, on behalf of the
client, would be recovered from the client. For details kindly refer the annexure to this Risk Disclosure
Document.
Note: For clients who have opened their PMS account with Karvy Stock Broking Limited prior to August
1, 2012, the performance fee will be computed on a High Watermark Principle over the life of the
Investment at the end of every financial year on financial year basis. However, for clients who have
opened their PMS accounts on or after August 1, 2012, the performance fees will be charged on
completion of 12 months from account opening date (anniversary basis) and not financial year basis.
The actual charges levied to client portfolio under these heads can be seen in the client’s Profit and
Loss statement which will be shared by Portfolio Manager with the client on annual basis
Section 11: TAXATION
General
It may be noted that the information given hereinafter is only for general information purposes and is
based on the advice received by the Portfolio Manager regarding the law and practice currently in force
in India and the Investors should be aware that the relevant fiscal rules or their interpretation may
change or it may not be acceptable to the tax authorities. As is the case with any interpretation of any
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law, there can be no assurance that the tax position or the proposed tax position prevailing at the time
of an investment in the strategy/plan/option will be accepted by the tax authorities or will continue to
be accepted by them indefinitely.
Further statements with regard to tax benefits mentioned herein below are mere expressions of
opinion and are not representations of the Portfolio Manager to induce any investor to invest whether
directly from the Portfolio Manager or indirectly from any other persons by the secondary market
operations. In view of the above, and since the individual nature of tax consequences may differ in
each case on its merits and facts, each Investor is advised to consult his / her or its own professional
tax advisor with respect to the specific tax implications arising out of its participation in the PMS
strategy/plan/option, as an investor.
In view of the above, it is advised that the investors appropriately consult their investment / tax
advisors in this regard.
Portfolio Manager cannot be held responsible for assisting or completing the fulfillment of the client’s
tax obligations.
Income arising from purchase and sale of securities under Portfolio Management Services can give rise to business income or capital gains in the hands of the Client. The issue of characterization of income is relevant as the tax computation and rates differ in either of the two situations. The said issue is essentially a question of fact and depends on whether the shares are held as business trading assets or on capital account. Based on judicial decisions, the following factors need to be considered while determining the nature of assets as above:
a. Motive for the purchase of securities
b. Frequency of transactions
c. Length of period of holding of the securities
d. Treatment of the securities and profit or loss on their sale in the accounts of the assessee and disclosure in notes thereto
e. Source of funds out of which the securities were acquired - borrowed or own
f. Existence of an objects clause permitting trading in securities – relevant only in the case of corporate.
g. Circumstances responsible for the sale of securities
h. Acquisition of the securities -from primary market or secondary market Infrastructure and set - up employed for undertaking the securities transactions by the client
Any single factor discussed above in isolation cannot be conclusive to determine the exact nature of the shares. All factors and principles need to be construed harmoniously.
Investors may refer to CBDT instruction no. 1827 dated August 31, 1989 read with CBDT Circular no. 4 dated June 15, 2007 for further guidance on the matter.
Tax implications under the Income Tax Act, 1961 ("IT Act") arise in the hands of the Clients (resident as
well as the non-resident) under both the scenarios, viz:
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a. Securities in the Portfolio held as business asset; and
b. Securities in the Portfolio held on capital account.
Additionally, non-residents (including Flls) are entitled to be governed by the applicable Double Tax
Avoidance Agreement ("DTAA), which lndia has entered into with the country of residence of the non-
resident, if that is more beneficial. The same would have to be considered on a case-to-case basis
depending upon the applicable DTAA. Ordinarily, capital gains and interest income are taxable in lndia
in the manner and at the rates prescribed under the relevant DTAA or the relevant rates applicable in
India, whichever is beneficial to the assessee. Further, business income is normally not taxable in lndia
if there is no permanent establishment of the non-resident in India.
Tax Deducted at Source
Presently, tax is withheld at source for non-residents. If any tax is required to be withheld on account
of any future legislation, Portfolio Manager shall be obliged to act in accordance with the regulatory
requirements in this regard. Interest and dividends would be subject to tax as per the provisions of the
Income Tax Act, 1961.
Advance Tax installment obligations
It shall be the client’s responsibility to meet the advance tax obligation installments payable on the due
dates under the Income Tax Act, 1961.
Long Term capital Gains
Any investments (equity share in a company or a unit of an equity oriented fund) held for 12 months or
more than 12 months would be classified as Long Term Capital Assets. Gains arising out of such assets
are called Long Term Capital Gains. These were exempt from capital gains tax, provided the shares are
sold on a recognized stock exchanges in India and such transactions are subjected to Securities
Transaction Tax (‘STT’) in accordance with Chapter VII of the Finance (No.2) Act, 2004 and/or Income
Tax Act, 1961. With effect from 1st April 2017, in the case of equity shares, in terms of proviso to
Section 10(38) of the Income Tax Act, 1961 inserted vide Finance Act, 2017, equity shares acquired on
or after 1st October’ 2004 (other than the acquisition notified by the Central Government), exemption
shall be admissible only if STT was also paid at the time of acquisition of such equity shares. Finance
Bill, 2018 has withdrawn the above exemption and thus vide Section 112A of the Income Tax Act, 1961
tax on such long term capital gains exceeding one lakh rupees is leviable at the rate of 10%. Clients
are requested to check with their Tax Advisor on the applicable rates of tax, STT, surcharge and health
and educational cess at any given point of time.
Short Term Capital Gains
Any investments held for less than 12 months would be classified as Short Term Capital asset and any
gains arising out of such investment are called Short Term Capital Gains. Such gains would be added to
the total income. With effect from 1st April 2008, as per Section 111A of the Finance (No.2) Act, 2004,
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short term capital gains arising on transfer of short term capital asset (equity shares in a company or a
unit of an equity oriented fund) are subject to tax @ 15% plus applicable surcharge and educational
cess, provided the shares are sold on a recognized stock exchange in India and such transactions are
subjected to Securities Transaction Tax in accordance with Chapter VII of the Finance (No.2) Act, 2004
and/or Income Tax Act, 1961. Clients are requested to check with their Tax Advisor on the applicable
rates of tax, STT, surcharge and educational cess at any given point of time.
Securities Transaction Tax
STT is the tax leviable on the taxable securities transactions i.e. transaction of:
(a) Purchase or sale of an equity share of a listed companies (whether delivery based or non-delivery
based) or a derivative or a unit of an equity oriented fund, entered into in a recognized stock exchange;
or
(b) Sale of a Unit of an equity oriented fund to the Unit Trust of India or Mutual Fund.
The income arising from the securities transactions shall be taxed at applicable rates under the Income
Tax Act, 1961 if STT is not applicable in respect of such transactions.
Capital loss
Losses under the head 'capital gains' cannot be set off against income under any other head. Further,
within the head 'capital gains', long-term capital losses cannot be adjusted against short-term capital
gains. However, short-term capital losses can be adjusted against any capital gains. Unabsorbed long-
term capital loss can be carried forward and set off against the long-term capital gains arising in
subsequent eight assessment years. Unabsorbed short-term capital loss can be carried forward and set
off against the income under the head capital gains in subsequent eight assessment years
Section 12: ACCOUNTING POLICIES
The following is the accounting policy followed by Portfolio Manager while accounting for the portfolio
investments of the clients.
Investment in equities will be valued on the closing price of that equity at NSE. In case of any
investments done in any equity listed on BSE only, the same will be valued based on the closing price of
that equity in BSE. In case the prices are not available from NSE or BSE Stock exchange, then any other
stock exchange shall be considered. These shall include the Equity shares including Indian Depository
Receipts and other instruments, as the case may be. In case a share is not traded on a valuation date,
latest closing price of either principal / secondary or any other stock exchange would be used.
Equity shares which are not listed on stock exchanges are included in portfolio valuation at fair/cost
value. In case an Equity share is suspended/non-traded/ awaiting Corporate Actions, then the
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Valuation of such Equity share shall be done on the basis of good faith relying upon prevailing practices
elsewhere.
In case of the warrants been traded separately they would be valued as an equity share and valued
accordingly. In case of the non traded warrants, the warrants will be valued at the value of the share
which would be obtained on exercise of the warrant less the amount payable on exercise of the
warrant. On exercise of warrant, the warrants would be transferred to the normal equity and valued
accordingly.
For valuation of the derivatives contract, the open positions, as on the date of valuation, shall be
valued as per the last traded prices available from the relevant stock exchange, and will be valued on
the mark to market method.
In case of Mutual Fund, Investments in Mutual Funds shall be valued at the latest available NAV of the
respective scheme. Investment in Exchange listed (ETF) shall be valued at the closing price on the
relevant exchange. If on a valuation date Exchange Traded Funds (ETF) is not traded either on the
primary or secondary stock exchange, ETF shall be valued at the latest available NAVs of the ETF
Scheme.
Investment in debt instruments will be valued at the market value of the debt instrument as on cut-off
date (or) the latest available price on the relevant exchange or the most recent NAV will be reckoned.
For illiquid securities, the valuation may be provided by the issuer on a periodic basis and/or as
required by the portfolio manager.
Realised gains/losses will be calculated on the basis of First in First out (FIFO) basis.
Transaction date will be the trade date and not the settlement or auction date.
For derivatives transactions (if any), the unrealized gains/losses on open position will be calculated on
the mark to market method.
Unrealized gain/losses means the profit/loss not yet booked and the same will be the difference of the
current market price or NAV minus the actual purchase price (or) the historical cost of the securities.
All income will be accounted on accrual or receipt basis, whichever is earlier. All expenses will be
accounted on due or payment basis, whichever is earlier.
Purchase and sale transactions are accounted for on trade date basis.
Cost of purchase and sale includes consideration for scrip and brokerage but excludes Securities
Transaction Tax, Goods and Service Tax & other charges paid on purchase/sale of securities. Other
expenses like Custodian charges (Safe keeping charges, Transaction charges, Fund Accounting charges,
Out of Pocket expenses) are accounted for as & when debited by the Custodian.
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Any corporate benefits like dividend on shares, Mutual Fund units, interest on debt instruments, stock
lending fees etc. shall be accounted on accrual basis except interim dividend which would be
accounted on receipt basis.
Bonus shares are recorded on the ex-benefit date (ex-date). Dividend income is recorded on the ex-
dividend date (ex-date)
Tax deducted at source [TDS] on interest on instruments like debentures, Fixed Deposits and the like.
/Dividend is considered as withdrawal of corpus and debited accordingly. Hence, in case TDS has been
deducted, for the purpose of calculation of profit made by the investor, the TDS amount will be added
back. This profit arrived at (after adding back the TDS amount) will be used to calculate the applicable
performance sharing fee.
Portfolio Manager and the Client, on case to case basis, can mutually agree to any specific norms or
methodology for valuation of investment and/or accounting
The Client may contact the Portfolio Manager for the purpose of clarifying or elaborating on any of the
above.
Section 13: INVESTOR RELATIONS OFFICER – IRO
The below mentioned employee has been nominated as the Investor Relations Officer by Portfolio
Manager who will attend to the investor queries and complaints:
Ms. Nikita Sanghvi Karvy Stock Broking Ltd. 701, Hallmark Business Plaza, Sant Dnyaneshwar Marg, Bandra (E), Mumbai 400 051. Tel No. (B) 022-33055000 Tel No. (D) 022 61491675
currencies, Secured Premium Notes, money market instruments, etc. for those investors
who want returns linked to an underlying asset with a predefined level of capital
protection.
These products may be principal or non principal protected.
Investments may be made both in rated and unrated debentures to cater to specific
Client requirement.
Investments in such products will be made in consultation with and as per directions or
consent of the client.
Minimum investment amount is Rs. 25 Lakhs.
4. Structured
product
The Structured products are designed for those investors who want returns linked to
price movement of any Equity index, basket of stocks, commodities, precious metals,
etc., with a predefined level of capital protection.
Structured Products may be principal or non principal protected or may not have any
protection at all. Investments will be made in the structured products in consultation
with and as per directions or the consent of the client.
Minimum investment amount is Rs. 25 Lakhs.
The list of products provided here is not exhaustive and the Portfolio Manager may devise and recommend other products as per specific needs of the client.
Asset Allocation
The Portfolio will be invested in Equities, Mutual Funds, Exchange Traded Funds, Non Convertible Debentures,
Bonds, Debt Instruments, Derivatives, Money market Instruments and Structured products in consultations
with and as per directions or consent of the client. The cash in the portfolio will be invested in Liquid Funds or
Liquid Bees.
Valuation of Assets
Investment in equities will be valued on the closing price of that equity at NSE. In case of investments in any
stocks listed on BSE only, the same will be valued based on the closing price of that equity in BSE. Investment
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in NCDs, bonds and other debt Instruments will be valued at closing price, if listed, or as per valuation
provided by the issuer. Investment in “Futures and Options”, used for hedging, shall be valued at actual cash
margins paid against F&O contracts, summed with Mark to Market profit / loss computed on the basis of
closing price of such contracts.
Structured Products will be valued at the valuation provided by the issuer of the structured products from
time to time.
Non - Discretionary Portfolio Management Services
Customised Growth Portfolio
Introduction
This portfolio is designed for those investors who seek aggressive capital appreciation from their asset
allocation to equity, debt and gold. The portfolio will invest in stocks across sectors, market capitalization
categories and investment themes. Customised Growth Strategy caters to different investor mandates with
varying objectives and constraints. Each portfolio is unique and addresses the individual circumstances of the
client and hence does not follow a model portfolio. Customised Growth strategy follows an active
management style with close monitoring and review of portfolio positions. The Customised Growth Portfolio
was formerly known as Alpha Portfolio until January 31, 2014.
The Customised Growth Portfolio serves various kinds of investment mandates such as diversification,
focused, profit booking, etc and follows an active management style with close monitoring and review of
portfolio positions.
Investment Objective
The investment objective is to provide returns and capital appreciation through broad based participation in
equity markets with investments in companies which have sustainable business model, good corporate
governance and high growth.
Asset Allocation
Assets will be allocated amongst following asset classes in consultation with and as per directions or consent
of the client.
The amount of Portfolio invested in Equity will be between 0% - 100% of the Portfolio.
Investment can be made in other asset classes like debt, Gold ETF as per choice, consent or directions of the
client.
Securities
Investments will be made in Stocks and other investment options like Mutual Funds, Exchange Traded Funds
(ETF) as per choice, consent or direction of the client.
Investment in equities will be valued on the closing price of that equity at NSE. In case of investments in any
stocks listed on BSE only, the same will be valued based on the closing price of that equity at BSE. Investment
in Mutual Funds and ETFs will be valued on the day end’s NAV Investment.
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Optima Portfolio The Optima Portfolio is designed for those investors who seek capital appreciation from their asset allocation
to Equities, debt, preference capital and gold.
Investment Objective
The investment objective of the Strategy is to generate capital appreciation of wealth through a portfolio of
debt, preference capital, pass through certificates, Equity and Gold securities which is rebalanced regularly
and the allocation between Debt, Equity and Gold ETFs is done on the basis of the risk profile of the investor in
consultation with and as per directions or consent of the client.
Asset Allocation
Assets will be allocated amongst following asset classes in consultation with and as per directions or consent
of the client.
The amount of Portfolio invested in Equity will be between 0% - 100% of the Portfolio.
The amount of Portfolio invested in Debt will be between 0% - 100% of the Portfolio.
The amount of Portfolio invested in Gold ETFs will be between 0% - 100% of the Portfolio.
Investment can be made in other asset classes as per choice, consent or directions of the client.
Securities
Investments will be made in Stocks, Mutual Funds, Exchange Traded Funds (ETF), Non-Convertible
Debentures, and Bonds, preference capital (perpetual, optionally convertible, compulsorily redeemable), pass
through certificates and other investment options as per choice, consent or direction of the client.
Investment in equities will be valued on the closing price of that equity at NSE. In case of investments in any
stocks listed on BSE only, the same will be valued based on the closing price of that equity at BSE. Investment
in Mutual Funds and ETFs will be valued on the day end’s NAV Investment in NCDs, bonds and other debt
Instruments will be valued at closing price, if listed, or as per valuation provided by the issuer.
Omega Portfolio
The Omega Portfolio is designed for those investors who seek long-term capital appreciation from their asset
allocation to equities, debt, gold and other asset classes which are available through either exchange traded
products or through mutual funds.
Investment Objective
The investment objective of the Strategy is to generate long term capital appreciation of wealth through a
portfolio of debt, equity, gold ETFs and other asset classes which are available through either exchange traded
products or through mutual funds and the allocation amongst the asset classes is done on the basis of the risk
profile of the investor in consultation with and as per directions or consent of the client.
Asset Allocation
Assets will be allocated amongst following asset classes in consultation with and as per directions or consent
of the client.
The amount of Portfolio invested in Equity will be between 0% - 100% of the Portfolio.
The amount of Portfolio invested in Debt will be between 0% - 100% of the Portfolio.
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The amount of Portfolio invested in Gold ETFs will be between 0% - 100% of the Portfolio.
The amount of Portfolio invested in other asset classes which are available through either exchange traded
products or through mutual funds will be between 0% - 100% of the Portfolio.
Investment can be made in other asset classes as per choice, consent or directions of the client.
Securities
Investments will be made in Stocks, Mutual Funds, Exchange Traded Funds (ETF), Non-Convertible
Debentures, and Bonds. The Portfolio will also use derivative instruments – Futures and Options – for hedging
and rebalancing of the portfolio and other investment options as per choice, consent or direction of the client.
Derivative Instruments shall, however, not be used in case of NRI investors.
Investment in equities will be valued on the closing price of that equity at NSE. In case of investments in any
stocks listed on BSE only, the same will be valued based on the closing price of that equity at BSE. Investment
in Mutual Funds and ETFs will be valued on the day end’s NAV. NAV Investment in NCDs, bonds and other
debt Instruments will be valued at closing price, if listed, or as per valuation provided by the issuer.
Investment in “Futures and Options”, used for hedging, shall be valued at actual cash margins paid against
F&O contracts, summed with Mark to Market profit / loss computed on the basis of closing price of such
contracts. Derivative Instruments shall, however, not be used in case of NRI investors.
Advisory Services
Equity Advisory Portfolio
Introduction
This portfolio is designed for those investors who seek aggressive capital appreciation from their equity asset
allocation. The portfolio will invest in stocks across sectors, market capitalization categories and investment
themes.
Investment Objective
The investment objective is to provide returns and capital appreciation through broad based participation in
equity markets with investments in companies which have sustainable business model and high growth.
Asset Allocation
Assets will be allocated amongst following asset classes in consultation with and as per directions or consent
of the client.
The amount of Portfolio invested in Equity will be between 0% - 100% of the Portfolio.
Investment can be made in other asset classes like debt, Gold ETF as per choice, consent or directions of the
client.
Securities Investments will be made in Stocks and other investment options like Mutual Funds, Exchange Traded Funds
(ETF) as per choice, consent or direction of the client.
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Investment in equities will be valued on the closing price of that equity at NSE. In case of investments in any
stocks listed on BSE only, the same will be valued based on the closing price of that equity at BSE. Investment
in Mutual Funds and ETFs will be valued on the day end’s NAV Investment.
The term “Strategy” or “Strategies” referred in this document is not prima facie the strategy(s) devised to
organize investment portfolios, rather these are various investment categories/ frameworks on the basis of
which investment portfolio of a subscriber can be tailored. Reference to the term “Strategy” or “Strategies”
however helps in defining and communicating fee structure to a subscriber in a simple and transparent
manner.
The final fee structure and fee charging frequency may vary with every client and would be pre decided
between the portfolio manager and the client. This may be changed during the term of the PMS arrangement
upon mutual consent by the investor and the portfolio manager.
The fee portion below is common for all strategies whether Discretionary and Non Discretionary Product
PLACEMENT FEE:
A Placement fee will be charged as a percentage of corpus over and above the fixed management fee and
performance fee. The placement fee shall also be charged each time corpus is infused/ brought in by the client
during the lifetime of the portfolio investment. The placement fee shall be computed as a percentage of the
initial corpus brought in by the client and if subsequent to account opening, additional corpus brought in by
such client then it shall be computed as a percentage of the additional corpus brought in. The placement fee
so computed shall be completely recovered from client’s portfolio within the first year of receiving corpus. The
Placement fee shall be deducted from client’s portfolio at end of each calendar quarter till completion of one
year of receiving corpus. For clients starting their PMS in between any quarter, the placement fee will be
proportionately charged for that quarter and thereafter on quarterly basis till recovery of full placement fee. If
client closes his portfolio account prior to recovery of entire placement fee, the Portfolio Manager shall
deduct the balance Placement Fee from the proceeds payable to the client upon portfolio closure. For details
kindly refer the annexure to this Risk Disclosure Document.
FIXED MANAGEMENT FEE: The Fixed fee Shall be applicable by the Portfolio Manager will not exceed 3.00%
p.a. charged up to 0.75% at the end of every quarter / month [as may be agreed with clients] on the daily
average Net Asset Value of the Portfolio (inclusive of all securities and cash/bank balance).
PERFORMANCE FEE: The Performance fee shall not exceed 25% of incremental gains beyond annualized
hurdle rate not exceeding 12% on the basis of High Water Mark Principle over the life of the investment. For
existing clients, the performance fee is being computed on a High Watermark Principle over the life of the
Investment at the end of every financial year on financial year basis. From 1st August, 2012, for new clients the
performance fees is being charged on completion of 12 months (anniversary basis) and not financial year
basis.
SECTION II: FEES AND EXPENSES PERTAINING TO THE PORTFOLIO STRATEGIES
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PREMATURE REDEMPTION CHARGES/ EXIT CHARGES: If the redemption is done prematurely at the option of
the client, the Portfolio Manager shall levy the Premature Redemption Charges/ exit charges as may be agreed
upon between the Portfolio Manager and the clients when signing the Portfolio management Services
Agreement.
Further, the below general costs and expenses shall be borne by the clients availing the services of the
portfolio manager.
1. Custodian/ Depository Participant Fee:
The charges relating to opening and operation of demat accounts, custody and transfer charges for
shares, bonds and units, dematerialization and rematerialization, pledge and removal of pledge, etc.
will be as per the actual charged by the Depository Participant/Custodian.
2. Registrar and transfer agent fee:
Charges payable to the Registrar and Share Transfer Agents in connection with effecting transfer of
any or all securities and bonds, units, etc. including stamp charges, cost of affidavits, notary charges,
postage/courier charges and other related charges will be recovered on actual
3. Brokerage and transaction cost:
The Brokerage and other charges like Goods and Services tax, Stamp duty, Security Transaction Tax,
SEBI Fees, Bank charges, Turnover tax, and other charges (if any), as per the rates existing from time
to time, will be charged on actual.
4. Securities Lending Charges:
If utilized, the charges pertaining to lending of securities, costs associated with transfer of securities
connected with lending transfer operations, Depository Participant Charges, Share Transfer Agent
Charges, etc. would be recovered on actual.
5. Certification Charges or Professional Charges:
Any charges payable for outsourced professional services like accounting, taxation, auditing, and any
legal services, notarizations, etc., incurred on behalf of the Client by the Portfolio Manager, will be
charged from the client on actual.
6. Fees, entry/exit loads and charges in respect of investment in mutual funds:
Mutual funds may be recovering expenses or management fees, entry/exit loads and other incidental
expenses along with services tax, if any, on such recoveries and such fees, entry/exit loads and
charges including services tax on such recoveries, as per the relevant regulation shall be paid to the
asset management company of these Mutual Funds on the clients’ account. Such fees and charges are
in addition to the Portfolio Management fees described above.
7. Incidental Expenses:
Charges in connection with day to day operations like courier charges incurred in providing physical
reports relating to client’s portfolio / welcome letter / account statements/ other communication to
clients, stamp duty, Goods and Services tax, postal, telegraphic expenses, opening and operation of
bank and demat accounts or any other out of pocket expenses incurred by the Portfolio Manager, on
behalf of the client, would be recovered from the client. All incidental and ancillary expenses not
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covered above but incurred by the Portfolio Manager on behalf of the client would be recovered from
the client.
SECTION III: COMMON FEATURES OF THE PORTFOLIO STRATEGIES {common features applicable to all strategies}
Minimum investment amount is Rs. 25 Lakhs.
Liability of a client shall not exceed client’s investment with the portfolio manager.
The Portfolio Manager shall charge audit fees, custodial/ AMC charges and other charges/costs, attributable
to the Portfolio Management Services on actual.
Any charges payable for outsourced professional services like accounting, taxation, auditing, and any legal
services, notarizations, etc., incurred on behalf of the Client by the Portfolio Manager, will be charged from
the client on actual.
The Client may withdraw whole or part of the funds or securities from the portfolio account by giving advance
notice and the Portfolio Manager will endeavor to liquidate the securities held in the strategy and return the
funds or securities of the strategy, as the case may be, to the client within reasonable time. In case the
Portfolio Manager is for any reason unable to sell the securities, the Client shall be obliged to accept the
securities in the portfolio.
The Portfolio Manager will provide periodical reports as required under the regulations at the communication
address provided by the client at time of account opening. In case Portfolio Manager is unable to provide the
periodic reports in physical copy, the same shall be provided to clients via email at the email id registered by
clients at time of account opening.
The portfolio account will be audited by the Independent Chartered Accountant every year and copy of the
Certificate issued by the Chartered Accountant will be given to the Client.
GLOSSARY OF TERMS USED IN THE RISK DISCLOSURE DOCUMENT AND ANNEXURE A
Discretionary portfolio: A portfolio where the funds of each client are managed individually and independently by the fund manager in accordance with the needs of the client.
Non discretionary Portfolio: A portfolio where the funds are managed by the fund manager in accordance with the directions of the client. Hurdle rate: The rate over which profit sharing / performance related fees are usually charged by portfolio managers. This is not a fixed number and would be specified in the agreement signed with the client. High Water Mark Principle: As defined by SEBI, High Water Mark shall be the highest value that the
portfolio/account has reached. Value of the portfolio for computation of high watermark shall be taken to be
the value on the date when performance fees are charged. The portfolio manager shall charge performance
based fee only on increase in portfolio value in excess of the previously achieved high water mark