KMBL

A project report on

“INVESTMENT PRODUCTS AT KOTAK”

IN

SUBMITTED IN THE PARTIAL FULFILMENT FOR THE AWARD OF THE DEGREE OF BACHELOR OF BUSINESS ADMINISTRATION 2010-2013

UNDER THE GUIDANCE OF: SUBMITTED BY:

MRS. MONA KAWATRA NITIN HOODA

FACULTY, MAIMS BBA (B&I) III SEM

03414701810

MAHARAJA AGRASEN INSTITUTE OF MANAGEMENT STUDIES

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Affiliated to Guru Gobind Singh Indraprastha Univers Delhi PSP Area, Plot No. 1, Sector 22, Rohini Delhi 110041.

DECLARATION CERTIFICATE

I hereby declare that the project on “Investment Products at Kotak” in Kotak Mahindra Bank

Limited submitted to Maharaja Agrasen Institute Of Management Studies under the guidance of

Mrs. Mona Kawatra towards the partial fulfillment for the award of the degree of Bachelor of

Business Administration is my original work and is not copied or meant for any other degree/

diploma courses.

I hereby declare that all the information provided in the project is valid and is based on immense

research work done.

All the data provided is factual and based on the information provided as per the website and the

brochures of the organization.

NITIN HOODA

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CERTIFICATE

This is to certify that the project titled “INVESTMENT PRODUCTS AT KOTAK”

is an academic work done by “NITIN HOODA” submitted in the Partial fulfillment

of the requirement for the award of the degree of Bachelor of Business Administration

from Maharaja Agrasen Institute of Management Studies, Delhi, under my guidance &

direction.

To the best of my knowledge and belief the data & information presented by him in

the project has not been submitted earlier.

Mrs. Mona Kawatra

Project Guide

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ACKNOWLEDGEMENT

I take due pleasure to thank all those who have helped & supported me for the completion of this

project. At the outset I express my profound and sincere gratitude to Maharaja Agrasen Institute Of

management Studies , New Delhi for providing me with the opportunity to explore the corridors of

the corporate world and gather invaluable information and practical experience in the field of

Finance and banking.

I express my indebtness and deepest gratitude to Mrs. Mona Kawatra (project guide), who took

great pains in going through each step of my project and made valuable comments and suggestions,

which has helped me to prepare this project on time.

My thanks to the entire unit of Kotak Mahindra including the bank and the life insurance, for their

valuable guidance and the help given directly or indirectly due to which I have been able to make

optimum utilization of my learning and knowledge into practice successfully.

I express my sincere gratitude to my parents for their invaluable support and continuous

encouragement for the successful completion of my project.

Last but not the least, I would like to thank “GOD” without whose grace; I wouldn’t have been able

to complete this project.

A project of this nature calls for intellectual nourishment, professional help & encouragement from

various quarters. This report has naturally gained a number of ideas and theory from the books of this

subject. I express our thanks to all these authors, too numerous to acknowledge.

NITIN HOODA

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EXECUTIVE SUMMARY

The project report is to acquaint the study with the real life situation of the organization.

The report contains the corporate profile of Kotak Mahindra Bank, Kotak Mahindra Asset

Management Company, Kotak mahindra life insurance Company. It also contains the list of all the

products sold by Kotak mahindra bank. Further, mutual funds and unit linked insurance plans have

been explained in details. The features of all the MF and ULIP products at Kotak have been

mentioned. The best plans among these have been dealt in details. Then an analysis has been done

about the best plans. At last a conclusion has been drawn on the basis of the whole study.

The project makes aware of various things about mutual funds and ULIPs their types, features,

procedure of issuance, parameters on which they are compared, customer preferences, etc. Besides

this, it also makes familiar with the organization culture, the generally accepted behaviors in an

organisation, and the internal environment.

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CHAPTER SCHEME

CHAPTER-1: INTRODUCTION: - chapter 1 includes details of the banking business in India. It

makes aware about how the whole banking business is carried in India. The central bank of the

Indian Banking Business is RBI (Reserve bank of India).It controls all the banking business in India.

It also includes a small description of Kotak Mahindra Bank.

CHAPTER-2 COMPANY PROFILE:- chapter 2 consists of details of the Kotak Mahindra Bank

Limited. Besides it also consists of the details of all the products sold by the bank under its name.

There is a small picture of the company’s financial results also.

CHAPTER-3 RESEARCH METHODOLOGY:- chapter 3 contains details of the type of data

which have been used while making the entire project. Basically the type of data which has been

used in the project is secondary.

CHAPTER-4 FINDINGS & ANALYSIS: - chapter 4 has the broad details of the findings and

analysis of the entire project. There is a detailed analysis of the entire company on the basis of the

products it offers in various sectors and also the company’s financial results are kept in mind.

CHAPTER-5 CONCLUSION: - finally the last chapter-5 has the conclusion of the detailed study

of the project. The conclusion is drawn on the basis of the detailed study of the entire project.

Various points have bee kept in mind while drawing the conclusion.

CHAPTER-6 RECOMMENDATIONS: - this chapter has suggestions on how Kotak Mahindra

enhance its business and compete in the corporate sector

CHAPTER-7 LIMITATIONS OF THE STUDY: -this chapter states the limits of this project.

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CONTENTS

CHAPTER-1 INTRODUCTION

BANKING OVERVIEW

COMMERCIAL & CO-OPERATIVE BANKS

KMBL

CHAPTER-2 COMPANY PROFILE

INTRODUCTION TO KMBL

MILESTONES OF KMBL

CORPORATE IDENTITY OF KMBL

KOTAK MAHINDRA BANK LIMITED AND ITS SUBSIDIARIES

THE JOURNEY SO FAR

GROUP STRUCTURE

VISION STATEMENT

PRODUCT PROFILE

MUTUAL FUND PRODUCTS AT KOTAK

INTRODUCTION TO INSURANCE

INTRODUCTION TO ULIP

FEATURES OF ULIP

CORPORATE PROFILE OF KLI

ULIP PRODUCTS AT KOTAK LIFE INSURANCE

FINANCIAL RESULTS

CHAPTER-3 RESEARCH METHODOLOGY

RESEARCH METHODOLOGY OF STUDY

PURPOSE OF STUDY

CHAPTER-4 FINDINGS

CHAPTER-5 CONCLUSION

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CHAPTER-6 RECOMMENDATIONS

CHAPTER-7 LIMITATIONS OF THE STUDY

BIBLIOGRAPHY

GLOSSARY

INTRODUCTION

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CHAPTER-1 INTRODUCTION

Banking Overview

The major participants of the Indian financial system are the commercial banks, the financial institutions (FIs), encompassing term-lending institutions, investment institutions, specialized financial institutions and the state-level development banks, Non-Bank Financial Companies (NBFCs) and other market intermediaries such as the stock brokers and money-lenders. The commercial banks and certain variants of NBFCs are among the oldest of the market participants. The FIs, on the other hand, are relatively new entities in the financial market place.

Historical perspective

Bank of Hindustan, set up in 1870, was the earliest Indian Bank . Banking in India on modern lines started with the establishment of three presidency banks under Presidency Bank's act 1876 i.e. Bank of Calcutta, Bank of Bombay and Bank of Madras. In 1921, all presidency banks were amalgamated to form the Imperial Bank of India. Imperial bank carried out limited central banking functions also prior to establishment of RBI. It engaged in all types of commercial banking business except dealing in foreign exchange.

Reserve Bank of India Act was passed in 1934 & Reserve Bank of India (RBI) was constituted as an apex bank without major government ownership. Banking Regulations Act was passed in 1949. This regulation brought Reserve Bank of India under government control. Under the act, RBI got wide ranging powers for supervision & control of banks. The Act also vested licensing powers & the authority to conduct inspections in RBI.

In 1955, RBI acquired control of the Imperial Bank of India, which was renamed as State Bank of India. In 1959, SBI took over control of eight private banks floated in the erstwhile princely states, making them as its 100% subsidiaries.

RBI was empowered in 1960, to force compulsory merger of weak banks with the strong ones. The total number of banks was thus reduced from 566 in 1951 to 85 in 1969. In July 1969, government nationalized 14 banks having deposits of Rs.50 crores & above. In 1980, government acquired 6 more banks with deposits of more than Rs.200 crores. Nationalisation of banks was to make them play the role of catalytic agents for economic growth. The Narsimham Committee report suggested wide ranging reforms for the banking sector in 1992 to introduce internationally accepted banking practices.

The amendment of Banking Regulation Act in 1993 saw the entry of new private sector banks.

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COMMERCIAL & CO-OPERATIVE BANKS

The commercial banking structure in India consists of:

Scheduled Commercial Banks

 Unscheduled Banks

Scheduled commercial Banks constitute those banks which have been included in the Second

Schedule of Reserve Bank of India(RBI) Act, 1934.

RBI in turn includes only those banks in this schedule which satisfy the criteria laid down

vide section 42 (60 of the Act. Some co-operative banks are scheduled commercial banks

albeit not all co-operative banks are. Being a part of the second schedule confers some

benefits to the bank in terms of access to accommodation by RBI during the times of liquidity

constraints. At the same time, however, this status also subjects the bank certain conditions

and obligation towards the reserve regulations of RBI. 

For the purpose of assessment of performance of banks, the Reserve Bank of India categorize

them as public sector banks, old private sector banks, new private sector banks and foreign

banks. 

This sub sector can broadly be classified into: 

1. Public sector

2. Private sector 

3. Foreign banks

Public sector banks have either the Government of India or Reserve Bank of India as the

majority shareholder. This segment comprises of:

State Bank of India (SBI)and its Subsidiaries 

Other Nationalized Banks

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CO-OPERATIVE BANKS

There are two main categories of the co-operative banks. 

(a) Short term lending oriented co-operative Banks - within this category there are three sub

categories of banks viz state co-operative banks, District co-operative banks and Primary

Agricultural co-operative societies.

(b) Long term lending oriented co-operative Banks - within the second category there are land

development banks at three levels state level, district level and village level. 

The co-operative banking structure in India is divided into following main 5 categories : 

1. Primary Urban Co-op Banks

2. Primary Agricultural Credit Societies

3. District Central Co-op Banks

4, State Co-operative Banks

5. Land Development Banks

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KMBL

Kotak Mahindra is one of India's leading financial conglomerates, offering complete financial

solutions that encompass every sphere of life. From commercial banking, to stock broking, to mutual

funds, to life insurance, to investment banking, the group caters to the diverse financial needs of

individuals and corporate

As on 31st March , 2007, the group had a net worth of over Rs. 3,200 crore, employing around

10,800 people in its various businesses and had a distribution network of branches, franchisees,

representative offices and satellite offices across 300 cities and towns in India and offices in New

York, London, Dubai, Mauritius and Singapore. The Group services around 2.6 million customer

accounts

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COMPANY PROFILE

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CHAPTER-2 COMPANY PROFILE

INTRODUCTION TO KMBL

Kotak Mahindra is one of India’s leading institutions, offering complete financial solutions that

encompass every sphere of life. From commercial banking, , to stock broking to mutual funds, to life

insurance, to investment banking, the group caters to the financial needs of individuals and corporate.

The group has a net worth of around Rs. 5,600 crore, employs around 17,100 people in its various

businesses and has a distribution network of branches, franchisees, representative offices and satellite

offices across 300 cities and towns in India and offices in New York, London, Dubai and Mauritius.

The group services over 3.6 million customer accounts.

CREATING BANKING HISTORY

Established in 1985, the kotak Mahindra group has long been one of India’s most reputed financial

organizations. In February 2003, kotak Mahindra finance ltd, the group’ flagship company was given

the license to carry on banking business by the reserve bank of India (RBI). This approval creates

banking history since kotak Mahindra finance ltd. It is the first company in India to convert to a

bank.

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THE COMPLETE BANK

At kotak Mahindra bank, they address the entire spectrum of financial needs for individuals and

corporate. They have the products, the experience, the infrastructure and most importantly the

commitment to deliver pragmatic, end -to –end solutions that really work.

A license authorizing the bank to carry on banking business has been obtained from the Reserve

Bank of India in terms of Section 22 if the Banking Regulation Act, 1949. It must be distinctly

understood, however, that in issuing the license, the Reserve Bank of India does not undertake any

responsibility for the financial soundness of the bank or the correctness of any of the statements

made or opinion expressed in this connection.

MILESTONES OF KMBL

The Kotak Mahindra Group was born in 1985 as Kotak Capital Management Finance Limited. This

company was promoted by Uday Kotak, Sidney A. A. Pinto and Kotak & Company. Industrialists

Harish Mahindra and Anand Mahindra took a stake in 1986, and that's when the company changed

its name to Kotak Mahindra Finance Limited.

Since then it's been a steady and confident journey to growth and success.

1986 Kotak Mahindra Finance Limited starts the activity of Bill Discounting

1987 Kotak Mahindra Finance Limited enters the Lease and Hire Purchase market

1990 The Auto Finance division is started

1991 The Investment Banking Division is started. Takes over FICOM, one of India’s largest

financial retail marketing networks

1992 Enters the Funds Syndication sector

1995 Brokerage and Distribution businesses incorporated into a separate company - Kotak

Securities. Investment Banking division incorporated into a separate company - Kotak

Mahindra Capital Company

1996 The Auto Finance Business is hived off into a separate company - Kotak Mahindra

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Prime Limited (formerly known as Kotak Mahindra Primus Limited). Kotak Mahindra

takes a significant stake in Ford Credit Kotak Mahindra Limited, for financing Ford

vehicles. The launch of Matrix Information Services Limited marks the Group’s entry

into information distribution.

1998 Enters the mutual fund market with the launch of Kotak Mahindra Asset Management

Company.

2000 Kotak Mahindra ties up with Old Mutual plc. For the Life Insurance business.

Kotak Securities launches its on-line broking site (now www.kotaksecurities.com).

Commencement of private equity activity through setting up of Kotak Mahindra

Venture Capital Fund.

2001 Matrix sold to Friday Corporation

Launches Insurance Services

2003 Kotak Mahindra Finance Ltd. converts to a commercial bank – the first Indian

company to do so.

2004 Launches India Growth Fund, a private equity fund.

2005

2006

Kotak Group realigns joint venture in Ford Credit; Buys Kotak Mahindra Prime

(formerly known as Kotak Mahindra Primus Limited) and sells Ford credit Kotak

Mahindra.

Launches a real estate fund

Bought the 25% stake held by Goldman Sachs in Kotak Mahindra Capital Company

and Kotak Securities

CORPORATE IDENTITY OF KMBL

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The symbol of the infinite Ka reflects its global Indian personality. The Ka is uniquely Indian, while

its curve forms the infinity sign which is universal. One of the basic tenets of economists is that

men’s needs are unlimited. The infinite Ka symbolizes that it has infinite number of ways to meet

those needs.

KOTAK MAHINDRA BANK LIMITED AND ITS

SUBSIDIARIES

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Kotak Mahindra Bank Ltd

Kotak Mahindra is one of India's leading financial conglomerates, offering complete financial

solutions that encompass every sphere of life. From commercial banking, to stock broking, to mutual

funds, to life insurance, to investment banking, the group caters to the diverse financial needs of

individuals and corporate

As on 31st March , 2007, the group had a net worth of over Rs. 3,200 crore, employing around

10,800 people in its various businesses and had a distribution network of branches, franchisees,

representative offices and satellite offices across 300 cities and towns in India and offices in New

York, London, Dubai, Mauritius and Singapore. The Group services around 2.6 million customer

accounts.

Subsidiaries of Kotak Mahindra Bank Ltd

Kotak Mahindra capital company ltd.

Kotak securities ltd.

Kotak Mahindra old mutual life insurance ltd.

Kotak Mahindra prime ltd.

Kotak Mahindra asset management ltd & kotak Mahindra trustee company ltd.

Kotak Mahindra investments ltd.

International subsidiaries of Kotak Mahindra Bank Ltd

Kotak Mahindra securities ltd.

Kotak Mahindra Trusteeship Services Ltd.

Kotak Forex Brokerage Ltd.

THE JOURNEY SO FAR

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In October 2007, Kotak Group acquired the 40% stake in Kotak Prime held by Ford Credit

International (FCI) and FCI acquired the stake in Ford Credit Kotak Mahindra (FCKM) held by

kotak group.

In May 2006, Kotak Group bought 25% stake held by Goldman Sachs in Kotak Capital and Kotak

Securities.

GROUP STRUCTURE

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VISION STATEMENT

THE GLOBAL INDIAN FINANCIAL SERVICES BRAND

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Our customers will enjoy the benefits of dealing with a global Indian brand that best understands

their needs and delivers customized pragmatic solutions across multiple platforms. We will be a

world class Indian financial services group. Our technology and best practices will be benchmarked

along international lines while our understanding of customers will be uniquely Indian. We will be

more than a repository of our customers’ savings. We, the group, will be a single window to every

financial service in a customer’s universe.

THE MOST PREFERED EMPLOYER IN FINANCIAL SERVICES

A culture of empowerment and a spirit of enterprise attracts bright mind with an entrepreneurial

streak to join us and stay with us. Working with a home- grown professionally managed company,

which has partnership with international leaders gives our people a perspective that is universal as

well as unique.

THE MOST TRUSTED FINANCIAL SERVICES COMPANY

We will create an ethos of trust across all our constituents. Adhering to high standards of compliance

and corporate governance will be an integral part of building trust.

VALUE CREATION

Value creation rather than size alone will be our business driver.

PRODUCT PROFILE

personal products and services deposit accounts

savings account current account

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term account loans

personal loans home loans loan against property

investment services demat mutual fund insurance kotak gold eternity

convenience banking net banking mobile banking kotak payment gateway phone banking ATM network SMS banking Alerts

NRI products and services Deposits

NRE savings account NRO savings account NRE term deposits NRO term deposits FCNR deposits Rupee advantage plan

Investments Demat Mutual funds Portfolio investment scheme MF on the net and call

Remittances Funds to home Wire transfer Mail Remittances from the middle east

Loans Home finance

Convenience banking Net banking Phone banking Global debit card Access India debit card(NRO card)

Small businesses products and services Current accounts

Edge current accounts Pro current accounts Ace current accounts

Personal loans

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Jaldi loans Corporate products and services

Funded products Working capital Structured products

Treasury products Foreign exchange Money market Benchmark PLR

Investments products Term deposits Mutual funds Bancassurance

Fixed income products Sales and distributions Research Case studies

Current account Transaction group on banking Corporate advisory services Custody services Retail assets

MUTUAL FUND PRODUCTS AT KOTAK

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MUTUAL FUND

INVESTMENT

OBJECTIVE

AVAILABLE OPTIONS

CORPUS

(IN CRORES)

MINIMUM INITIAL INVESTMENT

TOTAL EXPENSE RATIO

TYPE OF SCHEME

KOTAK

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To generate capital appreciation from a portfolio of predominantly equity related securities. The portfolio will generally compromise of equity and equity related instruments of around 30 companies which may go up to 39.

DP, DR & G 705.67 5000 2.19% Open ended equity scheme

KOTAK

MID-CAP

To generate capital appreciation from a diversified portfolio of equity and equity related securities.

DP, DR & G 167.26 5000 2.39% Open ended equity growth scheme

KOTAK OPPORTUNITIES

To generate capital appreciation from a diversified portfolio of equity and equity related securities.

DP, DR & G 859.61 5000 2.13% Open ended equity growth scheme

KOTAK LIFESTYE

To generate long term capital appreciation from a portfolio of equity and equity related securities, generally diversified across companies, which are likely to benefit by changing lifestyle and rising consumerism in India.

DP, DR & G 172.19 5000 2.31% Open ended equity growth scheme

KOTAK CONTRA

To generate long term capital appreciation from a portfolio of equity and equity related securities

DP, DR & G 98.96 5000 2.49% Open ended equity growth scheme

KOTAK EQUITY ARBITRAGE

to generate capital appreciation and income by predominantly investing in arbitrage opportunities in the cash and derivatives segment of the equity market, and by investing the balance in debt and money market instruments.

DP, DR & G 404.88 5000 1.10% Open ended equity growth scheme

KOTAK TAX SAVER

To generate long term capital appreciation from a portfolio of equity and equity related securities and enable investors to avail the income tax rebate, as permitted from time to

DP, DR & G 452.71 500 2.28% Open ended equity linked saving scheme

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time.

KOTAK GLOBAL INDIA

To generate capital appreciation from a portfolio of equity and equity related securities issued by globally competitive Indian companies.

DP, DR & G 84.53 5000 2.46% Open ended equity growth scheme

KOTAK MNC

To generate capital appreciation from a portfolio of equity and equity related securities issued by multinational companies

DP, DR & G 30.46 5000 2.50% Open ended equity growth scheme

KOTAK TECH

To generate capital appreciation from a portfolio of equity and equity related securities in technology, other technology enabled companies and related sectors as given in the investment strategy.

DP, DR & G 25.95 5000 2.25% Open ended equity growth scheme

KOTAK EQUITY FOF

To generate long term capital appreciation from a portfolio created by investing predominantly in open-ended diversified equity schemes of mutual funds registered with SEBI

DP, DR & G 58.74 5000 .75% Open ended equity Funds of Funds scheme

KOTAK BALANCE

To achieve growth by investing in equity and equity related instruments, balanced with income generation by investing in debt and money market instruments.

DP & DR 78.00 5000 2.50% Open ended balance scheme

KOTAK INCOME PLUS

To enhance returns over a portfolio of debt instruments with a moderate exposure in equity and equity related I instruments

DP, DR & G 28.00 5000 2.23% Open ended income scheme

KOTAK BOND SHORT TERM PLAN

To provide reasonable returns and high level of liquidity by investing in debt and money market instruments of different maturities, so as to spread the risk across different kinds of issuers in the debt market

DR & G 246.35 5000 .60% Open ended debt scheme

KOTAK BOND

To create a portfolio of debt and money market instruments of different maturities so as to spread the risk across a wide maturity horizon and different kinds of issuers in the debt market.

DP, DR & G 123.39 5000 2.25% Open ended debt scheme

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KOTAK GILT SAVING

To generate risk free returns through investments in sovereign securities issued by the Central Govt and/or State Govts and/or reverse repos in such securities

DP, DR & G 6.05 5000 1.00% Open ended dedicated gilt scheme

KOTAK FLEXI DEBT

To maximise returns through an active management of a portfolio of debt and money market securities.

DP, DR & G 7268.32 5000 .40% Open ended debt scheme

KOTAK FLOATER LONG TERM

To reduce the interest rate risk associated with investments in fixed rate instruments by investing predominantly in floating rate securities, money market instruments and using appropriate derivatives.

DR & G 65.93 5000 1.00% Open ended debt scheme

KOTAK FLOATER SHORT TERM

To reduce the interest rate risk associated with investments in fixed rate instruments by investing predominantly in floating rate securities, money market instruments and using appropriate derivatives.

DR & G 329.88 5000 .40% Open ended debt scheme

Presently, there are three best working Mutual Funds at Kotak Mahindra Bank:

KOTAK 3

KOTAK OPPORTUNITIES

KOTAK TAXSAVER

INTRODUCTION TO INSURANCE

What is Insurance?

The business of insurance is related to the protection of the economic value of assets. Every asset has

a value. The assets would have been created through the effort of the owner. The assets are valuable

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to the owner, because he expects to get some benefit from it. The benefit may be an income or some

thing else. It is a benefit because it meets some of his needs. In the case of factory or a cow, the

product generated by them is sold and income is generated. In the case of the motorcar, it provides

comfort and convenience in transportation. There is no direct income.

Every asset is expected to last for a certain period of time during which it will perform. After that the

benefit may not be available. There is a lifetime for a machine in a factory or a cow or a motorcar.

None of them will last forever. The owner is aware of this and he can so manage his affairs that by

the end of that period or life time, a substitute is made available Thus, he make sure that the value or

income is not lost. However the assets may get lost earlier. An accident or some other unfortunate

event may destroy it or make it nonfunctional. In that case the owner and those driving benefit and

the planned substitute there from, would be deprived of the benefit and the planned substitute would

not have been ready. There is an adverse or unpleasant situation. Insurance is a mechanism that helps

to reduce the effect of such adverse situation.

INTRODUCTION TO ULIP

Unit linked insurance plans, ULIPs, are distinct from the more familiar ‘with profits’ policies sold for

decades. ‘With profits’ policies are called so because investment gains (profits) are distributed to

policyholder in the form of a bonus announced every year. ULIPs also serve the same function of

providing insurance protection against death and provision of long term savings, but they are

structured differently. In ‘with profits’ policies, the insurance company credits the premium to a

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common pool called the ‘life fund’, after setting aside funds for risk premium on life insurance and

management expenses.

Every year, the insurer calculates how much has to be paid to settle death and maturity claims. The

surplus in the life fund left after meeting these liabilities is credited to policyholders’ accounts in the

form of a bonus. In a ULIP too, the insurer deducts charges towards life insurance (mortality

charges), administration charges and fund management charges. The rest of the premium is used to

invest in the fund that invests money in stocks and bonds. The number of units represents the share

of the policyholder in the fund.

The value of the unit is determined by the total value of all investments made by the fund divided by

the number of units. If the insurance company offers the range of funds, the insured can direct the

company to invest in the fund of his choice. Insurers usually offer three choices-an equity (growth)

fund, debt fund and a balanced fund, which invests in both.

In both ‘with profits’ policies as well as unit-linked policies, a large part of the first year premium

goes towards paying the agents’ commissions.

FEATURES OF UNIT LINKED INSURANCE PLAN

1) Unit linked policies are unbundled i.e. separate identification of parts is there like, Investment

element, expenses, administration charges and benefits and charges etc.

2) Unit Linked Policies make use of linked funds

3) Client has choice of funds

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4) Unit Linked Policies are linked i.e. value of property is linked to net assets.

5) Investment risk and rewards are transferred from insurer to the client.

6) Unit Linked Policies have explicit charges

CORPORATE PROFILE OF KLI

Kotak Mahindra Old Mutual Life Insurance Limited was established in 2000 as a joint

venture between Kotak Mahindra Bank Ltd. - KMBL (74%) and Old Mutual plc, London

(26%)

A total asset managed by the Kotak Mahindra Group is around USD 9.4 billion. It is amongst

the few banks in India to have a non-profitable asset level of just 0.33%

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KMBL was the first non-banking financial company (NBFC) to receive a retail bank license

in 2003

In the life insurance market, Kotak Life Insurance registered an adjusted premium (single

premium: 1/10) growth of over 53% from financial year 2005-06 to financial year 2006-07

Kotak Life Insurance, with 100 branches in over 68 cities, and a work force of over 4,100

employees, is a company with a high level of brand awareness

Kotak Life Insurance aspires to a spiraling growth with a strong focus on the customer,

products, mapping of geographic distribution channels and fund performance

Member of the Swiss Life Network since 2003

Website:

www.kotaklifeinsurance.com

Management of KLI

Mr. Gaurang Shah (Managing Director)

Mr. G Murlidhar (Chief Financial Officer)

Mr. Arun Patil (Vice President - Sales & Management Development)

Registered office

Kotak Mahindra old mutual life insurance ltd.

9th floor, Godrej Coliseum,

Behind Everard Nagar,

Sion (E), Mumbai-400 022

Tel: (022) 6621 5999

Fax: (02) 66215757, 66215858

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Customer service centre

Kotak Mahindra old mutual life insurance ltd.

8th floor, Godrej Coliseum,

Behind Everard Nagar,

Sion (E), Mumbai-400 022

Tel: (022) 6050 5000

Toll free number: 1800-22-8081

Fax: (022) 6621 5353, 6621 5454

Email id: [email protected]

SPECIAL ADVANTAGES

Market leader in brokerage, car finance & investment banking

Dedicated to developing unique products with a special focus on product and service quality

Among the first to offer group insurance products in the Indian market

Extensive nationwide coverage through a direct sales force, brokers, spotters and frontline

sales managers in more than 68 cities

Kotak Life Insurance's value proposition is based on strong corporate relationships, superior

products, extensive marketing skills and quality of service

The objective of Kotak Life Insurance is to build long-term sustainable business under

regular premium and sustain fund performance in the capital guaranteed segment

ULIP Products at Kotak Life Insurance

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Kotak Safe Investment Plan II

Kotak Flexi Plan

Kotak Smart Advantage Plan

Kotak Retirement Income Plan

Kotak Headstart Child Plans (Future Protect)

Kotak Headstart Child Plans (Assure Wealth)

Kotak Easy Growth Plan

Kotak Platinum Advantage

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Kotak safe investment plan II

Name of the product KOTAK SAFE INVESTMENT II PLAN

Brief Product

Description

Regular or limited pay market linked plan with guaranteed maturity

value and higher allocation rates.

Features Guaranteed Maturity Value

Investment Portfolio Guaranteed Growth, Guaranteed Balanced, Guaranteed Bond,

Guaranteed Floating Rate, Guaranteed Gilt, Guaranteed Money

Market

Max equity exposure Maximum Equity Exposure - 40% to 80%

Death Benefit Higher of Sum Assured or Fund Value.

Maturity Benefit Guaranteed Maturity Value or market value of units in Main

account, whichever is higher

Top Up Premiums Min - Rs. 10,000

Partial Withdrawal Investment accessible after completion of 3 years, with no penalty

charges from year 7 onwards (subject to retaining a minimum

balance of one annualized basic premium)

Complete Surrender No surrender allowed in the first 3 policy years. Thereafter

surrender involves a charge till year 7

Riders Term benefit; Preferred term Benefit; Critical illness; Accidental

death; Permanent Disability; Life Guardian; Accidental Death

Guardian.

Switching Option 4 free switches per year. Rs 500 additional charge per switch.

Revival period 2 yrs

Kotak flexi plan

33

Name of the product KOTAK FLEXI PLAN

Brief Product

Description

Regular or limited pay market linked plan with guaranteed maturity

value.

Features Guaranteed Maturity Value

Investment Portfolio Guaranteed Growth, Guaranteed Balanced, Guaranteed Bond,

Guaranteed Floating Rate, Guaranteed Gilt, Guaranteed Money

Market

Max equity exposure Maximum Equity Exposure - 40% to 80%

Death Benefit Sum Assured

Maturity Benefit Guaranteed Maturity Value or market value of units in Main

account, whichever is higher

Top Up Premiums Min - Rs. 10,000

Partial Withdrawal Investment accessible after completion of 3 years, with no penalty

charges from year 7 onwards (subject to retaining a minimum

balance of one annualized basic premium)

Complete Surrender No surrender allowed in the first 3 policy years. Thereafter surrender

involves a charge till year 7

Riders Term benefit; Preferred term Benefit; Critical illness; Accidental

death; Permanent Disability; Life Guardian; Accidental Death

Guardian.

Switching Option 4 free switches per year. Rs 500 additional charge per switch.

Revival period 2 yrs

Kotak smart advantage plan

34

Name of the product KSAP

Brief Product

Description

Capital guarantee market linked plan with limited premium paying

term.

Features Limited premium paying term with capital guarantee with maximum

exposure to equity

Investment Portfolio Advantage Multiplier Fund, Advantage Plus Fund

Max equity exposure Maximum Equity exposure - 0% to 100%

Death Benefit An amount equal to life cover plus the value of units in the Main &

and Supplementary Accounts.

Maturity Benefit Fund Value or sum of premiums paid whichever is higher

Top Up Premiums Min -Rs 25,000 /- .Max ( 25% of the total basic premiums paid to

date)

Partial Withdrawal In multiples of Rs 25,000/- subject to a maximum of 2 withdrawals

per year (Withdrawals from the Supplementary account)

Charges applicable after yr 3.

Complete Surrender No surrender in the last 2 years of the term of the contract .Charges

applicable after yr 3.

Riders NA

Switching Option 4 switches free per year. Every additional switch would be charged

Rs 500 /-

Revival period 2 years

Kotak retirement income plan

35

Name of the product KOTAK RETIREMENT INCOME PLAN

Brief Product

Description

regular or single premium market linked pension plan with

guaranteed maturity value; with and without cover options

Features Guaranteed Maturity Value for the regular premium mode

Investment Portfolio Pension Balanced; Pension Bond; Pension Floating Rate; Pension

Gilt; and Pension Money Market

Max equity exposure Maximum Equity Exposure - 30% to 60%

Death Benefit In case life cover has been opted, sum assured or market value of

units, whichever is higher. Otherwise Fund Value. Can be taken as

lump sum or pension.

Maturity Benefit In case of life cover option, Basic Sum Assured or market value of

units, whichever is higher? Otherwise Guaranteed Maturity Value or

market value of units in Main account, whichever is higher.

Top Up Premiums Min - Rs. 10,000

Partial Withdrawal NA

Complete Surrender No surrender allowed in the first 3 policy years. Thereafter surrender

involves a charge till year 6

Riders Term benefit; Preferred term Benefit; Critical illness; Accidental

death; Permanent Disability; Accidental Death Guardian.

Switching Option 4 free switches per year. Rs 500 additional charge per switch.

Revival period 2 yrs

Kotak Head start Child Plans (Future Protect)

36

Name of the product KOTAK HEADSTART CHILD PLANS(FUTURE PROTECT)

Brief Product

Description

Regular and Limited Pay unit linked plan, maximizes protection

Investment Portfolio Kotak Aggressive Growth, Kotak Dynamic Growth, Kotak Dynamic

Balanced, Kotak Dynamic Floor, Kotak Dynamic Bond, Kotak

Dynamic Floating Rate, Kotak Dynamic Gilt, Kotak Dynamic

Money Market

Max equity exposure Maximum Equity Exposure - 40% to 100%

Death Benefit 100% of sum assured on death of life insured (on the second death,

in case of joint life)

Maturity Benefit Fund Value paid (Withdrawal option, 5 years after maturity)

Top Up Premiums 25% of cumulative premiums paid up to that date

Partial Withdrawal Allowed from year 4 onwards, No withdrawal charges after year 7.

Withdrawal subject to a minimum fund balance of Rs. 25,000

Complete Surrender Allowed only after completion of 3 years. No surrender charge from

year 7 onwards.

Riders Critical Illness Benefit, Permanent Disability Benefit, Accidental

Death Benefit, Accidental Disability Guardian Benefit

Switching Option 4 switches free per year

Revival period 2 yrs

Kotak Headstart Child Plans (Assure Wealth)

37

Name of the product KOTAK HEADSTART CHILD PLANS(ASSURE WEALTH)

Brief Product

Description

Regular and Limited Pay unit linked, maximizes wealth

Investment Portfolio Kotak Aggressive Growth, Kotak Dynamic Growth, Kotak Dynamic

Balanced, Kotak Dynamic Floor, Kotak Dynamic Bond, Kotak

Dynamic Floating Rate, Kotak Dynamic Gilt, Kotak Dynamic Money

Market

Max equity exposure Maximum Equity Exposure - 30% to 100%

Death Benefit Sum Assured (Life Cover) = Higher of (5 X Total Annual Premium)

and (0.5 X Policy Term X Total Annual Premium). On death, higher of

sum assured or fund value payable

Maturity Benefit Fund Value paid (Withdrawal option, 5 years after maturity)

Top Up Premiums 25% of cumulative premiums paid up to that date

Partial Withdrawal Allowed from year 4 onwards, No withdrawal charges after year 7.

Withdrawal subject to a minimum fund balance of Rs. 25,000

Complete Surrender Allowed only after completion of 3 years. No surrender charge from

year 7 onwards.

Riders Critical Illness Benefit, Permanent Disability Benefit, Accidental Death

Benefit

Switching Option 4 switches free per year

Revival period 2 yrs

KOTAK SAFE INVESTMENT PLAN II

Kotak safe investment plan II is a unit linked plan that combines the benefits of the insurance and the

capital market returns into one. This plan from the stable of kotak life insurance is a true reflection of

the company’s essence; innovation that will benefit the investor.

38

What makes investing in kotak safe investment plan II truly unique is that investor enjoys a

guaranteed maturity value, with varying degrees of equity exposure depending on investor’s risk

appetite. So, if the market value of investor’s units is higher, he/she will reap the benefits with the

peace of mind that whilst in the bear market his/her investment is under-pinned by the guaranteed

maturity value. And the added feature is that the returns are totally tax-free.

KEY FEATURES

Fund options

The capital market offers a spectrum of investment options. Similarly kotak safe investment II has an

entire range of fund options. For the risk averse it has the Guaranteed Gilt Fund and for aggressive

investors, it offers the Guaranteed Growth Fund. With the expertise of kotak backing your

investment, it ensures that your risk profile and investment objectives are matched.

INVESTMENT OPTIONS

EQUITY (HIGH RISK)

DEBT (MEDIUM RISK)

CASH AND MONEY MARKET

RISK-RETURN PROFILE

OBJECTIVES

Aggressive growth 60%-100%

0%-40% 0% Aggressive Aims for a high level of capital growth by holding a significant portion in equities

Guaranteed/dynamic growth

40%-80% 20%-60% 0%-20% Aggressive May experience high level of

39

shorter term volatility

Guaranteed/dynamic balanced

30%-60% 20%-70% 0%-20% Moderate Aims for moderate growth by holding a diversified mix of equities and fixed interest instrumentsMay experience moderate levels of shorter term volatility

Guaranteed/dynamic bondGuaranteed/dynamic floating rate

_ 0%-100% 0%-20% Safe Returns will be in line with those of fixed interest instrument, and may provide little protection against unexpected inflation increases.

Guaranteed/dynamic gilt

_ 80%-100% 0%-20% Safe Will preserve capital and minimize downside risk, with investment in debt and government instruments.

Guaranteed/dynamic money market

_ _ 100% Conservative Will protect capital and not have downside risk.

Guaranteed maturity value

Most investors who stay away from equity do so not because they do not want to earn higher equity

linked returns but because they fear loss of capital. To protect their money from losses they invest in

low return debt instruments. Kotak life insurance, having understood this concern of their investors

and have developed a unique proposition of a guaranteed maturity value, underpinning their

investment in equity.

40

When the markets are in the bull phase, investors will enjoy the market linked returns delivered on

their portfolio. However in a bear market, their investment is still safe as they are sure of getting the

guaranteed maturity value. In a nutshell, “Bulls You Win and Bears You Win”.

The Guaranteed Maturity Value applies where all premiums have been paid up-to-date at maturity

and will fall away, where partial withdrawals have been made from the Main Account.

Death benefit

Life is uncertain and you would not want to take a chance when it comes to your loved ones.

Depending on your existing life cover and the need you have, this plan allows you to choose your life

cover-the sum assured on death.

Top-up premiums

Besides regular premiums, whenever you have excess money, you can invest it by way of top-up

premiums, without any commitment to bring them in the coming year (subject to a maximum of 25%

of the cumulative premiums paid till that date).

Partial withdrawals/surrender

Kotak safe investment plan II allows you early exit option through partial withdrawal of funds or

complete surrender of the policy. With this plan, you can access the investment after completion of

the 3rd policy year, with no surrender or partial withdrawal charges from year 7 onwards (subject to

retaining a minimum balance of one annualized basic premium).

Limited premium payment

If any investor wishes to pay off all premiums over short period of time, instead of the full term, this

plan has the limited premium payment option for him. This option allows you to pay off your

premiums over tenure shorter than your policy term. Under this option, you can pay off your

premiums over 3, 5, 6,7,10 or 15 years.

Advantages

o Enjoy unlimited upside from capital market with a downside protection guarantee on your

maturity value.

o Flexibility in premium payment: limited premium payment option and full term payment

option.

o Tax free switching across fund categories.

41

o Increase contribution at will by way of top up premiums

o Easy exit option.

Tax benefit

Section 80(c), 10(10D) of the income tax act, 1961 would apply.

Eligibility

Entry age to the life to be ensured Min-0years, max-65years

Term Min-10years or 18 minus age at entry for

minors; whichever is higher, max-30years

Maturity age Max-75years

Regular premium Min-Rs 18,000 annually

Limited premium payment Min-Rs 50,000 annually

Top-up premiums/partial withdrawals Min- Rs 10,000, max 25% of the cumulative

annualized premiums paid

KOTAK HEADSTART FUTURE PROTECTYour children are your joy, your pride and your world. And you strive to give your little one(s) the

very best in life. You would like to provide your children with all the opportunities that could give

them the extra edge over others. For this, you would require an investment and protection package

42

that is specially designed to help you plan wisely for a financially secure and comfortable tomorrow,

no matter what the uncertainty of life.

Kotak headstart future protect is a unit-linked dual benefit plan to help secure your children’s future

financial needs and ensure that plans do not go awry, given you may not always be there to help.

How does this plan benefit?

Double benefit on death

In the event of the death of a parent, grandparent or a legal guardian, there would be an irreplaceable

void in the life of their children, but headstart future protect can ensure that the financial loss is

minimized.

Under this plan, a lump sum amount of 100% of the sum assured would be paid out immediately on

the life insured’s death(on the second death in case of joint life), to assist in meeting unanticipated

financial obligations.

At the same time, it provides an additional boost (on death of the life insured) via a lump sum benefit

which reduces over the term of the plan to compensate beneficiaries for the outstanding premiums

that would have been payable had the policyholder survived the full term of the poll.

Protection boosters

You can opt for additional rider benefit payments should accidental death bring on your demise or,

unfortunate events render you disabled or incapacitated. Should a critical illness befall you along the

way, a portion of sum assured is immediately made available. Premiums waiver protection is also

available on disability. These benefits will be charged for by way of additional unit deductions from

the fund.

Fund options

INVESTMENT OPTIONS

EQUITY (HIGH

DEBT (MEDIUM RISK)

CASH$ MONEY MARKE

RISK-RETURN

OBJECTIVES

43

RISK) T PROFILE

Kotak Aggressive growth

60%-100%

0%-40% 0% Aggressive

Aims for a high level of capital growth by holding a significant portion in equities

Kotak dynamic growth

40%-80%

20%-60% 0%-20% Aggressive

May experience high level of shorter term volatility

Kotak dynamic balanced

30%-60%

20%-70% 0%-20% Moderate Aims for moderate growth by holding a diversified mix of equities and fixed interest instrumentsMay experience moderate levels of shorter term volatility

Kotak dynamic floor

0%-75%

0%-100% 0%-20% Cautious Aims to provide stable long term inflation beating growth over the medium to longer term and defend capital against short term capital shocks.Is likely to out perform traditional balanced or equity funds during sideways or falling markets and shadow the rising equity market.

Kotak dynamic bondKotak dynamic floating rate

_ 0%-100% 0%-20% Conservative

Returns will be in line with those of fixed interest instrument, and may provide little protection against unexpected inflation increases.

Kotak dynamic gilt

_ 80%-100%

0%-20% Conservative

Will preserve capital and minimize downside risk, with investment in debt and government instruments.

Kotak dynamic money market

_ _ 100% Secure Will protect capital and not have downside risk.

In short, you can select over time which funds you would like to be in, based on your time horizon

and views on market.

Some suggestions on how you might allocate your savings are illustrated in the chart below:

Investment time horizon Recommended fund

44

options and allocations

If your child is below the age of 7, you will probably not require the money for another 15-20 years

If your child is between the age of 8 and 12, you are likely to save for the next 10-15 years

If your child is between the age of 13 and 15, you may require the amount within 7-10 years.

75% in aggressive growth fund or dynamic growth fund and 25% in dynamic floor fund

50% dynamic growth fund 50% dynamic floor fund

100% in dynamic floor fund

When there are about 2 or 3 years before you actually require he money, it is advisable to switch

your money to the debt funds, dynamic bond funds, dynamic floating rate fund or the dynamic gilt

fund, so that it is safe and accessible.

Flexible withdrawals

With costs being different for every need, the financial requirements for your children would change

from time to time and you require a child savings plan that is flexible. With this plan you can access

the investment after completion of 3rd policy year, with no penalty charges from year 7 onwards.

Alternatively, you can just let the amount multiply if the need is not immediate. You can also elect to

receive a percentage at maturity proceeds in cash and the balance by way of pre-specified

installments, for up to 5 years after maturity.

FINANCIAL RESULTS

AUDITED FINANCIAL RESULTS FOR

Rs in lakhs Nine Months Ended

45

THE YEAR ENDED 31ST

MARCH, 2009Sr Quarter Ended Year Ended

No Particulars Dec-08 (Unaudited) Mar-09

(Unaudited) Mar-08 (Unaudited) Mar-09 (Audited)Mar-08 (Audited) 1 Interest earned

(a+b+c+d) 326,211.15 110,445.19 110,424.39 436,656.34 364,838.80

(a) Interest/discount on advances/bills 261,221.99 89,323.91 78,631.39 350,545.90 260,768.46

(b) Income on investments 56,027.59 19,930.14 26,191.93 75,957.73 85,879.03

(c) Interest on balances with RBI & other

banks 5,265.70 355.98 2,409.32 5,621.68 9,037.14

(d) Others 3,695.87 835.16 3,191.75 4,531.03 9,154.17

2 Other income (a+b) 174,939.75 113,321.67 75,826.44 288,261.42 390,100.32

a) Profit/(Loss) on sale of investments

including revaluation (insurance

business) (47,983.30) (3,829.36) (43,072.14) (51,812.66) 15,348.79

b) Other income (see Notes 2 and 5) 222,923.05 117,151.03 118,898.58 340,074.08 374,751.53

3 Total income (1+2) 501,150.90 223,766.86 186,250.83 724,917.76 754,939.12

4 Interest expended 151,557.05 47,682.42 46,800.87 199,239.47 181,647.70

5 Operating expenses (a+b+c) 261,494.78 129,583.86 90,965.20 391,078.64 396,197.50

(a) Payments to and Provisions for

employees 93,174.03 26,077.02 32,380.88 119,251.05 119,789.20

(b) Policy holders’ reserves, surrender

expense and claims 46,853.30 67,093.60 17,334.12 113,946.90 142,438.11

(c) Other operating expenses (see Note 3

and 5) 121,467.45 36,413.24 41,250.20 157,880.69 133,970.19

6 Total expenditure (4+5) (excluding

provisions and contingencies) 413,051.83 177,266.28 137,766.07 590,318.11 577,845.20

7 Operating Profit before Provisions and

Contingencies (3-6) 88,099.07 46,500.58 48,484.76 134,599.65 177,093.92

8 Provisions (other than tax) and

Contingencies (see Note 1) 19,508.61 13,470.85 14,090.24 32,979.46 36,302.67

9 Exceptional Items - - - - -

10 Profit from Ordinary Activities before

tax (7-8-9) 68,590.46 33,029.73 34,394.52 101,620.19 140,791.25

11 Tax expense (see Note 7) 25,410.82 10,942.16 10,307.14 36,352.98 44,918.61

12 Profit from Ordinary activities after tax

before Minority Interest (10 – 11) 43,179.64 22,087.57 24,087.38 65,267.21 95,872.64

13 Extraordinary items (net of tax expense) - - - - -

14 Profit from Ordinary activities after tax

before Minority Interest (12 – 13) 43,179.64 22,087.57 24,087.38 65,267.21

15 Less: Share of Minority Interest (658.52) 1,031.35 70.46 372.83 (1,868.75)

16 Add: Share in Profit of associates 334.00 10.25 (6.88) 344.25 1,381.27

17 Profit after tax (14-15+16) 44,172.16 21,066.47 24,010.04 65,238.63

46

95,872.64 99,122.6618 Paid Up Equity Capital - (Face Value of

Rs. 10 per share) 34,547.35 34,566.89 34,467.28 34,566.89 34,467.28

19 Group Reserves (excluding Minority

Interest) 617,687.52 547,923.35

20 Minority Interest 6,286.02 5,123.34

21 Analytical Ratios

(i) Earnings per Share (before and

after extraordinary items)

(a) Basic (not annualized) Rs. 12.74 6.10 6.97 18.90 29.62

(b) Diluted (not annualized) Rs. 12.66 6.09 6.86 18.87 29.18

(ii) NPA Ratios (a) Gross NPA 89,139.91 83,208.43 56,719.36 83,208.43 56,719.36

(b) Net NPA 56,141.11 45,430.59 36,266.58 45,430.59 36,266.58

(c) % of Gross NPA/ Gross Advances 3.68 3.64 2.56 3.64 2.56

(d) % of Net NPA/ Net Advances 2.35 2.02 1.65 2.02 1.65

(e) % of Gross NPA/ Gross Advances

(excluding NPAs acquired from other

banks/ NBFCs) 1.91 2.44 0.85 2.44 0.85

(f) % of Net NPA/ Net Advances

(excluding NPAs acquired from other

banks/ NBFCs) 1.01 1.18 0.33 1.18 0.33

(iii) Return on Assets (average) (not

annualised) 1.09

0.52 0.59 1.61 2.87

47

RESEARCH

METHODOLOGY

48

CHAPTER-3 RESEARCH METHODOLOGY

Managers need information in order to introduce products and services that create value in the

mind of the customer. But the perception of value is a subjective one, and what customer’s value this

year may be quite different from what they value next year. As such, the attributes that create value

cannot simply be deduced from common knowledge. Rather, data (information) must be collected

and analyzed. The goal of Marketing Research (analysis) is to provide the facts and direction that

managers need to make their more important marketing decisions.

The analysis involves the following steps:

Define the problem.

Determine research design.

Identify data types and sources.

Determine sample plan and size.

Collect the data.

Analyze and interpret the data.

Prepare the research report.

For the purpose of study, data from the in-house survey conducted by the marketing

Department (secondary data) has been used and also for coming out with the recommendation. It was

also felt that mere secondary data would not provide in-depth information for the analysis, hence it

was decided that interactive discussions with the managers and the head of every department would

help in an in-depth and true understanding of challenges faced by the department. The methodology

adopted was to gather relevant information from the appropriate department, correlate the

information obtained and to present the information in a logical and systematic manner.

49

PURPOSE OF STUDY

1: To identify the services offered by KOTAK MAHINDRA BANK.

2: To study and analyze the customer perception and preference about KOTAK MAHINDRA BANK.

3: Finally to draw the various conclusion and recommendation on the basis of study conducted.

50

FINDINGS

51

CHAPTER-4 FINDINGS

Kotak Mahindra bank sells around 20 mutual funds. After analyzing these funds on the basis of their

risk, return, NAVs, expenses etc., it was found that its three products i.e., Kotak 30, Kotak

opportunities, and Kotak taxsaver are the most popular ones. These three funds give the highest

returns. This is because they invest around 80% in equity and very less in debt instruments.

Kotak 30 is an open-ended scheme which invests predominantly in large cap blue chip stocks which

lend stability to the portfolio. It has a flexibility to take some exposure to some mid caps to

potentially enhance returns.

Kotak opportunities are an open-ended equity growth scheme. As market evolve and grow, new

opportunities of growth keep emerging. Kotak opportunities are an aggressive scheme that endeavors

to capture these opportunities to create wealth. Since inception, the scheme has been able to generate

‘alpha” by spotting opportunities from time to time.

Kotak taxsaver is an equity linked saving scheme (ELSS) which allows investors twin advantage of

capital appreciation and tax saving. It has a portfolio diversified across sectors.

52

KOTAK TAXSAVER

ABOUT THE SCHEME

Kotak Tax saver offers the investor the dual advantage of potential capital appreciation as well as tax

savings (as applicable). The portfolio offers a diversified mix across various sectors. As it is a close

ended architecture, the investor has to compulsorily lock in ones fund for 3 years.

ALLOTMENT DATE

22 NOVEMBER, 2008

CORPUS: - 452.71 Crore

FUND MANAGER’S VIEW

Indian economy is expected to sustain its growth momentum in the coming years on the back of

growing consumption, demand for infrastructure and an increasing trend towards outsourcing. We

expect the Indian economy to be resilient against any shocks in the global economy due to huge base

of domestic consumption. The improving demographic profile of the country and growing

urbanization are likely growth drivers. Focus of the fund is to capitalize on the investment

opportunities in the economy with long-term perspective. The investors in this fund has to invest

with a minimum of 3 years horizon, hence investment of the fund is made in companies which can

create greater performance over longer period of time. The fund focuses on a bottom up style of

investing.

INVESTMENT OBJECTIVE

To generate capital appreciation from a diversified portfolio of equity & equity related securities and

enable investors to avail the income tax rebate, as permitted from time to time.

INVESTMENT PATTERN

Equity & Equity related securities: 80% - 100%

Debt & Money Market instruments: 0% - 20%

INVESTMENT HORIZON

53

3 years & above

INVESTMENT OPTIONS

Growth, Dividend Payout, Dividend Re-Investment.

MINIMUM INVESTMENT

Initial: Rs 500 and in multiples of 500.

Additional: Rs 500 and in multiples of 500.

Systematic: Rs 500 and in multiples of 500.

BENCHMARK INDEX

S&P CNX 500

ESTIMATED RECURRING EXPENSES

2.50%.

54

CONCLUSION

CHAPTER-5 CONCLUSION

55

Kotak Mahindra Finance Ltd is the first company in India to convert to a bank. In February 2003, the

company was given the license to carry on banking business by the RBI. Since, then the company

has achieved a very important place in the financial sector of the nation. The bank caters to different

groups of customers by providing a variety of investment products. The bank brings a full range of

mutual fund and ULIP products. The Kotak group caters to the financial needs of individuals and

corporate. Kotak Mahindra bank has won many awards since its formation. The bank has achieved

“The Best Investment Bank in India” award by Finance Asia continually each year since its

inception.

There has been a 100% growth in mutual fund industry in 6 years. Now, customers are more aware

than earlier and different investment avenues are available to the investors. Mutual funds also offer

good investment opportunities to the investors. Investments in securities are spread across a wide

cross-section of industries and sectors and thus the risk is reduced in the MFs. Diversification

reduces the risk because all stocks may not move in the same direction in the same proportion at the

same time. Thus, Mutual funds spread the risk among many different securities, limiting the potential

of one company’s performance from impacting the entire portfolio. It also reduces the emotion

associated with watching individual equities rise and fall.

During our summer training we made an analysis of mutual funds and unit linked products available

at the bank. After making an analysis it is concluded that its three MF products i.e. Kotak 30, Kotak

opportunities, and Kotak Taxsaver are the most popular ones and best selling products. These three

MF schemes give high returns to the investors.

In the traditional plans, high risk and fewer returns are there because they invest more in debt market

and less in equity market, which yield less returns and these plans are not flexible. Investors do not

have choice to invest according to their need and risk appetite in the traditional investment plans. But

the modern MF schemes and unit linked plans give more returns and less risk is associated with

them. The companies disclose the performance of their ULIPs and MFs on daily basis in NAVs. The

investment strategy, outlooks of the market and scheme related details are disclosed with reasonable

frequency to ensure that transparency exist in the system. In this way the policyholder gets the entire

upside on the performance of his fund. Thus, ULIP investors have the opportunity to 'manage' their

monies.

56

ULIPs provide all the benefits of that of a mutual fund and top it up with an insurance cover.

ULIP is a product which takes care of multiple needs. It offers flexibility, has a risk cover and

provides long-term investment opportunity. Thus, it saves the hassle of investing in multiple products

to take care of different needs. According to Vijay Sinha, asst director - agency, Tata AIG Life

Insurance, "ULIP is ideal for someone who is looking for a long-term investment product, is under-

insured and is averse to taking a traditional life insurance product. ULIP should be looked at from

both an investment as well as insurance point of view and not in isolation."

After making an analysis it is concluded that the two ULIP plans of Kotak are the high returns

yielding plans. These two plans are Kotak safe investment plans II and Kotak headstart future

protect.

Kotak Mahindra bank’s USP is that it invests the investors’ money, more in equity and less in debt.

This gives high returns but at the same time high risk is also associated with it. But, for

compensating this high risk, the bank provides the Guaranteed Maturity Value on investment

schemes to its customers.

Unit linked insurance plans (ULIP) are all set to pose serious competition to mutual funds. In case of

a mutual fund if one has to change the asset allocation, the scheme or a fund by itself has to be

changed whereas a single ULIP might have five options in one and the investor sticks to the same

life insurance. Also most insurance companies do not charge the investor for shifting plans. In case

of ULIP there is no upper limit regarding expenses and are decided by the insurance company but in

case of mutual fund there exists an upper limit to the expenses chargeable to investors and are set by

the regulatory authority.

Though, ULIP as an investment avenue are closest to mutual funds in terms of their structurse

and functioning, since both the avenues meet different needs, comparing the products offered

by them would be inappropriate.

57

RECOMMENDATIONS

CHAPTER-6 RECOMMENDATIONS

All categories of loans (other than the exceptions permitted by RBI) will henceforth be priced with reference to the revised Base Rate .

58

The committee of Kotak Mahindra Bank in its meeting on 22 September 2010 has

allotted 3,82,040 equity shares of Rs 5 each

The Reserve Bank of India (RBI) guidelines on Base Rate system requires banks to review the respective Base Rates at least once in a quarter. The ALCO of Kotak Mahindra Bank in its review on September 30, 2010 (in accordance with the Board approved ‘Base Rate and Loan Pricing methodology’) has revised the Base Rate upwards from 7.25% p.a. to 7.50% p.a. All categories of loans (other than the exceptions permitted by RBI) will henceforth be priced with reference to the revised Base Rate. Changes in the Base Rate from the current level of 7.50% p.a. will be conveyed from time to time. The Bank has also revised its Benchmark Prime Lending Rate [BPLR] upwards by 25 basis points

59

LIMITATION OF THE

STUDY

60

CHAPTER-7 LIMITATIONS OF THE STUDY

The limitations of this study is that it is secondary in nature that is it is obtained from

secondary data present in magazines,newspapers,journals and on internet and is not

100%authentic

No first hand research is done to determine the facts, figures and data. The facts, figures and

performance are not of current year that is till last year and the study is not up to date. It may

be possible that some changes or improvisation is missed out

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BIBLIOGRAPHY

BOOKS

Retail Banking( Publisher: Macmillan Publishers India (2010)

Tannans Banking Law and Practice in India(ML Tannan 2008)

Banking Law and Practices(PN varshney 201)

WEBSITES

www.kotakmahindra.com

www.kotaklifeinsurance.com

www.kotakmutual.com

www.google.com

www.amfiindia.com

NEWS PAPERS:

Economic Times

Times of India

MAGAZINES:

Business India

Business Today

Bank’s Brochures and Manual

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GLOSSARY

KMBL- Kotak mahindra bank limited

KMMF- Kotak mahindra mutual fund

KMAMC- Kotak mahindra Asset Management Company

KMLI- Kotak mahindra life insurance

NAV- Net asset value

AUM- Asset under management

MF- Mutual fund

ULIP- Unit linked insurance products

AMC- Asset Management Company

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