US food giant McCormik enters Indian market

New Delhi: US food giant McCormick and Company signed a joint- venture with country’s major basmati rice supplier Kohinoor foods and marked its entry in packaged food business.
Satish Rao, Managing Director of the venture in India today said, “This is an exciting strategic initiative and enables McCormick to expand its flavor business into India. Key growth drivers for this business are distribution expansion, product innovation and brand building investment.”
He also said that the company is targeting sales of around $85 million in the first year of operation.
Alan Wilson, Chairman McCormick on his visit said, “Our mission is not only to grow Kohinoor’s basmati rice business but also to expand it further in a big way through other food categories that deliver flavor like cooking ingredients and convenience food.”
Talking about Indian markets Wilson, said, “India is a top priority market for McCormick and is in line with our emerging market growth strategy. We foresee India to be a significant business for McCormick in 10 years and the company has been participating in the Indian economy for more than 100 years beginning with sourcing of pepper and other flavor ingredients from the country for international markets.”
So far McCormick has invested more than $150 million in India, he added.
While talking to reporters, Gurnaam Arora MD Kohinoor foods said that his company enjoys a market share of 25 per cent of organised rice retail.
The joint-venture Kohinoor Speciality Foods India Private Ltd., is in the

ratio of 85:15 between McCormick and Kohinoor.

PNB’s profit grows by 12.1 per cent, to decide on interest rates as per market trend

New Delhi: Country’s leading public sector bank, PNB today announced its results for the quarter ending on September’ 11 and said that they are waiting for market reactions to decide on increasing savings interest rates.

The bank registered a growth of 12.1 per cent in the net profit reaching to Rs 1205 crore as compared to a profit of Rs 1075 crore in second quarter of FY’11.
A growth of 22.5 per cent in total business of bank and 25 per cent in deposits was recorded in second quarter for the present financial year compared to the second quarter of previous year.
The total income of the bank rose by 37.2 per cent to Rs 9841 crore due to healthy growth of 38.7 per cent in interest income which reached Rs.8952 crore in the second quarter.
In the loans segment, the retail loans by 20.2 per cent on YoY basis and crossed Rs 24,000 crore at end September’11. On the other hand credit to MSME sector grew by 22.7 per cent to more than Rs 49,000 crore as at end September’11.
Talking about increase in deposit rates PNB Chairman and Managing Director KR Kamath told the reporters that "We are waiting for larger market players to react. Once more number of banks announce (new rate), our ALCO (asset liability committee) will take a call."
PNB currently offers an interest rate of 4 per cent on savings bank account, as was mandated by RBI.
But RBI last week had freed the banks to decide interest rate on their savings bank account.
Following this few private sector players raised their interest rates up to 6 per cent on their deposits of over Rs 1 lakh.
Talking about overseas plans of PNB, the bank said that it is upgrading its offices at Norway and China into branches, and is also exploring possibilities in Maldives, Bangladesh, Brazil and Singapore.
At present PNB's branch network stands at 5,300 with more than 5,600 ATMs.

ONGC net profit in Q2 jumps to 60%

New Delhi: State run oil exploration major, ONGC today announced a jump of 60.4 per cent in net profit of quarter ending on September, 11 compared to quarter – 2 of previous financial year.

With the support of lower subsidy payments and gains from high crude oil and gas prices, ONGC’s net profit for its fiscal second quarter ended September rose to Rs 8,642 crore, compared to Rs 5,389 crore in the previous financial year.
The net sales rose to Rs Rs 22,620 crore from Rs 18,190 in the previous financial year.
ONGC also made three new discoveries during the second quarter and one more in October'11 totaling to nine discoveries (five were made in the quarter ending in June, 11) so far in this fiscal. All these discoveries have been notified to DGH.
ONGC is required to partially subsidise crude oil sales to state-run refiners, which in turn sell fuel products at state-set, below-market prices.
The company holds 30 per cent stake in the Cairn-operated oil and gas fields in western India, also gave its nod for London-based miner Vedanta Resources' deal to buy a majority stake in Cairn India, subject to royalty payments being shared between the two partners.
It is expecting to get about Rs 1,900 crore on account of royalty recovery from Cairn India's Rajasthan blocks.
"The total recovery will be about Rs 2,500 crores. After tax, it should be about Rs 1,900 crores," ONGC Chairman Sudhir Vasudeva told reporters, adding this would be accounted for in the December quarter.

IDBI Mutual Fund launches gold exchange traded fund

Mumbai: IDBI Mutual Fund has launched 'IDBI Gold ETF', an open-

ended gold exchange traded fund. The new fund offer (NFO) will open for subscription on October 19 and will close on November two.

The date of allotment of units under the Fund would be November 10. The minimum application amount during NFO will be Rs 10,000 and in multiples of Re one, thereafter for all investors directly with the Mutual Fund.
The Fund will invest in physical gold and track gold prices. The benchmark for the fund would be domestic price of gold. The investment objective of the Fund is to replicate the performance of gold. It will seek to achieve the investment objective by minimizing the tracking error.
Talking to reporters here, RM Malla, Chairman and MD of IDBI Bank Ltd and Chairman of IDBI Asset Management Ltd, said "We, at IDBI Mutual Fund, see investment in gold as a component of prudent diversification to hedge against uncertainties, inflation and for long term benefits."
Debasish Mallick MD and CEO, IDBI Asset Management Ltd said "Gold Exchange Traded Funds (ETFs) track the price of physical gold in the domestic market and are very transparent and liquid investment products. IDBI Gold ETF units are proposed to be listed on NSE and BSE to impart liquidity.
Reputed Bullion Dealers have been appointed as market makers to provide buy-sell quotes in the markets on a regular basis. IDBI MF will also offer direct buy-sell options at NAV related prices for investments of 1000 units and above. Gold has generated consistent returns over times. It is a 'must-have' asset in any portfolio."

Tata Indicom integrates into Tata Docomo, launches Photon Max

Kolkata: In order to provide a wholesome and totally integrated data base services to its wide pool of customers, Tata Teleservices Limited (TTL) announced the 'total integration' of all its services under the single brand name of ‘Tata Docomo’.

Announcing this TTL Regional Head (East), Mahesh Thampi informed the media that under the new brand identity the company would now leverage its diversified products and services to customers in a unified manner using both the GSM and CDMA platforms.
Claiming that the new strategy was aimed to ensure speedy growth of improved services,
Thampi said currently as much as 25 per cent of TTL's revenue was being generated from high speed data services only, while the rest was coming from voice recorders and other services.
Further elaborating about the new plans of the company, he said the new portfolio of products, applications and solutions would not only allow the consumers to access cutting edge voice and data services, but also enable them to enjoy content of their choice and avail a host of solutions ranging from life and lifestyle assistance services.
Since all the Tata Indicom customers would now seamlessly be transferred into the integrated services of Tata Docomo, all of them would be able to utilise its facilities including the spectrums, retail touch phones and the digital footprints, etc., he said.
In order to increase its presence across the country under the new brand identity, Tata Docomo would be having about 3,500 new outlets across the country including 400 in eastern region; he informed but refused to shed any light on the size of possible investment in this regard.
The company also launched a 6.2 mbps mobile broadbad access product called 'Photon Max' on the CDMA platform for its consumers in Kolkata and its neighbouhood.
Reiterating that the new service would be available in all cities and towns across India soon Thampi said initially the Photon Max would be released under two schemes under an introductory offer prices of Rs 1999 with a minimum monthly rental of Rs 750.

NIC registers a profit of Rs 75 crore

Visakhaptnam: General insurance major, National Insurance Company (NIC) announced that the company earned a profit of Rs 75 crore for the year 2010-11.

Addressing a press conference after inaugurating the 26th Regional Office here, Chairman and Managing Director NSR Chandra Prasad said the company had set a target of Rs 8080 crore for the year 2011-12 and had already achieved business of Rs 3670 crore in the first six months.
It had clocked a business of Rs 6,245 crore last year and had tied up with companies like Maruti, Hero Honda, Ashok layeland tata Motors and others.
He said that the company tied up with the Maharastra Government for their health insurance scheme – Rajiv Gandhi Jeevan Aarogya Scheme which was being implemented in eight districts.
It plans to set up second regional office in Jodhpur in Rajasthan, third regional office at New Delhi and at present it has 1350 branches and 26 regional offices across the country.
The company also plans introduce new products---Credit Insurance Product and Agricultural insurance product soon.

JSW Steel reports net profit of Rs 127.12 crs in Q2

New Delhi: JSW Steel Limited reported net profit of Rs.127.12 crores for second quarter of FY12, on standalone basis. The company stated that its profit would have been much higher had the production not cut due to severe iron ore shortage and also the forex translation losses of Rs 512.98 crores due to adverse movement in rupee dollar parity.

The turnover and net sales for the quarter stood at Rs 8,242.55 crores and Rs 7,625.06 crores, respectively, showing a growth of 33 per cent over the corresponding quarter of the previous year, mainly due to higher volume and improved sales realization. The EBIDTA for the quarter is Rs 1,332.95 crores up by 15 per cent over the corresponding quarter of the previous year. The company has posted a net profit after tax of Rs 127.12 crores after considering foreign exchange translation losses.
During the current quarter, company achieved production of crude steel of 1.738 million tonnes. Production volume grew by 11 per cent in crude steel, 2 per cent in rolled flat products and 30 per cent in rolled long products relative to that of corresponding quarter of the previous year.
Company’s production was lower at least by 4,50,000 tonnes due to acute shortage of iron ore and higher procurement cost of iron ore also increased the cost of production of steel by about Rs 1500 per tonne during the quarter.
It achieved quarterly sales volume of 1.882 million tonnes, 19 per cent growth in sales volume and 33 per cent in Net sales value, compared to that of corresponding quarter of the previous year.
The Company has been facing for the past few months severe shortage of Iron ore due to banning of Iron-ore mining in the State of Karnataka by the Honorable Supreme Court of India. This problem of acute shortage of Iron-ore was further accentuated in Sept.'2011 when there was delay in the implementation of the Honorable Supreme Court’s directive to make available Iron-ore to the Steel Companies from stock piles and NMDC production through E Auction. This led to a steep drop of 28 per cent in crude steel production in Sept.'2011 as compared to August'11, as the Company cut down its production at Vijayanagar Works to 30 per cent in the last week of Sept.'2011
The Company’s Vijayanagar Works secured 1.924 million tonnes and Salem Works secured 0.156 million tonnes of Iron-ore in the E Auctions conducted so far by the ‘Monitoring Committee; against which the Iron ore received at site is only around 18 per cent of total material procured by Vijayanagar Works in E-Auctions. The Company is yet to improve capacity utilization significantly from existing levels as the receipt of E-Auction material is taking considerably longer time due to procedural delays and logistical constraints.

L&T reports 20% growth in revenue in Q2

New Delhi: Larsen & Toubro reported a Gross Revenue of Rs 11375 crore for the quarter ended September 30, 2011, registering a growth of 20 per cent y-o-y.
Order inflow of Rs 16096 crore during the quarter took company's order books to Rs 142185 crore as on September 30, 2011.
Despite the current slowdown in new investment decisions in many industries, and uncertainty in global markets, the Company succeeded in garnering orders against stiff competition, mainly from Building & Factories, Hydrocarbon, Minerals & Metals and Power Transmission and Distribution sectors.
Profit after Tax (PAT) for the quarter from ordinary activities stood at Rs 798 crore recording an increase of 15 per cent over the corresponding quarter of the previous year.
The Engineering & Construction segment achieved Gross Revenue of Rs 9,704 crore for the quarter ended September 30, 2011 registering a growth of 21 per cent y-o-y. Execution of various ongoing projects is progressing as per schedule.
During the quarter, the segment secured orders totaling to Rs 14,552 crore with International orders constituting 35 per cent of the total order inflow. The segment margin at 10.7 per cent during the quarter was maintained almost at the same level seen in the immediately preceding quarter, despite an unabated increase in key input costs.
The Order Book of the segment stood at a healthy Rs 1,39,891 crore as at September 30, 2011. The segment recorded an operating margin of 11.9 per cent during the quarter ended September 30, 2011 aided by efficient project management and execution.
The Machinery and Industrial Products segment recorded Gross Revenue of Rs 666 crore during the quarter ended September 30, 2011 on the back of a general downtrend in the industrial off-take. The segment earned an operating margin of 17.7 per cent during the quarter ended September 30, 2011 mainly contributed by the Construction & Mining Machinery Business.
The current slowdown in investment momentum witnessed in almost all sectors of the economy, is constraining growth opportunities. Intensifying competition, high inflation, elevated interest rates, volatile financial markets and delayed policy intervention are posing considerable challenge for the decision-makers. Irrational pricing offered in the market place for the limited pie of opportunity, is yet another factor to reckon in selection of remunerative projects to participate in.
While keeping itself ever agile to win every worthwhile prospect meriting attention, be it in the domestic or in the international market, the Company is focused on timely execution of its large order book.
In the medium term, the company sees itself in a strong position to maintain its revenue growth trajectory and stay totally prepared to benefit from opportunities when they materialise.

PNB bags best bank award

New Delhi: One of India’s premier banking institution, Punjab National Bank (PNB) has been conferred with the ‘Best Bank Award – 2011’ among all the banks in the country.

The award was received KR Kamath CMD PNB, from the hands of C Rangarajan Chairman

Prime Minister’s Economic Advisory Council.
Speaking on the occasion, Rangarajan said that the best way to promote excellence is to honour persons and institutions who are excellent and added that the year 2011 was a difficult year and getting the ‘Best Bank Award’ for the year is a remarkable achievement.
Chairman, Bank of Baroda and also the Chairman of the Jury MD Mallya observed that while selecting the Best Bank, the Jury went beyond the numbers also. He said that Kamath has the qualities of a leader to lead a large Bank like PNB in the long term, and has built the team.
On receiving the honour, Kamath said that PNB has a rich legacy and a large franchise of loyal
customers. Technology is an important strength of PNB and it transacts 5 million transaction per
day and has also developed 22 risk rating models in house.
The bank will be recruiting ten thousand employees this year, he added.
While concluding his speech he said “the best in us is yet to come”.
The function was also attended by Rakesh Sethi and Usha Ananthasubramanian, EDs, PNB. The other dignitaries present on the occasion were MV Nair CMD Union Bank of India, MV Tanksale CMD Central Bank of India.

MTS to launch international data roaming for CDMA prepaid customers

Gurgaon: Sistema Shyam TeleServices Limited (SSTL) that nationally operates its telecom services under the MTS brand with over 13 million wireless customers launched international roaming services for its prepaid subscribers enabling them to roam across 433 GSM networks in 231 countries.

The company has also launched a dual mode sim cards which would work both on GSM handsets while abroad and on CDMA handsets while in India. With this MTS has become the first telecom operator in the country to provide international data roaming for CDMA prepaid customers.
Leonid Musatov chief marketing & sales officer, MTS India said we at MTS are always looking at innovation in our products and services to enhance customer experience. With a view to enhance connectivity and convenience, we have now introduced international roaming services for our customers. This would enable our customers to stay connected while traveling abroad without changing their phone numbers and also enjoy seamless data connectivity on the go, internationally.
Post the initial activation of international roaming service, customers can simply dial MTS customer care to activate or deactivate international roaming on their MTS mobile numbers.
MACH’s inter-standard roaming solution will enable CDMA operators around the world to provide their pre-paid and post-paid customers with seamless access to international roaming on GSM and high-speed 3G networks and other wireless technologies.
It is both quick and easy to implement, providing a cost-effective extension of network coverage and reducing customer churn.
MACH provides services to telecom operators with roaming, interconnect, messaging, and direct billing solutions. It is the largest provider of data and financial clearing solutions for wireless roaming and operates the globe’s largest and fastest growing open connectivity roaming hub, Link2One.

NTPC –Dadri stage II awarded for project excellence by IPMA

New Delhi: The project team of NTPC for Dadri stage II underwent the assessment process according to International Project Management Association (IPMA) model for project excellence and has achieved the highest status of prize winner in award category for ‘project excellence in mega sized projects’.

Earlier also NTPC Simhadri and Vindhyachal were awarded in the year 2005 and 2008 respectively for excellence in project implementation by IPMA.
NTPC team consisting SN Ganguli RED (WRII), PR Dahake General Manager (Dadri) and KS Rajeev AGM, received the honor at the 25th IPMA world congress held in Brisbane recently.
IPMA annually presents project management awards to most successful project teams and researchers. The aim of the award is to increase recognition of project work and to motivate project teams to develop and improve.
IPMA is the world‘s first project management association, founded in 1965 and offers unique, role –specific competence development guidelines for improved project and program success.

OVL inks agreement of cooperation with Petro Vietnam

New Delhi: ONGC Videsh Limited (OVL) and Vietnam Oil and Gas Group (PetroVietnam), National Oil Company (NOC) of Socialist Republic of Vietnam signed an agreement of cooperation here in the presence of visiting President of Socialist Republic of Vietnam, His Excellency Truong Tan Sang and the Honourable Prime Minister of India, Manmohan Singh.

The agreement was signed by Phung Dinh Thuc, Chairman of the Board of Directors, PetroVietnam and DK Sarraf, CEO and Managing Director, OVL.
The agreement intended for developing long term cooperation in oil and gas industry and shall be in force and effect for three years. Some of the key areas in which both the companies are desirous to cooperate are related to the exchange of information on the petroleum industry, exchange of working visits of authorities and specialists in various domains of the petroleum industry, new investments, expansion and operations of oil and gas exploration and production including refining, transportation and supply in Vietnam, India, and third countries according to the laws and regulations of their countries.
The cooperation between OVL and PetroVietnam dates back to 1980s which culminated in signing of the production sharing contract between Hydrocarbon India Ltd., (renamed later as ONGC Videsh Limited) and PetroVietnam on 19th May 1988 for Block 06.1. The development of the gas fields in the block is of national and strategic importance to Vietnam. This contributes about 50 per cent of the gas requirement for the domestic sector.
Both the companies have cordial relations which paved the way for the award of two exploration blocks 127 and 128 in Phu Kanh basin in Vietnam to OVL during June, 2006 through regular bidding process.
Both the companies, over the years, have made significant growth in the hydrocarbon sector within their respective countries and outside. Discussions have been held at high levels to further expand the cooperation not only in Vietnam and India but also in third countries.
Vietnam’s upstream oil and gas sector has attracted a host of international oil companies and Asian national oil companies in the recent past. OVL is keen to enhance its investments in Vietnam offshore for exploration and production of oil and gas.

Edelweiss Tokio life to focus on customer centricity

New Delhi: Edelweiss Tokio Life Insurance, a joint venture between Edelweiss Financial Services and Japanese Insurance major Tokio Marine Holdings announced that it has set a target of insuring 5 million lives by 2015.

The company opened its 13th branch in the country and first in Delhi which follows launching of its operations in Gujarat, Maharashtra, Chandigarh, Punjab and Haryana. The company plans to launch 9 more branches during the current financial year, totaling upto 22 branches - all in North and Western India and extend them to South and Eastern India next year. This would be expanded to 64 branches by FY 14 and 75 branches by FY 15.
Jun Hemmi, Executive Director of Edelweiss Tokio Life Insurance said, "Our entire business model is built on the principles of customer centricity, cost efficiencies and agent productivity.
He also informed that the company plans to add 50 thousand agents over a period of five years and told that nine of the insurance products have already been approved by IRDA and seven are under approval.
He further said that the hyper growth the industry has seen in the last decade has also resulted in several inefficiencies creeping in. As the 24th entrant into the market and the first one after the regulator has changed guidelines governing the industry, we have the opportunity to learn and build the appropriate systems and processes right from inception.
Talking about the industry scenario and the company's approach he said, "India has among the lowest penetration of life insurance in the world. However, by 2020 India is expected to emerge as one of the top three life insurance markets. The country has among the highest savings rate in the world and about 20 per cent of which gets invested into life insurance. Despite some recent re-adjustments in the industry, we believe that the opportunity in the life insurance space is huge. What has changed following the new guidelines mandated by Insurance Regulatory and Development Authority (IRDA) is the renewed focus on product innovation and competitive pricing. We believe that it also needs a new method of selling which focuses on customers and their needs. Our entire orientation is based on this premise."
While talking about future plans, he informed that they plan to enter asset management business. He also said the weak point of Japanese institutional investors is that they are reluctant to invest in India because of currency fluctuation.
Yash Prasad, Chief Agency Officer said, "We have put in place the most stringent agent recruitment and training processes in the industry. Our personal finance advisors have to undergo rigorous training specially designed to blend the Indian context and our international experience.
In terms of duration, it is three times that mandated by IRDA. This is expected to lead to higher customer satisfaction. The entire focus would be to develop a long term relationship with our customers rather than achieve a short term sale."
In a brief conversation with us about the competition in the life insurance business he said our customer centric approach will gain us more customers and added that life insurance sector is coming towards achieving its purity which will help in growth of the industry.
Both JV partners in the company -- Edelweiss and Tokio Marine -- together have committed a paid up capital of Rs 550 crore, which is among the highest by any private sector life insurance company at start up stage.

ZTE becomes world’s first telecom company to get the highest level of security certification

New Delhi: ZTE Corporation, a leading global provider of telecommunications equipment and network solutions, announced that it has been awarded the ISO 15408 Common Criteria Certificate for its GSM equipment.

With this, ZTE has become the first telecom company in the world to get the ISO 15408 Common Criteria (CC) Certificate for its GSM equipment MSCS (Mobile Switching Center Server). The ISO 15408 Common Criteria (CC) Certificate is currently the highest level of security certification for telecommunication equipments.
Currently Common Criteria (CC) is the internationally recognised information technology security certification required. The standard adopted in this certification is IEC/ISO15408, which is also known as the CC standard, or the Common Criteria for Information Technology Security Evaluation. CC certification is managed by the national security agency of each CC member state. There are 26 CC member states, including European nations, the United States and Japan, as well as emerging countries such as India.
ZTE India CEO Cui Liangjun said, “We are delighted to receive the ISO 15408 CC, which is the highest level of security certification globally. This amply demonstrates ZTE’s seriousness towards complying with global security standards and offer superior products and solutions that are reliable and secure”.
ZTE provides telecommunications equipments and network solutions with product range covering almost every sector of the wireline, wireless, service and terminals markets.
The company delivers innovative, custom-made products and services to over 500 operators in more than 140 countries, helping them to meet the changing needs of their customers while achieving continued revenue growth.

StanChart appoints Chalisgaonkar as SME head

Mumbai: The country's largest foreign lender Standard Chartered announced the appointment of Rajeev Chalisgaonkar as the SME banking head in India and South Asia.
Prior to his appointment, Chalisgaonkar was associated with another British lender Barclays, where he was the head of corporate banking business.
"Rajeev has a proven track record in setting up and growing the SME business across geographies critical for us from a growth stand point which will be an added advantage,"
Standard Chartered Bank Regional Head South Asia and Group Chief Marketing Officer (Consumer Banking) Sanjeeb Chaudhuri said in a statement.
Standard Chartered operates 94 branches in 37 cities in the country. Its SME client list stood at 52,000 as of June, while the SME assets grew 30 per cent.

Bachchan & Parker to re-unite

By Pulkit Gupta

New Delhi:  Luxor Writing Instruments said it has signed Bollywood star Amitabh Bachchan as the brand ambassador for 'Parker' pens in India for two years.
Earlier, Mr. Bachchan was associated with the brand from 2001 till 2008 and did enormous ads to promote the brand.
 "With the re-signing, Luxor looks at creating a new high for brand Parker in India...Both Parker and Mr. Bachchan stand for knowledge, heritage, lineage and value. So the fit is perfect," the company said in a statement.
Bachchan will soon be seen with Parker in an extensive all India multimedia campaign, it added.
Parker was launched in India in 1996 by Luxor Writing Instruments Pvt Ltd and is currently available in more than 50000 outlets in India.
The company produces over 300 million pens every year under Luxor, Pilot, Parker and Waterman brand.

Businessdiction: MUTUAL FUNDS

By Pulkit Gupta


Atleast 20 times a day through tv, newspapers, internet, people, hoardings we all hear this term 'mutual funds' but what is this Mutual Fund???
A 'mutual fund' can be described as a fund that is pooled by a large group of investors who give their money to a fund manager (or group of fund managers) of an investment company to invest in equities, debentures, bonds, etc. depending upon the various schemes floated by asset management firms and charge a very small fee for their services.

History of Mutual funds

• Mutual funds evolved from unregulated investment pools put together by individuals in Europe during the 19th century. The first legitimate U.S. based mutual fund began operations in 1924. After the Wall Street crash of 1929, the federal government began to regulate the fledgling industry. The 1934 Securities Exchange Act required mutual fund companies to register with the Securities and Exchange Commission. The 1940 Investment Company Act provided the structural framework for modern-day mutual funds.
• So how these funds work!!
• Firstly, a mutual fund scheme is floated in the market by the asset management firms and they give all the details through a prospectus, that how and where the fund would be invested, including all the fees and terms & conditions. The fund is divided into 'units', which an investor can purchase in accordance to his pocket. Though such funds generally come with a minimum investment clause, in which an investor has to invest a minimum amount declared in the prospectus of the fund. The current value of these funds are calculated on a daily basis (generally the working days of stock markets), on the basis of which the Net Asset Value (NAV) of a fund is declared, which is the market value of a fund minus its liabilities. NAV's keep on changing according to the condition of the stock markets and other instruments in which the money is invested. Investors can exit from these funds according to the type of fund or the conditions mentioned in the prospectus while entering the fund.
• One must be aware of the fact that while buying or selling the units of a mutual fund, asset management firms levy charges on their investors. The fees levied while buying is called 'entry load' and while selling its called 'exit load'.

What are different types of Mutual funds?

A very important question which pops up is what are these different kinds of mutual funds because while investing in a mutual fund all an investor gets to know is all those fancy names like magna fund, aggressive growth fund, emerging markets fund, etc. Mutual funds can be categorised as follows:

a) In accordance to type of investments :
Whenever a mutual fund scheme is introduced in the market, its prospectus will always give you details about where all the money of the fund would be invested. This can be further categorised as follows:

1) Equity funds: Funds that invest only in equities or stocks of various listed companies, these can be further divided to small-cap, mid-cap, large-cap.

2) Balanced or Diversified funds: Funds that invest in equities as well as debt instruments to avoid excessive risk.

3) Gilt funds: Funds which invests in several different types of medium and long term government securities in addition to high quality corporate debt.

4) Money Market funds: These are the funds which invests in the money markets instruments and are short term investments.

5) Sector Specific funds: These are the ones which only invests in a particular sector like banking, real estate, services, etc.

6) Index funds: Its a kind of a fund which invest in the equities which are a part of  index of a particular stock market.

7) Income funds: The objective of these funds is to invest in debt papers. Government authorities, private companies, banks and financial institutions are some of the major issuers of debt papers. By investing in debt instruments, these funds ensure low risk and provide stable income to the investors. These are some what similar to Gilt Funds.

b) In accordance to time of closure of the fund:
A fund is also classified on the basis of its closure date. Some funds have a fixed date of closure and some don't have a definite closure date.

1) Open Ended funds: Funds which do not have a specific date of closure are known as open ended funds.

2) Close Ended funds: These are the funds which have a specific date of closure.

c) Tax Incentive funds:
There are certain funds which offer tax saving benefits to its investors on long term basis.

d) On the basis of payouts by the fund:
Mutual funds can also be classified on the basis of periodicity of its payout to its investors. At time of investment, investors are given the options for payout on their investment.On this basis it can be divided in two types:

1) Dividend Paying funds: Under this option an investor is paid a dividend from time to time as per the profits earned by the fund. But this dividend is given on the discretion of the asset management company as it may require funds to increase the fund's NAV or for expansion of the fund.

2) Reinvestment Schemes: As per this option, the investor's dividend would be re-invested in the fund. He would be allotted additional units of the same fund in the ratio of dividend earned and current market price per unit.

A mutual fund scheme may come under combinations of various categories mentioned above. An investor should enquire about all the possible details before entering into any such fund. Investors can exit the fund anytime as per their requirement by paying exit load and the earning would be calculated according to the current market value of the unit of a fund which entirely depends upon the NAV of the mutual fund.

Investment in mutual funds is beneficiary as it gives you a regular or high return on your investments as compared to what you get via fixed deposits or any other investment scheme.
A mutual fund can not be described as risk free investment but can be a wise way of investing for a layman as their money is looked after by a team of professionals but its advisable that investors should check the previous performance of the asset management company offering the mutual fund scheme.