CHAPTER: 1 INTRODUCTION Portfolio Management is a science for managing the varying combination of Portfolio elements.

These elements are the subcomponents, of which the larger portfolio is formed; say, the elements may be plans for a portfolio of plans, or strategies for portfolio of strategies, or securities for a portfolio of securities, and so on. In general, we may say that the elements of a portfolio are different forms of assets and in essence, portfolio management is managing these assets. We shall henceforth refer to portfolio management as the management of these assets. In particular, the scope of this report has been focused to handle and discuss securities as the typical sub-component of portfolio of assets. The objectives of the project report are: - To find out the awareness level of Investors about various parameters of Portfolio Management Schemes. Particularly, the rate of return to the investor. - To investigate and determine the various strategies and practice adopted by the institution offering Portfolio Management Services and the resultant satisfaction level of investors

Portfolio management service is a professional service rendered by the experts for management of portfolio of others. It may be an individual portfolio or an institutional portfolio. The portfolio management service is an advisory service which involves the advice regarding the worthwhileness of any particular investment or it is an 1

advice to buy or sell the securities. It also involves continuing relationship with client to manage investments with or without discretion for the client as per his requirements. Portfolios are built to suit the return expectations and the risk appetite of the investor. It is a combination of assets or securities which meet the level of return expected provided the investor is willing to meet the associated risk. Thus, building a portfolio which meets both the return expectations and the risk taking ability of the investor is not possible

In the present day, the financial markets are quite complex, with each investor having his or her own specific financial needs based on the financial goals and risk appetite. But ultimately, every investor aims at maximizing returns on his/her investment, along with capital protection. This calls for professional management of investments for attaining investment objectives.

By definition, portfolio management is nothing but allocation of assets that is the process of deciding the distribution pattern of an investors wealth among varying asset classes, which may or may not be in different countries, for the purpose of investment. The process depends on the level of risks that the investor is ready to take as well as her or his investment constraints and goals.

Keeping in mind the stock markets unpredictable nature, there is a requirement of being equipped with strong research and expertise for 2

taking the right decision. Portfolio management is quite a challenging task as it requires one to strike a balance between the restricted choices for ensuring adequate earnings with adequate safety.

An investors needs and requirements keep on changing with his or her age, financial status and future plans. Additionally, the various stages in an investors life cycle affects his or her return and risk preferences.

Since management of investments in equity involves factors like experience, right mindset, knowledge, time and constant tracking of share market happenings, a person expert in this job, called a portfolio manager, is roped in. He/she advises, manages as well as administers the funds and securities on behalf of the client.

Hence, Portfolio Management Services refer to the science and art of taking decisions regarding investment policy and mix, aligning investments and objectives, asset allocation for institutions and individuals, and balancing performance and risk. This specialized service offers numerous customized investment strategies for capitalizing market opportunities.

ABOUT THE REPORT: 1) Title of the study: The present study is title as, A PROJECT REPORT ON PORTFOLIO MANAGEMENT SERVICES and it was done with special reference to KOTAK MAHINDRA BANK. 2) Objective of the study:

a) The project helps in understanding the basic concept of financial planning, and also how to recommend different investment product to different investors according to their goals and requirement. b) With help of this project, I will able to know the role of bank in portfolio management. c) This project helps to know practical aspect of PMS and make best use in personal investment in future.

3) Limitation:

All the limitation of case study is applicable here also in this project. a) Some of the investor might not be willing to disclose all the information due to some reason or other.

4) Data and methodology: For the purpose of present study both primary secondary data were used. Primary data 1) Directly contact with the organization: I have visited to kotak bank (mulund branch) to collect the information about kotak PMS service. Secondary data: 1) Websites and search engines: The internet, being the largest sources of information and knowledge, proved to be biggest help in data collection. The website of kotak bank provides lots of information.

2) Book available: The data was also collected from the book with us and the brochures also proved very useful.

PRESENTATION OF THE STUDY:

Chapter I: Introduction Chapter II: Profile of bank Chapter III: Theoretical view Chapter IV: Case study Chapter V: Conclusion 5

CHAPTER :2 PROFILE OF BANK

PROFILE OF KOTAK MAHENDRA BANk

Kotak Mahindra Group: Kotak Mahindra is one of India's leading banking and financial services organizations, offering a wide range of financial services 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 sector. The group has a net worth of over Rs. 100.6 billion and has a distribution network of branches, franchisees, representative offices and satellite offices across cities and towns in India, and offices in New York, London, San Francisco, Dubai, Mauritius and Singapore servicing around 8 million customer accounts. Kotak Mahindra is one of India's leading banking and financial services groups, offering a wide range of financial services that encompass every sphere of life.

DEVELOPMENT OF KOTAK GROUP

SUBSIDIARY:

1) Kotak mahindra bank ltd 2) Kotak mahindra old mutual life insurance ltd 3) Kotak securities ltd 4) Kotak Mahindra Capital Company 5) Kotak Mahindra prime ltd 6) Kotak international business 7

7) Kotak Mahindra asset management company ltd 8) Kotak private equity group 9) Kotak realty fund

Corporate responsibility: Kotak Mahindra views Corporate Social Responsibility as an investment in society and in its own future. Kotak uses the power of its human and financial capital to help in transforming communities into vibrant, desirable places for people to live. The group leverages its core competencies in three areas:

Sustainability an integral part of all Kotak Mahindra Group activities is to be consistently responsible to shareholders, clients, employees, society and the environment.

Economic Development by helping people achieve their financial goals, Kotak strengthens the fabric of communities and helps them overcome unemployment and poverty to help them shape their future.

Doing My Bit a growing number of employees are committed to civic leadership and responsibility with the support and encouragement of the Kotak Group. A number of employees have been involved in strengthening communities through voluntary work, payroll giving and management inputs. 8

Kotak securities:

Kotak Securities is one of the largest broking houses in India with a wide geographical reach. Kotak Securities operations include stock broking and distribution of various financial products including private and secondary placement of debt, equity and mutual funds. Kotak Securities operate in five main areas of business: Stock Broking (retail and institutional) Depository Services Portfolio Management Services Distribution of Mutual Funds Funds

Distribution of Kotak Mahindra Old Mutual Life Insurance Ltd

products

KOTAK MAHINDRA BANK

Established in 1985, the Kotak Mahindra group has been one of India's most reputed financial conglomerates. It was previously known as Kotak Mahindra Finance Limited, a non-banking financial company. In February 2003, Kotak Mahindra Finance Ltd, the

group's flagship company was given the license to carry on banking business by the Reserve Bank of India (RBI). This approval created banking history since Kotak Mahindra Finance Ltd. is the first nonbanking finance company in India to convert itself in to a bank as Kotak Mahindra Bank Ltd. Today, kotak Mahindra bank one of the

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fastest growing bank and among the most admired financial institutions in India. As one of the leading players in financial solutions. Kotak Mahindra Bank Ltd is a one stop shop for all banking needs. The bank offers personal finance solutions of every kind from savings accounts to credit cards, distribution of mutual funds to life insurance products. Kotak Mahindra Bank offers transaction banking, operates lending verticals, manages IPOs and provides working capital loans. Kotak has one of the largest and most respected Wealth Management teams in India, providing the widest range of solutions to high net worth individuals, entrepreneurs, business families and employed professionals. Kotak Mahindra has a network across 300 cities in India employing around 20,000 people. The net worth of the group is Rs. 3100 crore and it serves around 2.2 million customers. It also has offices in London, New york, Dubai and Mauritius. HISTORY AND DEVELOPMENT OF BANK: 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. The customer base of this group is more than 14 lakh. 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.

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It bought stressed assets from a number of banks, at full loan value of Rs 1,000 crore in 2005.In January 2011, the bank reported a 32% rise in net profit to Rs188 crore for the quarter ended December 2010 against Rs. 142 crore the corresponding quarter last year. Kotak Mahindra bank also reached the top 100 most trusted brands of India in The Brand Trust Report published by Trust Research Advisory in 2011.

IN 2003 - The proposal of changing the name from 'Kotak Mahindra Finance Ltd' to 'Kotak Mahindra Bank Ltd' and the proposal to change the Authorized capital from 100,00,00,000 divided into 10,00,00,000 equity shares of Rs.10 each has been approved by the company shareholders. - In same year RBI has granted license to Kotak Mahindra Finance Ltd to embark on its banking business. - Kotak Mahindra Bank has received a lot of interest from portfolio investors, private equity investors and potential strategic investors - Kotak Mahindra Bank has entered into an ATM sharing agreement with UTI Bank, which would allow KMB's customer free access to around 800 ATM's. - Kotak Mahindra bank has unveiled several home finance products options which includes Home loan, Home equity Loan, Home loan transfer and Home improvement loans.

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IN 2004 - Kotak Mahindra Bank inks pact with Reuters - Kotak Mahindra Bank sets up branch in Surat - Kotak Mahindra Bank Limited has informed that the Bank's equity shares will be delisted from The Stock Exchange, Ahmedabad with effect from January 20, 2004.

IN 2005 - Kotak Mahindra Bank purchases stressed assets worth Rs 1,000 cr - Kotak Bank join hands with IndianNGOs.com - Kotak Mahindra Bank invests Rs 25 cr in BFW

IN 2006 - Kotak Mahindra joins hand HDFC Bank to share ATMs. - Kotak Mahindra Bank sets up branch in Valsad

IN 2007 - Kotak Mahindra Bank Launches Home Banking, Improves Banking Experience - Kotak Mahindra Bank Launches Salary 2 Wealth - Kotak Mahindra Bank Launches Kotak Gold Debit Card - Kotak Mahindra Bank Ties up with Taxshax.com, Simplifies Filing of IT Returns

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IN 2008 - Kotak Mahindra Bank launched credit cards for its customers.

IN 2009 - Kotak entered into tie up with Russia's top investment bank - Kotak Mahindra Bank Wins IT Team of the Year for 3rd Consecutive Time at the Banking Technology Awards 2008

REACH:

Kotak Mahindra Bank has over 323 branches and a customer account base of over 2.7 million. Spread all over India, not just in the metros but in Tier II cities and rural India as well, we are redefining the reach and power of banking.

AWARDS:

At Kotak Mahindra Group we take a client-centric view and constantly innovate to provide you with the best of services and infrastructure. Banks have regularly received accolades that stand testimony to bank success in this endeavor. Some of our recent achievements are: ICAI Award - Excellence in Financial Reporting under Category 1 - Banking Sector for the year ending 31st March, 2010 14

Asia money - Best Local Cash Management Bank 2010 IDG India - Kotak won the CIO 100 'The Agile 100' award 2010 IDRBT - Banking Technology Excellence Awards Best Bank Award in IT Framework and Governance Among Other Banks' - 2009 - Banking Technology Award for IT Governance and Value Delivery, 2008 IR Global Rankings - Best Corporate Governance Practices - Ranked among the top 5 companies in Asia Pacific, 2009 Finance Asia - Best Private Bank in India, for Wealth Management business, 2009 Kotak Royal Signature Credit Card - Was chosen "Product of the Year" in a survey conducted by Nielsen in 2009 IBA Banking Technology Awards - Best Customer Relationship Achievement - Winner 2008 & 2009 - Best overall winner, 2007 - Best IT Team of the Year, 4 years in a row from 2006 to 2009 - Best IT Security Policies & Practices, 2007

VISION:

1) The Global Indian Financial brand:

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The customers will enjoy the benefit ofdealing with global Indian brand that best understand their need and delivers customized pragmatic solution 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 customer will be uniquely Indian. Bank will more responsible for their customers savings. 2) MOST PREFERRED EMPLOYER IN FINANCIAL SERVICE: A cultural of empowerment and spirit of enterprise attracts bright minds with an entrepreneurial streak to join with bank. Working with home-grown professionally-managed company, which has partnership with international leaders, gives our people a perspective that is universal as well as unique. 3) T HE MOST TRUSTED FINANCIAL SERVICES COMPANY The bank will create an ethos of trust across all our constituents. Adhering to high standard of compliance and corporate governance will be an integral part of building trust.

4) VALUE CREATION: Value creation rather than size along will be our business driver.

BOARD OF DIRECTOR:

NAME

DESIGNATION

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Mr. K. M. Gherda Mr. Udya Kotak

Executive Chairman Executive vice chairman and Managing Director

Mr. Anand Mahindra

Co-Promoter of Kotak Mahindra Bank and Managing Director of Mahindra and Mahindra

Mr. Cyril Shroff

Co-promoter

Mr. Pradeep N Kotak

Agri Division of Kotak and company limited

Mr. Shivaji Dam

Managing Director Kotak Mahindra old mutual life insurance limited

Mr.C. Jayaram

Executive Director

Mr. Dipak Gupta

Executive Director

Dr. Shankar Acharya

Director

REGISTERED OFFICE:

Kotak Mahindra Bank Limited 36-38A, Nariman Bhavan, 227, Nariman point, 17

Mumbai 400 021 Tel +91 22 6658 1100 Fax + 91 22 2285 5577

Customer care services:

24 hours customer care toll free: 1800 102 602

WEBSITE:
www.Kotak.com

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CHAPTER: 3 THEROTICAL VIEW Portfolio management: Portfolio means combined holding of many kinds of financial securities. Such as shares, debenture, government bonds, units and other financial assets. Making a portfolio means putting ones eggs in different baskets with varying elements of risk and returns. The object of portfolio is to reduce risk by diversification and maximize gain. Portfolio management is also known as investment management Objectives of Portfolio Management There are seven objectives of portfolio management: 1) Return

Portfolio management is technique of investing in securities. The ultimate object of investment in the securities is return. Hence, the first objective of portfolio management is getting higher return.

2) Capital Growth

Some investors do not need regular returns. Their object of portfolio management is that not only their current wealth is invested in the securities; they also want a channel where their future incomes will also be invested. 19

3) Liquidity

Some investors prefer that the portfolio should be such that whenever they need their money, they may get the same.

4) Availability of Money at Pre-decided Time

Some persons invest their money to use it at pre-decided time, say education of children, etc. Their objective of portfolio planning would be that they get their money at that time.

5) Favorable Tax Treatment

Sometimes, some portfolio planning is done to obtain some tax savings.

6) Maintaining the Purchasing Power

Inflation eats the value of money, i.e., purchasing power. Hence, one object of the portfolio is that it must ensure maintaining the purchasing power of the investor intact besides providing the return.

7) Risk Reduction through Diversification

It is the perhaps most important object of the portfolio management. All other objectives (mentioned above) can be achieved even without 20

portfolio, i.e., through investment in a single security, but reduction (without sacrificing the return) is possible only through portfolio.

If we invest in a single security, our return will depend solely on that security; if that security flops, our entire return will be severely affected. Clearly, held by itself, the single security is highly risky. If we add nine other unrelated securities to that single security portfolio, the possible outcome changes if that security flops, our entire return wont be as badly hurt. By diversifying our investments, we can substantially reduce the risk of the single security. Diversification substantially reduces the risk with little impact on potential returns. The key involves investing in categories or securities that are dissimilar.

The two basic principles of effective portfolio management : (i) (ii) Invest on the basis of fundamentals of the security. Review and update the portfolio regularly. The object of the portfolio management is to provide maximum return on the investments by taking only optimum risk. To achieve these objectives, the portfolio manager should invest in diversified securities and see that the coefficient of correlation between these securities is as less as possible (only then the portfolio will be able to reduce the risk). This is the foundation of portfolio management. The portfolio manager should follow the 21

above-mentioned principles to further strengthen his targets of higher returns and optimum risk.

The first principle suggests that investment should be made only in those securities which are fundamentally strong. The strength of a security depends upon three strengths: (a) Strength of the company, (b) Strength of the industry, and (c) Strength of the economy. The strength of the company depends upon various factors like
I. II. III. IV. V.

Intelligent, dedicated and motivated human resources, Having positive values and vision, Policy regarding encouraging R&D Integrity of promoters, and Long range planning for profits.

The fundamentals of the industry depend upon the product consumer surplus the product provides to its users, various possible alternative uses of the product, and availability (rather we should say non-availability of the substitutes). Economy, here, means national economy. By fundamentals of the economy we mean recession/boom, tax policy, monetary policy, budgetary policies, stability of government, possibility of war and its impact on economy, closed/open economy and finally the governments attitude towards business houses. The portfolio manager should see that most of the fundamentals are favorably placed.

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The second principle suggests that the portfolio should be reviewed continuously and if need be, revised immediately. The Fundamentals of the company, industry and economy keep on changing. Accordingly, the portfolio should be revised according to emerging situations. For example, in case of monsoon failure, investments should move from fertilizer companies to irrigation companies, in case some sick-minded person takes over as CEO of the company, perhaps desired step will be to disinvest the securities of the company, in case cheaper substitutes have emerged for any industrys product, better move to some other industry, etc. Two more points regarding the second principle (i) Sometimes, after making the investment in some securities,

portfolio manager realizes that his decision of investing in that security is wrong, he should not wait for happening of some event which will make his decision as a right one (if there is some loss on that investment, he should not even wait for breakeven); rather he should move immediately liquidate his position in that security. [Remember that no portfolio manager has ever made 100 per cent correct decisions (Warren Buffet is perhaps exception) (ii) Do not bother much about transaction cost related to reshuffling

of the portfolio, consideration of such small costs generally result in heavy losses or foregone opportunities of earning profit.

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7 Principles of Portfolio Management :

1 Emphasize a Disciplined Process to eliminate response to shortterm market volatility. 2. Deliver Great Capability to all investment management solutions. 3. Align your investment strategy with your Objectives and Risk Tolerance. 4. Emphasize the importance of Asset Allocation 5. Implement a plan using the most Appropriate Investment Strategies. 6. Monitor and Adjust your portfolio on an ongoing basis 7. Assess your Progress regularly.

PORTFOLIO MANAGEMENT SERVICES:

Portfolio management service (PMS) is a type of professional service offered by portfolio managers to their client to help them in managing their money in less time. Portfolio managers manage the stocks, bonds, and mutual funds of clients considering their personal investment goals and risk preferences. In addition to money, the portfolio managers manage the portfolio of stocks, bonds, and mutual funds. Portfolio management service is strictly for investors having loads of 24

money but not have enough time and expertise to manage the portfolio. You will get a personalized fund manager and can call up to discuss at any time The business of portfolio management has never been an easy one. Juggling the limited choices at hand with the twin requirements of adequate safety and sizeable returns is a task fraught with complexities.

Given the unpredictable nature of the share market it requires solid experience and strong research to make the right decision. In the end it boils down to make the right move in the right direction at the right time. That's where the expert comes in.

PORTFOLIO MANAGEMENT SERVICE

A group of experts design and manage your equity portfolio suiting risk-return Appetite. Benefit of Diversification and an element of customization No Settlement hassles separately held securities Greater Flexibility Efficient switch between cash and equity positions Portfolio designing is done as per market conditions and market considerations Customized Performance Reporting 25

 100% Transparency, managed under SEBI license and regulations Competitive Fee Structure So investments under portfolio management are risk diversified and research oriented.

Discretionary Portfolio Management

The Portfolio Manager undertakes the entire management of portfolio. Starting from buying and selling of securities to reshuffling and safe custody is undertaken. Investors involvement will be minimum thereby allowing investor the flexibility to attend to their personal matters, while the Portfolio Manager takes care of investors investments and keeps it posted on a regular basis.

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PORTFOLIO MANAGEMENT PROCESS

Portfolio management is a complex activity, which may be broken down into the Following steps:

Specification of investment objectives and constraints:

The typical objectives sought by an investor are current income, capital appreciation, safety, fixed returns on principal investment. Choice of asset mix:

The most important decision in portfolio management is the asset mix decision. This is concerned with the proportions of stock or units of 27

mutual fund or Bond in the portfolio. The appropriate mix of Stock and Bonds will depend upon the risk tolerance and investment horizon of the investor. Formulation of portfolio strategy:

Once the certain asset mix has been chosen an appropriate portfolio strategy has to be decided out. Two broad portfolio choices are available. An active portfolio management: it strive to earn superior risk adjusted returns by resorting to market timing, or sector rotation or security selection or some combination of these. A passive portfolio management involves holding a broadly diversified portfolio and maintaining a pre-determined level of risk exposure.

BENEFITS OF PORTFOLIO MANAGEMENT SERVICES While selecting Portfolio management service (PMS) over mutual funds services it is found that portfolio managers offer some very services which are better than the standardized product services offered by mutual funds managers. Such as: Asset Allocation:

Asset allocation plan offered by Portfolio management service PMS helps in allocating savings of a client in terms of stocks, bonds or equity funds. The plan is tailor made and is designed after the detailed analysis of client's investment goals, saving pattern, and risk taking capacity.

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Timing:

portfolio

managers preserve

client's

money

on

time. Portfolio

management service PMS help in allocating right amount of money in right type of saving plan at right time. This means, portfolio manager provides their expert advice on when his client should invest his money in equities or bonds and when he should take his money out of a particular saving plan. Portfolio manager analyzes the market and provides his expert advice to the client regarding the amount of cash he should take out at the time of big risk in stock market.

Flexibility:

portfolio managers plan saving of his client according to their need and preferences. But sometimes, portfolio managers can invest client's money according to his preference because they know the market very well than his client. It is his client's duty to provide him a level of flexibility so that he can manage the investment with full efficiency and effectiveness. Balanced Portfolio: Professional research and advice will help you with information on the best investment options and ideas for your portfolio.

Maximum Returns, Minimum Risks: Portfolio management services assure you of the best downside protection for your portfolio. You will benefit with practical financial advice that can help convert all paper gains into real profits in the shortest time. 29

Adjust Your Portfolio To Market Trends: When you avail of portfolio management services you enjoy greater freedom and flexibility to diversify your investments. Professionals will help you with prudent advice and financial solutions so that your portfolio is in sync with the latest market trends.

Services and Strategies Provided Through Portfolio Management Are:

portfolio managers works as a personal relationship manager through whom the client can interact with the fund manager at any time depending on his own preference.

To discuss any concerns regarding money or saving, the client can interact with his appointed portfolio manager on monthly basis.

The client can discuss on any major changes he want in his asset allocation and investment strategies.

Portfolio management service (PMS) handles all type of administrative work like opening a new bank account or dealing with any financial settlement or depository transaction.

While choosing online Portfolio management service (PMS), the client receives a User-ID and Password, which helps him in getting online access to his portfolio details and checking his portfolio as frequent as he want.

Portfolio management service (PMS) also help in managing tax of his client based on the detailed statement of the transactions found on his portfolio 30

Portfolio Management Payment Criteria:

There are types of payment criteria offered by portfolio managers to their client, such as:

Fixed-linked management fee. Performance-linked management fee. In fixed-link management fee the client usually pays between 2-2.5% of the portfolio value calculated on a weighted average method. In performance-linked management fee the client pays a flat fee ranging between 0.5-1.5% based on the performance of portfolio managers. The profits are calculated on the basis of 'high watermarking' concept. This means, that the fee is paid only on the basis of positive returns on the investment. In addition to these criteria, the manager also gets around 15-20% of the total profit earned by the client. The portfolio managers can also claim some separate charges gained from brokerage, custodial services, and tax payments.

Value Your Money Before Selecting Portfolio Management Services (PMS):

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Equity bias:

Equity portfolio offered by Portfolio management services helps in adding high value than what a debt portfolio offers. Because of this, many portfolio managers emphasis on equity investments and some offer hybrid products.

Large surplus to invest:

The client should always choose the portfolio managers after considering his portfolio size and the fee he would charge for managing his portfolio. PMS are recommended to those clients who have large surplus amount of money to invest. Otherwise, the company can also think for cheap options like a financial planner or advisor to construct an asset allocation plan and to manage investment.

Eligibility Securities and Exchange Board of India, SEBI stipulates the minimum investment required for a Portfolio Management Service to be Rs. 5 Lakhs. Large brokerage firms offer PMS starting with a minimum investment limit ranging from Rs. 25 Lakhs to Rs. 1 Crore. ACTIVITIES IN PORTFOLIO MANAGEMENT:32

There are three major activities involved in an efficient portfolio management which are as follows:-

a. Identification of assets or securities, allocation of investment and also identifying the classes of assets for the purpose of investment.

b. They have to decide the major weights, proportion of different assets in the portfolio by taking in to consideration the related risk factors.

c. Finally they select the security within the asset classes as identify. The above activities are directed to achieve the sole purpose to maximize return and minimize risk in the investment even if there is unlimited risk in the market.

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CHAPTER: 4 CASE STUDY

KOTAK PORTFOLIO MANAGEMENT: The portfolio management services combine competent fund management, dedicated research and technology to ensure a rewarding experience for its clients.

KOTAK SECURITIES: A Kotak security is one of the oldest portfolio management in India. It is also one of the largest with assets under management of over RS.3300 Crores. Kotak portfolio management comes as an answer to those who would like to grow exponentially on the crest of stock market, with backing of an expert. Kotak, measure our success through the success of their clients. Whatever be customer requirement, kotak will tailor your stock market portfolio to your specific investment need. At the very base of financially sound portfolio lies the identification of ones investment objective. Kotak help you identify customer investment objective and also outline important requirement like liquidity, capital appreciation, current income, time span and fiscal implication and then suggest an appropriate scheme.

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Kotak securities see investing from customer perspective, and make recommendation based on customer needs. Bank, one of important goals is to simplify investing ofcustomer, along with this bank also provide long term values to their customer. Bank also has a million reasons for customer to choose kotak bank listed below are a few: STABILITY: Kotak security are a 100% subsidiary of kotak Mahindra bank and one of the oldest and largest stock broking firms in the industy.kotak have been the first and only NBFC to receive the license to be converted into a bank.

INNOVATION IN THE INDUSTRY: - First to provide margin financing to the customer - First to enable investing in ipos and mutual fund on the phone. - Providing SMS alerts before execution of depository transaction. - Launching of mobile application to track portfolio.

AUTO INVEST A systematic investing plan in equities and mutual fund. Provision of margin against securities automatically against shares in customer demat account 35

RELIABILITY Bank accolades are a testimony to our services and high standards. Kotak have been awarded as: - Best broker in India by finance Asia for 2010 and 2009 - UTI MF-CNBC TV 18 Financial Advisor Awards- Best performing equity broker for year 2009 - Best brokerage firm in India by Asian money in 2009, 2008, 2007 and 20006 - Best performing equity broker in India-CNBC Financial Advisor Awards2008 - Avaya Customer Responsiveness Awards 2007 in Financial Service sector - The leading equity house in India in ThomasExtelSurveys awarded for the year 2007 - Euro money award 2006 and 2007- best provider of portfolio management equities

VALUE: A customer with a small or large wallet size, banksays, you can expect us to bring value to you in every form. - Quality research - Quick trade execution - Low brokerage - Account that suit customer investment profile 36

- Risk profiler - Superior customer service

SERVICE: Bank believes in high standards of service and thats precisely what we offer. Its an honor to be awarded the most customer responsive company award in the financial institution sector by AVAYA Global connected award both in 2006 and 2007.

ROBUST TECHNOLOGY: Bank have developed their own proprietary trading platform which is robust and among the best in the industry. Banks have more than 150 technology professionals constantly working on upgrading and speeding up all our systems.

CENTRALISED RISK MANAGEMENT SYSTEM Unlike many other players bank have a centralized risk management system. This allows us to offer the same levels of service to customers across all location

EXCEPTIONAL RESEARCH

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Unlike most other competition bank have our own in house research team. Bank in house research team is among the best in the industry and they have years of experience in the financial markets. They scan through the plethora of stocks and find the scrips that have a high potential of providing customer good returns. Bank provides research Technical, Fundamental, derivatives, macro economic and mutual fund research for this customers.

LARGE PRESENCE Bank is present in more than 450 cities with more than 1400 offices all over the country. Bank employee strength extends beyond 4000.

TAX STATUS Bank expect all client to consult their tax consultant before investing in to any form of securities, at kotak securities, bank provides each client an audited tax statement of their portfolio annually, the same client can use at time of filing return.

RISK FACTOR Equity investments are subject to market risk and there is no assurance or guarantee that the objective of the portfolio management service will be achieved. With any investment in securities, the net asset value of the managed portfolio can go up or 38

down depending on the factors and forced affecting capital markets. Past performance of the portfolio does not indicate future performance.

FACTS OF KOTAK PORTFOLIO MANAGEMENT SERVICES - One of Indias oldest and largest portfolio management bank - Over a decade of experience - Assets under management (AUM) of over RS. 3300 crores

BENEFITS OF KOTAK PORTFOLIO MANAGEMENT SERVICE: - An investment relationship manager will ensure that customer receive all the services related to their investment needs. - A dedicated website and a customer services desk allows customer to keep a tab on their portfolio performance. - Customer portfolio of investment in stock market is tailored after a thorough research backed by the experience from the kotak securities research team. - An experienced team of portfolio managers ensure that customer portfolio is tracked monitored and optimized at all times. - The personalized services also translate in to zero paper work and all customers financial statement will be e-mailed.

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KOTAK HAVE A PRODUCT FOR EVERY INVRSTORE NEED AND PERIOD.KOTAK BANK OFFERS SEVEN TYPES OF PORTFOLIO PRODUCTS: - Bep large cap focus portfolio - GEMS portfolio - Origin equity portfolio - klassic portfolio flexi - select optima - select portfolio - customized portfolio

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BEP-LARGE CAP FOCUS PORTFOLIO Security and multiplication are the criteria under which investments are made. But market fluctuations are generally unpredictable. While the reasons for this are many, what matters is that your investments keep performing profitably. Hence kotak bank bring the BE Large cap focus portfolio for their customers, where investments will be made in mis-priced large cap stocks that have a high growth potential and can withstand macro level risks to sustain in an adverse environment. Large Caps are dominant players in their respective sectors, and hence have the strength and ability to maintain margins in a tough operating environment.

FEARTURES OF THE BEP- LARGE CAP FOCUS PORTFOLIO: - The portfolio will seek to achieve returns through broad participation in large cap companies. - The portfolio will primarily invest scrips which are mispriced, but have a very high growth potential over a period of time. - These large cap companies have defensive businesses and can withstand macro level risks. - These large cap companies are dominant players in their respective sectors.

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ADVANTAGES OF INVESTING IN THE BEP-LARGE CAP FOCUS PORTFOLIO: - Concentrated and compact portfolio - The portfolio shall adopt the active management style to identify mis- priced assets and use various stock selection strategies to outperform. - Portfolio to focus on large caps with stable and visible growth potential.

WHY LARGE CAPS: Large caps have a high growth rate in adverse environment as: - They can sustain hardening interest rates. - They have adequately capitalized balance sheets. - They have underleveraged capital structure. - They have higher capital productivity. - They can manage lower cost of financing. - They have large size of cash flows. Large caps recovered more than mid-caps in June July 2008. This indicates the superior risk- return trade-off in volatile markets. See illustration below,

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GEMS PORTFOLIO: Objective The main objective of the scheme is to generate capital appreciation in the medium term to to long term through investments in equities and equity related instruments. The scheme will seek to achieve returns through investments in stocks of small, medium and large capitalized companies. The portfolio manager may invest in private placements or pre Follow on Public Offering (FPO) placement of securities.

PORTFOLIO STYLE: - Concentrated and compact portfolio - Shift investment themes to participate in multiple growth drivers of the economy of corporate sector. - Predominantly bottom up approach.

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PORTFOLIO CHARACTERISTICS: - Portfolio with companies across large cap, mid cap and small cap segment. - Option to participate in pre FPO or private placement of listed companies. - This will be a diversified scheme investing across the sector and will not have sectorial restriction. - Benchmark: BSE 200 Index

INVESTMENT DOMAIN: - Investment in companies which have a global footprint or aspire to become global leaders in their business. - Companies from emerging sectors which have the potential to deliver higher growth vis--vis broad markets. - Competitive players from the manufacturing sector. - Companies participating in the robust growth in the services sector.

KEY FEATURES OF GEMS PORTFOLIO: - Option to participate in pre FPO placement or private placement of listed companies. - Potential to capture superior upside with commensurate risk in the medium to long term. 44

- Provides flexibility to the portfolio manager. - Ability to meaningfully participate in companies with strong growth prospectus through the pre FPO/ private placement route. - These investments have a lock on clause for a pre specified time horizon.

ORIGIN EQUITY PORTFOLIO: Objective: The portfolio would aim to invest in growth oriented companies with sustainable business models backed by strong management capabilities with emphasis on smaller capitalized companies with a market capitalization not exceeding Rs. 2500 crore at the time of investment.

TRAITS OF SUCCESSFUL COMPANIES IN ORIGIN DOMAIN: - Differentiated business models/new business segments. - Scalable businesses are as large opportunity to grow. - Equipped with adequate financial resources. - Entrepreneur backed/strong professionally managed. - Possess strong execution skills. - Can demonstrate consistency in profitability/profitable growth. - Presence in Niche business segments. 45

DISSECTING THE TARGET COMPANY - Adequate management strengths to ensure growth. - Companies with competitive advantage in the domestic market exploring geographical reach. - Companies building strong multiple revenue streams. - Companies with critical mass targeting manifold growth in size of operation. - Entrepreneur led companies - Beneficiaries of positive policy initiatives- banking, telecom, insurance, media & infrastructure. - New media/digital companies- internet media, online media and mobile technologies.

INVESTMENT STRATEGY: - Buy & Hold a basket of 15-25 companies with a medium to long term horizon. - De-risked strategy through diversification. - Target companies in quest of growth in any market environment. - Endeavour shall be to focus on emerging businesses at a nascent stage or matured businesses at attractive valuations. - Stocks could have trigger events creating potential for valuation unlocking over longer term.

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KLASSIC PORTFOLIO- FLEXI Description: The scheme will seek to achieve returns through broad based participation in equity markets by creating a diversified equity portfolio of small, medium and large capitalized companies.

INVESTMENT STRATEGY Present market conditions hints at growth as a central premises to support valuations. - Identify companies with higher growth as compared to the market. - Scan the investment universe. - Scout for discount in valuations as compared to the market. - Select valuations which provide a case for higher returns potential as compared to the market. - Scout for companies which can result in higher growth in earnings on a sustained basis.

SECTORAL COMPOSITION: Across all market capitalization.

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NO. OF STOCKS Customer can keep a maximum of up to 20 stocks, in one portfolio.

INVESTOR PROFILE - An investor willing to invest for medium to long term without being about short term returns, volatility and market momentum. - Any investor with a penchant for medium to high risk taking qualifies for the portfolio.

SELECT OPIMA Objective: Select portfolio will seek to achieve returns through investment in stock of concentrated number of small, medium and large capitalized companies. In optima plan portfolio will seek to achieve return through broad based participation in equity market by constructing a focused portfolio of sizably capitalized companies.

INVESTMENT STRATEGY: 1) The environment clearly points towards shrinkage in the number of stocks participating in a market rally. Hence the

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investment mantra shall be to get stocks right in the portfolio. Stock specific approach shall be followed to optimize returns. 2) Stock selection to be influenced by the following parameters, - Growth at reasonable price (GARP) - Companies with growth in earning considerably higher than that of all companies in an companies in an index put together. - Companies with consistency and better visibility of future growth. - Companies with sufficient diversification in revenues streams. - Companies with high ROI compared to its cost of capital - Companies with lesser need for raising capital. - Companies with adequate capitalization to carry out organic and in organic growth. - Portfolio strategy driven by a mix of active and passive management actions. - Buy and Hold approach. - Investments driven by both medium and long term investment horizon. - Medium term: 9-12 months - Long term : 12-24 months

- Portfolio shall be diversified over 15-20 stocks across the sect oral spectrum.

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TARGET COMPANIES: Target Domain companies having marketing capitalization of more than Rs. 4000 crores. - Hunger for organic as well as inorganic growth - Strong competitive advantage - Sustainable growth aided by geographical diversification - Built scale in rapidly growing sectors - At the forefront of Indian economic development.

SELECT PORTFOLIO:

DESCRIPTION: The scheme will seek to achieve returns through broad based participation in equity markets by constructing a concentrated portfolio of capitalized companies.

PORTFOLIO STYLE: - Aggressive concentrated portfolio consisting of 10-12 stocks. - Buy and hold approach.

PORTFOLIO CHARACTERISTICS:

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Multi cap portfolio with companies spread large cap, mid cap & small cap. INVESTMENT DOMAIN AND COMPOSITION: - Sectors expected to be beneficiaries of demographic patterns & reforms. - Sectors expected to benefit from infrastructure spending.

PORTFOLIO TENURE: The customer can keep the long term portfolio for a maximum up to 18 months.

INVESTOR PROFILE: - An investor willing to invest for medium to long term without being perturbed about short-term returns, volatility and market momentum. - Any investor with a penchant for medium to high risk taking qualifies for the portfolio.

CUSTOMIZED INVESTOR PORTFOLIO Different product plays different roles in portfolio construction. If returns are one side of the story, risk is the other. Balancing these is the key to customized investor portfolio. 51

Customer investment plans must be based on various insights. The main source for these insights will be from your risk profile and the understanding of which asset classes meet customer return expection.At this point it is important to understand that different products play different roles in portfolio construction. If returns are one side of the story, risks are the other. Balancing these is key to a customized investor.

RISK RETURN GRAPH:

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CHAPTER :5 CONCLUSION

The kotak bank is one of the largest players in portfolio management service. Customers can keep a tab on their portfolio performance even with help of website of Kotak.

Kotak has various types of portfolio management products, as per the requirement of the clients. All the products of kotak portfolio management is the best, but the customers have to choose the product as per their risk and return profile. Kotak has some products with high risk and high returns and on the other hand, some product with low return and stable income.

I found that the kotak is lacking in some places such as branches, customer awareness, feedback system and mainly in advertisement. Kotak have very limited no of branches as compared to other developed banks. Regarding to customer awareness, still people keep money in their house, due to the risk factor people feel it is better to keep money with themselves rather than investing somewhere.kotak also has to improve their feedback system and advertisement strategies.

The project helps me to understand the basic concept of finance planning and why there is a need of professional portfolio manager to manage the securities. The portfolio managers of Kotak provide best

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services to their clients. Kotak always says that they measure the success of the bank base on success of clients.

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SUGGESTION AND RECOMMENDATION: Some of the suggestion and recommendation for improving the present image as well as the services of kotak are as follows: More branches: Some more branches should be opened so it becomes more easy and approachable for the people to do their transaction. The branches should have well trained employees.

Customer Awareness: The people should be updated with the new issues and scheme started by the organization to the existing customer. Regular contact with the customer through telephone can be maintained for smooth running of business.

Proper feedback system: A proper feedback system should be designed to take care of the dissatisfied customer and solving their problems as their bad works of mouth publicity can make loose its potential as well as existing customer.

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More advertisement: Newspaper and agents are most effective tools for awareness, so Kotak should use these tools more for advertisement.

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BIBLOGRAPHY: 1) SECURITIES ANALYSIS AND PORTFOLIO MANAGEMENT - V. A. Avadhani.

2) INVESTMENT MANAGEMENT - Preeti Singh.

WEBLIOGRAPHY: www.google.com www.kotak.com www.wikipedia.com

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