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Investment

option

Rate of

interest (%)

Inflation (%) G D P (%) DIFFERENCE

SAVING A/C 3.75 6 8.5 -2.25(NEGATIVE

RETURN)

FIXED

DEPOSIT

8-9.5 6 8.5 THE

ACCOMMODATE

BY PRESENT

VALUE FACTOR

GOVT.

BOND

7-8 6 8.5 -0.5 (NEGATIVE

RETURN)

REAL

ESTATE

30+ 6 8.5 HIGH AMOUNT

OF MONEY

REQURIED FOR

PURCHASE OF

REAL ESTATE

KISSAN

VIKAS

PATRA

7-8 6 8.5 -1(NEGATIVE

RETURN)

POST

OFFICE

DEPOSIT

6.5-8.5 6 8..5 AVERAGE

MUTUAL 20-30 6 8.5

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While the Indian mutual fund industry has grown in size by about 320% from March,

1993 (Rs. 470 billion) to December, 2004 (Rs. 1505 billion) in terms of AUM, the AUM of

the sector excluding UTI has grown over 8 times from Rs. 152 billion in March 1999 to $

148 billion as at March 2008.

Though India is a minor player in the global mutual fund industry, its AUM as a

proportion of the global AUM has steadily increased and has doubled over its levels in

1999.

The growth rate of Indian mutual fund industry has been increasing for the last fewyears. It was approximately 0.12%

in the year of 1999 and i t is noticed 0.25% in 2004 interms of AUM as percentage of global AUM.

Some facts for growth of mutual fund in indiaNumber of foreign AMCs is in the queue to enter the Indian markets.Our saving rate is over 23%, highest in the world. Only channelizing these savings in mutual

funds sector is requiredWe have approximately 29 mutual funds which is much less than US having

more than 800. There is a big scope for expansionMutual fund can penetrate rurals like the Indian insurance industry with simple

and limited products.Introduction of Financial Planners who can provide need based advice

Recent trend in mutual fund

The most important trend in the mutual fund industry is the aggressive expansionof the foreign owned mutual fundcompanies and the decline of the companiesfloated by the nationalized banks and smaller private sector players.

Many nationalized banks got into the mutual fund business in the early ninetiesand got off to a start due to the stock

market boom was prevailing. These banksdid not really understand the mutual fund business and they just viewed it

asanother kind of banking activity. Few hired specialized staff and generally choseto transfer staff from the parent

organizations. The performance of most of the

schemes floated by these funds was not good. Some schemes had offeredguaranteed returns and their parent

organizations had to bail out these AMCs bypaying large amounts of money as a difference between the guaranteed

andactual returns. The service levels were also very bad. Most of these AMCs havenot been able to retain staff, float

new schemes etc.

SWOT Analysis

Strengths:

* Rich experience of the management.

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Good brand equity

Giving the very good return from inception

* Stabilized and loyal clients.

* Well combination of new energetic and experienced employees.

* Wide variety of investment product to match with every level of customer

* Giving the mutual fund exposure

Weakness:

* Insufficient office equipments.

* Not all employees have his/her cabin.

* Work place (back office) is quite congested.

* Not very popular in rural area

Opportunities:

* Stability through increased brand awareness, market penetration and

Service offerings

* Across all categories of financial services.

* Increase in customers wallet share.

* Leveraging the latest technology for providing quality and client centric

Services.

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Threats;

* Increasing interest rate scenario.

* Execution risk.

* Competition from local and multinational players.

* Rising inflation could reduce savings and investments