report on icici mutual fund's effectiveness
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DESCRIPTIONThis document says about the effectiveness of ICICI's mutual fund in bangalore market
Executive summaryThis report analyses the customers perception on mutual funds and theirwillingness to invest in it.We did a research on the customers preference towards mutual funds. ICICI direct is one ofthe largest mutual funds distributers in India. It is committed towards guiding investors tocreate wealth. Theyhave a range of innovative products andservices. Theyguide thecustomers through all stages of investment cycle.ICICI Securities has takenanInitiative tocreateawareness about Mutual unds toitscustomers. The pro!ect is named "Mutual und Simplified#. The ob!ective is to demonstratethebenefit ofmutual fundandinvestinginMutual undthroughICICIdirect.comandasurvey about Mutual und investments frome$isting customers of ICICI Securities%Customers who have an ICICIdirect.com account&.The ob!ective of our research was to find out the customers perception on mutual funds andtheir willingness to invest in it.'ere we were trying to study the customers willingness with respect to the factors such asgender( age group( occupation( etc.)ro!ect duration was * weeks and the sample si+e was ,-. The research location was central.angalore since it is near to my assigned office %Cunningham road branch ICICI direct&.Themethodusedwas/uestionnairemethodwhichwasfilledonline( therebymakingtheprocesseasier(fasterandeco0friendly.Thedatawasdirectlystoredingoogledrive. Thismade the data compilation and analysis very easy.1nce we got the data( we e$ported it to e$cel sheet and interpreted the data. 2atainterpretation was basically in the form of pie charts and bar charts. rom those charts( it wasvery easy to make out the response towards each /uestion.The !ob to fi$ an appointment was really tough. Most of the customers refused to talk and some were reluctant to meet.Travelling was another issue because most of the addresses in the database available were wrong or old. There were few customers with whom I did not meet because their office or residence was in the outskirts of city.3umber of phone calls made in a day was dependent on the follow ups I used to have or number of meeting on that particular day. 1n an average I used to call around 4- to 5- customers a day. INTROD!TIONSmall dropsof watermakeabigoceanonthisconcept mutual fundworks. Smallinvestors canalsoinvest inmutual fundandearnafair rateof returnwithlessriskcompare to shares. Mutual fund also provides the benefits of speciali+ed services( e$pertknowledge6 ta$ benefits etc. investors do not spend all their income into various goods andservices. Certain amount they will save and out of saved amount they will invest certainproportionininvestment avenues. Today( variousinvestment optionslikeland( gold(shares( debenture( bonds etc( are available for an investor. So while choosing a best possible investment option( investor has to take carefully verifyall available options. Investor will be primary looking at an investment option which willgive ma$imum return with minimum risk. So Mutual fund is e$pected a better option fortheinvestor at present. Mutual fundis different fromother interms of risk( return(li/uidity( profitability( transparency etc.Thisresearchhelpsinidentifyingtheinvestors perceptiontowardsmutualfundsdebtschemes and the factors that influence investors to invest in various debt schemes whichare managed by various fund managers of 7sset Management Company. 7long with thatan e$tra effort is put to evaluate the performance of various debt schemes using standarddeviation and 378 returns."utual fundMutual fund is vehicle to mobili+e funds from investors( to invest in different markets andsecurities( in line with the investment ob!ectives agreed upon( between the mutual fundand the investors."utual fund wor#ing processThe following figures e$plain the Mutual und Working )rocess ig.9.9: Mutual und Working )rocessThe mutual fund collects money directly or through brokers from investors. The moneyis investedinvarious instruments dependingontheob!ectiveof thescheme. Theincomegeneratedbysellingsecuritiesor capital appreciationof thesesecuritiesispassedontothe investors in proportionto their investment inthe scheme. Theinvestments are divided into units and the value of the units will be reflected in 3et7sset 8alue or 378 of the unit. 378 is the market value of the assets of the schememinusitsliabilities. The378isthenet asset valueoftheschemedividedbythenumberofunitsoutstandingonthevaluationdate. Mutual fundcompaniesprovidedaily net asset value of their schemes to their investors. $E%I&"!!ustodianTrusRegistranit$avingTrustReturnsInvestmentnit holders&"!$tructure of "utual 'undig.9.;: Structure of Mutual fundThe structure consists of($ponsorSponsor is the person who acting alone or in combination with another body corporateestablishes a mutual fund. Sponsor must contribute at least 4-< of the net worth of theInvestment managed and meet the eligibility criteria prescribed under the Securities and=$change .oard of India %Mutual und& >egulations( 9??,. The sponsor is not responsibleor liable for any loss or shortfall resulting from the operation of the Schemes beyond theinitial contribution made by it towards setting up of the Mutual und.Trust$E!ustodianTrusteeTransfer &gent&"!nit )oldersThe "utual 'und$ponsorThe Mutual und is constituted as a trust in accordance with the provisions of the IndianTrusts 7ct( 9**; by the Sponsor. The trust deed is registered under the Indian >egistration7ct( 9?-*.TrusteeTrustee is usually a company %corporate body& or a .oard of Trustees %body ofindividuals&. The main responsibility of the Trustee is to safeguard the interest of the unitholders and ensure that the 7MC functions in the interest of investors and in accordancewith the Securities and =$change .oard of India %Mutual unds& >egulations( 9??,( theprovisions of the Trust 2eed and the 1ffer 2ocuments of the respective Schemes. 7t least;@Ard directors of the Trustee are independent directors who are not associated with theSponsor in any manner.&sset "anagement !ompany *&"!+The 7MC is appointed by the Trustee as the Investment Manager of the Mutual und. The7MC is re/uired to be approved by the Securities and =$change .oard of India %S=.I& toact as an asset management company of the Mutual und. 7t least 5-< of the directors ofthe7MCareindependent directors whoarenot associatedwiththeSponsor inanymanner. The 7MC must have a net worth of at least 9- cores at all times.!ustodianThe custodian has custody of the assets of the fund. 7s part of this role( the custodianneeds to accept and give delivery of securities for the purchase and sale transactions of thevarious schemes of the fund. 7ll custodians need to register with S=.I. The custodian isappointed by the mutual fund. 7 custodian agreement is entered into between the trusteesand the custodian. Registrar and Transfer &gentThe 7MC if so authori+ed by the Trust 2eed appoints the >egistrar and Transfer 7gent to theMutual und. The >egistrar processes the application form( redemption re/uests anddispatchesaccount statements totheunit holders. The>egistrar andTransfer agent alsohandles communications with investors and updates investor records.&uditors7uditorsareresponsiblefor theaudit of accounts. 7ccountsof theschemes needtobemaintainedindependent of theaccount of the7MC. Theauditor appointedtoaudit theschemeaccountsneedstobedifferent fromtheauditor ofthe7MC. Whiletheschemeauditor is appointed by the Trustees( the 7MC auditor is appointed by the 7MC.'und &ccountantsThefundaccountant performstheroleofcalculatingthe378(bycollectinginformationabout the assets and liabilities of each scheme.Distri,utors2istributors have a key role in selling suitable types of units to their clients i.e. the investorsin the schemes. 2istributors need to pass the prescribed certification test.!ollecting %an#ersThe investors moneys go into the bank account of the scheme they have invested in. Thesebank accounts are maintained with collection bankers who are appointed by the 7MC. &dvantages of "utual 'und for Investors(-rofessional "anagementMutual funds offer investors the opportunity to earn an income or build their wealth throughprofessional management of their investible funds. There are several aspects to suchprofessional management vi+. investing in line with the investment ob!ective( investing basedon ade/uate research( and ensuring that prudent investment processes are followed.&fforda,le -ortfolio DiversificationBnitsofaschemegiveinvestorse$posuretorangeofsecuritiesheldintheinvestmentportfolio of the scheme. Thus( even a small investment of >s.5--- in mutual fund scheme cangive investors a diversified investment portfolio. With diversification( an investor ensures thatall the eggs are not in the same basket. Conse/uently( the investor is less likely to lose moneyonall the investments at the same time. Thus( diversificationhelps reducetheriskininvestment. In order to achieve the same diversification as a mutual fund scheme( investorswill need to set apart several Cakhs of rupees. Instead( they can achieve the diversificationthrough an investment of a few thousand rupees in mutual fund scheme.
Economy of $caleThe pooling a large sums of money from so many investors makes it possible for the mutualfund to engage professional managers to manage the investment. Individual investors withsmall amounts to invest cannot( by themselves( afford to engage such professionalmanagement. Carge investment corpus leads to various other economies of scale. orinstance( costs related to investment research and office space get spread across investors.urther( thehigher transactionvolumemakes it possibletonegotiatebetter terms withbrokers( bankers and other service providers.i/uidity7t times( investors in financial markets are stuck with a security for which they cannot find abuyer0worse( at timestheycannot findthecompanytheyinvestedinDSuchinvestments(whose value the investor cannot realise in the market( are technically called illi/uidinvestments and many result in losses for the investor. Investment in a mutual fund schemecan recover the value of the moneys invested( from the mutual fund itself. 2epending on thestructure of the mutual fund scheme( this would be possible( either at any time( or duringspecificintervals( or onlyoncloser of thescheme. Schemes( wherethemoneycanberecoveredfromthemutual fundonlyonclosureof thescheme( arelistedinthestocke$change. In such schemes( the investor can sell the units in the stock e$change to recover theprevailing value of the investment.Tax Deferral Mutual funds are not liable to pay ta$ on the income they earn. If the same income were to beearnedbytheinvestordirectly(thenta$mayhavetobepaidinthesamefinancial year.Mutual funds offer options( whereby the investor can let the fund grow in the scheme forseveral years. .yselectingsuchoptions( it is possiblefor theinvestor todefer theta$liability. This helps investors to legally build their wealth faster than would have been thecase( if they were to pay ta$ on the income each year.Tax %enefitsSpecific schemes of mutual funds %=/uity Cinked Saving Schemes& give investors the benefitof deduction of the amount invested( from their income that is liable to ta$. This reduces theirta$able income( and therefore the ta$ liability. 2ividends received from mutual fund schemesareta$0freeinthehandsoftheinvestors. 'owever(dividendsfromcertaincategoriesofschemesaresub!ect todividenddistributionta$( whichispaidbytheschemebeforethedividend is distributed to the investor. Cong term capital gains arising out of sale of debt and li/uid funds are sub!ect to long termcapital gains ta$( which may be ta$ed at a different% and often lower& rate of ta$. !onvenient OptionsThe options offered under a scheme allow investors to structure their investments in line withtheir li/uidity preference and ta$ position. There is also great transaction convenience like theability ofwithdrawonly partof the money from the investment account(abilitytoinvestadditional amounts to the account( setting up systematic transactions( etc.Investment !omfort1nce an investment is made with a mutual fund( they make it convenient for the investor tomake further purchase with very little documentation. This simplifies subse/uent investmentactivity.Regulatory !omfortThe regular( securities E =$change .oard of India %S=.I&( has mandate strict checks andbalances inthe structure of mutual fundsand their activities.These aredetailedin thesubse/uent units. Mutual fund investors benefit from such protection.$ystematic &pproach to InvestmentsMutual funds alsooffer facilities that helpinvestor invest amounts regularlythroughaSystematicInvestment )lan%SI)&6 or withdrawamounts regularlythroughaSystematicWithdrawal )lan%SW)&6 ormovemoneysbetweendifferent kindsofschemesthroughaSystematic Transfer )lan %ST)&. Types Of "utual 'undig. 9.A: Types of Mutual fundsTypes of Mutual Fund Schemes in IndiaWidevarietyofMutual FundSchemesexiststocatertotheneedssuch as fnancial position, risk tolerance and return expectations etc.Thus mutual funds have a variety of favours. There are overhundreds of mutual funds scheme to choose from. It is easier to thinkof mutual funds in cateories, mentioned !elo". %y$tructureTypes ofMutual fund!losed 0endedOpen0endedInterval%y Investment O,1ectiveE/uity 'undsDe,t 'unds)y,rid 'undsOverviewof existing schemes in mutual fund category: ByStructureOpen!nded Schemes#n open$end fund is one that is availa!le for su!scription all throuh theyear. These do not have a fxed maturity. Investors can conveniently !uyand sell units at %et #sset &alue '(%#&() related prices. The key feature ofopen$end schemes is li*uidity."lose!nded Schemes Theseschemeshaveapre$specifedmaturityperiod. +necaninvestdirectly in the scheme at the time of the initial issue. ,ependin on thestructure of the scheme there are t"o exit options availa!le to aninvestor after the initial o-er period closes. Investors can transact '!uy orsell)theunitsof theschemeonthestockexchanes"heretheyarelisted. The market price at the stock exchanes could vary from the netasset value'%#&) of theschemeonaccount of demandandsupplysituation, expectations of unit holder and other market factors.#lternatively some close$ended schemes provide an additional option ofsellin the units directly to the Mutual Fund throuh periodic repurchaseattheschemes%#&. ho"everonecannot!uyunitsandcanonlysellunits durin the li*uidity "indo". S/0I 1eulations ensure that at leastone of the t"o exit routes is provided to the investor. Interval SchemesInterval Schemes are that scheme, "hich com!ines the features of open$ended and close$ended schemes. The units may !e traded on the stockexchane or may !e open for sale or redemption durin pre$determinedintervals at %#& related prices. Overview of existing schemes in mutual fund category: By #ature!$uity fundThese funds invest a maximum part of their corpus into e*uities holdins.The structure of the fund may vary di-erent for di-erent schemes andthe fund manaer2s outlook on di-erent stocks. The /*uity Funds are su!$classifed dependin upon their investment o!3ective, as follo"s4 ,iversified /*uity Funds Mid$5ap Funds Sector Specific Funds Tax Savins Funds '/6SS)/*uityinvestmentsaremeant foralonertimehori7on, thus/*uityfunds rank hih on the risk$ return matrix. De%t fundsTheo!3ectiveof theseFundsistoinvestinde!tpapers. 8overnmentauthorities, private companies, !anks and fnancial institutions are someofthema3orissuersofde!tpapers. 0yinvestininde!tinstruments,these funds ensure lo" risk and provide sta!le income to the investors. De%t Funds are further classi&ed as: 'ilt FundsInvest their corpus in securities issued !y 8overnment, popularly kno"nas 8overnment of India de!t papers. These Funds carry 7ero ,efault risk!ut are associated "ith Interest 1ate risk.Theseschemes aresafer asthey invest in papers !acked !y 8overnment. Income Funds Invest ama3or portionintovarious de!t instruments suchas !onds,corporate de!entures and 8overnment securities. Monthly Income (lans )MI(s*Invest maximum of their total corpus in de!t instruments "hile they takeminimumexposureine*uities. Itets!eneftof!othe*uityandde!tmarket. These scheme ranks slihtly hih on the risk$return matrix "hencompared "ith other de!t schemes. Short Term (lans )ST(s* Mean for investment hori7on for three to six months. These fundsprimarily invest in short term papers like 5ertifcate of ,eposits '5,s) and5ommercial 9apers '59s). Some portion of the corpus is also invested incorporate de!entures. +i$uid Funds6i*uid fund also kno"n as Money Market Schemes, These funds provideseasy li*uidity and preservation of capital. These schemes invest in short$term instruments like Treasury0ills,inter$!ankcallmoneymarket, 59sand5,s. Thesefundsaremeant for short$termcashmanaement ofcorporate houses and are meant for an investment hori7on of :day to ;months. These schemes rank lo" on risk$return matrix and areconsidered to !e the safest amonst all cateories of mutual funds. Balanced fundsTheseareamixof !othe*uityandde!tfunds. Theyinvestin!othe*uities andfxed income securities, "hich are in line "ithpre$defnedinvestment o!3ectiveof thescheme. Theseschemes aimtoprovideinvestors "ith the !est of !oth the "orlds. /*uity part provides ro"thand the de!t part provides sta!ility in returns. Further the mutual fundscan!e !roadly classifedon the !asis of investment parameter vis,!yinvestment o!3ectiveandtypesof returns. /achcateoryof fundsis!acked !y an investment philosophy, "hich is pre$defned in theo!3ectives of the fund. The investor can alin his o"n investment needs"ith the funds o!3ective and invest accordinly. Overviewof existing schemes in mutual fund category: %yInvestment O%,ective 'rowth Schemes8ro"thSchemes arealso kno"nase*uityschemes. Theaimoftheseschemesistoprovidecapital appreciationovermediumtolonterm.These schemes normally invest a ma3or part of their fund in e*uities andare "illin to !ear short$termdecline in value for possi!le futureappreciation. Income SchemesIncomeSchemesarealsokno"nasde!t schemes. Theaimof theseschemesistoprovidereular andsteadyincometoinvestors. Theseschemes enerally invest in fxed income securities such as !onds andcorporatede!entures. 5apital appreciationin suchschemes may !elimited. Balanced Schemes0alanced Schemes aim to provide !oth ro"th and income !yperiodically distri!utin a part of the income and capital ains they earn.These schemes invest in !oth shares and fxed income securities, in theproportion indicated in their o-er documents 'normally =S is simpleD If( during the course of the contract life( the price moves in your favour %i.e. rises in case you have a buy position or falls in case you have a sell position&( you make a profit. )resently only selected stocks( which meet the criteria on li/uidity and volume( have been enabled for futures trading. Calculate Inde$ and Fnow your Margin are tools to help you in calculating your margin re/uirements and also the inde$ E stock price movements. The Centre for inancial Cearningis a comprehensive guide on futures and options trading. O-TION$ 7n option is a contract( which gives the buyer the right to buy or sell shares at a specific price( on or before a specific date. or this( the buyer has to pay to the seller some money( which is called premium. There is no obligation on the buyer to complete the transaction if the price is not favorable to him. To take the [email protected] position on [email protected] options( you have to place certain < of order value as margin. With options trading( you can leverage on your trading limit by taking [email protected] positions much more than what you could have taken in cash segment. The .uyer of a Call 1ption has the >ight but not the 1bligation to )urchase the Bnderlying 7sset at the specified strike price by paying a premium whereas the Seller of the Call has the obligation of selling the Bnderlying 7sset at the specified Strike price. The .uyer of a )ut 1ption has the >ight but not the 1bligation to Sell the Bnderlying 7sset at the specified strike price by paying a premium whereas the Seller of the )ut has the obligation of buying the Bnderlying 7sset at the specified Strike price. .y paying lesser amount of premium( you can create positions under 1)TI13S and take advantage of more trading opportunities.3eneral InsuranceKeneral Insurance products cover 'ealth( 'ome( Motor and Travel( and help protect your financial health unforeseen events strike close to home. ICICI Combard is the leading private general insurance company and has one of the best products.1ur partnership with ICICI Combard enables us to bring to you the entire range of insurance offerings for your personal and professional needs( with minimal paperwork and at the comfort of your home or office. Select products can be entirely bought online on ICICIdirect.com with instant policy issuance. )ealth Insurance'ealth Insurance %popularly known as Mediclaim& offers protection in case of une$pected medical emergencies. In case of a sudden illness or accident( the health insurance policy takescare of the hospitali+ation( medical and other cost incurred. "otor InsuranceMotor Insurance0 7comprehensive package for your two0wheelers and four0wheelers(securing them against damage caused by natural and man0made calamities. 7ccess to over ;H-- network garages across the country for cashless claims acrossIndia. Transfer your full benefits of 3o Claim .onus when you shift your motor insurancepolicy from any another company to ICICI Combard. Ket =MI facility through credit card without any interest. International travelInternational travel coversune$pectedandemergencymedical e$penses incurredwhenapersonisinoverseas. Inadditiontothemedicalcover(therearenon0medicalcoverslikebaggage loss @ delay( trip cancellation @ interruption @ delay( passport loss( personal accidentcover and financial emergency. )ay on a per day basis for your overses travel. Choose from a wide range of product. 3o medical check0up upto H- years( cashless hospitali+ation available worldwide. )ome InsuranceComeInsurance 1ur 'omeInsurancepolicysecures thestructureaswell asthecontents of your home against natural and man0made disasters. Secure your most pri+edpossession against terrorist activities by opting for a Terrorism Cover.'ixed Deposits and %onds!orporate 'ixed DepositsWe offer a range of Corporate i$ed 2eposits varying in tenures( interest rates E institutions to suit your investment needs. The deposit schemes have been specially chosen from high0safety options to ensure that you en!oy the twin benefits of returns and protection. Why opt for Corporate i$ed 2epositsL If your risk appetite is low( fi$ed deposits are perfect for you. Since most of the instruments are rated( corporate fi$ed deposits have a very high safety level. 7ttractive returns at interest rates higher than banksMs i$ed 2eposits. 'igher Interest rates for senior citi+ens. 'igh li/uidity6 most of these issuers offer H5< of the investment amount as loan N ;< over the interest rate on the deposit( as well as a pre0mature withdrawal 1ption. )otential to earn compounding interest on your money by reinvesting the principal amount along with the interest earned. le$ible tenure 0 there are various tenures ranging from 9 to H years. Iou can choose interest fre/uency6 most issuers offer monthly( /uarterly( bi annual and annual cumulative deposits. Iou get direct =CS credit facility for interest payments or advance interest warrants for the year issued by most issuers.%onds.ond refers to a security issued by a company( financial institution or government which offers regular or fi$ed payment of interest in return on the amount borrowed money for a certain period of time.Thus by purchasing a bond( an investor loans money for a fi$ed period of time at a predetermined interest rate. While the interest is paid to the bond holder at regular intervals( the principal amount is repaid at a later date( known as the maturity date. While both bonds and stocks are securities( the principle difference between the two is that bond holders are lenders( while stockholders are the owners of the organi+ation. 7nother difference is that bonds usually have a defined term( or maturity( after which the bond is redeemed( whereas stocks may be outstanding indefinitely.Customer also has the option of recurring interest along with )rincipal i.e Cumulative Interest. Thus a bond is like a loan: the issuer is the borrower %debtor&( the holder is the lender%creditor&( and the coupon is the interest. .onds provide the borrower with e$ternal funds to finance long0term investments( or( in the case of government bonds( to finance current e$penditure. .onds must be repaid at fi$ed intervals over a period of time..oansICICI direct offers a wide variety of Coan )roducts from ICICI bank to suit your re/uirements. We strive to provide best of our products and services to you at your doorstep. Iou can choose any of our below mentioned loan products and provide us with your details online. 1ur representative will get in touch with you for further processing. )ome .oansThe 3o. 9 'ome Coans )rovider in the country( ICICI .ank 'ome Coans offers some unbeatable benefits to its customers0 2oorstep Service( Simplified 2ocumentation and Kuidance throughout the )rocess. !ar .oansICICI .ank is the most preferred financer for car loans in the country with a network of morethan 9--- channel partners in over ;-- locations. Tie0ups with all leading automobile manufacturers to ensure the best deals. le$ible schemes E /uick processing. .oan &gainst $ecurities*.&$+Coans against Securities is an overdraft facility from ICICI .ank( given by way of a current account against pledge of securities that you hold. 3ot only do you get to hold on to your securities( but you are also able to generate funds without selling your hard0earned assets.!urrency DerivativesICICI 2irect offers you a simple and convenient way to trade and hedge your currency risk infour pair of Currencies0 2ollar( =uro( )ound and Gapanese Ien against Indian >upee. .y offering you the choice of trading in different asset class of Currencies we offer you the opportunity to diversify the portfolio. The benefits of choosing ICICI 2irect for your Currency Trading are: !onvenience 0 )rovides a well0diversified set platformfor online trading withcompetitivebrokerageunder asinglesign0onandcompletelypaper0lessinvestinge$perience Expertise 0 Iou can access to our 2aily >esearch >eports as well as undamental ETechnical >eports and 7dvisory. 'lexi,ility 0 Iou can select the Currency )air [email protected]>( =B>@I3>( K.)@I3> andG)[email protected]> in which you wish to trade'ew &dvantages of this mar#et are9 Trading hours of -?:-- am to -5:-- pm provide more trading opportunities; Tradeinprominent currencieslikeBS2ollar( =B>1( )ound( Ienagainst Indian>upeeA >eal time and Transparent Currency >ates in comparison to 1TC >ates.4 3o Counterparty 2efault risk due to settlement guarantee by regulated clearing house.5 Cow Ta$ation % 3o STT and CTT&, 2aily Cash Settlement in I3> via MTM %Mark to Market&.ife Insurance -lansTerm .ife insuranceTerm Cife Insurance plan ensures financial protection and stability to your family in case ofany unforeseen events. It offers ade/uate coverage at an affordable price. There is no maturityvalue or survival benefit in a term plan. Term Insurance benefits can be offered through lumpsum payment or regular income stream or a combination of both. -rotection( 7 term life insurancehelps in securingfamilyMsfuture in your absence.romtakingcare of the dailye$penses( toother( moresignificant e$penses like professionaleducation for the children and their marriage( having a safety net helps. Tax %enefits( 7part from the benefit of protection( term insurance plan also offers you ta$benefits under Sec *-C up to >s.9(5-(--- ta$ limits. Iprotect IcareII7ealth planWealth )lans ensure that you receive your invested amount at the time of maturity of the)olicy. In an unfortunate event during the term of the policy( your family also receives lumpsum amount( called the Sum 7ssured. Thus it combines the benefits of protection and savingin a single instrument. Regular savings( Insurance inculcates the habit of regular and disciplined savings( which isthe key to successful long term financial planning. )ay your premiums regularly and en!oythe uninterrupted benefits of wealth insurance. -rotection( It provides the protective benefit of a life cover( which keeps your family secure(always. Tax ,enefits( 7part from protection and savings( wealth plans also offer ta$ benefits as perprevailing ta$ laws 3uaranteed 7ealth -rotect 7ealth %uilder II !ash &dvantage $avings $ura#shaRetirement -lan>etirement )lan ensures that you or your family members receive a regular pension amountpost a retirement date. Iou have the fle$ibility to choose the retirement date and the mannerin which you receive the pension. inancial independence post retirement: =arlier( people could depend on their children to takecareof thempost retirement. 'owever( as amodernindividual( youcanmaintainyourfinancial independence post retirement also Inflation: Inflationisanimportant factor.)ost retirement( youneedaregularincometoensure that your e$penses can be met. Easy Retirement Immediate &nnuity Easy retirement $-"utual fundsE/uity 'unds=/uity schemes endeavor to provide potential for high growth and returns with a moderateto high risk by investing in shares. Such schemes are either actively or passively %replicateindices& managed( and are best suited for investors with a long term investment hori+on.I!I!I -rudential Dynamic -lanICICI )rudential 2ynamic )lan is an 1pen0ended 2iversified =/uity und that aims to makethe most of market changes. Kiven the dynamic nature of the markets( the fund has the abilityto attack by taking aggressive asset calls in e/uity and e/uity related securities. 1n the flipside it may also adopt a defensive strategy by investing in debt( money market instrumentsand derivatives as and when markets get overvalued.Key Benefts It could be an ideal product in a volatile environment as it has the agility( aimed atcapturing upside opportunities in the market across market capitali+ations. 1ntheflipside( it hastheabilitytoswitchtocash6 thusseekingtolimit thedownside( in case stock markets get into an overvalued position.I"I"I (rudential Focused Bluechip !$uity FundICICI )rudential ocused .luechip =/uity und is an 1pen0ended e/uity scheme that aimsfor growth from a focused and optimally diversified portfolio .It invests in e/uity and e/uityrelated securities of companies belonging to the large cap domain.Key Benefts The fund seeks to create reasonable diversification across sectors The fund has a long term focus with Obuy and holdO approach Thelargecapcompanies haveproventrackrecord( /ualitymanagement andgood growth potential.I"I"I (rudential 3alue Discovery FundI5I5I 9rudential &alue,iscoveryFundisan+pen$ended,iversifed/*uityFund, "hichaimstoinveststocksavaila!leatadiscounttotheir intrinsicvalue, throuhaprocessof H,iscovery2. Theprocessinvolves identifyin companies that are "ell manaed, fundamentallystron, and are availa!le at a price, "hich can !e termed as a !arain.Key Benefts It follows a value strategy of bargain hunting for intrinsically good stocks 7sthepotential valueofthestocksinwhichthefundinvestshasnot yet beenunlocked( the probability of growth is much higher.I"I"I (rudential 3alue Discovery FundICICI )rudential 8alue 2iscovery und is an 1pen0ended 2iversified =/uity und( whichaimstoinveststocksavailableatadiscounttotheirintrinsicvalue( throughaprocessofP2iscovery. The process involves identifying companies that are well managed(fundamentally strong( and are available at a price( which can be termed as a bargain.Key Benefts It follows a value strategy of bargain hunting for intrinsically good stocks 7sthepotential valueofthestocksinwhichthefundinvestshasnot yet beenunlocked( the probability of growth is much higher.I"I"I (rudential Infrastructure FundICICI Prudential Infrastructure Fund is an open0ended e/uity fund( focused on capturing the opportunity presented by the long0term growth and development potential of the Indian Infrastructure Sector. The und focuses its investments on the core infrastructure sector and allied sectors that directly feed off its growth.Key Benefts The potential for long termgrowth makes this fund an attractive investmentopportunity. There is lower concentration risk as it is a thematic fund.De,t 'unds2ebt unds primarily invests in bonds and other debt instruments( and will suit investorswho want to optimi+e current income assuming low to moderate levels of risk.I!I!I -rudential 'lexi,le Income -lanThedebt market offersits ownrisk0to0returntradeoff( whichistriggeredbychangesininterest rates and the impact they have on debt securities. To a fund manager( however( thechanges in the yield curve not only offers risk( but also opportunities to benefit by activelymanaging these risks and making use of an opening to increase returns.ICICI )rudential le$ible Income )lan( an open0ended income fund( seeks to actively managesuch risks as a conscious investment strategy by allowing the fund manager to switch theallocation from a 9--< debt stance to a 9--< cash stance( which provides the fle$ibility toimplement yield curve strategies( or manage interest rate volatility better.Key Benefts 7 portfolio which strategically deploys funds in the debt markets to take advantageof interest rate risks. acilitates participation in markets that are large and institution0dominated. )rovides the potential to earn total return from both interest and capital gains( withthe attendant risks of capital loss as well.I"I"I (rudential Savings FundThere are many factors that determine the rate of interest of securities( and constant changesin these underlying fundamentals( cause fluctuations in the interest rates( which has a directimpact on the value of our portfolio. 7n increase in rates reduces the value of our holdingsand vice0versa.If interest rates on instruments in the portfolio were to keep getting reset according to the prevailing market rates( then( we may be able to focus on the interest income without worrying too much about its impact on the portfolio.ICICI )rudential loating >ate )lan( an open0ended income fund( focuses primarily on dynamic interest rates( and takes rapid action when necessary to minimi+e the impact of thesefluctuations on your portfolio.8ey %enefits 7 portfoliothat focusesonaccrual income( whichisderivedfromfloatingrateinstruments. >educed interest rate risk of longer term instruments.I"I"I (rudential 4ltra Short Term (lanICICI )rudential Bltra Short Term )lan( an open0ended income fund( is designed for suchshort0term re/uirement( as it enables deploying of funds for shorter periods of time( from A to, months( to generate regular income while cautiously monitoring the rate of interest.8ey %enefits Investors seeking safety and li/uidity( while earning stable and competitive returns(in a scenario where it is difficult to forecast the future interest rate outlook. Conservativeinvestors whomaywant tooutplaythe yieldinshort0termbankdeposits in a ta$0efficient manner.I"I"I (rudential +i$uid (lanICICI )rudential Ci/uid )lan( an open0ended li/uid income fund( offers a potentially rewarding parking facility for short0term( idle cash. It provides the fle$ibility of withdrawing cash as and when re/uired( and proves to be an investment through its earnings( while it is parked in the fund.8ey %enefits It enables efficient and fruitful deployment of idle cash. This plan ensures a high level of li/uidity and fle$ibility to access cash invested at adays notice. It offers a low risk option to invest in mutual funds.%alance2)y,rid funds'ybrid Schemes or balanced schemes bridge the gap between e/uity and debt schemes.This category is characteri+ed by a portfolio that is made up of a mi$ of e/uity stocksand bonds and will suit investors looking for debt plus returns with higher levels of riskthan fi$ed income schemes.I"I"I (rudential "hild "are (lan )Study*ICICI )rudential Child Care )lan( an open0ended fund( is an investment instrument specially designed to help you give your child a head start in life by leveraging the opportunities and dynamism of e/uity and debt markets. It offers two options 0 Kift 1ption 0 %Suitable if your child is in age group of 909A years.& Study 1ption 0 %Suitable if your child is in age group of 9A09H years.&Key Benefts )ersonal 7ccident Cover %for resident applicants& 0 Till your child attains the age of9* or till units are redeemed %whichever is earlier&( you as his @ her parent @ legalguardian will be eligible for a )ersonal 7ccident Cover e/uivalent to 9- times thevalue of the Bnits youhave purchased%value at purchase price& sub!ect toama$imum of limit of >s. 5 lakh.I"I"I (rudential MI( 56ICICI )rudential Income Multiplier und( an open0ended debt fund that invests upto A-< ine/uity( adds apinchof e/uitytoyour debt portfolio( sothat youcanbenefit fromthedynamism of e/uity markets( with peace of mind.Key Benefts 7 core portfolio invested in debt provides stability to the investment. )rovides limited e$posure to e/uity that has the potential to spike up the returnsgenerated from the basic debt portfolio.I"I"I (rudential Monthly Income (lanICICI Prudential Monthly Income Plan (MIP( %Monthly Income is not assured and is sub!ectto availability of distributable surplus&( an open0ended fund( is designed to be a low risk income0generating product for an investor who likes to earn the short term debt market returnenhanced by a small e/uity component that does not significantly add to the risk of the portfolio.Key Benefts 7 core portfolio invested in debt provides stability to the investment. Cimited e$posure to e/uity has the potential to spike up the returns generated fromthebasicdebt portfolioEprovides anopportunitytoearnbetter risk0ad!ustedreturns The fund has the track record of uninterrupted monthly dividends since inception.I"I"I (rudential Balanced FundICICI )rudential .alanced und( an open0ended balanced fund( takes care of the asset allocation by constantly investigating market outlook and performance and accordingly by increasing @ decreasing e/uity e$posure based on the market outlook and using a core debt portfolio to do the rebalancing.Key Benefts )rovides the twin benefits of growth from e/uity markets and steady income fromdebt markets. Cower volatility of returns and lower risk through diversification.!ompetitors
"ar#et share"utual 'und Industry synopsis InMay;-95( assets under management %7BM& grew9?s.9;-A54H crore with share of e/uity oriented funds at A-< from ;9< in May;-94. Total net inflowsinmutual fundsweremutedat >s.;4AcroreinMay;-95 . Inflows into e/uity scheme continues to be strong at >s.?*5- crore during May;-95. Incomefundsreceived>s.4;-5croreofnet inflowsduringMay;-95.'owever( outflowtothetuneof >s.95,5Hcrorefrommoneymarket fundsresulted in to muted total net inflows.%alance sheet &nd -rofit and .oss account *for the year ended March %&' ()&*+%alance $heet -rofit &nd .oss &ccount'inancial Ratios!ash 'low $tatement'unctional &reasI!I!I $ecurities 9 Institutional !orporate 'inance E/uity capital mar#et "ergers and &c/uisitions -rivate e/uityI!I!I $ecurities 0 -rivate 7ealth "anagementICICI Securities Ctd is an integrated securities firm that speciali+es in offering a varied bou/uet of customi+ed services to people such as yourself. Their services range from investment banking E private wealth management services to institutional broking( retail broking and financial products distribution catering to a hugely diverse customer base. Their services are patroni+ed by corporates( financial institutions as well as successful high net0worth individuals E other retail investors alike. Their ob!ective has always been to PCreate Informed 7ccess to the Wealth of the 3ation.7t ICICI Securities )rivate Wealth Management( they base their services on a simple yet powerful philosophy. They allow people to define their financial space Q with all the updated market information at their fingertips( a diverse bou/uet of products to choose from( the best in class services( and the essential ingredients for a well0balanced wealth management strategy( )eople will have a comprehensive wealth management platform at their disposal. Their out0of0the0bo$ approach and the opportunity to draw from their e$perience and e$pertise will ensure that that the interests are well looked after. I!I!I $ecurities 9 RetailICICI Securities empowers over A.5 million Indians to seamlessly access the capital market with ICICIdirect.com( an award winning and pioneering online broking platform. The platform not only offers convenient ways to invest in =/uity( 2erivatives( Currency utures( Mutual unds but also other services i$ed 2eposits( Coans( Ta$ Services( 3ew )ension Systems and Insurance are available. ICICIdirect.com offers a convenient and easy to use platform to invest in e/uity and various other financial products using its uni/ue A0in09 account which integrates customerMs saving( trading and demat accounts. 7part from convenience( ICICIdirect.com also offers access to comprehensive research information( stock picks and mutual fund recommendations among other offerings. Tailored services and trading strategies are available to different types of customers6 long term investors( day traders( high0volume traders and derivatives traders to name some.TechnologyICICIdirect.com uses the most advanced commercially available 9;*0bit encryptiontechnology enabled Secure Socket Cayer %SSC&( to ensure that the information transmittedbetween the client and ICICIdirect.com across the internet is safe and cannot be accessed byany third party.ICICIdirect.com is the first broker in India to introduce R2igitally Signed Contract 3oteM to itscustomers. 7s a result( the process of generating contract notes has been automated and thesame would be instantly available to its customers in a safe and secure manner through thewebsite.$election -rocess7t ICICI(theselection process aimsat gettingapplicantswhoare likely tosucceed atvarious roles in the organi+ation. The endeavor is to select people who have a high serviceorientation( are passionate about their career goals( and who display integrity and ethics inall engagements.Dependingonthelevel ofrecruitment7 theselectionprocessconsists of following com%inations: 7ptitude Tests Kroup 2iscussion %This method is primarily used for campus selection process& )sychometric )rofiling )ersonal Interview/ptitude Tests: 2esigned for entry level !obs( the aptitude test aims to assess basic aptitude of applicantsincluding 3umerical( 8erbal comprehension( logical reasoning and basic checkingabilities. 'roup Discussion:.ased on case studies( the group discussions are mainly conducted to !udge applicants ontheir analytical thinking( approach to hypothetical building around business situations andthe ability to break down comple$ problems to arrive at simple solutions.(sychometric (ro&ling: 7 /uestionnaire 0 based psychometric tool that assesses the typical or preferred behaviorofindividualsinworksettings.7pplicantsarere/uiredtocompletethe/uestionnairebeforetheyappearfortheinterview. Thistool givesusabetterunderstandingoftheapplicant and is not used for elimination of applicants.(ersonal Interview:7ll applicants are e$pected to go through the interview round( which is the final step inthe selection process. Training and DevelopmentOrgani:ational $tructure *)ierarchy+Roles and Responsi,ilities!hief Executive officer 2uty of C=1 is to direct the partners and to frame the policies of the organi+ation. The C=1 communicates with managing directors and regional heads once in a month over conference call. C=1s responsibilities is to check whether the organi+ation is moving in the right directions as per the policies framed. "anaging DirectorM2 ensures whether the all categories of managers of ICICI S=CB>ITI=S are strictly adhered to the policies framed by the C=1. Coming up with innovative strategies against competitors is another responsibility of M2.ExecutiveDirector=2s responsibility is to ensure that the ICICI S=CB>ITIS associates are following the process implemented by the top authorities( check the performances of the individual and decides the promotion of an individual.)ead of -roduction and Distri,utionThe level of contribution in terms of business by every region is reviewed by the head and feedbacks are circulated across the regions.Retail )ead7ny new contest for the month is decided by the head of production. 7sset allocation is also decided by the retail head. They communicate with the entire regional managers.Regional )eadThey are the key person for the business generated for ICICI S=CB>ITI=S. =very manager is allocated with different region to ensure that business is generated effectively and efficiently. They communicate with cluster managers. !luster "anagerThey are responsible to check whether the process implemented inside the organi+ation by the branch managers( senior relationship managers and relationship managers.%ranch "anagerCentre heads role is to guide the senior relationship managers and relationship managers in all parameters. They work on target basis and communicates with their cluster heads simultaneously.Relationship "anagersTheir role is to meet the clients and educate them on products they deal with and to convince the clients to stick on with ICICI S=CB>ITI=S. )roduct selling is the ma!or tasks which are to be done on target basis.Designations *Top team mem,ers+ and 'acilitiesDIRE!TOR$Chanda Fochhar( ChairpersonBday Chitale8inod Fumar 2hallShilpa FumarSarin 2aruwala7nup .agchi( Managing !irector " C#$7!ay Saraf( #%ecuti&e !irectorE;E!TI5E$Subir Saha8ai!ayanti 3aik>a!u 3anwani( Company Secretary)rashant Mohta( Chief Financial $fficer&DITOR$S. >. .atliboi E Co. CC)Chartered 7ccountantsRE3I$TERED O''I!EICICI Centre( '.T. )arekh MargChurchgate( Mumbai 4-- -;-!OR-OR&TE O''I!EICICI Securities CimitedShree Sawan Fnowledge )ark)lot 3o. 205-H( T.T.C. Industrial 7reaMI2C( Turbhe3avi Mumbai 4-- H-5$7OT &N&.4$I$The SW1T analysis is an e$tremely useful tool for understanding and decision0making for all sorts of situations in business and organi+ations. SW1T is an acronym for Strengths( Weaknesses( 1pportunities and Threats. SW1T analysis is perfect for business planning( strategic planning( competitor evaluation( marketing( business and product development and research reports. The SW1T analysis enables companies to identify the positive and negative influencing factors inside and outside of a company or organi+ation.$trengths0monetary assistance provided0high profitability and revenue 7ea#nesses0future competition0future profitability0unknown Opportunities0venture capital0new products and services0new markets0growing economy Threats0rising cost of raw materials0price changes0ta$ changes0increasing costs0financial capacity0increasing rates of interest IND$TR4 -RO'I.E"utual 'und Industry)istory of "utual 'und Industry When three .oston securities e$ecutives pooled their money together in 9?;4 to create thefirst Mutual und( they had no idea how popular Mutual unds would become. The idea ofpooling money together for investing purposes started in =urope in the mid09*--s. Thefirst pooledfundintheB.Swascreatedin9*?Aforthefacultyandstaffof'arvardBniversity. 1n March ;9st( 9?;4 the first official Mutual und was born. It was called theMassachusetts Investor trust.)istory of Indian "utual 'undBnit Trust of India was the first mutual fund set up in India in the year 9?,A. In early9??-s( Kovernment allowed public sector banks and institutions to set up mutual funds. Intheyear 9??;( Securities ande$change.oardof India%S=.I& 7ct was passed. Theob!ectives of S=.I are to protect the interest of investors in securities and to promote thedevelopment of and to regulate the securities market. 7s far as mutual funds areconcerned( S=.I formulates policies and regulates the mutual funds to protect the interestof theinvestors. S=.I notifiedregulations for themutual funds in9??A. Thereafter(mutual funds sponsored by private sector entities were allowed to enter the capital market.The regulations were fully revised in 9??, and have been amended thereafter from time totime. The mutual fund industry in India started in 9?,A with the formation of Bnit Trust ofIndia( at theinitiativeoftheKovernment of Indiaand>eserve.ank. Thehistoryofmutual funds in India can be broadly divided into four distinct phases.'irst -hase9 [email protected] Trust of India %BTI& was established on 9?,A by an 7ct of )arliament. It was set upbythe>eserve.ankofIndiaandfunctionedunderthe>egulatoryandadministrativecontrol of the >eserve .ank of India. In 9?H* BTI was de0linked from the >.I and theIndustrial 2evelopment .ank of India %I2.I& took over the regulatory and administrativecontrol in place of >.I. The first scheme launched by BTI was Bnit Scheme 9?,4. 7t theend of 9?** BTI had >s.,( H-- crores of assets under management.$econd -hase9egulations came into being( under which all mutualfunds( e$cept BTI were to be registered and governed. The erstwhile Fothari )ioneer %now merged with ranklin Templeton& was the first privatesector mutual fund registered in Guly 9??A. The 9??A S=.I %Mutual und& >egulationswere substituted by a more comprehensive and revised Mutual und >egulations in 9??,.The industry now functions under the S=.I %Mutual und& >egulations 9??,. The number of mutual fund houses went on increasing( with many foreign mutual fundssetting up funds in India and also the industryhas witnessed several mergers andac/uisitions. 7s at the end of Ganuary ;--A( there were AA mutual funds with total assets of>s.9( ;9(*-5crores. TheBnit Trust of Indiawith>s.44( 549crores of assets undermanagement was way ahead of other mutual funds.'ourth -hase 9 $ince 'e,ruary CEEBInebruary;--A( followingtherepeal oftheBnit Trust ofIndia 7ct 9?,ABTIwasbifurcated into two separate entities. 1ne is the Specified Bndertaking of the Bnit Trustof India with assets under management of >s.;?( *A5 crores as at the end of Ganuary ;--A(representing broadly( the assets of BS,4scheme( assured return and certain otherschemes. The Specified Bndertaking of Bnit Trust of India( functioning under anadministrator andunder therulesframedbyKovernment of Indiaanddoesnot comeunder the purview of the Mutual und >egulations. The second is the BTI Mutual und Ctd( sponsored by S.I( )3.( .1. and CIC. It isregistered with S=.I and functions under the Mutual und >egulations. With thebifurcation of the erstwhile BTI which had in March ;--- more than >s.H,( --- crores ofassets under management and with the setting up of a BTI Mutual und( conforming to theS=.IMutual und>egulations( andwithrecent mergerstakingplaceamongdifferentprivate sector funds( the mutual fund industry has entered its current phase consolidationand growth. 7s at the end of September( ;--4( there were ;? funds( which manage assetsof >s.95A9-* crores under 4;9 schemes.!urrent $cenarioThe Indian mutual fund industry continued the positive trend in the last /uarter of ;-94withaverageassetsunder management %7BM&risingtoarecordhighande$ceeding>s.99trillionmark( accordingtoC>ISIC%Credit >atingInformationServicesof IndiaCimited). 7verage 7BM rose 4.A4< or >s.45?.4, bn to >s.99.-, trillion %e$cluding fundof funds& in the /uarter ended 2ecember ;-94 as per the data released by the 7ssociationof Mutual unds in India %7MI&. The industrys average assets increased ;,.94< or by>s.;.;?trillionin;-94Qthefastest calendar year growthsincetheindustrystarteddeclaring /uarterly average assets in September ;-9-. Krowth in the latest /uarter wasprimarily driven by rise in the assets of e/uity funds6 the industrys total gain would havebeen higher but for the decline in 7BM of li/uid funds( M)s and gold =Ts.SuppliersWe! MaintainerMscl5sdl%S/0S/M5J9+T/%TI#6 /%T/1#%TKerodha. 8eo3it.India Infoline.0uyersSmall [email protected]!usinessMF 5ompaniesC>FSu!stitutessavins.1eal estate.Insurance0ank F.,.5ompetitorsC,F5securities ltdLotak securities ltdI%,I#0>66S etc.&pplication of the "ichael E. -orters 'ive 'orces "odel!ompetition in the industryThe industry is now in a fairly high growth phase. 'owever the brokerage industry is verycyclical andisimpactedbyactivitylevelsinthemarkets. 2uringthedownturnssuchas;--*0;--? periods( the smaller players were s/uee+ed out of the business. 7s a result there isa contrast consolidation happeningintheindustry.Competitionis among localas well asnational level players. The local players provide facility for off0line trading while the nationalplayers like ICICIdirect.com and Fotak( '2C security( Sharekhan provide online tradingservices.-otential of new entrants7 new entrant in addition to the above also needs a reasonable level of capital to fund the working re/uirements of the business %finance to customers( deposits with e$changes( etc&.The scale re/uirements are increasing constantly and as a result a new entrant will re/uire higher levels of investments in the future to enter the business. 7s pointed out( it is likely to see many entrants in the industry. 1n the contrary( it is likely that the smaller players will e$itby selling out or closing. Some of the new entrants are Keo!it( Serodha( 8entura( 7$is securities( etc.-ower of the supplier3ot much relevant in most segments e$cept investment banking( where employees control client relationships and hence have to be highly compensated and website maintainers also act as suppliers provide platform for the customers. MCT E 3C2=T are e$changes where commodities and derivatives are traded. 3S= and .S= are the stock e$changes where the stocks of different companies are traded. 'ere again stock brokers have to follow rules and regulations of S=.I. -ower of the customersThis is important in the brokerage business which involves high volume and low brokerage charges. The e$tent of buyer power is very low to non0e$istent in all kinds of retail segments.Threat of su,stitutesThe products offered by all firms in this industry are more or less differentiated. Investing rather saving in the bank rather than investing in a brokerage firm can be one option6 else thisis not applicable for this industry.'ere substitute are such instruments which can be used instead of investing in shares.The instruments like .ank 2( Insurance( and Stock e$changes are the substitutes..esearch DesignStatement of pro%lemCustomers perception on ICICI mutual fundsO,1ectives of research pro,lem 7wareness of mutual funds in Indian market. To identify the consumer behaviour while selecting a fund. To identify the consumer perception about mutual funds investing through ICICI 2I>=CT..$cope of the study The scope of the pro!ect is to demonstrate ICICI 2irects online platform( M. investmentand seek customers insight on their savings pattern."ethodology used-rimary Data( $urvey methodsThis method was adopted because it helps in procuring data and detail information from therespondents. 'ere I collected data by filling /uestionnaires( directly talking to therespondents.$econdary dataThe secondary data also used in this pro!ect( which include various written documents andother related information about the customer details in their pivotal document0software usedby ICICI 2I>=CT.$ample si:eThe sample of 59 clients having trading account with ICICI direct customers only had beentaken for the whole pro!ect and analysis had been e$plained on this data.