Reliance Money

SUMMER INTERNSHIP PROJECT REPORT 2008-2009 Corporate Guide:Suresh Behera Head of Sales Faculty Guide:Mr. Prakash Chandra Dash BIMIT, Bhubaneswar Submitted in Partial Fulfillment for the Award of Degree MASTER IN BUSSINESS ADMNISTRATION Submitted by: - Rajendranath Behera Regd no:-0706275024 Prakash Chandra Dash B.I.M.I.T, Bhubaneswar FACULTY GUIDE CERTIFICATE This is to certify that Rajendranath Behera, a student of Bhuba neswar Institute of Mana ge ment and Information Technology, Bhuba neswar pursuing his MBA (Marketing) has worked under my guida nce and supervision on his Work entitled “Reliance Money – An Investment Avenue”. To the best of my knowledge this is an original piece of work. (Prakash Chandra Dash) Faculty Marketing I Submitted by: - Rajendranath Behera Regd no:-0706275024 DECLARATION I Sri Rajendranath Behera do hereby declare that the project report entitled “Reliance Money – An Investment Avenue” being submitted to Biju Patnaik University of Technology, Rourkela is my own piece of work and it has not been submitted to any other institute or published at any time before. Rajendranath Behera Regd No: - 0706275024 Bhubaneswar Institute of Management & Information Technology II Submitted by: - Rajendranath Behera Regd no:-0706275024 ACKNOWLEDGEMENT This report bears the imprint of many people. Right from the experienced staff of Reliance Money, to the staff of Bhubaneswar Institute of Management & Information Technology without whose support and guidance I would have not got the unique opportunity to successfully complete my internship in this esteemed organization. I take this opportunity to express my deep gratitude to all the employees of, Reliance Money, Bhubaneswar. Also I am indebted for the rich guidance, knowledge and suggestions provided by my guide, Mr. Prakash Das who took sincere efforts and illustrated the Marketing Concept of Financial Products, with their vast knowledge in the field, which helped me in carrying out my internship. I am gratified to Prof. B.M. Das for their earnest coordination owing to which, I had the leg-up of undertaking the internship at the prominent organization, Reliance Money Pvt ltd. Last but not least, I also thank all those people whom I met in the industry during my internship and helped me to accomplish my assignments in the most efficient and effective manner. Date: 18th Aug 2008 Place: Bhubaneswar (Rajendranath Behera) III Submitted by: - Rajendranath Behera Regd no:-0706275024 EXECUTIVE SUMMARY The project work is pursued as a part of MBA (Marketing) Curriculum at BHUBANESWAR INSTITUTE OF MANAGEMENT AND INFORMATION TECHNOLOGY, Bhubaneswar. It is undertaken as a traineeship at Reliance Money Ltd. The project is done under expert supervision and guidance of Mr. Prakash Chandra Das (Lecture in Marketing) and Mr. Suresh Behera (Center Sales Manager, Reliance Money) The Project is about th e study of marketing and sales of financial products and also the efforts done to make improvements in the customer acquisition process for better results. At RELIANCE MONEY, initially the trainees were imparted process and product knowledge. They were gi ven sufficient time to know about the products and also about sales and distribution channel. They had to work with the sales representatives of the Distributor and think of ways of i mproving the sales and distribution channel and implementing them. The ma in aim was to increase sales and for this different ways were tried and implemented. They were provided with database and had to make cold calls from the data. Compan y activit y was also one of the major sources for generating business. Initially they even accompanied sales representatives to the clients place. Main objective was to know the need of the customer and how to fulfill that in the best way. The project dealt with various fields like: 1. 2. 3. 4. Trading and Demat account Mutual funds Life insurance General insurance Thus it gave trainees the opportunity to learn about all the products and with the range of products Reliance money offered it made the task a bit easier as we could fulfill the need of the customer in a better way. IV Submitted by: - Rajendranath Behera Regd no:-0706275024 Our task was divided in 4 phases: 1. Product knowledge: This included the theoretical knowledge about the field and products which needed to be marketed. 2. Pitching in retail sector: This included the implementation of the knowledge imparted to us and the test of our marketing sk ills. Initially we were accompanied by other sales executive so that we can learn how to deal with the customers and understand their need. This also enhanced our interpersonal skills and confidence level. 3. Implementati on in retail sector and pitching i n corp orate: B y the start of this phase we were confident enough about the pitching and fulfilling the needs of the customer in the retail sector. This also included of the ways we should pitch the corporate. 4. Implementation at corp orate levels: This included the implementation of the all the knowledge and ways learnt for the pitching and extracting business out of the corporate. With the end of 6 weeks ever y phase was completed and it gave us the real experience of retail as well as corporate world. V Submitted by: - Rajendranath Behera Regd no:-0706275024 CONTENT Certificate of Company Faculty Guide Certificate Declaration Acknowledgement Executive Summary CHAPTER 1 INTRODUCTION 1.1 INVESTMENT AVENUES AND ALTERNATIVES 1.1.1 Non-marketable Financial Assets 1.1.2 Equity Shares 1.1.3 Bonds 1.1.4 Money Market Instruments 1.1.5 Mutual Funds 1.1.6 Life Insurance 1.1.7 Real Estate 1.1.8 Precious Objects 1.1.9 Financial Derivatives CHAPTER 2 LITERATURE REVIEW 2.1 Significance of Study 2.2 Objective of Study CHAPTER 3 COMPANY PROFILE 3.1 PRODUCT OFFERING 3.1.1 Trading Portal 3.1.2 Financial Products 3.1.3 Value-Added Services 3.1.4 Credit Cards 3.1.5 Gold coins retailing CHAPTER 4 TRADING PORTAL 4.1 DEMAT ACCOUNT CHAPTER 5 FINANCIAL PRODUCTS 5.1 MUTUAL FUNDS 5.1.1 Open end versus Closed end Schemes 5.1.2 Constitution of a Mutual Fund 5.1.3 Types of a Mutual Funds 5.1.4 How to invest in Mutual Fund 5.1.5 Nature of Income Distribution to Investors 5.1.6 Different schemes of Reliance Mutual fund VI i ii iii iv-v 1-8 1 5 5 6 6 6 7 7 7 7 9-11 10 11 12-13 13 13 13 13 13 13 14-19 14 20-42 20 21 23 24 26 28 29 Submitted by: - Rajendranath Behera Regd no:-0706275024 5.2 LIFE INSURANCE 5.2.1 Tax Benefits of Insurance 5.2.2 Claims 5.2.3 Plans 5.3 GENERAL INSURANCE 5.3.1 Types of General Insurance 5.4 BASIC FEATURES 5.5 VALUE ADDED FEATURES 5.6 POLICY FEATURES CHAPTER 6 OBJECTIVE AND CONCLUSIONS 6.1 OBJECTIVE 6.2 METHODOLOGY 6.3 SWOT ANALYSIS 6.4 MY ROLE IN THE ORGANISATION 6.5 LIMITATION 6.6 LEARNINGS CHAPTER 7 RESULTS AND FINDINGS CHAPTER 8 CONCLUSION AND RECOMMENDATIONS 8.1 RECOMMENDATIONS 8.2 KEY ISSUES AND CONCLUSIONS APPENDIX A.1: QUESTIONNAIRE A.2: LIST OF FIGURES A.3: BIBLOGRAPHY A.4: REFERENCES 31 33 35 37 39 39 41 41 41 43-51 43 43 46 46 48 48 49-52 53-54 53 53 55-58 55 57 58 58 VII Submitted by: - Rajendranath Behera Regd no:-0706275024 INTRODUCTION Whether it‟s retiring earl y, saving for children‟s education, paying off a loan or to live a secured and satisfied life ever yone has dreams they can achieve by investing their savings. However, the question that arises is that, should one leave his money tucked away in the bank or plough it into the stock market where the potential for higher returns is greater but the chances of losing money is higher? Deciding where to invest depends on one`s attitude towards risk (one`s capacity to take risk and one`s tolerance towards risk) and the investment horizon and non -availability of guaranteed -return investment products. In such a scenario, investing in equity, which offers returns that are higher than the inflation rate, help to build wealth and to improve the standard of living. It is fine that stock market fluctuates over time. At present as far as the world economy is concerned it is on a boom. As soon as globalization and liberalization has come into act it has well shaped the economy. India has turned out to be the hot destination for the money investors and this has resulted growth in the sensex .It was never hoped before that BSE will ever touch the mark of 16000 points. But only due to the new economic opportunities and the confidence of people in India‟s economic future it has been successful .Investing in equity is the way to earn money and to fulfill the dreams. The risk involved with investing in equity can be moderated by careful stock selection and close monitoring. INVESTMENT AVENUES AND ALTERNATIVES In vest ment alternatives var y from fixed income to variable income which includes RBI bonds, government securities, fixed deposit, equity investments, property and so on. In recent years the 6.5 percent tax -free RB I Bonds have become a ver y popular saving instrument -- especially amongst individuals. Till 1996, these bonds gave returns of 10 per cent. This came down to 9 per cent and then 8 percent and then in 2003 it was reduced to 6.5 per cent (tax free). Nowadays, 8 percent taxable Gover nment of India bonds are also doing well to attract investors who want safe and higher yield. 1 Submitted by: - Rajendranath Behera Regd no:-0706275024 However, with inflation at nearly 4.5%, the return offered b y these instruments were still attractive. However, with the scrapping of the tax-free bonds, safe investment options for individuals have become ver y limited and people are now choosing to go with either post office saving schemes or equity related instruments. Take a look at what is happening. Debt funds, which were said to be relatively risk-free, are giving ver y less returns. Monthly Income Plans offered by mutual funds are also not attractive as their portfolio is made up of 80 percent debt and 20 percent equity. With debt giving very less returns and returns from equity becoming stagnant, the returns from MIPs are also very attractive. The returns offered by M IPs are totally dependant upon the type of security and debt instruments held by the fund But with recent rally in the stock market, ver y few people are now going for MIPs and have a ver y positive sentiment about the market and would l ike to stay with the market for long. But continuously we still have a single question in mind: So where should individuals park their money now? "The 8 per cent taxable RBI Bonds seem to be one of the best options right now looking for a safe avenues." The person in the 30 percent tax bracket, the 8 per cent RB I bonds will give returns of approximatel y 5.6 per cent. Though this is much lower than the previous 6.5 percent, it is still a better than most other options. If you are a senior citizen, the Seni or Citizens Savings scheme offering a 9 Percent yearly interest is a good investment option. The scheme was announced in the Budget 200 6-2007 and was meant for people above the age of 60. However, this scheme has a maxi mum deposit limit of Rs. 15 lacs while RBI Bonds do not have any limit. In this case, the term for deposit is fi ve years with a facility for premature withdrawal. The 9 percent returns are subject to tax, so if you are in the 30 percent tax bracket, you will effectivel y get returns of 6.3 per cent. Another option can be Floating Rate Bond Fund offered by mutual funds. Basically, these funds invest in floating rate instruments and therefore have a direct correlation to interest rates. If 2 Submitted by: - Rajendranath Behera Regd no:-0706275024 interest rates go up the returns from these funds rise an d returns fall with a fall in interest rates. This is unlike debt funds, where there is a reverse relationship between interest rates and returns. A rise in interest rates results in a fall in returns. In the current scenario, these funds are likely to give returns of 5 percent to 5.5 percent. The dividends are tax-free in the hands of the investor and most importantly, there is complete liquidity. Again, there is no limit on the amount that can be deposited. Also, there is hardly any volatility making it a safe option. If you are willing to take a bit of risk, you can divide your portfolio in such a way that 60 percent is invested in floating rate bond funds and the remaining 40 percent in equity. That's like having an MIP except that instead of 80 percent in debt and 20 percent in equity, here the 60 percent is in floating rate bond funds. Such a portfolio can give you returns of aprox. 8.5 % to 9.5 %. The NSCs and the Kisan Vikas Patras give returns of 8 percent so for those in the 30 percent tax bracket, it works out to 5.6 percent. Here too there is no limit on the amount of deposit. However, here the interest is posted only at the time of maturity. So it is not a good option if you want regular returns. On the other hand, RBI Bonds give returns ever y si x months or half yearly. So, depending upon their risk profile and need for liquidity, one will have to decide on their portfolio. For anyone below 35 years, it is recommend that one should invest some part of there portfolio in RBI Bonds and in NSCs, KVPs as a long term investments and the remaining in combination of floating rate bond funds and equity But for those above 35, it is advocate that one should look at nearly 40 percent in RBI Bonds, 30 percent in NSCs, KVPs, hence giving safe and regular inco me. And the remaining 30 per cent in floating rate bond funds and equity. For those above the age of 60, 40 percent must be put in the Senior Citizens Scheme (of course, this is up to a maximum limit of Rs 15 lakh), another 40 percent in RBI Bonds and the remaining 20 percent in floating rate bond funds, so that one has some liquidity.As an investor one has a wide array of investment avenues available to on e 3 Submitted by: - Rajendranath Behera Regd no:-0706275024 Investment Avenues Non-Marketable Financial Assets Equity Shares Bonds Life Insurance Policies Mutual Fund Schemes Money Market Instruments Real Estate Precious Objects Financial Derivatives Fig1.1 Investment Alternatives Non- marketable Financial Assets - A good portion of financial assets is represented by non -marketable financial assets. These can be classified into the following broad categories:  Bank deposits  Post office deposits  Compan y deposits  Provident fund deposits Equity Shares - Equity shares represent ownership capital. As an equity shareholder, you have an ownership stake in the company. This essentially means that you have a residual interest in income and wealth. Perhaps, the most romantic among various investment avenues, equity shares are classified into the following broad categories by stock market analysts:  Blue chip shares  Growth shares 4 Submitted by: - Rajendranath Behera Regd no:-0706275024  Income shares  Cyclical shares  Speculative shares Bonds - Bonds or debentures represent long -term debt instruments. The issuer of a bond promises to pay a stipulated steam of cash flow. Bonds may be classified into the following categories:  Government securities  Government of India relief bonds  Government agency securities  PSU bonds  Debentures of private sector companies  Preference shares Money Market Instruments - Debt instruments which have a maturity of less than one year at the time of issue are called money market instruments. The important money market instruments are:  Treasury bills  Commercial paper  Certificates of deposits Mutual Funds - Instead of directly buying equity shares and/or fixed income instruments, you can participate in various schemes floated by mutual funds which, in turn, invest in equity shares and fixed income securities. There are three broad types of mutual fund schemes:  Equity schemes  Debt schemes  Balanced schemes Life Insurance - In a broad sense, life insurance may be viewed as an investment. Insurance premiums represent the sacrifice and the assured sum the benefit. The important types of insurance policies i n India are:  Endowment assurance policy  Money back policy  Whole life policy  Term assurance policy 5 Submitted by: - Rajendranath Behera Regd no:-0706275024 Real Estate - For the bulk of the investors the most important asset in their portfolio is a residential house. In addition to a residential house, the more affluent investors are likely to be interested in the following types of real estate:  Agricultural land  Semi-urban land  Time share in a holiday resort Precious Objects - Precious objects are items that are generally small in size but highly valuable in mone tary terms. Some i mportant precious objects are:  Gold and silver  Precious stones  Art objects Financial Derivatives - A financial derivative is an instrument whose value is derived from the value of an underlying asset. It may be viewed as a side bet on the asset. The most important financial derivatives from the point of view of investors are:  Options  Futures Since every individual would like to earn return on their investment but where to invest has always been a problem. There has always been a confusion as to which instrument to invest, which instrument will give me higher returns, etc. Even now nuclear families are in and so are longer life spans. Even inflation is increasing and so do the standard of life, medical costs, and other things. In such a scen ario, one need to think as to how he will take care of all his future needs and build up a corpus that will not only take care of routine expenses but also provide for extra costs, especially of health care. One need to have a corpus of funds, post retirement, which will give him close to 100% of the salary to preserve the lifestyle he has grown to enjoy. 6 Submitted by: - Rajendranath Behera Regd no:-0706275024 LITERATURE SURVEY According to the Webster‟s dictionary, literature is “the writings that pertain to a particular branch of learning, and printed matte r”. And review means “to examine again, to study carefully”. Therefore literature review is the printed matter which we study ver y carefully during our work. This project is also a collection of insight into the different printed material. As this project is specifically related to sales of financial products hence books on investments is one of the study materials. The insurance institute of India has published books which give an insight into the life insurance products and general insurance products. The main source of data through which this project has taken its shape is the circulars of SEBI and IRDA. These circulars give description of existing market. The knowledge about the marketing principles is gained from the book “principles of marketing” writt en by Philip Kotler. Chapter “positioning and marketing of ser vices” of the “service management and operations” published by prentice hall international editions gives us the outline of marketing of services. Chapter “Building Customer Satisfaction, Value and Retention” of “Marketing Management” written by Philip Kotler. Purpose of this book is to provide background needed to understand the basics of for ming strong customer bonds and customer relationship management. Chapter on distribution channels in the book “marketing channels” written by Louis W.stern & add I.E.I Ansary. Purpose of this book is to provide the detailed knowledge about what is distribution channel, its importance & role in marketing. Chapter “The concept and role of mutual funds” of the A MF I mutual fund testing programme by association of mutual funds in India. This book provide concept of mutual funds. 7 Submitted by: - Rajendranath Behera Regd no:-0706275024 The article “managing your Demat account” published in the MINT dated June 18, 2007 page 12 give knowledge about Demat account. Last but n ot the least, the practical experiences of reliance money has gi ven the best ever exposure on the actually market works in financial products and services. SIGNIFICANCE OF STUD Y The need of the study arises because of the reason that a trainee must understand the company, its achievements and tasks, products and services and also to collect information about its competitors, its products and services offered. So that, after understanding and collecting information about the organization and its competit ors, a trainee will be able to work well for the organization. 8 Submitted by: - Rajendranath Behera Regd no:-0706275024 COMPANY PROFILE Reliance Money is promoted by Reliance Capital; one of India's leading and fastest growing private sector financial services companies, ranking among the top 3 private sector financial services and banking companies, in terms of net worth. Reliance Capital is a part of the Reliance Anil Dhirubhai Ambani Group. Thus, Reliance Money provides a comprehensive platform, offering an investment avenue for a wide range of asset classes. Its endeavor is to change the way India transacts in financial market and avails financial services. Reliance Money offers a single window facility, enabling you to access amongst others, Equities, Equity and Commodity derivatives, Offshore In vest ments, IPO‟s, Mutual Funds, Life Insurance and General Insurance products. Advantages offered by Reliance money over other companies:        Cost Effective Convenience Security Single Window for Multiple Products 3 in 1 Integrated Access Demat Account wi th Reliance Capital Other Services like research, live news from Reuter and Dow Jones, etc. PRODUCT OFFERING 1. Trading Portal (with almost negligible brokerage )  Equity Broking  Commodity Broking  Derivatives ( Futures & Options )  Offshore Invest ments (Contra ct For Differences)  D-Mat Account. 2. Financial Products  Mutual Funds  Life Insurance o ULIP plan o Term Plan 9 Submitted by: - Rajendranath Behera Regd no:-0706275024 o Money Back Plan  General Insurance o Vehicle/Motor Insurance o Health Insurance o House insurance  IPO‟s  NFOs 3. Value-Added Services  Retirement Planning  Financial Planning  Tax Saving  Children Future Planning 4. Credit Cards 5. Gold coins retailing 10 Submitted by: - Rajendranath Behera Regd no:-0706275024 TRADING PORTAL Online trading refers to buying and selling of the shares/stocks/contracts/bonds with the use of internet. In this shares are not issued in physical form rather they are transferred in the dematerialized form in the Demat account directly. DEMAT ACCOUNT In India, a Demat account, the abbreviation for demat erialized account, is a type of banking account which dematerializes paper based physical stock shares. The dematerialized account is used to avoid holding physical shares: the shares are bought and sold through a broker. This account is popular in India. The Securities and Exchange Board of India (SEBI) mandates a Demat account for share trading above 500 shares. As of April 2006, it became mandatory that any person holding a Demat account should posses a Permanent Account Number (PAN), and the deadline for submission of PAN details to the depository lapsed on January 2007. What are th e b enef it s of op ening a Demat account ? Demat account has become a necessity for all categories of investors for the following reasons/ benefits:  SEBI has made it compulsory for trades in almost all scrip‟s to be settled in Demat mode. Although, trades up to 500 shares can be settled in physical form, physical settlement is virtually not taking place for the apprehension of bad deliver y on account of mismatch of signatures, forgery o f signatures, fake certificates, etc.  It is a safe and convenient way to hold secur ities compared to holding securities in physical form..  No stamp duty is levied on transfer of securities held in Demat for m.  Instantaneous transfer of securities enhances liquidity.  It eli minates delays, thefts, interceptions and subsequent misuse of certificates. 11 Submitted by: - Rajendranath Behera Regd no:-0706275024  Change of name, address, registration of power of attorney, deletion of deceased's name, etc. - can be effected across companies by one single instruction to the DP.  Each share is a market lot for the purpose of transactions - so no odd lot probl em. Any number of securities can be transferred/delivered with one deliver y order. Therefore, paperwork and signing of multiple transfer for ms is done away with. It facilitates taking advances against securities on low margin/low interest. DEMAT ACCOUNT There are many broking houses doing business in India and they charge a brokerage on every transaction made online or offline. (Buying and Selling are treated as separate transaction). Reliance Money’s advantage over others is that it’s charging the lowest brokerage in the market which is just 1 paisa on every executive trade irrespective of the volume traded. Reliance Money, the brokerage and distribution arm of Reliance ADA Group, aims to tap investors in the smaller towns and cities through a flat fee structure. The current leaders in the retail broking segment like ICICI Direct, India Infoline and Indiabulls offer a ‘pay per use’ model whe re the customer pays a percentage of the amount transacted by him. Reliance Money’s brokerage rates are quite competitive. The new wonder is Reliance Money's pre -paid card for stock market brokerage. Reliance Money, the financial services division of Anil Dhirubhai Ambani Group-promoted Reliance Capital, is bringing to the market pre-paid cards in denominations of Rs500, Rs1,350 and Rs2,500 with validity period of two months, six months and twelve months respectively. These cards would offer brokerage at one-third of the rate being charged by institutional and individual brokerage houses. Sample this. For a pre-paid card worth Rs500, an investor can trade up to Rs90 lakh in futures and option segment or can undertake intra -day trade of 12 Submitted by: - Rajendranath Behera Regd no:-0706275024 similar amount. Besides, an investor can undertake a deliver y-based activity of Rs10 lakh. The Rs1350 worth pre-paid card, total trading limit would reach Rs 3 crore, of which Rs 2.70 crore is for the F&O segment and balance Rs30 lakh for deliver y-based activities. For Rs2500 pre-paid card, total trading limit is fixed at Rs16 crore, that include F&O limit of Rs15.40 crore and balance Rs 60 lakh for delivery-based broking. (Sour ce W eb) 13 Submitted by: - Rajendranath Behera Regd no:-0706275024 Fig .4 .1 Fee Structure Converted to percentage terms - Reliance Money offers most competitive brokerage rates - 0.05% for deliver y trades and 0.005% for non-deliver y trades (fixed fee of Rs500/ - for delivery trades up to Rs10 lacs and/or non -delivery trades up to Rs1 crore). Industry ra tes var y between 0.4% to 0.85% for delivery trades and between 0.05% and 0.10% for non delivery trades. Target low level of retail penetration in India - less than 3 per cent of household financing savings makes it into equity markets Reliance Money consu mers can trade in equities, commodities and offshore Invest ments , IPO‟s, Mutual Funds, Insurance, Money 14 Submitted by: - Rajendranath Behera Regd no:-0706275024 transfer and Money Changing - all through single window, both offline and online. Reliance Money has already tied -up with CMC Capital Plc UK to offer offshore In vestment products to Indian consumers as per guidelines. How reliance money scored over others? 1. Two way authentication : Reliance offers its customers with a token (an electronic gadget) that generates a password, which are a third level of secu rity in addition to the customer log in and a password provided. The password generated by the token is valid only for a period of 20 seconds. If the web page expires, for the fresh login, a new password generated by the token has to be keyed in by the customer. 2. Lowest brokerage: Reliance offers the lowest brokerage of 1 paisa which is very less with respect to the other DPs in the market. 3. User friendly software: The portal offered is ver y easy to understand and use. 4. Forex and offshore investment : Reliance provides the offshore facility which no other AMC is providing in the market. 5. Better research and news : Reliance offers news from the DOW JONES and REUTERS. Seeking to bring share trading closer to consumers just like ATMs, Reliance Capital's stock brokera ge arm Reliance Money launched Internet trading services through web -enabled retail kiosks. 15 Submitted by: - Rajendranath Behera Regd no:-0706275024 M onda y, Apri l 16 , 2 007 Reliance Money launches Internet trading through kiosks NEW DELHI: Seek i ng t o bri ng sha re t rad i ng cl ose r t o c onsume rs j ust l ike ATM s, Re lia nce Ca pit al 's st oc k broke ra ge a rm Reli a nce M one y on Monda y la unc hed Int e rnet t radi ng se rvi ce s t hrough We b -e na bled ret ail ki osk s. Be c omi ng t he fi rst Ind ia n c ompa ny t o provide sha re t rad i ng t hrough We b -e na bl ed re tail ki osk s, Anil Dhi rubhai Amba ni Group fi rm sa id it pla ns t o de pl oy 10 ,000 suc h ki osk s ac ross t he c ount ry, for whi c h i t i s al so t alki ng t o va ri ous re tai l c ha i ns. "The se Int e rnet e na bled ki osk s wi l l provide t he use rs a nyti me -a nywhe re ac ce ss t o Re lia nce M one y's fi na ncia l t ra nsact i on portal t hrough whic h t hey ca n i nve st i n va ri ous fi na ncial i nst rume nt s i n a sec ure e nvi ronme nt ", M r. Sudi p Ba nd yopad hya y, C EO, R eli a nce M one y said. In i t s fi rst pha se, t he ki osk s woul d be ope ra ti onal a t t he ret ail outle t s of Rel ia nc e M one y, whic h had c omme nc ed ope rat i ons l a st we ek ac ross 7 00 citi e s. The ki osk s a t va ri ous ret ail c ha i ns would be la unc hed i n t he subse que nt pha se s. The c ompa ny ha s tied up wit h Wi nc or Ni xd orf, a l eadi ng gl obal provid e r of re tail ba nk i ng IT sol uti on wi t h ne t re ve nue s of $1. 4 bil li on a nd pre se nc e i n 90 c ountrie s, for t he se k i osk s. Wi nc or-Ni xd orf's AP AC Ret ail Head , M r. And re w P ha y sa id , "We se e great pot e nti al for our prod uc t s i n t he c ount ry owi ng t o t he re tail boom a nd wil l c onti nue t o i nt rod uce lat e st prod uc t s for our c ust ome rs he re. " The c ompa ny sa id t hi s woul d be bi gge st e ve r de pl oyme nt of Int e rnet e na bled reta il ki osk s by a ny c ompa ny ac ross t he world. - PTI (Source : We b) 16 Submitted by: - Rajendranath Behera Regd no:-0706275024 FINANCIAL PRODUCTS A mutual fund represents a vehicle for collective invest ment. When you participate in a scheme of a mutual fund, you become a part-owner of the investments held under that scheme. The most important characteristic of a mutual fund is that the contributors and the beneficiaries of the fund are the same class of people, namely the investors. The term “MUTUAL” means that investors contribute to the pool, and also benefit from the pool. The money held in the trust is divided into shares of equal value called “UNITS”. In vestors become “unit -holders” and are allocated units based on the amount of their investment. The income earned through these investments and the capital appreciation realized is shared by its unit holders in proportion to the number of units owned by them. In vest ments in securities are spread across a wide cross -section of industries and sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. Mutual fund issues units to the investors in accordance with quantum of mone y invested by them. Investors of mutual funds are known as unit holders. Thus a mutual fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relative ly low cost. 17 Submitted by: - Rajendranath Behera Regd no:-0706275024 Fig.5 .1 Conce pt of mut ual fund The shift in investor preference towards mutual funds has been facilitated by:  Fiscal incentives  Increasing returns from debt mutual fund investments in the last few years due to the secular decline in in terest rates  The growing number of choices available to investors  The gradual change in the investors‟ risks profile and returns. Open end versus Closed end Schemes There are two different types of funds.  Open-ended Fund/ Scheme  Closed-ended fund/ Scheme The key differences between the closed -end and open -end schemes area as follows: The subscription to a closed -end scheme is kept open only for a limited period (usually one month to three months). Where an open end scheme accepts funds from investors by offering its units or shares on a continuing basis. A closed-end scheme does not allow investors to withdraw funds as and when they like, whereas an open -end scheme permits investors 18 Submitted by: - Rajendranath Behera Regd no:-0706275024 to withdraw funds on a continuing basis under a re -purchase arrangement. A closed-end scheme has a fixed maturity period (usually fi ve to fifteen years) whereas an open -end scheme has no maturity period. The closed -end schemes are listed on the secondary market, whereas the open -end schemes are ordinarily not list. In India, three entities are central to a mutual fund operation:  The sponsor,  The mutual fund  The asset management company. The sponsor is the key who establishes the mutual fund and the asset Management Company. For example, Templeton International (sponsor) set up the Templeton Mutual Fund which has been constituted as a trust under the Indian Trusts Act, 1882 and registered with SEBI. The mutual fund is, in a way, an umbrella organization that floats various schemes in which investors participate. The asse t management compan y, organized as a separate joint Stock company, manages the funds of mutual fund under its various schemes. For example, Templeton Asset Management (India) Pvt. Ltd., the asset management compan y set up by Templeton International, manag es the various schemes of Templeton Mutual Fund. Why one should invest in mutual funds? Mutual funds are preferable mode of invest ment due to the following reasons:        Reduction of risk Professional Management Tax benefits Low transaction costs Highly regulated Liquidity Easy to administer 19 Submitted by: - Rajendranath Behera Regd no:-0706275024 Why one should not invest in mutual funds? The following are the reasons, which are deterrent to mutual fund investment:    No control over costs No tailor made portfolios Managing a portfolio of funds Constitution of a Mutual Fund There are a number of bodies that form a part of the mutual fund, they are as follows: Sponsors The sponsor is the company which sets up the mutual fund. It means anybody corporate acting alone or in combination with another body corporate established a mutual fund after initiating and completing the formalities. Trustees The management of the mutual fund is subject to the control of the board of trustees of the fund. They guide the operations of the fund and carry the crucial respon sibility to see that AMC always act in the best interest of the investors . Asset Management Company The mutual fund is operated by a separately est ablished asset management company (AMC).It manages the funds of the various schemes. It is entrusted with the specific task of mobilizing funds under the scheme. Custodian A custodian is a person carrying on the activities of the safekeeping of the securities or participating in any clearing system on behalf of the clients to effect deliveries of the securiti es. Types of Mutual Funds There are different ways of classifying mutual funds:     20 Submitted by: - Rajendranath Behera Regd no:-0706275024  An EQUITY FUND invests mainly in stocks and shares of companies. EQUITY FUNDS typically aim to generate long term growth in the unit capital. There are a variety of ways in wh ich an equity portfolio can be created for investors. There are thus the following choices in equity funds: o Simple equity funds o Industry Specific funds o Index funds o ELSS Target market: They are ideal for investors having a long term perspecti ve, Speculative outlook- the equity cult, who would like to make gains in the shortest period of time and investors in their prime earning years specifically the young who have a decent earning and can take some kind of risk.  A DEBT FUND invests mainly in debt in struments like bonds and debentures, with high and consistent dividend payout. These funds give decent returns but the capital appreciation is not much. There are a variety of ways in which a debt portfolio can be created for investors. There are thus the following choices in debt funds: o Liquid and Money market funds o Gilt Funds o Monthly Income Plan o Floating rate funds Target market: o Retired people and others with a need for stability and regular income. o In vestors who need some income to supplement thei r earnings.  A BALANCED FUND invests in both equity and debt instruments. It aims to generate growth and income b y periodically distributing its assets over both types of securities . Target market: 21 Submitted by: - Rajendranath Behera Regd no:-0706275024 These ideal for investors looking for a combination of income and moderate growth. How t o invest in mutual funds? The following are the essential steps which one must take into account while investing in Mutual funds: Step 1- Identify the investment needs Financial goals of an individual will var y, based on his/her age, lifestyle, financial independence, family commitments, level of income and expenses among many other factors. Therefore the first step is to assess one‟s needs, which can be done by asking oneself these questions: Q1.What is my investment objectives and needs? Q2.How much risk I am willing to take? Q3.What is my cash flow requirements? By going through such an exercise, one will know what one wants out of his investment and can set the foundation for a sound mutual fund investment strategy. Step 2-Choose the right mut ua l fund Once an individual has a clear strategy in mind, he now has to choose which mutual fund and scheme he wants to invest in. The offer document of the scheme tells its objectives and provides supplementary detail like the track record of other schemes managed by the same fund manager. Some factors to evaluate before choosing a particular mutual fund are:  The track record of the performance over the past few years in relation to appropriate yardstick and similar funds i n the same categor y. How well the fund is organized to provide efficient, prompt and personalized service. Degree of transparency as reflected in frequency and quality of their communications. 22 Submitted by: - Rajendranath Behera Regd no:-0706275024   Step 3-Select the ideal mix of schemes. In vesting in one mutu al fund may not meet all the investment needs. One may consider investing in a combination of schemes to achieve the specific goals. Step 4- Invest regularly For most of us, the approach that works best is to invest a fixed amount at specific intervals, sa y ever y month. By investing a fixed sum each month one buys fewer units when the price is higher and more units when the price is low, thus bringing down the average cost per unit. This is called Rupee cost averaging and is a disciplined investment strategy followed by investors all over the world. Step 5-Keep the taxes in mind If an individual comes under the high tax bracket and has utilized fully the exemptions under Section 80L of the income tax act, investing in mutual funds will improve his return. Step 6-Start early It is desirable to start investing early and stick to a regular investment plan. If one starts now .he will make more t han if he waits and invests later. The power of compounding lets one earn income on income and one‟s money multiplies a t a compounded rate of return. Step 7-The final Step All one needs to do now is to get in touch with a mutual fund or one‟s agent and start investing. Reap the benefits in the years to come. Mutual funds are suitable for ever kind of investor -whether starting a career or retiring, conservative or risk taking, growth oriented or income seeking. Nature of Income Distribution to Investors At a broad level, the investors have three options: DIVIDEND PAY OUT OPTION In this option investors receive dividends f rom the mutual fund, as and when such dividends are declared. Dividends are paid in the for m of warrants, or are directly credited to the investor‟s bank accounts. 23 Submitted by: - Rajendranath Behera Regd no:-0706275024  GROWTH OPTION In vestors who do not require periodic income distributions can choose the growth option, where the incomes earned are retained in the investment portfolio, and allowed to grow, rather than being distributed to the investors. RE-INVESTMENT OPTION In this option investors re invest the dividends that are declared by the mutual fun d, back into the fund itself, at NAV that is prevalent at the time of reinvestment .In this option, the number of units held by the investor will change with every reinvestment. The value of the units will be similar to that under the dividend option.   Different sc hemes of Reliance Mutual fund The different schemes offered to various kinds of investors by Reliance mutual fund can be broadly classified into three categories – Equity, Debt and sector specific. Each of these categories has different investment objectives and therefore has differ ent portfolio. Equity Schemes  Reliance Growth Fund  Reliance Vision Fund  Reliance NRI Equity Fund  Reliance Equity Opportunities Fund  Reliance Index Fund  Reliance Tax Saver Fund  Reliance Equity Fund Debt Schemes  Reliance Income Fund  Reliance Medium Term Fund  Reliance Short Term Fund  Reliance Liquid Fund  Reliance Monthly Income Plan  Reliance Gilt Securities Fund  Reliance Floating Rate Fund  Reliance NRI Income Fund Sector Specific Schemes 24 Submitted by: - Rajendranath Behera Regd no:-0706275024     Reliance Reliance Reliance Reliance Bankin g Fund Pharma Fund Media and Entertainment Fund Diversified Power Sector Fund As I was more involved in the understanding and promotion of the NFO of Reliance Equity Fund during the initial part of my training. I would like to summarize it in brief. Reliance Equity Fund The Reliance Equity Fund is an open ended diversified equity fund that seeks to provide long term capital appreciation by investing in a portfolio constituted of equity and equity related securities of top 100 companies by market capitalization and of companies that are available in derivatives segment, belonging to diverse sectors. The investment strategy being that even if the markets go down, the fund has a part of its portfolio hedged, which aims at minimi zing the downside risk. The fund will not only use hedging techniques to limit the downside risk but will also try & capitalize on short selling opportunities to generate additional returns for the investors. The fund will invest 75 -100% in equity and equi ty related instruments and 0-25% in debt and money market securities. In a nut shell what this fund tries to do:  Generate long term returns by investing in a diversified portfolio of stocks.  Minimize the downside risk by being in a hedged position  Capitalize on generating additional returns by selective shorting. 25 Submitted by: - Rajendranath Behera Regd no:-0706275024 "Insurance is a contract between two parties whereby one pa rty called insurer undertakes in exchange for a fixed sum called premiums, to pay the other party called insured a fixed amount of money on the happening of a certain event." Reliance Life Insurance is an associate company of Reliance Capital Ltd., which along with its associates has acquired 100% shares in AMP Sanmar Life Insurance Co Ltd. Reliance Life Insurance, has a pan presence and a range of products catering to individual as well as corporate needs. A total of 16 products covering savings, protection & investment requirements. Vision : Empowering everyone live their dreams Mission : Create unmatched value for ever yone through dependable, effective, transparent and profitable life insurance and pension plans      Guiding Principles Customer Care and Satisfaction Corporate Governance Creativity and Innovation Competitiveness N EED FOR LIFE INSURAN CE  Protection of the interest of the faculty of the loss of income due to death of the breadwinner.  Provision for the education & marriage of children.  Post retirement income for self & dependents.  Special needs like loss of income due to disabilities, accidents, treatment of diseases, sickness etc.  To protect against inflation. Who Can B uy A P olic y? Any person who has attained majority and is eligible to enter into a valid contract can insure himself/herself and those in whom he/she has insurable interest. Policies can also be taken, subject to 26 Submitted by: - Rajendranath Behera Regd no:-0706275024 certain conditions, on the life of one's spouse or children. While underwriting proposals, certain factors such as the poli cyholder‟s state of health, the proponent's income and other relevant factors are considered by the Corporation. Insurance f or Women Prior to nationalization (1956), many private insurance companies would offer insurance to female lives wi th some extra premium or on restrictive conditions. However, after nationalization of life insurance, the terms under which life insurance is granted to female lives have been reviewed from time -to-time. At present, women who work and earn an income are treated at par with men. In other cases, a restrictive clause is imposed, only if the age of the female is up to 30 years and if she does not have an income attracting Income Tax. Medical and Non-Medical Schemes Life insurance is normally offered after a medical examination of the life to be assured. However, to facilitate greater spread of insurance and also to avoid inconvenience, Companies has been extending insurance cover without any medical exami nation, subject to certain conditions. With Profit and Without Profit Plan s An insurance policy can be 'with' or 'without' profi t. In the for mer, bonuses disclosed, if any, after periodical valuations are allotted to the policy and are payable along with the contracted amount. In 'without' profit plan the contracted amount is pa id without any addition. The premium rate charged for a 'with' profit policy is therefore higher than for a 'without' profit policy. Keyman Insurance Keyman insurance is taken by a business firm on the life of ke y employee(s) to protect the firm against f inancial losses, which may occur due to the premature demise of the Keyman. 27 Submitted by: - Rajendranath Behera Regd no:-0706275024 Tax Be nefits of Insurance The tax breaks that are available under our various insurance and pension policies are described below:  Life insurance plans are eligible for deduction under Sec. 80C.  Pension plans are eligible for a deduction under Sec. 80CCC.  Health insurance plans/riders are eligible for deduction under Sec. 80D.  The proceeds or withdrawals of our life insurance policies are exempt under Sec 10(10D), subject to nor ms prescribed in that section. Unit Linked Insurance Plan ULIPs have been selling like proverbial „hot cakes‟ in the recent past and they are likely to continue to outsell their plain vanilla counterparts going ahead. Earlier there were a gamut of traditio nal products, for instance Endowment Plans; Money back plans etc, then came the concept of Unit Link Insurance Plans, which today has caught the fancy of man y people. Unit Link plans work like a combination of Mutual Funds and Life Insurance, just like in Mutual Funds the In vestment here is also broken up into units based on the current NAV, these products are termed as Unit Linked plans because the Invest ment is broken up into units. For instance if you were to invest Rs10000, it would be broken into 3 components:  Charges- These are charges that the Insurance Company deducts from your premium, a major chunk of charges goes into paying commission to the Agent for sourcing the business.  Mortality- Expense- Mortality expenses are not as high as agent commission; they approxi matel y tend to be around Rs100/Lakh for a 30 yr old man. In case of a death claim of 1 lakh, the insurance company can make this claim with a mere Rs100 deducted from you, now this is made possible because mortality charge is deducted from e ver y customer who has invested in the plan. In this manner the Insurance Company collects a 28 Submitted by: - Rajendranath Behera Regd no:-0706275024 substantial portion and not ever y person dies at the same time leading to only a few claims in a single year.  Investment– After the above 2 deductions, the balance is invested on behalf of the customers, so in reality if the current NAV is 10, and a customer has paid a premium of 10,000, then allotment of units would be 10,000 – (charges + Mortality expense) current NAV . The same process is repeated in the following years when premiums are paid however in the following years the charges tend to be lower as insurance charge lesser after the 1 s t year. Mortality Cost however goes up with age but does not increase substantially for a younger person in his 20‟s or 30‟s as a result of which the money allotted towards In vest ment goes up. Unit Link plans give the flexibility to withdraw your investments earlier than Traditional Plans, but withdrawals can decrease the Insurance cover you have opted for. The other thing to keep in mind is the tax implication of making early withdrawals, from the returns point of view Unit link plans give you a chance of choosing your own In vest ment Options, which could be Debt, Equity or Balanced (combination or both) whereas traditional plans h ave primaril y invested in debt instruments like Govt. Bonds where the security is ensured but returns may not be ver y high. Unit link plans also give a greater amount of flexibility in terms of your policy not lapsing if premium in a year or two is not pai d. The other interesting option that these plans offer is the choice to decide your own Insurance cover in the beginning. Flexibility wise Unit Link plans definitely score over traditional plans; even they tend to be more transparent. Claims In case of Critical illness, Total and permanent disability or Death claim please log the claim and submit listed documents either directly to the Claims department, Chennai or at any of the nearest branch. Register the Claim under:  Death 29 Submitted by: - Rajendranath Behera Regd no:-0706275024  Critical Illness  Disability Survival or Maturity Benefits Survival Benefits : Survival benefits are those payments which are paid during the term of the policy. The frequency of payment ma y var y from product to product. Maturity Benefits: Payment made at end of the policy ter m as shown in policy documents . Do cu ment s requi red f or de ath cl ai m  Claim for m A: This form need to be filled by the nominee or claimant  Claim for m B - Certificate of last illness to be filled, signed and stamped by the doctor in attendance during the last illness of the deceased life assured.  Original Policy Documents  Original death certificate by Death and Birth Registrar  Death certificate by the doctor confirming cause of death  Nominees photo identification card copy attested by Insurance company official.  All hospital reports, if hospitalized during the last sickness  Post Mortem Report and Viscera report, if performed In case o f accident o r sui cide  First Information Report and final Police In vestigation Report  Panchnama /Inquest report  News paper report on the a ccident with photographs, if available Do c uments required fo r To tal & permanent disa bility clai m  Claim forms (A & B)  All hospital reports (certificate of diagnosis, attended physician report, discharge summar y, first consultation notes etc)  Original policy document  FIR and Police Investigation Report  News paper report on the accident  Panchanama or Inquest Report 30 Submitted by: - Rajendranath Behera Regd no:-0706275024 PLANS Individual Plans Produc t Name Rel i ance Au to mati c Inve stment Pl an Rel i ance Money Gu arante e P lan Re lianc e E ndowme nt Plan De sc riptio n A sma rt pla n whi c h ada pt s t o your c ha ngi ng ri sk profil e wit h i nc rea si ng a ge . Unde r t hi s pla n t he i nve st me nt ri sk i n t he i nve st me nt port foli o i s borne by t he polic yholde r. Thi s pl a n wil l k ee p you fi na nci all y pre pa red for all t he spec ial oc ca si ons i n your li fe . Rel i ance S pecial Thi s i nsura nce poli c y i s de si gned for pe ople who wi sh t o c ombi ne Endo wment Pl an sa vi ngs wi t h e xte nd ed se c urit y. Rel i ance Cash Flo w Pl an Rel i ance Ch ild Pl an Rel i ance Te rm Pl an Thi s i nsura nce poli c y i s de si gne d for t hose who ha ve a rec urri ng ne ed for rei nve st me nt i n busi ne ss or l ook for short -t e rm i nve st me nt c ha nne l s. Thi s i nsura nce polic y i s d e si gned for pe ople who wi sh t o sa ve mone y for a fut ure ti me. Thi s i nsura nce polic y i s de si gned for t hose who onl y wa nt li fe c ove r for t he prot ecti on of t hei r fa mil y, a nd d o not wi sh t o sa ve for t he mse l ve s. Thi s i nsura nc e poli c y i s de si gned for pe ople who d o not wi sh t o a vail of a ny be ne fi t s t he msel ve s but wi sh t o c reat e a n i mmedi ate e st ate t o protec t t hei r fa mil y by a vaili ng o f i nsura nc e c ove r on t hei r li fe at a ve ry l ow c ost. Re lia nce Ma rk et Re t urn Fund i s t he unit -li nked prod uct t hat he l ps you i nve st i n t he fi na ncia l ma rk et s i n a c ombi nati on of i nve st me nt i nst rume nt s of your c hoi ce. Re lia nce Golde n Yea rs Pl a n i s a fle xi ble pa cka ge t hat provid e s fre ed om of c hoi ce i n c hoosi ng t he t ype of i nve st me nt, l i fe c ove r, ve st i ng opt i ons suc h a s c ommut i ng a nd a nnuit y opti ons. Re lia nce Si mple Te rm Pl a n i s a c ost -e ffecti ve, pure li fe i nsura nce pl a n t ha t offe rs you c ompre he nsi ve a nd a fforda bl e c ove ra ge for a l i mi ted pe ri od of ti me t o sui t your need s. Re lia nce Speci al Term P la n i s a pure li fe i nsura nce pla n t ha t offe rs you c ompre he nsi ve a nd a fford a ble c ove ra ge for a li mit ed pe ri od of t i me t o suit your nee d s. Re lia nce C redit Guardia n Pl a n e nsure s t hat your housi ng l oa ns, pe rsona l l oa ns or e ve n out sta ndi ng c redi t ca rd bi ll s a re pa id i n t he e ve nt of unti mel y de mi se. Thus kee pi ng you a nd your fa mil y 31 Submitted by: - Rajendranath Behera Regd no:-0706275024 Rel i ance Whole Lif e P lan Rel i ance Market Re turn Pl an Rel i ance G olden Ye ars Pl an Rel i ance S imp le Te rm Pl an Rel i ance S pecial Te rm Pl an Rel i ance Credi t Gu ardi an Pl an prot ect ed from t he burde n a nd t he worry of de bt i n suc h a si t uati on. Rel i ance S pecial Credi t G u ard ian Pl an Rel i ance Conn ect 2 Li fe Pl an Re lia nce Spe cia l C redi t Gua rdi a n Pla n hel ps you a nd your fa mil y a void s suc h sit uat i ons by sec uri ng your ho usi ng l oa ns, pe rsonal l oa ns a nd e ve n c redit ca rd pa yme nt s. What ma ke s t he Pl a n spec ial i s t he fac t t hat on survi val at mat uri t y, a ll pre mi ums pa id for your ba si c pol ic y will be ret urned t o you. Re lia nce C onnect 2 Li fe Pla n hel ps you bui ld sec uri t y a nd sa vi ngs for a bette r t omorrow. Employee Benefit Plans Produc t Name Rel i ance G rou p Te rm A ssu ran ce P oli cy De sc riptio n Re lia nce Group Te rm Assura nce P oli c y i s a one ye a r Re ne wa bl e Te rm Assura nc e c ont ra ct. The be ne fit i s pa ya bl e on t he ha ppe ni ng of t he c onti nge nc y d uri ng one ye a r. At t he e nd of t he yea r, t he c ont rac t ma y be re ne wed. All e st a bli shme nt s wi t h a t lea st 10 full -ti me pe rma ne nt e mpl oyee s a nd t o whom t he Empl oyee 's P rovide nt Fund a nd Mi sc ella ne ous P rovi si ons Ac t, 1 952 a pplie s, ha ve a st at ut ory l ia bil it y t o subsc ri be t o Empl oyee 's De posit Li nked Insura nc e Sc he me (EDLI), t o provide for l i fe i nsura nce for al l t he i r e mpl oyee s. A gra t uit y poli c y t hat re fle ct s your c ompa ny's i d e nti t y a nd whi c h hi ghli ght s t he val ue of t he be ne fi t s you provid e t o your e mpl oye e s. Rel i ance ED LI S che me Rel i ance G rou p G ratu ity Pol icy Rel i ance G rou p A supe ra nnua ti on poli c y t ha t reflec t s your c ompa ny's id e nti t y Su peran nu atio n P oli cy a nd whi c h hi ghli ght s t he va l ue of t he be ne fit s you provid e t o your e mpl oye e s. 32 Submitted by: - Rajendranath Behera Regd no:-0706275024 Fundamentals of General Insurance companies are business houses. The product they sell is financial protection. To succeed and survive, they must cover their costs, which include payments to cover the losses of policyholders, as well as sales and administrative expenses, taxes and dividends. Insurance companies have two sources of income for covering these costs: premium and investment income. The premium are collected on a regular basis and invested in Government Bonds, Gift stoc ks, mutual funds, real estates and other conservative avenues. However, investment income depends on market conditions, interest rates, economy etc and vari es from year to year. Because of the uncertainty associated with the investment income, insurance companies must generate enough income for m premium to cover the bulk of their expenses. The primary function of insurance is to provide protection against financial losses caused by unforeseen events. This protection is available to individuals, businessmen and large companies alike. Types of General Insurance Health  Individual Mediclaim  Group Mediclaim  Reliance Health Wise Policy Personal Accident  Personal Accident  Group Personal Accident Fire  Standard Fire and Special Perils  Consequential Loss (Fire)  Industrial All Risks Engineering  Erection All Risks/Storage -cum-Erection  Contractor‟s All Risks  Contractor‟s Plant and Machinery 33 Submitted by: - Rajendranath Behera Regd no:-0706275024     Machinery Breakdown Insurance Machinery Loss of Profits Insurance Boiler and Pressure Plant Insurance Electronic Equipment Insurance Marine  Marine Cargo Insurance Mot or  Private Car Comprehensive Liability  Directors and Officers Liability  Public Liability (Act)  Public Liability  Product Liability  Professional Indemnity  Workmen‟s compensation Miscellaneous  Industry Care  Commercial Care  Office Package  Fidelity Guarantee  Burglary and Housebreaking  Money Insurance  Householder‟s Package  Shopkeeper‟s Package Travel     BASIC    Individual and Family Asia Student Corporate FEATURES Hospitalization Expenses Daycare Treatment Domiciliary Hospitalization 34 Submitted by: - Rajendranath Behera Regd no:-0706275024     Pre and Post Hospitalization Coverage of Pre-Existing Diseases Critical Illness Cover Donor Expenses VALUE ADDED FEATURES  Expenses of accompanying person at the Hospital  Local Road Ambulance Services  Recover y Benefit  Cost of Health Check up  Nursing Allowance  Hospital Daily Allowance POLICY FEATURES  Income Tax Benefit  Family Floater ( 1, 1+1, 1+2, 2+2 )  Sum Insured  Pre-insurance Health Check up  Option in Policy Duration ( 1 & 2 years )  Renewal Discount  Cashless Facility (Through Third Party Administrators - TPA)  Age Slabs 35 Submitted by: - Rajendranath Behera Regd no:-0706275024 Plan Details (Source : we b) 36 Submitted by: - Rajendranath Behera Regd no:-0706275024 OBSERVATION & FINDINGS To study the sales and distribution management and improve the Customer Acquisition Process by analyzing the consu mer behavior, response and mindset towards the product and services the company offers. OBJECTIVE  To find the market potential and market penetration of Reliance Money product offerings in Bhubaneswar.  To collect the real time information about preference level of customers using Demat account and their inclination towards various other brokerage firms e.g. Indiabulls, Sharekhan, Indiainfoline, Religare, Alankit , Unicon.  To expand the market penetration of Reliance money.  To provide pricing strategy of competitors to fight cut throat competition.  To increase the product aw areness of Reliance money as single window shop for investment solutions. METHODOLOGY We were supposed to operate from reliance money Nehru place branch. We were made aware about all the p roducts Reliance Money was providing with a more stress on their core product i.e. Demat account. TARGETS The time duration of the project is 2 months starting from 1 s t July and ending on 30 th August. We were given targets to be achieved during training months. The targets of each month were:  3Demat Accounts  1SIP or Mutual Fund worth Rs 10,000  General Insurance Premium worth Rs50 ,000  Life Insurance Premium worth Rs1,00,000 I was supposed to use the database provided by the company to make cold calls or by di rectly meeting people to get new leads 37 Submitted by: - Rajendranath Behera Regd no:-0706275024 The questionnaire used is attached in appendix A.1 While making cold calls, we need to have:  Good Communication Skills (Voice quality is clear and articulate)  Persistent and able to bounce back from rejection  Good organizational skills.  Ability to project a telephone personality (Enthusiasm, friendliness)  Flexibility: can adapt to different types of clients and new situations. Fig6.1 T he Construc tive Fac tors of Te le c alling Using a good database is very essential. “Eighty percent of our business comes from 20 percent of our customers" is a frequent statement at any sales convention. There's hardly a sales executive who is not aware of the 80/20 rule”. While talking to customers, I analyze their needs. Whether they want to go for investment purpose or insurance or both. Suggest them the plan that best suits them. If they agree to it then either we send across the agents to close the deal or close it themselves . 38 Submitted by: - Rajendranath Behera Regd no:-0706275024 Fig6.2 T he Custome rs Sale s Cyc le Problems faced while selling products:  Customer dissatisfi ed with the services.  People fear that Reliance Money Being a Private company and a new entrant may be able to sustain or not.  Insurance means LIC for people.  Past experience, word of mouth.  Misguidance by agents.  People do not want insurance products.  Lack of knowledge and awareness about general and life insurance.  People risk appetite is very low, so they are afraid of mutual fund as well.  People relate the problems of mobile phones of Reliance Communication with Reliance Money. 39 Submitted by: - Rajendranath Behera Regd no:-0706275024 SWOT ANALYSIS Weakness  Inexperienced Staff  Low awareness due to lack of advertisement.  Lack of loyal clientage  Developing product. Opportunity  Untapped Market  Increased spending power  Changing Mindset of Customers  Unpredictable Sensex Strength  Co-operative and Experienced Branch Managers  Good Database  Reliance Brand  Low pricing Threat  Reach  Stiff competition from existing players in the market  Better products Customer Acquisition Process  Educate the prospects on the products and services.  Customize the approach to each of the different customers involved in the sales process.  Establish a knowledge base for sales people, resellers and partners.  Ramp up the new salespeople more quickly and keep them on road.  Track the prospects as they move through the sales process.  Har vest oth er types of information from your market to help the company close business more quickly. The data of the prospects can be used for research and development purpose.  Enabling the consistent flow of infor mation to the customer and encouraging feedback from them.  Helping the customers do the Financial Planning for future. MY RESPONSIBILITY ORGANISATION: I worked with Reliance money with a profile of financial advisor. This profile offers me to understand the need of the customer 40 Submitted by: - Rajendranath Behera Regd no:-0706275024 and provide them the best dea l possible with maximization of the profit, both for the company as well as for the customer. The most important aspect for the role of financial advisor is trust. So for fulfillment of the targets one needs to:  Capitalize on old and loyal clientage which can be building slowly by advising people in the best possible way.  Generating new leads through various activities. Generation of leads: Since I was new in this field so I had to start from the scratch and generate new leads to sustain in the market. Cold calling is one of the trusted ways of getting to the customers without meeting them. Although the rate of conversion remained ver y less. For cold calling the quality and accent remains a ver y i mportant criterion. This activity gave me mixed results. I of ten got success and generated many leads through it but it also landed me in awkward position where the customer were in different mood and made us hear words for which a marketer should be always prepared to hear. Corporate calls always remained more diff icult to crack with respect to retail sector. The corporate were the most difficult and most tempting to get the business from. It took me one day to crack Hi -tech Gears. At Reliance money after getting the product knowledge in the first week at the branch I was also allotted distributor to work with. In the initial phase I was accompanied by more experienced staff. After I became known to the market and procedure I started attending calls alone only. After the third week my per for mance also improved and I was able to get close to the targets, though it looked difficult to achieve in the beginning. To get awareness of the every product I attended diversified calls. This helped me to i mplement cross selling to get better results. Since the reliance money core product is Demat account more stress was given over this. Demat account was also the most tempting of all the products as it was difficult to convince the customer for the 41 Submitted by: - Rajendranath Behera Regd no:-0706275024 reliance Demat as it was new and with many limitations. It was always difficult to convince on 1 paisa, as it wasn‟t mentioned anywhere in ink. LIMITATIONS: 1. Cold Calling  Voice and accent plays a major role.  The right time to call a customer cannot be decided, as the customer may in a different mood a t the time of calling.  Time consuming  Less success rate 2. Corporate  Time consuming  Contacts with higher authorities play a major role LEARNINGS  To get initial success in this field is very difficult. Although the business generation becomes easier with time as we serve more people who then get added up in the loyal clientage. Thus time and service are two most factors to get in this field.  Also the corporate remains a very i mportant segment which gets business in bulk but retail cannot be ignored which makes your business ticking.  Customer remains in the pivotal position. 42 Submitted by: - Rajendranath Behera Regd no:-0706275024 Findings 1. Preference of Investment Fig7.1 Result of Preference of Investment Interpretation: This shows that although the mutual funds market is on the rise yet, the most favored investment continues to be in the Share Market. So, with a more transparent system, investment in the Stock Market can definitely be increased. 2. Awareness on Online Share Trading Fig7.2 Result of Awareness of Online Share Trading Interpretation: With the increase in cyber education, the awareness towards online share trading has increased by leaps and bounds. This awareness is expected to increase further with the increase in Internet education. 43 Submitted by: - Rajendranath Behera Regd no:-0706275024 3. Awareness of Reliance Money as a Brand Fig7.3 Result of Awareness of Reliance money as a Brand Interpretation: This pie-chart shows that reliance money has a reasonable amount of Brand awareness in terms of a premier Retail stock broking company. This brand image should be further leveraged by the company to increase its market share over its competitors. 4. Awareness of Reliance Money Facilities Fig7.4 Result of Awareness of Reliance money Facilities Interpretation: Although there is sufficiently high brand equity among the target audience yet, it is to be noted that the customers are not aware of the facilities provided by the company meaning thereby, that, the company should concentrate more towards promotional tools and increase its focus on product awareness rather than brand awareness. 44 Submitted by: - Rajendranath Behera Regd no:-0706275024 5. Satisfaction Level among Customers with current broker Fig7.5 Result of satisfaction level among customers with current broker Interpretation: This pie-chart corroborate the fact that Strategic marketing, today, has gone beyond only meeting Sales targets and generating profit volumes. It shows that all the competitors are striving hard not only to woo the customers but also to make them Brand loyal by generating customer satisfaction. 6. Frequency of Trading Fig7.6 Result of Frequency of Trading Interpretation: Inspite of the huge returns that the share market promises, we see that there is still a dearth of active traders and investors. This is because of the non – transparent structure of the Indian share market and the skepticism of the target audience that is generated by the volatility of the stock market. It requires efficient bureaucratic intervention on the part of the Government. 45 Submitted by: - Rajendranath Behera Regd no:-0706275024 7. Percentage of earnings invested in Share Trading Fig7.7 Result of percentage of earning invested in share trading Interpretation: This shows that people invest only upto 10% of their earnings in the stock market, again reiterating the volatile and non-transparent structure of the Indian stock market. Hence, effective and efficient steps should be undertaken to woo the customers to invest more in the lucrative stock market . 46 Submitted by: - Rajendranath Behera Regd no:-0706275024 CONCLUSION AND RECOMMENDATIONS RECOMMENDATIONS Based on the findings of our project we would like to suggest the following: After sales services and follow up calls are important for getting new references so trained telesales should be appointed for this purpose whose sole work should be to make feedback calls.  Reliance is having too many financial products right from Demat account to General Insurance and not all the salespeople are familiar with each and every product so the work force should be segregated each group dealing in a specific product and the sales target should be given likewise.  While interacting with the investors I found that most of the customers are unaware about the Mutual fund. Some of the people look upon mutual funds and equity trading as gambling. Thus a mutual fund awareness program can help to increase the penetration of mutual funds in the market.  Reliance should declare in black ink that they will charge just 1 paisa per transaction. People tend to think that there must be some hidden charges.  Rs750 account opening charges are too high when targeting a corporate so the company should be flexible on this amount.  Reliance should provide periodic training for updating the product knowledge of various financial advisors.  Company should have a scheme of rewards and recognition to employees and the field persons to boost their motivation. KEY ISSUES AND CONCLUSIONS Based on the above SWOT analysis and study of the available data I have come to the following conclusions: HUGE POTENTIAL:  All though relatively new entrants in the market, Reliance is slowly but surely gaining a strong hold because it is finally able to grasp the investment climate in Delhi. Secondly the branch managers at all the 47 Submitted by: - Rajendranath Behera Regd no:-0706275024 branches are very knowledgeable with a lot of experience in the financial markets so under their leadership can definitely expand its base  The entire workforce consists of mostly youngsters, which means they can be encouraged and motivated to do good work because they have a long way to go and most of them are eager to climb the ladder.  Right now Reliance is at its nascent stage and will surely grab the major market under its belt very soon like in other fields. Huge investments taking place:  The Stock Market has been very buoyant until now especially in the past 3 years. This particular trend is very favorable because a soaring SENSEX means higher returns, which encourages the investors to invest their money in the market. Although in the past 3 months the market has shown very unpredictable trend and has already lost over 1000 points.  So in order to make the best the only thing required is to recruit more field staff who should be trained in a proper way to get better results.  In case of insurance, it requires push selling because people always associate it with emergencies and unpleasant situations like death and they don‟t want to think about such situation let alone prepare for them, which means it requires a lot of conviction on part of the executives. Large untapped market:  People have just opened up to the idea of ULIPs because till now they knew only two kinds of insurance plans, endowment and term plans so the concept of high returns with protection is very new to them and slowly and slowly these are becoming popular so there is a huge market waiting to be tapped.  In the past few years there has been a tremendous inflow of funds in the Indian market which has lead to the sky rocketing SENSEX. In fact there has been a tremendous response from the investors not only in shares but mutual funds as well. The Rs5700Cr infused in the market through the Reliance Equity mutual Funds is an example of the growing trust of investors who earlier shied from such investments due to stock market 48 Submitted by: - Rajendranath Behera Regd no:-0706275024 fiascos like the Harshad Mehta scam or the US64 disaster in which investors lost huge amounts of money as well as their trust in financial instruments.  With the FDI limits being relaxed, a lot of avenues will open up in the insurance sector and insurance companies are expected to come up with new plans with a great deal of customization and flexibility. 49 Submitted by: - Rajendranath Behera Regd no:-0706275024 QUESTIONNAIRE Q1. In which of these Financial Instruments do you invest into? Shares Mutual Funds Bonds Derivatives Q2. Are you aware of online Share trading? Yes No Q3. Heard about Reliance money? Yes No Q4. Do you know about the facilities provided by Reliance money? Yes No Q5. With which company do you have your DEMAT account? Reliance money ICICI Direct Kotak Mahindra India Bulls Others (please specify) Q6. What differentiates your Share trading company from others? (in regards of brokerage, satisfaction, services, products ) Q7. Are you currently satisfied with your Share trading company? Yes No Q8. How often do you trade? Daily Weekly Monthly Yearly Q9. What percentage of your earnings do you invest in share trading? Up to 10% Up to 25% Up to 50% a. b. c. d. e. Above 50% Reliance money ICICI Direct India Bulls Kotak Mahindra Others (Please specify) Q13. How do you rate these share trading companies? 1. 4. 2. 5. 3. Q14. What more facilities do you think you require with your DEMAT account? 50 Submitted by: - Rajendranath Behera Regd no:-0706275024 Personal Information Name: Age: Sex: Phone No: Occupation: Male Female 51 Submitted by: - Rajendranath Behera Regd no:-0706275024 LIST OF FIGURES FIGURE TITLE Investment Alternatives Concept of mutual fund Reliance Tax Saver (ELSS) Fund Reliance Systematic investment plan Reliance Growth fund – an open ended equity growth scheme The Constructive Factors of Tele calling The Customers Sales Cycle Result of Prefence of Investment Result of Awareness of Online Share Trading Result of Awareness of Reliance money as a Brand Result of Awareness of Reliance money Facilities Result of satisfaction level among customers with current broker Result of Frequency of Trading Result of percentage of earning invested in share trading Result of Effectiveness of data Result of Average no of Days to Complete process PAGE 4 13 23 23 24 1.1 4.1 4.2 4.3 4.4 6.1 6.2 7.1 7.2 7.3 7.4 7.5 45 46 52 53 53 54 55 7.6 7.7 55 56 7.8 7.9 57 59 52 Submitted by: - Rajendranath Behera Regd no:-0706275024 BIBLOGRAPHY  Agarwal, J.D. "Security Analysis & Portfolio Management: A Review, Finance India, Vol. II No. 1, March 1989.  Bhatt, V. V. "An Appraisal Of Some Recent Estimates Of Savings and Investments", ICRNI, Vol. 5, 1963.  Douglas A. Hayes and W. Scott Bauman "Investments: Analysis and Management" III Ed., 1976, MacMillan  Malhotra, Naresh "Marketing Research and Applied Orientation" IV Ed., 2005, Pearson REFERENCES  www.mutualfundsindia.com  www.easymf.com  www.amfiindia.com  www.google.com  www.moneycontrol.com  www.valueresearchonline.com  www.nseindia.com  www.bseindia.com 53 Submitted by: - Rajendranath Behera Regd no:-0706275024