KARVY STOCK BROKING LTDkarvypms.com/files/KSBL PMS RDD 26th Aug, 2019.pdf · KARVY STOCK BROKING...

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KARVY STOCK BROKING LIMITED

PORTFOLIO MANAGEMENT SERVICES

DISCLOSURE DOCUMENT

[As required under Regulation 14 of SEBI (Portfolio Managers) Regulation, 1993]

1. This document supercedes the Disclosure document dated February 18, 2019 , filed with

Securities and Exchange Board of India (SEBI) on February 18, 2019

2. This Disclosure Document has been filed with SEBI along with the certificate from independent

chartered accountant in the prescribed format in terms of Regulation 14 of the SEBI (Portfolio

Managers) Regulations, 1993 as amended till date.

3. The purpose of this Disclosure Document is to provide essential information about the

portfolio management services offered by Karvy Stock Broking Limited in such manner as to

assist and enable the investors in making informed and considered decision for engaging Karvy

Stock Broking Limited as a Portfolio Manager.

4. This document contains the necessary information about the Portfolio Manager required by an

investor.

5. Karvy Stock Broking Limited is permitted to provide Portfolio Management Services pursuant

to its registration as a portfolio manager with SEBI vide Registration number INP000001512

dated November 1, 2005 which registration shall be valid unless it is suspended or cancelled by

SEBI and is subject to payment of renewal fees to SEBI from time to time.

6. Investors should carefully read this entire document before making a decision to avail portfolio

management services from Karvy Stock Broking Limited and retain this document for future

reference. Any other relevant information may be provided upon request.

7. No person has been authorized to give any information or to make any representations not

confirmed in this Disclosure Document in connection with the services proposed to be

provided by the Portfolio Manager, and any information or representations not contained

herein must not be relied upon as having been authorized by the Portfolio Manager.

8. The Principal Officer designated by Karvy Stock Broking Limited, the Portfolio Manager is:

Name of the Principal Officer VIKAS RAJPAL*

Tel No: 022 61491606

Email : [email protected]

Address: 701, Hallmark Business Plaza,

Sant Dnyaneshwar Marg,

Bandra (E), Mumbai 400 051

mailto:[email protected]

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*The Principal Officer has changed from Mr. Sagar Jethwani to Mr. Vikas Rajpal with effect

from April 16, 2019

9. This disclosure document is dated August 26, 2019

Karvy Stock Broking Limited (CIN : U67120TG1995PLC019877)

Corporate Office: 701, Hallmark Business Plaza, Sant Dnyaneshwar Marg, Bandra (E) Mumbai

400 051

Registered Office: Plot No.31/P, Karvy Millennium, Nanakramguda Financial District, Gachibowli Hyderabad Telangana 500032

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Portfolio Management Services

KARVY STOCK BROKING LIMITED

SEBI Registration No. INP000001512.

INDEX

Sr No Contents Page Number

1 Disclaimer 4

2 Definitions 4 – 7

3 Description - The Portfolio Manager

I History, Present Business and background of the Portfolio

Manager.

7-8

Ii Promoters of the Portfolio Manager, Directors and their

background.

8 – 9

Iii Details of the top 10 group companies of the Portfolio manager

based on turnover as on March 31, 2019 [Based on latest audited

financial statements for companies where audit is completed]

10 -11

4 Penalties/Pending Litigations/Proceedings etc 11-12

5 Services offered 12 – 15

6 Risk Factors 16- 19

7 Client Representation

I Category of clients as on July 31, 2019 19 - 20

Ii Complete disclosure in respect of transactions with related

parties as per the standards specified by the Institute of

Chartered Accountants of India as on March 31,2019

20 -24

8 Financial Performance of Portfolio Manager, Karvy Stock Broking

Limited

24 – 25

9 Portfolio Management Performance of the Portfolio Manager for

last 3 years

25 – 28

10 Nature of Expenses 28 – 29

11 Taxation 29

12 Accounting Policies 32 – 34

13 Investor Services 34

14 Grievances Redressal 34 - 35

15 Dispute Settlement Mechanism 35

16 General 35

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Section 1: DISCLAIMER

This document has been prepared in accordance with the Securities Exchange Board of India (Portfolio

Managers) Regulations, 1993, as amended from time to time and other circulars issued by SEBI from

time to time and has been filed with SEBI. This Document has neither been approved nor disapproved

by SEBI nor has SEBI certified the accuracy or adequacy of the contents of this Document.

This information is not for public distribution and has been furnished to you solely for your information

and may not be reproduced or redistributed to any other person.

Section 2: DEFINITIONS

In this Agreement, unless otherwise clearly indicated by or inconsistent with the context, the following

expressions shall have the meaning assigned to them hereunder respectively:

“Act” – means the Securities and Exchange Board of India Act, 1992.

“Agreement” means the agreement entered between Karvy Stock Broking Limited, the Portfolio

Manager and the client for the management of funds or securities of the client in terms of Regulation

14 of the SEBI (Portfolio Managers) Regulations, 1993 and SEBI (Portfolio Managers) Amendment

Regulations, 2002 issued by the Securities and Exchange Board of India and as may be modified from

time to time and shall include all schedules and annexures thereto and shall also include all

modifications, alterations, additions or deletions made thereto in accordance with the terms thereof.

“Board” means the Securities and Exchange Board of India.

“Bank Account” means one or more bank accounts opened, maintained and operated by the Portfolio

Manager in the name of clients or a pool account in the name of the Portfolio Manager in which the

funds handed over by the client shall be held by the Portfolio Manager on behalf of the Client.

“Chartered Accountant” means a chartered accountant as defined in clause (b) of sub-section (1) of

section 2 of the Chartered Accountants Act, 1949 (38 of 1949) and who has obtained a certificate of

practice under sub-section (1) of section 6 of that Act.

“Client” means any body corporate, partnership firm, Limited Liability Partnership, individual, HUF,

association of person, body of individuals, trust, statutory authority, or any other person who enters

into agreement with the Portfolio Manager for availing the Portfolio Management Services

“Custodian” means any person who carries on or proposes to carry on the business of providing

custodial services in accordance with the regulations issued by SEBI from time to time.

“Depository” means Depository as defined in the Depositories Act, 1996 (22 of 1996) and currently

includes National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited

(CDSL).

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“Depository Account” means any account of the client or for the client with an entity registered as

depository participant under sub-section 1A of Section 12 of the Act or any other law for the time being

relating to registration of depository participants in which the securities comprising part of the

Portfolio of the Client are kept by the Portfolio Manager.

“Discretionary Portfolio Management Services” means the discretionary portfolio management

services rendered to a Client by the Portfolio Manager pursuant to the terms and conditions contained

in the Portfolio Management Services Agreement, where under the Portfolio Manager exercises

absolute and unfettered discretion, with regards to the investments and management of the portfolio

of securities or the funds of the client, as the case may be.

“Disclosure Document” means this disclosure document for offering Portfolio Management Services.

“Financial year” means the period of twelve months commencing on 1st April every year and ending on

31st March of the following year.

“Funds” means the monies placed by the Client with the Portfolio Manager and any accretions thereto

and also includes any further monies placed by the client with the Portfolio Manager to be managed

pursuant to the Agreement, the proceeds of the sale or realization of the portfolio and any other

monies so long as the same is being managed by the Portfolio Manager.

“Funds managed” means the market value of the Portfolio of the Client as on date.

“Fund Manager” (FM) means the individual/s appointed by the portfolio manager who manages,

advises or directs or undertakes on behalf of the client (whether as a discretionary portfolio manager

or otherwise) the management or administration of a portfolio of securities or funds of the client, as

the case may be.

“Initial Corpus” means the value of the funds and the market value of securities brought in by the

client and accepted by the Portfolio Manager at the time of registering with the Portfolio Manager for

the portfolio management services. The Initial corpus brought in by the Client in the form of securities

shall be valued at the closing market price of such securities, prevailing on recognised stock exchange

[NSE/ BSE (only if security is not listed on NSE)] on the previous working date of activation of client’s

portfolio management account by the Portfolio Manager or of the previous working day of the transfer

of such securities from client’s account to the Depository account whichever is later. The Portfolio

Manager shall not accept from the client/ client(s) , in case of joint holding funds or securities worth

less than Twenty five lakh rupees.

“Investment Advisory Services” means the non exclusive, non binding services, where the Portfolio

Manager advises Clients on investments in general or gives specific advice required by the Clients as

agreed upon in the Agreement. Advice, whether general or specific is non-binding in nature and it is

entirely at client’s discretion to follow the advice

“Non-Discretionary Portfolio Management Services” means the non-discretionary portfolio

management services to be rendered to a Client by the Portfolio Manager on the terms and conditions

pursuant to the Agreement, where under the Portfolio Manager invests and manages the Funds of the

Client based on the instructions of the Client.

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“Net Asset Value” or “NAV” means the market value of the Assets managed by the Portfolio Manager,

as calculated by the Portfolio Manager from time to time, depending on the Strategy chosen by the

Client.

“Person directly or indirectly connected” means Related Parties as defined under section 2(76) of the

Companies Act, 2013 - “Related Party” with reference to a company, means—

(i) a director or his relative;

(ii) a key managerial personnel or his relative;

(iii) a firm, in which a director, manager or his relative is a partner;

(iv) a private company in which a director or manager is a member or director;

(v) a public company in which a director or manager is a director or holds along with his relatives, more than two per cent. of its paid-up share capital;

(vi) any body corporate whose Board of Directors, managing director or manager is accustomed to act in accordance with the advice, directions or instructions of a director or manager;

(vii) any person on whose advice, directions or instructions a director or manager is accustomed to act:

Provided that nothing in sub-clauses (vi) and (vii) shall apply to the advice, directions or instructions given in a professional capacity;

(viii) any company which is—

A. a holding, subsidiary or an associate company of such company; or

B. a subsidiary of a holding company to which it is also a subsidiary;

(ix) such other person as may be prescribed;

“Portfolio” means the total holdings of securities and / or funds belonging to the client.

“Portfolio Manager” (PM) means Karvy Stock Broking Ltd., a company incorporated under the

Companies Act, 1956 and registered with SEBI as a Portfolio Manager in terms of SEBI (Portfolio

Managers) Regulations 1993 vide registration No.INP000001512 and having its Registered Office at

Karvy House, 46, Avenue 4, Road No.10, Banjara Hills, Hyderabad and its PMS dealing office at 701,

Hallmark Business Plaza, Sant Dnyaneshwar Marg, Bandra (E), Mumbai 400 051[ but may add more

dealing offices in future] and who pursuant to a contract or arrangement with a client, advises or

directs or undertakes on behalf of the client (whether as a discretionary Portfolio Manager or

otherwise) the management or administration of a portfolio of securities or the funds of the client, as

the case may be.

“Portfolio Management Services” means the Discretionary Portfolio Management Services, and/or the Non-Discretionary Portfolio Management Services, and/or the Investment Advisory Services, as the case may be. “Portfolio Value” means the aggregate of the Portfolio Funds and Value of Portfolio Securities.

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“Principal Officer” means a director/an employee of the portfolio manager who is responsible for the

activities of portfolio management and has been designated as principal officer by the portfolio

manager.

“Regulations” – means the Securities and Exchange Board of India (Portfolio Managers) Regulations,

1993, as amended by SEBI from time to time and includes Securities and Exchange Board of India

(Portfolio Managers) Amendment Regulations, 2012, and rules, guidelines or circulars issued in relation

thereto from time to time.

“Strategy” means any of the Portfolio Investment categories mentioned herein or that may be

introduced by the Portfolio Manager from time to time. The Term Strategy may be interchanged with

Plans/Products/Options.

“SEBI” means the Securities and Exchange Board of India established under sub-section (1) of Section 3

of the Securities and Exchange Board of India Act, 1992.

“Securities” means and includes shares (whether dematerialized or otherwise), derivatives (futures

and options), scrip, stocks, bonds, warrants, convertible debentures, non-convertible debentures, fixed

return investments, floating rate instruments linked to MIBOR/call money etc., equity shares and

equity linked instruments or other marketable securities of a like nature in or of any incorporated

company or other body corporate, negotiable instruments, including usage bills of exchange, trade

bills, deposits or other money market instruments, derivatives, commercial paper, certificates of

deposits, units issued by Unit Trust of India and units issued by Mutual Funds, mortgage backed or

other asset backed securities issued by any institution or corporate, cumulative convertible preference

shares issued by any incorporated Company and securities issued by the Central Government or a State

Government or any other securities that may be issued from time to time and other rights or interests

in securities .

“Securities lending” means the securities lending as per the Securities Lending Scheme, 1997 and

related guidelines specified by SEBI.

“Structured Products” means products returns on which may be linked to Equity Index, Debt

instruments, Non Convertible Debentures and may also be based on Basket of stock, index or stock

futures with pre-defined capital protection. These are normally third party products.

The terms that are used herein and not defined herein, except where the context otherwise so

requires, shall have the same meanings as are assigned to them under the Act, the Regulations or the

Rules.

Words importing the singular include the plural and vice-versa. Words importing a gender include the other gender.

Section 3 DESCRIPTION

1. HISTORY, PRESENT BUSINESS AND BACKGROUND OF THE PORTFOLIO MANAGER :

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KARVY, is a premier integrated financial services provider, and ranked amongst the leading corporate in

the country in all its business segments, servicing over millions of individual investors in various

capacities, and provides investor services to many corporates, comprising the who’s who of Corporate

India. KARVY covers the entire spectrum of financial services such as Stock Broking, Depository

Participants, Distribution of financial products – mutual funds, bonds, fixed deposit, equities, Insurance

Repository , Commodities Broking, Personal Finance, Advisory Services, Merchant Banking & Corporate

Finance, placement of equity, IPOs, services related to data management and Non Banking Financial

company among others. KARVY has a professional management team and ranks among the best in

technology and operations.

Karvy Stock Broking Limited (KSBL) was incorporated on 30th March 1995 having Registered Office at

Karvy House 46, Avenue 4, Street No.-1, Banjara Hills, Hyderabad – 500 034 and has been registered

with SEBI as a Portfolio Manager vide registration number No.INP000001512 , which registration is

valid till suspended or cancelled by SEBI. Karvy Stock Broking Limited (KSBL) is a member of – National

Stock Exchange of India Limited, BSE Limited and Metropolitan Stock Exchange of India Limited. Karvy

Stock Broking Limited has been registered as a Depository Participant with National Securities

Depository Ltd (NSDL) since December 1997 and with Central Depository Securities Ltd (CDSL) since

October 1999. KSBL has a large number of offices across the length and breadth of the country, thus

making financial services accessible to urban, semi-urban and rural investors. KSBL provides financial

services to corporate, institutional as well as individuals. We offer broking services across the entire

network on a robust platform with sound technological support and risk and surveillance mechanism

which are of a high order. The broking services are backed by a strong research desk which is very

proactive to market feedback and analyses information that flows into the capital markets which

enables us to provide quality advice to our customers. The research team comprises of technical

analysts who cover market trends and stock specific movements and fundamental specialists who track

various segments of industry and corporate. Besides this, we also provide customized advisory services

to help in making the right financial moves that are specifically suited to portfolio requirements of the

clients. Offering a wide trading platform with a dual membership both as a stock broker registered with

NSE, BSE and MCX as well as a Depository Participant registered with both NSDL and CDSL, we are a

powerful medium for trading and settlement of dematerialized shares. We have established Internet

access to accounts and an easier transaction process in order to offer more convenience to individual

and corporate investors.

2. DETAILS OF PROMOTERS,DIRECTORS AND THEIR BACKGROUND:

The directors of KSBL and their background is as follows:

Mr. Comandur Parthasarathy, Promoter, Chairman and Managing Director, aged about 64 years; is a

leader in the financial services industry in India and is responsible for building KARVY as one of India’s

truly integrated Financial Service provider. He is a Fellow Member of the Institute of Company

Secretaries of India, a Fellow Member of the Institute of Chartered Accountants of India and a graduate

in Law. As Chairman, he oversees the group’s operations and renders vision and business direction.

His passion and vision for achieving leadership in various segments of the business have transformed

KARVY into a leading financial intermediary ranking amongst the top in the Registrar, Share Transfer

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and IPO Distribution businesses. He has about 42 years of experience in the financial services arena.

He also holds directorships in various companies of the group and other corporates.

Mr. Meka Yugandhar, Promoter cum Director, aged about 68 years, is one of the founders of Karvy

group and has varied experience in the field of financial services spanning about 42 years. He is a

Fellow Member of the Institute of Chartered Accountants of India. He has helped position and build a

strong brand for the Karvy group in the registry and other financial services businesses. He has played a

key role in building strong relationships with public sector banks and other PSUs which has helped

Karvy win some important mandates from some of India’s renowned companies. Karvy under his

guidance has helped create the equity cult and substantially built retail investor wealth. He is Director

on the board of several reputed companies.

Mr. Mulpuri Siva Ramakrishna, Promoter, aged about 66 years, one of the founders of Karvy group is

an orchestrator of technology initiatives such as the call center in the service of the customers. He

holds directorships in various companies of the Karvy group and various other companies. He has

about 39 years of experience in the financial services arena.

Mr. Bhagwan Dass Narang, Non Promoter Director and Independent Director, aged about 74 years is

a post graduate in Science, M.Sc. (Agr. Eco). He has about 50 years of experience and has held senior

positions in various banks before superannuation and retiring as the Chairman and Managing Director

of Oriental Bank of Commerce in the year 2005. During his illustrious career, he has handled several

special assignments viz, Alternate Chairman of the Committee on Banking Procedures set up by Indian

Banks’ Association for the year 1997-98, Chaired a panel on Serious Financial Frauds appointed by the

RBI, Chaired a Panel on Financing Construction Industry appointed by Indian Banks’ Association,

Appointed as Chairman of Governing Council of National Institute of Banking Studies & Corporate

Management, Elected member of the Management Committee of India Banks’ Association, Member of

the Advisory Council of Banker Training College (RBI), Mumbai, etc. Since retirement he has handled

several assignments viz, Member- Expert group formed for examining problems of distressed farmers,

member- Committee to Oversee the Working of National Education & Investor Fund (Nominated by

the Ministry of Co. Affairs GOL), Technical Expert for Co-option in the Audit Board for Performance

Audit/Reviews in respect of Housing Finance PSUs & Hudco, Advisor- DSP Merrill Lynch, Mumbai (Dec

2003 to Sept 2007).

Ms. Jyothi Prasad, Non Promoter and Independent Woman Director, aged about 55 years is a law

Graduate and has a PGDM from IIM Ahmedabad and a chevening scholar at the London School of

Economics, UK. She has about 30 years of wide-ranging investment banking experience covering IPOs,

capital markets, Private Equity, M&A, domestic/cross border advisory and disinvestments of state

owned enterprises. She has advised state governments and public sector companies on financial and

market aspects of disinvestment transactions, from conceptualization to implementation. Ms. Jyothi

Prasad has been involved in and led over 40 IPOs, Indian and global and has significant experience in

transaction related documentation, due diligence, offer structure, offer marketing, interface with

client, investors and regulators.

Mr. Ashish Agarwal, Non Promoter Director ceased to be a Director of Karvy Stock Broking Limited,

Portfolio Manager with effect from July 14, 2019.

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iii DETAILS OF THE TOP 10 GROUP COMPANIES/ FIRMS BASED ON TURNOVER AS ON MARCH 31,

2019:

Name of the Company Nature of Business Status

Karvy Data Management Services

Ltd

Transaction Processing

Wholly owned subsidiary

company

Karvy Digikonnect Limited BPO and Call Centre Group company

Karvy Innotech Limited Data processing, data profiling and

management activities, supply of

computer peripherals, supply and

installation of these computer

peripherals, supply of manpower

under various segments viz e-

Governance, Banking, telecom, KRA

agency related activities, contact

centre operations, E-Commerce

support services

Group company

Karvy Forde Search Private

Limited

Placement agencies and HR

management services

Group company

Karvy Realty (India) Ltd.# Realty Services Wholly owned subsidiary

company

Karvy Financial Services Ltd. Financial Services-NBFC


company

Sciknow Techno Solutions Ltd Manufacture, assembling and

dealing in all kinds of computer

hardware, computer software,

smartphones, tablets and various

electronic products.

Group company

Karvy Capital Limited Financial Services-NBFC, SEBI

Registered Portfolio Manager and

Manager to SEBI registered AIF


company

Karvy Comtrade Ltd.# NCDEX /MCX/NMCE/ NCDEX Spot

Exchange / registered commodity


company

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broker

Karvy Holdings Limited. Core Investment Company Group company

# Provisional since audit of these companies is not completed. All other details above are based on

audited figures

Portfolio Manager offers Discretionary, Non discretionary & Advisory services as per the preference

and agreement with the individual client (For more details kindly refer Annexure A).

Section 4: PENALTIES, PENDING LITIGATION OR PROCEEDINGS, FINDINGS OF INSPECTION

OR INVESTIGATIONS FOR WHICH ACTION MAY HAVE BEEN TAKEN OR INITIATED BY ANY

REGULATORY AUTHORITY

I All cases of penalties imposed

by the Board or the directions

issued by Board under the Act

or Rules or Regulations made

there under

As contained in Annexure B II The nature of penalty/direction

III Penalties imposed for any

economic offence and/or for

violation of any securities laws

IV Any pending material

litigation/legal proceedings

against the Portfolio

Manager/key personnel with

separate disclosure regarding

pending criminal cases, if any

V Any deficiency in the systems

and operations of the Portfolio

Manager observed by the Board

or any regulatory agency

VI Any enquiry/adjudication

proceedings initiated against

the Portfolio Manager or its

directors, principal officer or

employee or any person directly

or indirectly connected with the

Portfolio Manager or its

directors, principal officer or

employee, under the Act or

Rules or Regulations made

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there under

Section 5: SERVICES OFFERED

5.1 The Portfolio Manager offers the following three types of Services

a. Discretionary Services

The Portfolio account of the client is managed at the full Discretion and liberty of Portfolio Manager.

Under these services, the choice as well as the timings of the investment decisions on an on-going basis

rest solely with the Portfolio Manager. The Portfolio Manager may at times and at its own discretion,

adhere to the views of the Client pertaining to the investment /disinvestment decisions in the Client’s

Portfolio. The Portfolio Manager shall have the sole and absolute discretion to invest in respect of the

Client’s account in any type of security as per the Agreement and make such changes in the

investments and invest some or all of funds in the Client’s account in such manner and in such markets

as it deems fit. The Client may give informal guidance to customize the portfolio strategies; however,

the final decision rests with the Portfolio Manager. The securities invested / disinvested by the

Portfolio Manager for Clients in the same Strategy may differ from one Client to another Client. The

Portfolio Managers’ decision (taken in good faith) in deployment of the Clients’ account is absolute and

final and can never be called in question or be open to review at any time during the currency of the

agreement or any time thereafter except on the ground of malafide, fraud, conflict of interest or gross

negligence. This right of the Portfolio Manager shall be exercised strictly in accordance with the

relevant Acts, Rules, and Regulations, guidelines and notifications in force from time to time.

Under these services, the Clients may authorize the Portfolio Manager to invest their Funds in specific

financial instruments or a mix of specific financial instruments or restrict the Portfolio Manager from

investing in specific financial instruments or securities. Periodical statements in respect of Client’s

Portfolio shall be sent to the respective Clients.

Currently, the Portfolio Manager offers the following strategies:

Portfolio Strategy:

1. Alpha Portfolio – this is designed for those investors who seek long-term capital appreciation

from their asset allocation to equities. The portfolio manager will invest in stocks across

sectors, market capitalization categories and investment themes.

2. Alpha Plus Portfolio – This is a diversified portfolio with investments in stocks across sectors,

market capitalizations and investment themes.

3. Gamma Portfolio – Gamma Portfolio aims to generate Capital appreciation in the medium to

long term through investments in equities. It would aim to invest in perceived high growth

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companies with sustainable business models backed by apparent strong management

capabilities.

4. PSI Portfolio – This is designed for those investors who seek long-term capital appreciation

from their asset allocation to equities and other investment vehicles, and to outperform the

market in the long run. The portfolio will invest in equity, equity related instruments, optionally

and fully converted debentures of listed and unlisted companies and other alternative asset

classes.

5. Delta Portfolio – This is designed for those investors who seek long-term capital appreciation

from their asset allocation to equities and debt. The portfolio will invest in mutual funds across

sectors, market capitalization categories and investment themes.

6. Omega Portfolio – This is designed for those investors who seek long-term capital appreciation

from their asset allocation to equities, debt, gold and other asset classes which are available

through either exchange traded products or through mutual funds.

7. Theta Portfolio – This is designed for those investors who seek income and long-term capital

appreciation from their asset allocation to debt.

8. Zeta portfolio - This is designed for those investors who seek long-term capital appreciation

from their asset allocation to equities, debt, gold, index/ stock futures and options and other

asset classes which are available through either exchange traded products, Over the counter

products or through mutual funds.

b. Non Discretionary

Non-Discretionary Portfolio is the Portfolio which Portfolio Manager manages client’s portfolio in

consultation with and as per the directions or consent of the client. Under these services, the Clients

decide their own investments with the Portfolio Manager only facilitating the execution of

transactions. The Portfolio Manager’s role would include but not limited to providing research,

structuring of clients’ portfolios, investment advice and guidance and trade execution at the Client’s

request. The Portfolio Manager shall execute orders as per the mandate received or consent obtained

from the Client. The deployment of the Client’s Funds by the Portfolio Manager shall be as per the

instructions or consent of the Client. The rights and obligations of the Portfolio Manager shall be

exercised strictly in accordance with the Act, Rules and/or Regulations, guidelines and notifications in

force from time to time. Periodical statements in respect of Client’s Portfolio shall be sent to the

respective Clients.

The following are illustrative, but not exhaustive, investment strategies available for client availing

Non-Discretionary Portfolio Management Services.

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1. Equity Portfolio: Equity Portfolio (Non discretionary) are designed for those investors who seek

long-term capital appreciation from their asset allocation to equities. The portfolio manager will

invest in stocks across sectors, market capitalization categories and investment themes, in

consultation with and as per directions or consent of the client.

2. Non Convertible Debentures: The Non Convertible Debentures are debentures which do not get

converted into equity and normally attract a fixed rate of return. The Non-convertible Debentures

may be listed or unlisted. Investments will be made in the Non Convertible Debentures in

consultation with and as per directions or the consent of the client.

3. Structured product: The Structured products are designed for those investors who want returns

linked to price movement of any Equity index, basket of stocks, commodities, precious metals, etc.,

with a predefined level of capital protection.Structured Products may be principal or non principal

protected or may not have any protection at all. Investments will be made in the structured

products in consultation with and as per directions or the consent of the client.

4. Non Convertible Debentures as part of Structured Products: Non convertible Debentures are

normally issued with a fixed rate of Interest. In case of Non convertible Debentures issued as part

of a structured product, the returns on Non-convertible debentures may be linked to the price

movement of an underlying or derivative thereof. Investments will be made in such products in


5. Omega Portfolio: It is designed for those investors who seek long-term capital appreciation from

their asset allocation to equities, debt, gold and other asset classes which are available through

either exchange traded products or through mutual funds.

6. Optima Portfolio: It is designed for those investors who seek capital appreciation from their asset

allocation to Equities, debt and gold.

7. Customised Growth Portfolio: It is designed for those investors who seek aggressive capital

appreciation from their equity asset allocation. The portfolio will invest in stocks across sectors,

market capitalization categories and investment themes.

Note: The Customised Growth Portfolio has been introduced with effect from 1/02/2012. The portfolio

was formerly known as Alpha Portfolio until January 31, 2014.

c. Advisory

Portfolio Manager will provide advisory services, as per the Regulations, which shall be in the nature of

investment advice and shall include the responsibility of advising on the portfolio strategy, investment,

disinvestment of the various securities in the client’s portfolio, for an agreed fee, entirely at the client’s

risk. The Portfolio Manger will render the best possible advice to the client having regard to the client’s

needs and the requirements, using his own professional skills. This service will be purely of advisory in

nature under an agreed fee structure with the client. It is up to the client to accept the

recommendations/advice of Portfolio Manager and Portfolio Manager will not be held responsible for

any consequence arising out of acceptance of Portfolio Manager’s advice under this service.

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5.2 Present Investment Objective

The General Objective is to formulate and device the investment philosophy to achieve long

term growth of capital by investing in assets, which generate reasonable return and to ensure

liquidity. The actual portfolio management style will vary in line with profile of each client with

regards to his risk tolerance levels and specific preferences or concerns. (The specific objective

will be as mentioned in the agreement with the client).

5.3 Types of securities

The Portfolio Manager/Fund Manager shall invest in all such types of Securities as defined

(kindly refer to the definition) and in all such Securities as permissible from time to time.

5.4 Investment in Group / associate companies

The Portfolio Manager/Fund Manager may invest in Securities of the associate/group

companies subject to the applicable laws/ regulations/ guidelines. These investments will be

carried out to achieve the investment objectives and strategies and in the normal course of

investment activity subject to the applicable laws/regulations.

The Portfolio Manager / Fund Manager shall not make any investments in any unlisted

securities of associate/group companies of the Portfolio Manager/ promoter. The Portfolio

Manager / Fund Manager will also not make investment in privately placed securities issued by

Associate/Group companies of the promoter. The Portfolio Manager may invest not more than

25% of the portfolio of an individual client in the listed securities of the Group companies.

5.5 Minimum Investment Amount

The Portfolio Manager shall not accept funds and/or securities from new clients, cumulative

value of which is less than Rupees Twenty Five Lakhs or as specified in the agreement with the

Portfolio Manager or as amended/specified in the SEBI (Portfolio Managers) Regulations, 1993.

Section 6: RISK FACTORS

1. Investments in securities are subject to market risks including price volatility and liquidity risk

and there is no assurance or guarantee that the objectives of the strategy will be achieved. The

investment may not be suited for all categories of investors. The past or present performance of

these strategies does not indicate the future performance of the same strategy or any other

future strategies launched subsequently by Portfolio Manager. With reference to appreciation

on the portfolio, the investors are not being offered any guaranteed or indicative returns

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through any of the strategies. The Portfolio Manager also does not guarantee any capital

protection for any strategy.

2. There are inherent risks arising out of investment objectives, investment strategy, asset

allocation and non-diversification of portfolio. The investment objective, investment strategy

and asset allocation may differ from client to client. However, generally, highly concentrated

portfolios with lesser number of stocks will be more volatile than a portfolio with a larger

number of stocks. Portfolios with higher allocation to equities will be subject to higher volatility

that portfolios with low allocation to equities. Diversified portfolios (allocated across companies

and broad sectors) generally tend to be less volatile than non diversified portfolios. The names

of the various strategies do not in any manner indicate their prospects or returns.

3. Investment decisions made by the Portfolio Manager may not always be profitable since actual

market movement may be at variance with anticipated trends.

4. ETF may trade above or below their NAV. The NAV of ETF will fluctuate with changes in market

value of scheme’s holdings of underlying stocks. However, given that ETF can be created and

redeemed only in creation units directly with the Mutual Fund, it is expected that large

discounts or premiums to the NAVs of ETFs will not sustain due to availability of arbitrage

possibility. Any changes in trading regulations by the Exchange (s) or SEBI may affect the ability

of market maker to arbitrage resulting into wider premium / discount to NAV for ETFs.

5. The performances of the strategies depend on the performance of the market and the

individual companies in which investment have been made under strategies relative to industry

specific and macro economic factors. The Portfolio Manager does not assure or guarantee that

Performance of Portfolio of the Investor shall better the Performance of any Benchmark Index.

6. The tax benefits described in this Disclosure Document are as available under the present

taxation laws and are available subject to conditions. The information given is included for

general purpose only and is based on advice received by the Portfolio Manager regarding the

law and practice in force in India and the investors should be aware that the relevant fiscal rules

or their interpretation may change. As is the case with any investment, there can be no

guarantee that the current tax position or the proposed tax position prevailing at the time of an

investment in the Portfolio will endure indefinitely. In view of the individual nature of tax

consequences, each investor is advised to consult his/her own professional tax advisor

regarding the taxation aspects of his/ her portfolio investments.

7. Prospective investors should review/ study this Disclosure Document carefully and in its entirety

and shall not construe the contents hereof or regard the summaries contained herein as advice

relating to legal, taxation, or financial/investment matters. Prospective investors are advised to

consult their own professional advisor(s) as to the legal, tax, financial or any other requirements

or restrictions relating to the subscription, gifting, acquisition, holding, disposal (sale or

conversion into money) of Portfolio and to the treatment of income(if any), capitalization,

capital gains, any distribution, and other tax consequences relevant to their portfolio,

acquisition, holding, capitalization, disposal (sale, transfer or conversion into money) of

portfolio within their jurisdiction of nationality, residence, incorporation, domicile etc. or under

the laws of any jurisdiction to which they or any managed funds to be used to purchase/gift

portfolio of securities are subject, and also to determine possible legal, tax, financial or other

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consequences of subscribing/gifting, purchasing or holding portfolio of securities before making

an investment.

8. The debt investments and other fixed income securities may be subject to interest rate risk,

liquidity risk, credit risk and reinvestment risk. Liquidity in these investments may be affected

by trading volume, settlement period and transfer procedures. Issuer of fixed income security

may default or may be unable to make timely payments of principal and interest. Net Asset

Value of portfolio may be affected due to perceived level of credit risk as well as actual event of

default.

9. The corporate debt market is relatively illiquid vis-à-vis the government securities market. There

could therefore be difficulties in exiting from corporate bonds in times of uncertainties. Further,

liquidity may occur only in specific lot sizes. Liquidity in a security can therefore suffer. Even

though the Government securities market is more liquid compared to that of other debt

instruments, on occasions, there could be difficulties in transacting in the market due to

extreme volatility or unusual constriction in market volumes or on occasions when an unusually

large transaction has to be put through. There can be no assurance that the requirements of the

securities market necessary to maintain the listing of specified debt security will continue to be

met or will remain unchanged.

10. Exposure to select Sector(s) carries the performance risk of the relevant sector, which could

outperform or underperform the market and/or various indices.

11. Some of the investments in niche sectors run the risk of volatility, high valuation, obsolescence

and low liquidity.

12. Frequent rebalancing of portfolio may result in higher brokerage / transaction cost. Also the

allocation to different securities can vary from 0 to 100 %, hence there can be a vast difference

between the performance of the products and returns generated by underlying securities.

13. Information available on some companies in which the Portfolio manager has made

investments may be limited.

14. The performance of the strategies may be affected by change in Government Policies including

taxation, and certain unforeseen developments in political or general areas at the national or

international level. Also, the investments are subject to external risks such as war, natural

calamities and policy changes of local / international markets which affect stock markets.

15. The performance of the strategies may also be affected and investor could lose money over

short periods due to fluctuation in NAV of Portfolio arising out of fluctuations of interest rates,

credit risk, political and geopolitical risk, currency risk, foreign exchange risks, foreign

investments, risks arising from changing business dynamics, risk associated with investment in

securities debt, risk due to movement in Futures and options markets, changes in the general

market conditions, forces affecting the capital markets, closure of stock exchange due to circuit

filter rules or otherwise and risks associated with trading volumes, settlement periods, transfer

procedures, liquidity and settlement systems in equity and debt markets.

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16. There is a possibility that loss may be sustained by the Portfolio as a result of the failure of

another party (usually referred as the “Counter party”) to comply with the terms of the

derivative contract.

17. Portfolio Manager, subject to authorization in writing by the client, may participate in securities

lending. Engaging in securities lending is subject to risks related to fluctuations in collateral

value/settlement/liquidity/default from counter party, including corporate benefits accrued

thereon. This may lead to the risk of Approved Intermediary unable to deliver back the

securities. Portfolio Manager cannot be held liable for any loss arising out of operation of such

strategies.

18. The portfolio manager may in the course of its activities, avail the services of persons / bodies

who are not employees of the portfolio manager. The portfolio manager would exercise due

diligence when employing such persons, however there may be losses incurred on account of

any act or omission on part of such persons or bodies. The portfolio manager disclaims liability

for any loss in the portfolio on this account. All portfolios under portfolio management are

subject to change at anytime at the discretion of the Portfolio Manager.

19. In the case of stock lending, risks relate to the defaults from counterparties with regard to

securities lent and the corporate benefits accruing thereon, inadequacy of the collateral and

settlement risks. The Portfolio Manager is not responsible or liable for any loss resulting from

the operations of the strategies/options.

20. Investments in the Market Linked Debentures (MLDs) are also subject to model risk. The MLDs

are created on the basis of complex mathematical models involving multiple derivative

exposures which may or may not be hedged and the actual behavior of the securities selected

for hedging may significantly differ from the returns predicted by the mathematical models.

21. Strategies may use derivative instrument like futures and options (index as well as individual

securities), warrants, convertible securities, swap agreements, etc. for the purpose of hedging

and/or portfolio balancing, as permitted under the Regulations/guidelines. Strategies using

such derivative products may be affected by risks different from those associated with stock

and bonds. Such derivative products are highly leveraged instruments and their use requires a

high degree of skill, expertise and diligence. Small price movements in the underlying security

may have a large impact on the value of the derivatives and futures and options and may also

result in loss. Some of the risks relate to mis-pricing or the improper valuation of the

derivatives/futures and option and the inability to correlate the positions with the underlying

assets, rates and indices. The risk of loss associated with futures contracts is potentially

unlimited due to the low margin deposits required and the extremely high degree of leverage

involved in futures pricing. Also, the derivatives/future and options market is nascent in India.

The liquidity of the investments is guided by trading volumes in the securities in which it invests.

Although securities may be listed on the Exchange(s), there can be no assurance that an active

secondary market will develop or be maintained. This may limit the Portfolio Manager’s ability

to freely deal with securities in the Portfolio and may lead to incurring of losses till the security

is finally sold. Different segments of the financial markets have different settlement periods and

such periods may be extended significantly due to unforeseen circumstances. The inability of a

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Portfolio to make intended securities purchase due to settlement problems could cause the

portfolio to miss certain investment opportunities. Similarly, the inability to sell securities held

in the portfolio due to absence of a well developed and liquid secondary market would at times

result in potential losses in the Portfolio, in case of a subsequent decline in the value of

securities held in the Portfolio.

22. The Portfolio Manager may invest in non-publicly offered debt securities and unlisted securities.

This may expose client’s portfolio to liquidity risks.

23. Securities, which are not listed on the Stock Exchanges, are inherently illiquid in nature and

carry a larger amount of liquidity risk, in comparison to securities that are listed on the

Exchanges or offer other exit options to the investor, including a PUT option. The Portfolio

Manager may, considering the overall level of risk of the Portfolio, invest in lower rated/unrated

securities that offer attractive yield, which may increase the risk of the Portfolio. Such

investments shall be subject to the scope of investments laid down in the executed agreement.

24. The Portfolio Manager may seek to create value by investing in stocks that trade below the

estimated fair value of the Company, which shall be judged by various quantitative valuation

parameters. But due to various reasons, it may so happen that such stocks continue to languish

and are not able to attain the price discovery. Accordingly, this may have material adverse

impact on the performance of the portfolio.

25. After accepting the corpus for management, the Portfolio Manager may not get an opportunity

to deploy the same or there may be delay in deployment. In such situation the clients may

suffer opportunity loss.

Section 7: CLIENT REPRESENTATION

i. Category of clients as on July 31,2019:

Category of Clients No of Clients Funds Managed Discretionary/Non Discretionary

(Rs. In Crs)

Associate/Group companies

As on 31st July 2019 - -

As on 31st March 2019 - -

As on 31st March 2018

As on 31st March 2017 - -

Others

As on 31st July 2019 192 76.28 Discretionary,

14 8.37 Non-discretionary

Total 206 84.65

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As on 31st March 2019 211 93.33 Discretionary,


Total 227 103.81



Total 286 127.62



Total 289 142.69

ii.Complete disclosure in respect of transactions with related parties as per the standards specified

by the Institute of Chartered Accountants of India (as on 31st March 2019)#

Sr. No

Name of the related party

Nature of Transaction

Amount

2018-19

(Provisional) 2017-18

(Audited)

1 Karvy

Consultants Limited

Brokerage on trading in securities - 62,98,072

(Group Company)

Reimbursement of expenses 9,90,80,117 6,29,41,398

Trade payables / (receivables)

89,364.59 29,147

2 Karvy

Computershare Pvt. Limited

Reimbursement of expenses 48,16,626 1,28,32,292

(Group Company) Fees and marketing income / (expenses)

(8,97,460) (25,54,083)

Trade payables / (receivables) - (26,09,537)

3 Karvy Investor

Services Limited Reimbursement of expenses

39,34,263 38,52,305

(Subsidiary company)

4 Karvy Comtrade

Limited Reimbursement of expenses 2,01,82,041 2,09,47,551


Corporate guarantees given and

outstanding

58,25,23,468 42,95,19,556

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1. 5

Karvy Investment Advisory Services Limited(formerly known as Karvy Insurance Broking Limited*)

Reimbursement of expenses

16,532 12,74,792


6 Karvy Data

Management Services Limited

Brokerage on trading in securities - 583

Interest income 9,05,29,151 8,84,80,295

Rent (paid) / received

50,53,464

50,53,461


Loans and advances given / (refunded), maximum at any time

during the year 1,48,90,00,000 1,77,30,00,000

Reimbursement of expenses 30,91,32,277 12,89,94,479

Fees and marketing income/ (expenses)

(45,38,743) (92,77,737)

Corporate guarantees given and outstanding

3,03,81,00,000 3,26,42,00,000

7 Karvy Financial

Services Limited Brokerage on trading in securities - 3,67,462


Interest expense 1,483,55,190 9,83,80,247

Loans and advances taken/

(repaid), maximum at any time

during the year

1,37,00,00,000

1,27,00,00,000

-

Reimbursement of expenses 14,42,302 87,99,030

Fees and marketing income/ (expenses)

7,56,441 21,64,000

Balance at year end, Trade payables / (receivables)

15,709 69,06,979

Corporate guarantees given and outstanding

11,20,00,000 1,59,37,00,000

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Inter-corporate Deposits from related parties

1,11,85,00,000 50,00,00,000

8 Karvy Forex &

Currencies Private Limited


4,71,962

3,64,197


9 Karvy Realty

(India) Limited Reimbursement of expenses 16,57,17,496 1,73,64,910


Fees and marketing income / (expenses)

10,50,00,000

-

10 Karvy Capital

Limited Brokerage on trading in securities - 710


Reimbursement of expenses 1,18,23,261

1,10,16,757

Fees and marketing income /

(expenses) 16,95,00,000

17,75,00,000

Trade payables / (receivables)

- 16,840

Corporate guarantees given and

outstanding 6,30,40,000 9,06,00,000

11 Karvy Holdings

Limited


1,46,81,477

1,38,33,555



(4,53,27,699) (2,98,13,227)

12 Karvy Asia Pacific

Pte Limited Fees and marketing income /

(expenses)

- (6,19,899)


13 Karvy Inc., USA


(expenses)

(4,07,307) (78,98,211)


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14 Karvy Middle East LLC, Dubai


(9,03,45,719) (10,10,26,020)

(Subsidiary Company)

15 Karvy Forde

Search Private Limited


(expenses)

(6,95,36,302) (6,06,17,565)

(Step down subsidiary Company)

Trade payables/(receivables)

69,74,325

67,30,842

16 Karvy

DigiKonnect Limited


(1,88,54,034) -

(Step down subsidiary Company)

17 Karvy Broking (IFSC) Limited

Investment in equity shares 4,89,75,000 -


18

Karvy Private Wealth

Consulting & Financial Analysis

LLC, Dubai

Investment in equity shares 94,34,950 -


19 Karvy Fintech

Private Limited Reimbursement of expenses 2,20,06,320 -

(Group Company)


5,13,267 -

*The name of Karvy Insurance Broking Limited has been changed to Karvy Investment Advisory Services

Limited with effect from November 18, 2013.

# The above data are provisional since audit of these companies are not completed

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Section 8: FINANCIAL PERFORMANCE OF PORTFOLIO MANAGER (BASED ON AUDITED FINANCIAL

STATEMENT except data as on March 31, 2019 which is based on Provisional figures since audit is not

complete)

As at

31st March, 2019

Rs in

Lakhs*[Provisional]

As at

31st March, 2018

Rs in Lakhs

As at

31st March, 2017

Rs in Lakhs

SOURCES OF FUNDS

Shareholders' Funds 42,857 41,348 39,322

Share Application Money _ _ _

Loan Funds 61,304 65,847 63,773

Deferred Tax Liability 21 21 -

Total 1,04,181 1,07,216 1,03,095

APPLICATION OF FUNDS

Net Fixed Assets 11,477 11,970 11,274

Stock Exchange Membership Cards - - -

Investments 21,283 21,926 22,637

Current Assets 85,884 1,01,853 91,360

Less: Current Liabilities and Provisions 14,463 28,533 22,177

Net Current Assets 71,421 73,320 69,183

Deferred Tax Asset - - -

Total 1,04,181 1,07,216 1,03,095

Summarized Financial Statement - Profit and Loss Account

For the year ended

31st March, 2019

Rs. Lakhs

(Provisional – based

on unaudited data)

For the year

ended

31st March,

2018

Rs. Lakhs

For the year ended

31st March, 2017

Rs. Lakhs

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Total Income 53,435 54,038 41,751

Total Expenses 51,549 51,447 40,071

Profit before Depreciation and Tax 3,510 4,168 3,259

Depreciation/Amortisation 1,624 1,577 1,579

Profit before Tax 1,886 2,592 1,680

Provision for Tax 377 565 -

Profit After Tax 1509 2026 1680

Find below the Performance of the Portfolio Manager calculated using weighted

average Method for the three financial years 2016-17, 2017-18 , 2018-19 and April

2019 to July 2019

Returns%

Period

01.04.2019-

31.07.2019

01.04.2018-31.03.2019

01.04.2017-31.03.2018

01.04.2016 - 31.03.2017

Discretionary PMS- Resident

Portfolio Performance (%)

Alpha (4.66) 7.23 5.50 19.54

Benchmark Performance (%)

Nifty 50

(4.35) 14.93 10.25 18.5


Alpha Plus (3.73) 5.59 4.64 22.37


Nifty 50

(4.35) 14.93 10.25 18.5

Section 9: PORTFOLIO MANAGEMENT PERFORMANCE OF PORTFOLIO MANAGER FOR THE LAST THREE YEARS. IN

CASE OF DISCRETIONARY PORTFOLIO MANAGER, DISCLOSURE OF PERFORMANCE INDICATORS CALCULATED

USING WEIGHTED AVERAGE METHOD IN TERMS OF REGULATION 14(2)(b)(iv) OF THE SEBI (PORTFOLIO

MANAGERS) REGULATIONS, 1993

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Gamma (13.40) (1.82) 2.27 35.53


Nifty Midcap

100

(12.80) (2.66) 9.07 34.9


Delta (4.35) 1.85 7.13

17.02


BSE 200 Index (5.56) 10.71 11.04

22.5


Omega (9.78) 1.52 1.39

22.95


BSE 200 Index (5.56) 10.71 11.04

22.5

Discretionary PMS - Non Resident

Portfolio Performance (%) Alpha (7.37) 6.40 6.48 23.92

Benchmark Performance (%) Nifty 50 (4.35) 14.93 10.25 18.50


Alpha Plus

(5.73) 6.63 5.62 20.49


Nifty 50 (4.35) 14.93 10.25 18.5


Gamma (14.20) (2.52) 2.72 35.61

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Nifty Midcap

100 (12.80) (2.66) 9.07 34.9

Portfolio Performance (%) Delta (1.51) 4.68 -7.49 19.99


BSE 200 Index (5.56) 10.71 11.04 22.5


Omega (11.98) (0.20) 8.32 37.14


BSE 200 Index

(5.56) 10.71 11.04 22.5

Non Discretionary PMS- Resident


Customised

growth (3.64) 2.85 9.39 17.59

Portfolio

Performance (%)

Optima 1.21 6.92 8.83 14.66

Non Discretionary PMS- Non Resident


Customised

growth (4.40) 3.88 8.82 13.34

Portfolio

Performance (%)

Optima (4.50) 2.40 2.00 24.77

Note: Portfolio Management performance of Resident Individual and Non Resident Indian have been

shown separately above effective April 1, 2011.

Section 10: NATURE OF EXPENSES

The following are the general costs and expenses to be borne by the Client availing the services by the

Portfolio Manager. However, the exact nature of expenses relating to each of the following services is

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provided in the annexure to this Risk Disclosure Document and in the Schedule of Charges signed by

the client in respect of each of the services provided.

(i) Portfolio Management and Advisory Fees

This fee relates to the portfolio management services offered by Portfolio Manager (including advisory

services) to the clients. The fee may be a Fixed Charge on the quantum of the funds being managed

(or) charges linked to portfolio return (or) combination of both. For details kindly refer the annexure to

this Risk Disclosure Document.

(ii) Premature Redemption Charges

If the redemption is done prematurely at the option of the client, the Portfolio Manager shall levy the

Premature Redemption Charges. For details kindly refer the annexure to this Risk Disclosure Document.

(iii) Custodian/Depository Participant fee

The charges relating to opening and operation of demat accounts, custody and transfer charges for

shares, bonds and units, dematerialization and rematerialization, pledge and removal of pledge, etc.

will be as per the actual charged by the Depository Participant/Custodian. For details kindly refer the

annexure to this Risk Disclosure Document.

(iv) Registrar and transfer agent fee

Charges payable to the Registrar and Share Transfer Agents in connection with effecting transfer of

securities and bonds, units, etc. including stamp charges, cost of affidavits, notary charges,

postage/courier charges and other related charges will be recovered on actual. For details kindly refer

the annexure to this Risk Disclosure Document.

(v) Placement fee :

A Placement fee will be charged as a percentage of corpus over and above the fixed management fee

and performance fee. The placement fee shall also be charged each time corpus is infused/ brought in

by the client during the lifetime of the portfolio investment. The placement fee shall be computed as a

percentage of the initial corpus brought in by the client and if subsequent to account opening,

additional corpus brought in by such client then it shall be computed as a percentage of the additional

corpus brought in. The Placement fee shall be deducted upfront from the Client’s portfolio immediately

on receiving the corpus from the client. For details kindly refer the annexure to this Risk Disclosure

Document.

(vi) Brokerage and transaction cost

The Brokerage and other charges like Goods and Services Tax, Stamp duty, Security Transaction

Tax, SEBI Fees, Bank charges, Turnover tax, and other charges (if any), as per the rates existing from

time to time, will be charged on actual. For details kindly refer the annexure to this Risk Disclosure

Document.

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The investment by Portfolio Manager will be done through Karvy Stock Broking Limited {Stock Broker}

or through any SEBI Registered stock broker only and would as per the rates negotiated between

Portfolio Manager and such stock broker. The charges relating to brokerage as per the related party

transactions charged by Karvy Stock Broking Limited or through any SEBI Registered stock broker will

be recovered on actual by the Portfolio Manager

(vii) Securities Lending Charges

If utilized, the charges pertaining to lending of securities, costs associated with transfer of securities

connected with lending transfer operations, Depository Participant Charges, Share Transfer Agent

Charges, etc. would be recovered on actual. For details kindly refer the annexure to this Risk Disclosure

Document.

(viii) Certification Charges or Professional Charges

Any charges payable for outsourced professional services like accounting, taxation, auditing, and any

legal services, notarizations, etc., incurred on behalf of the Client by the Portfolio Manager, will be

charged from the client on actual. For details kindly refer the annexure to this Risk Disclosure

Document.

(ix) Incidental Expenses

Charges in connection with day to day operations like courier charges incurred in providing physical

reports relating to client’s portfolio / welcome letter / other communication to clients , stamp duty,

Goods and Services Tax, postal, telegraphic expenses, opening and operation of bank and demat

accounts or any other out of pocket expenses incurred by the Portfolio Manager, on behalf of the

client, would be recovered from the client. For details kindly refer the annexure to this Risk Disclosure

Document.

Note: For clients who have opened their PMS account with Karvy Stock Broking Limited prior to August

1, 2012, the performance fee will be computed on a High Watermark Principle over the life of the

Investment at the end of every financial year on financial year basis. However, for clients who have

opened their PMS accounts on or after August 1, 2012, the performance fees will be charged on

completion of 12 months from account opening date (anniversary basis) and not financial year basis.

The actual charges levied to client portfolio under these heads can be seen in the client’s Profit and

Loss statement which will be shared by Portfolio Manager with the client on annual basis

Section 11: TAXATION

General

It may be noted that the information given hereinafter is only for general information purposes and is

based on the advice received by the Portfolio Manager regarding the law and practice currently in force

in India and the Investors should be aware that the relevant fiscal rules or their interpretation may

change or it may not be acceptable to the tax authorities. As is the case with any interpretation of any

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law, there can be no assurance that the tax position or the proposed tax position prevailing at the time

of an investment in the strategy/plan/option will be accepted by the tax authorities or will continue to

be accepted by them indefinitely.

Further statements with regard to tax benefits mentioned herein below are mere expressions of

opinion and are not representations of the Portfolio Manager to induce any investor to invest whether

directly from the Portfolio Manager or indirectly from any other persons by the secondary market

operations. In view of the above, and since the individual nature of tax consequences may differ in

each case on its merits and facts, each Investor is advised to consult his / her or its own professional

tax advisor with respect to the specific tax implications arising out of its participation in the PMS

strategy/plan/option, as an investor.

In view of the above, it is advised that the investors appropriately consult their investment / tax

advisors in this regard.

Portfolio Manager cannot be held responsible for assisting or completing the fulfillment of the client’s

tax obligations.

Income arising from purchase and sale of securities under Portfolio Management Services can give rise to business income or capital gains in the hands of the Client. The issue of characterization of income is relevant as the tax computation and rates differ in either of the two situations. The said issue is essentially a question of fact and depends on whether the shares are held as business trading assets or on capital account. Based on judicial decisions, the following factors need to be considered while determining the nature of assets as above:

a. Motive for the purchase of securities

b. Frequency of transactions

c. Length of period of holding of the securities

d. Treatment of the securities and profit or loss on their sale in the accounts of the assessee and disclosure in notes thereto

e. Source of funds out of which the securities were acquired - borrowed or own

f. Existence of an objects clause permitting trading in securities – relevant only in the case of corporate.

g. Circumstances responsible for the sale of securities

h. Acquisition of the securities -from primary market or secondary market Infrastructure and set - up employed for undertaking the securities transactions by the client

Any single factor discussed above in isolation cannot be conclusive to determine the exact nature of the shares. All factors and principles need to be construed harmoniously.

Investors may refer to CBDT instruction no. 1827 dated August 31, 1989 read with CBDT Circular no. 4 dated June 15, 2007 for further guidance on the matter.

Tax implications under the Income Tax Act, 1961 ("IT Act") arise in the hands of the Clients (resident as

well as the non-resident) under both the scenarios, viz:

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a. Securities in the Portfolio held as business asset; and

b. Securities in the Portfolio held on capital account.

Additionally, non-residents (including Flls) are entitled to be governed by the applicable Double Tax

Avoidance Agreement ("DTAA), which lndia has entered into with the country of residence of the non-

resident, if that is more beneficial. The same would have to be considered on a case-to-case basis

depending upon the applicable DTAA. Ordinarily, capital gains and interest income are taxable in lndia

in the manner and at the rates prescribed under the relevant DTAA or the relevant rates applicable in

India, whichever is beneficial to the assessee. Further, business income is normally not taxable in lndia

if there is no permanent establishment of the non-resident in India.

Tax Deducted at Source

Presently, tax is withheld at source for non-residents. If any tax is required to be withheld on account

of any future legislation, Portfolio Manager shall be obliged to act in accordance with the regulatory

requirements in this regard. Interest and dividends would be subject to tax as per the provisions of the

Income Tax Act, 1961.

Advance Tax installment obligations

It shall be the client’s responsibility to meet the advance tax obligation installments payable on the due

dates under the Income Tax Act, 1961.

Long Term capital Gains

Any investments (equity share in a company or a unit of an equity oriented fund) held for 12 months or

more than 12 months would be classified as Long Term Capital Assets. Gains arising out of such assets

are called Long Term Capital Gains. These were exempt from capital gains tax, provided the shares are

sold on a recognized stock exchanges in India and such transactions are subjected to Securities

Transaction Tax (‘STT’) in accordance with Chapter VII of the Finance (No.2) Act, 2004 and/or Income

Tax Act, 1961. With effect from 1st April 2017, in the case of equity shares, in terms of proviso to

Section 10(38) of the Income Tax Act, 1961 inserted vide Finance Act, 2017, equity shares acquired on

or after 1st October’ 2004 (other than the acquisition notified by the Central Government), exemption

shall be admissible only if STT was also paid at the time of acquisition of such equity shares. Finance

Bill, 2018 has withdrawn the above exemption and thus vide Section 112A of the Income Tax Act, 1961

tax on such long term capital gains exceeding one lakh rupees is leviable at the rate of 10%. Clients

are requested to check with their Tax Advisor on the applicable rates of tax, STT, surcharge and health

and educational cess at any given point of time.

Short Term Capital Gains

Any investments held for less than 12 months would be classified as Short Term Capital asset and any

gains arising out of such investment are called Short Term Capital Gains. Such gains would be added to

the total income. With effect from 1st April 2008, as per Section 111A of the Finance (No.2) Act, 2004,

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short term capital gains arising on transfer of short term capital asset (equity shares in a company or a

unit of an equity oriented fund) are subject to tax @ 15% plus applicable surcharge and educational

cess, provided the shares are sold on a recognized stock exchange in India and such transactions are

subjected to Securities Transaction Tax in accordance with Chapter VII of the Finance (No.2) Act, 2004

and/or Income Tax Act, 1961. Clients are requested to check with their Tax Advisor on the applicable

rates of tax, STT, surcharge and educational cess at any given point of time.

Securities Transaction Tax

STT is the tax leviable on the taxable securities transactions i.e. transaction of:

(a) Purchase or sale of an equity share of a listed companies (whether delivery based or non-delivery

based) or a derivative or a unit of an equity oriented fund, entered into in a recognized stock exchange;

or

(b) Sale of a Unit of an equity oriented fund to the Unit Trust of India or Mutual Fund.

The income arising from the securities transactions shall be taxed at applicable rates under the Income

Tax Act, 1961 if STT is not applicable in respect of such transactions.

Capital loss

Losses under the head 'capital gains' cannot be set off against income under any other head. Further,

within the head 'capital gains', long-term capital losses cannot be adjusted against short-term capital

gains. However, short-term capital losses can be adjusted against any capital gains. Unabsorbed long-

term capital loss can be carried forward and set off against the long-term capital gains arising in

subsequent eight assessment years. Unabsorbed short-term capital loss can be carried forward and set

off against the income under the head capital gains in subsequent eight assessment years

Section 12: ACCOUNTING POLICIES

The following is the accounting policy followed by Portfolio Manager while accounting for the portfolio

investments of the clients.

Investment in equities will be valued on the closing price of that equity at NSE. In case of any

investments done in any equity listed on BSE only, the same will be valued based on the closing price of

that equity in BSE. In case the prices are not available from NSE or BSE Stock exchange, then any other

stock exchange shall be considered. These shall include the Equity shares including Indian Depository

Receipts and other instruments, as the case may be. In case a share is not traded on a valuation date,

latest closing price of either principal / secondary or any other stock exchange would be used.

Equity shares which are not listed on stock exchanges are included in portfolio valuation at fair/cost

value. In case an Equity share is suspended/non-traded/ awaiting Corporate Actions, then the

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Valuation of such Equity share shall be done on the basis of good faith relying upon prevailing practices

elsewhere.

In case of the warrants been traded separately they would be valued as an equity share and valued

accordingly. In case of the non traded warrants, the warrants will be valued at the value of the share

which would be obtained on exercise of the warrant less the amount payable on exercise of the

warrant. On exercise of warrant, the warrants would be transferred to the normal equity and valued

accordingly.

For valuation of the derivatives contract, the open positions, as on the date of valuation, shall be

valued as per the last traded prices available from the relevant stock exchange, and will be valued on

the mark to market method.

In case of Mutual Fund, Investments in Mutual Funds shall be valued at the latest available NAV of the

respective scheme. Investment in Exchange listed (ETF) shall be valued at the closing price on the

relevant exchange. If on a valuation date Exchange Traded Funds (ETF) is not traded either on the

primary or secondary stock exchange, ETF shall be valued at the latest available NAVs of the ETF

Scheme.

Investment in debt instruments will be valued at the market value of the debt instrument as on cut-off

date (or) the latest available price on the relevant exchange or the most recent NAV will be reckoned.

For illiquid securities, the valuation may be provided by the issuer on a periodic basis and/or as

required by the portfolio manager.

Realised gains/losses will be calculated on the basis of First in First out (FIFO) basis.

Transaction date will be the trade date and not the settlement or auction date.

For derivatives transactions (if any), the unrealized gains/losses on open position will be calculated on

the mark to market method.

Unrealized gain/losses means the profit/loss not yet booked and the same will be the difference of the

current market price or NAV minus the actual purchase price (or) the historical cost of the securities.

All income will be accounted on accrual or receipt basis, whichever is earlier. All expenses will be

accounted on due or payment basis, whichever is earlier.

Purchase and sale transactions are accounted for on trade date basis.

Cost of purchase and sale includes consideration for scrip and brokerage but excludes Securities

Transaction Tax, Goods and Service Tax & other charges paid on purchase/sale of securities. Other

expenses like Custodian charges (Safe keeping charges, Transaction charges, Fund Accounting charges,

Out of Pocket expenses) are accounted for as & when debited by the Custodian.

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Any corporate benefits like dividend on shares, Mutual Fund units, interest on debt instruments, stock

lending fees etc. shall be accounted on accrual basis except interim dividend which would be

accounted on receipt basis.

Bonus shares are recorded on the ex-benefit date (ex-date). Dividend income is recorded on the ex-

dividend date (ex-date)

Tax deducted at source [TDS] on interest on instruments like debentures, Fixed Deposits and the like.

/Dividend is considered as withdrawal of corpus and debited accordingly. Hence, in case TDS has been

deducted, for the purpose of calculation of profit made by the investor, the TDS amount will be added

back. This profit arrived at (after adding back the TDS amount) will be used to calculate the applicable

performance sharing fee.

Portfolio Manager and the Client, on case to case basis, can mutually agree to any specific norms or

methodology for valuation of investment and/or accounting

The Client may contact the Portfolio Manager for the purpose of clarifying or elaborating on any of the

above.

Section 13: INVESTOR RELATIONS OFFICER – IRO

The below mentioned employee has been nominated as the Investor Relations Officer by Portfolio

Manager who will attend to the investor queries and complaints:

Ms. Nikita Sanghvi Karvy Stock Broking Ltd. 701, Hallmark Business Plaza, Sant Dnyaneshwar Marg, Bandra (E), Mumbai 400 051. Tel No. (B) 022-33055000 Tel No. (D) 022 61491675

Fax No. 022-33055033 Email ID – [email protected]

Section 14: GRIEVANCE REDRESSAL

The Portfolio Manager has dedicated an email id [email protected] for all the investors to lodge

their grievance. Apart from this, the portfolio clients can get in touch with the IRO in person, over

phone or through written communication.

Portfolio Manager will ensure that the above IRO attends to all investor grievance/service issues with

promptness and Portfolio Manager will ensure that this IRO is vested with necessary authority,



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ANNEXURE A

A. Discretionary Portfolio Management Services

1. Alpha Portfolio

Introduction

The Alpha Portfolio is designed for those investors who seek long-term capital appreciation from their asset

allocation to equities. The portfolio will invest in stocks across sectors, market capitalization categories and

investment themes.

Investment Objective

The investment objective of the strategy is to generate growth of capital and excess returns over the

benchmark index through long term investing. Investments would be made in companies which have a strong

and sustainable business model and are growth oriented.

Investment Horizon and Risk Return Profile

This Portfolio is recommended for investors seeking to hold a diversified equity portfolio with moderate risk

appetite expecting a moderate return over medium term horizon.

Asset Allocation

The Portfolio will seek to remain substantially invested in Equities or Equities related instruments at all times.

The cash in the portfolio may be invested in Liquid Funds or Liquid Bees.

Securities

Investments will be made in Stocks, Mutual Funds and Exchange Traded Funds (ETF). The Portfolio will also

use derivative instruments – Futures and Options – for hedging and rebalancing of the portfolio. Derivative

Instruments shall, however, not be used in case of NRI investors.

Investment in equities will be valued on the closing price of that equity at NSE. In case of investments in any

stocks listed on BSE only, the same will be valued based on the closing price of that equity in BSE. Investment

in “Futures and Options”, used for hedging, shall be valued at actual cash margins paid against F&O contracts,

summed with Mark to Market profit / loss computed on the basis of closing price of such contracts.

2.Alpha Plus Portfolio

Introduction

The Alpha Plus Portfolio is a focused equity portfolio of fundamentally strong, mainly large cap companies. It

is a portfolio of stocks diversified across sectors that seek Alpha through superior stock selection. Investments

are diversified in stocks across sectors, market capitalizations and investment themes. The Portfolio is a

vehicle to invest in opportunities created by the Indian growth story.

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The investment objective of the strategy is to achieve growth and returns through broad based participation

in equity markets with investments in companies which have sustainable business model, good corporate

governance and high growth.

Investment strategy/ Philosophy

The portfolio aims to achieve sustainable growth at a reasonable rate thereby generating steady returns. The

portfolio management style is active with close monitoring and review of portfolio positions. Investments are

research driven. Fundamental research and analytical rigor are used to arrive at margin of safety. Sound risk

management is followed. Risk mitigation is done to minimize portfolio downside and is achieved by regular

study of extraneous risks and by diversifying across economic themes, sectors and companies. Discipline is

followed – Risks which are not understood are avoided. Price value gap is regularly monitored.

The Alpha Plus Portfolio follows the following investment strategy:

1. Invest in Emerging business led by aspiring leaders/ market leaders in their respective field of

operations having a competitive edge i.equality management with good corporate practices and

attractive growth prospects. Stocks which the Portfolio Manager considers as having attractive

valuations with good upside potential from current levels are considered for investment;

2. Top Down approach in sector selection – weights are assigned by incisive evaluation of stocks within

sectors;

3. Focused portfolio with adequate stock diversification across sectors that seek Alpha through superior

stock selection. Stocks are selected after rigorous quantitative and qualitative analysis;

4. Long Term Perspective as price discovery might take time with adequate margin of safety. Investment

is high conviction driven and long only prospects are considered.

Asset Allocation



Securities

Investments will be made in stocks, mutual funds and Exchange Traded Funds (ETF). The Portfolio will also use

derivative instruments – Futures and Options – for hedging and rebalancing of the portfolio. Derivative






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This Portfolio is recommended for investors seeking to hold a diversified equity portfolio with moderate risk

appetite expecting a moderate return over medium to long term horizon. Below is the pictorial representation

of the Alpha Plus Portfolio risk:

3.Gamma Portfolio


Gamma Portfolio is a focused portfolio of fundamentally strong midcap companies and aims to generate

Capital appreciation in the medium to long term through investments in equities. It would aim to invest in

perceived high growth companies with sustainable business models backed by apparent strong management

capabilities.

Asset Allocation



Securities

Investments will be made in Stocks, Mutual Funds and Exchange Traded Funds (ETF). The Portfolio will also

use derivative instruments – Futures and Options – for hedging and rebalancing of the portfolio. Derivative






Investment strategy/ Philosophy

The philosophy of the portfolio is to invest in today’s midcap stocks which have the potential to be

tomorrow’s large cap stocks thereby creating wealth through investment in value stocks. All investments in

Gamma are in high conviction ideas based on intensive research & bottom up stock picking approach. Stocks

which the Portfolio Manager considers as having attractive valuations with good upside potential from current

levels are considered for investment. Emerging businesses who are market Leaders in their field of operations

with quality management and who adhere to good corporate practices are considered for investment.

Management style is active with close monitoring and review of portfolio positions.

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A rigorous stock selection process is followed using quantitative analysis, research and qualitative analysis to

identify undervalued stocks with high growth prospects; Industry prospects and competitive edge of the

companies selected are considered along with interaction with management. Broadly, Gamma Portfolio

considers these parameters when selecting stocks - Strong Management Capability, established product

positioning, a healthy balance sheet, strong product pipeline, attractive valuation and competitive edge of the

company.

The Gamma Portfolio aims to achieve superior compounding by using the following investment strategy:

1. Long Term Perspective is maintained as price discovery might take time with adequate margin of

safety. Investment is high conviction driven and long only prospects are considered;

2. Risk mitigation is achieved by regular study of extraneous risks. Risk is minimized by diversifying

across economic themes, sectors and companies;

3. Investments are research driven. Fundamental research and analytical rigor are used to arrive at

margin of safety;

4. The objective is to achieve sustainable growth at a reasonable rate;

5. Discipline is followed – Risks which are not understood are avoided. Price value gap is regularly

monitored.


This Portfolio is recommended for investors seeking to hold a diversified equity portfolio with high risk

appetite expecting a high return over medium to long term horizon. Below is the pictorial representation of

the Alpha plus strategy risk:

4.PSI Portfolio

Introduction The PSI Portfolio is designed for those investors who seek long-term capital appreciation from their asset

allocation to equities and other investment vehicles and attempt to outperform the market in the long run.

The portfolio will invest in equity, equity related instruments, optionally and fully converted debentures of

listed and unlisted companies and other alternative asset classes.


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The investment objective of the Strategy is to generate growth of capital and returns through short term

investing. Investments will be made in instruments which look attractive on valuation and growth prospects.

Additionally investments will be made in alternate asset classes based on attractiveness of the asset class.


This Portfolio is recommended for investors with high risk appetite expecting a high return over medium term

horizon.

Asset Allocation

The Portfolio will seek to remain substantially invested in Equities or Equities related instruments. Part of the

portfolio might be invested in Government Bonds, optionally and fully converted debentures of listed and

unlisted companies, Exchange Traded Funds (ETF). The cash in the portfolio may be invested in Liquid Funds or

Liquid Bees. The portfolio composition will vary from time to time.

Securities

Investments will be made through Stocks, Stock futures, Mutual Funds, optionally and fully converted

debentures of listed and unlisted companies, unlisted equity, Equity & non Equity ETFs, Gold ETFs, structures,

NCDs, Government Bonds and Corporate bonds. The Portfolio will also use Stock options and Index Futures

and Options – for hedging and rebalancing of the portfolio. Derivative Instruments shall, however, not be used

in case of NRI investors.


stocks listed on BSE only, the same will be valued based on the closing price of that equity in BSE.

Investment in “Futures and Options”, used for hedging, shall be valued at actual cash margins paid against

F&O contracts, summed with Mark to Market profit / loss computed on the basis of closing price of such

contracts.

5. Delta Portfolio

The Delta Portfolio is designed for those investors who seek long-term capital appreciation from their asset

allocation to equities and debt. The portfolio will invest in mutual funds across sectors, market capitalization

categories and investment themes.


The investment objective of the Strategy is to generate long term capital appreciation of wealth through a

portfolio of debt and equity related mutual funds which are rebalanced regularly and the allocation between

debt and equity is done on the basis of the risk profile of the investor (conservative, moderate or aggressive).

Delta – Aggressive will have an aggressive allocation towards debt and equity.

Delta – Moderate will have a moderate allocation towards debt and equity.

Delta – Conservative will have a conservative allocation towards debt and equity.


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Delta Aggressive portfolio is recommended for investors seeking to hold a diversified equity portfolio with

moderate risk appetite expecting a moderate return over medium term horizon.

Delta Moderate and conservative portfolios are recommended for investors seeking to hold a diversified

equity and debt portfolio with moderate risk appetite expecting a moderate return over medium term

horizon.

Asset Allocation

The amount of Portfolio invested in Equity related Mutual Fund will be between 0% - 100% of the Portfolio.

The balance of Portfolio will be invested in debt related Mutual Funds. The idle cash will be invested in Liquid

funds or Liquid bees.

Note: The amount of Portfolio invested in Equity related Mutual Fund has been changed from 30% - 100% of

the Portfolio to 0% – 100% with effect from February 1, 2013. The said change in asset allocation shall be

applicable prospectively only for new clients subscribing to the Strategy. Asset allocation of existing clients of

the Strategy shall remain unchanged.

Securities

Investments will be made in Mutual Funds and Exchange Traded Funds (ETF). The Portfolio will also use

derivative instruments – Futures and Options – for hedging and rebalancing of the portfolio. Derivative


Investment in Mutual Funds will be valued on the day end’s NAV. Investment in “Futures and Options”, used

for hedging, shall be valued at actual cash margins paid against F&O contracts, summed with Mark to Market

profit / loss computed on the basis of closing price of such contracts.

6. Omega Portfolio

The Omega Portfolio is designed for those investors who seek long-term capital appreciation from their asset

allocation to equities, debt, gold and other asset classes which are available through either exchange traded




portfolio of debt, equity, gold ETFs and other asset classes which are available through either exchange traded

products or through mutual funds, which is rebalanced regularly and the allocation amongst the asset classes

is done on the basis of the risk profile of the investor (moderate or aggressive).

Omega – Systematic Equity will primarily be investing into Equity and Equity related instruments {Omega

Systematic Equity has been introduced with effect from February 15, 2013}

Omega – Aggressive will have an aggressive allocation towards debt, gold and equity.

Omega – Moderate will have a moderate allocation towards debt, gold and equity.

Omega – Plus will have a dynamic allocation towards debt, gold and equity and may be fully invested in a

particular asset class at a specific time depending on the investor profile. {Omega Plus strategy has replaced

the erstwhile Omega Conservative strategy with effect from February 1, 2013}

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Omega – Systematic Multi asset will have an allocation across multiple asset classes

{Omega Systematic Multi Asset has been introduced with effect from February 15, 2013}


Omega Systematic Equity is recommended for investors seeking to hold a diversified equity portfolio with

moderate risk appetite expecting a moderate return over medium term horizon.

Omega moderate and Aggressive portfolios are recommended for investors seeking to hold a diversified multi

asset portfolio with moderate risk appetite expecting a moderate return over medium term horizon.

Omega Plus is recommended for investors seeking to hold a diversified portfolio with moderate risk appetite

expecting a moderate return over medium term horizon.

Omega Systematic Multi asset portfolio is recommended for investors seeking to hold a portfolio diversified

across multiple asset classes with moderate risk appetite expecting a moderate return over medium term

horizon.

Asset Allocation

The amount of Portfolio invested in Equity will be between 0% - 100% of the Portfolio.

The amount of Portfolio invested in Debt will be between 0% - 100% of the Portfolio.

The amount of Portfolio invested in Gold ETFs will be between 0% - 100% of the Portfolio.

The amount of Portfolio invested in other asset classes of Exchange Traded Products or Mutual Funds will be

between 0% - 100% of the Portfolio.

Note: The asset allocation for the Omega strategy has been changed with effect from February 1, 2013. The

said change in asset allocation shall be applicable prospectively only for new clients subscribing to the

Strategy. Asset allocation of existing clients of the Strategy shall remain unchanged.

Securities

Investments will be made in various equity and equity related securities including but not limited to stocks,

convertible/non-convertible and/or cumulative/non-cumulative preference shares, convertible and/or

cumulative/non-cumulative debentures, bonds and warrants carrying the right to obtain equity shares, units

of mutual funds, ETFs and other eligible modes of investment as may permitted by the Regulations from time

to time. Investments may be made in securities acquired through secondary market purchases, open market

sales/auctions, Initial Public Offers (IPOs), other public offers, bilateral offers, placements, rights, offers,

negotiated deals, etc. These securities may be listed or unlisted.

Investments would be made in all types of debt securities including but not limited to listed, unlisted,

convertible, non-convertible, secured, unsecured, rated or unrated debentures of any maturity, and acquired

through secondary market purchases, RBI auctions, open market sales conducted by RBI etc., other public

offers, bilateral offers, placements, rights, offers, negotiated deals, etc. They could include Securitised Debt,

Pass Through Certificates, Debentures (fixed, floating, Variable Coupon, and equity index /stocks /stocks

basket linked, real estate backed), Bonds, Government securities issued or guaranteed by Central or State

Government, corporate debt of both public and private sector undertakings, securities issued by banks (both

public and private sector) and development financial institutions, bank fixed deposits, commercial papers,

certificate of deposit, trade bills, treasury bills and other money market instruments, units of mutual funds,

ETFs, units of SEBI registered AIFs, floating rate debt securities and fixed income derivatives like interest rate

Page | 8

swaps, forward rate agreements etc. as may be permitted by the Act, Rules and/or Regulations, guidelines and

notifications in force from time to time.

Investments will also be made in gold ETFs and other asset classes which are available through either

exchange traded products or through mutual funds.

The Portfolio will also use derivative instruments – Futures and Options – for hedging and rebalancing of the

portfolio. Derivative Instruments shall, however, not be used in case of NRI investors.


stocks listed on BSE only, the same will be valued based on the closing price of that equity at BSE. Investment

in Mutual Funds and ETFs will be valued on the day end’s NAV. Investment in NCDs, bonds and other debt

Instruments will be valued at closing price, if listed, or as per valuation provided by the issuer. Investment in

“Futures and Options”, used for hedging, shall be valued at actual cash margins paid against F&O contracts,


7. Theta Portfolio

The Theta Portfolio is designed for those investors who seek income and long-term capital appreciation from

their asset allocation to debt.


The investment objective of the Strategy is to generate income and long term capital appreciation through a

100% debt portfolio investing in debt mutual funds, bonds and debentures.


Theta portfolio is recommended for investors seeking to hold a debt portfolio with moderate risk appetite

expecting a moderate return over a long term horizon.

Asset Allocation

The amount of Portfolio invested in Debt will be 100% of the Portfolio.

Securities

Investments will be made in mutual funds, Exchange Traded Funds (ETF), listed and unlisted bonds and

debentures whether listed or unlisted, rated or unrated.

Investment in Mutual Funds and ETFs will be valued on the day end’s NAV. Investment in Non Convertible

Debentures, Certificate of Deposits, bonds and other debt instruments will be valued at closing price, if listed,

or as per valuation provided by the Issuer.

8. Zeta Portfolio

Introduction

Zeta Portfolio is designed for those investors who seek long-term capital appreciation from their asset

allocation to equities, debt, gold, stock futures and options and other asset classes which are available

through either exchange traded products, over the counter products or through mutual funds.

Page | 9

Investment Objective The investment objective of the Strategy is to generate long term capital appreciation of wealth through a

portfolio of equities, debt, gold, index/ stock futures and options and other asset classes which are available

through either exchange traded products, over the counter products or through mutual funds. The allocation

to these assets will be made in accordance with the view of the portfolio manager on the specific asset class.


The strategy is recommended for clients with a moderate risk profile looking at capital appreciation of their

assets over a moderate investment horizon.

Asset Allocation



The amount of Portfolio invested in Gold Exchange Traded Funds {ETFs} will be between 0% - 100% of the

Portfolio.

The amount of Portfolio invested in other asset classes of Exchange Traded Products or Mutual Funds will be

between 0% - 100% of the Portfolio.

Investment in Futures and Options will be to the extent of 100% of the portfolio value at all times.

Derivative Instruments shall, however, not be used in case of NRI investors.

Securities

Investments will be made through stocks, stock futures, mutual funds, Equity & non Equity ETFs, Gold ETFs,

market linked debentures, Non Convertible Debentures (NCDs), Government Bonds and Corporate bonds and

Over the counter instruments. The Portfolio will also use stock options and index futures and options – as may

be required from time to time. The exposure through futures and options will not exceed 100 percent of the

portfolio value at all times. The portfolio will not invest in commodity futures.


stocks listed on BSE only, the same will be valued based on the closing price of that equity in BSE.

Investment in “Futures and Options” shall be valued at actual cash margins paid against F&O contracts,


Investment in mutual funds and ETFs will be valued on the day end’s NAV. Investment in NCDs, bonds and

other debt instruments will be valued at closing price, if listed or as per valuation provided by the issuer.

B . Non - Discretionary Portfolio Management Services

The following are illustrative, but not exhaustive, investment options or products available for client availing

Non-Discretionary Portfolio Management Services.

1. Equity

Portfolio:

Equity Portfolio (Non discretionary) are designed for those investors who seek long-term

capital appreciation from their asset allocation to equities. The portfolio manager will

Page | 10

invest in stocks across sectors, market capitalization categories and investment themes,

in consultation with and as per directions or consent of the client.

Minimum investment amount: Rs. 25 lakhs

2. Non

Convertible

Debentures:

The Non Convertible Debentures are debentures which do not get converted into equity

and normally attract a fixed rate of return. The Non-convertible Debentures may be

listed or unlisted.

Investments will be made in the Non Convertible Debentures in consultation with and as

per directions or the consent of the client.

Minimum investment amount is Rs. 25 Lakhs.

3. Non

Convertible

Debentures as

part of

Structured

Products

Non convertible Debentures are normally issued with a fixed rate of Interest.

The Non Convertible Debentures as part of Structured Products are designed as equity

linked structures, debentures, derivative instruments, swaps, swaptions, a basket of

securities, options, indices, commodities linked structures, debt issuances and/or foreign

currencies, Secured Premium Notes, money market instruments, etc. for those investors

who want returns linked to an underlying asset with a predefined level of capital

protection.

These products may be principal or non principal protected.

Investments may be made both in rated and unrated debentures to cater to specific

Client requirement.

Investments in such products will be made in consultation with and as per directions or

consent of the client.


4. Structured

product

The Structured products are designed for those investors who want returns linked to

price movement of any Equity index, basket of stocks, commodities, precious metals,

etc., with a predefined level of capital protection.

Structured Products may be principal or non principal protected or may not have any

protection at all. Investments will be made in the structured products in consultation

with and as per directions or the consent of the client.


The list of products provided here is not exhaustive and the Portfolio Manager may devise and recommend other products as per specific needs of the client.

Asset Allocation

The Portfolio will be invested in Equities, Mutual Funds, Exchange Traded Funds, Non Convertible Debentures,

Bonds, Debt Instruments, Derivatives, Money market Instruments and Structured products in consultations

with and as per directions or consent of the client. The cash in the portfolio will be invested in Liquid Funds or

Liquid Bees.

Valuation of Assets



Page | 11

in NCDs, bonds and other debt Instruments will be valued at closing price, if listed, or as per valuation

provided by the issuer. Investment in “Futures and Options”, used for hedging, shall be valued at actual cash

margins paid against F&O contracts, summed with Mark to Market profit / loss computed on the basis of

closing price of such contracts.

Structured Products will be valued at the valuation provided by the issuer of the structured products from

time to time.

Non - Discretionary Portfolio Management Services

Customised Growth Portfolio

Introduction

This portfolio is designed for those investors who seek aggressive capital appreciation from their asset

allocation to equity, debt and gold. The portfolio will invest in stocks across sectors, market capitalization

categories and investment themes. Customised Growth Strategy caters to different investor mandates with

varying objectives and constraints. Each portfolio is unique and addresses the individual circumstances of the

client and hence does not follow a model portfolio. Customised Growth strategy follows an active

management style with close monitoring and review of portfolio positions. The Customised Growth Portfolio

was formerly known as Alpha Portfolio until January 31, 2014.

The Customised Growth Portfolio serves various kinds of investment mandates such as diversification,

focused, profit booking, etc and follows an active management style with close monitoring and review of

portfolio positions.


The investment objective is to provide returns and capital appreciation through broad based participation in

equity markets with investments in companies which have sustainable business model, good corporate

governance and high growth.

Asset Allocation

Assets will be allocated amongst following asset classes in consultation with and as per directions or consent

of the client.


Investment can be made in other asset classes like debt, Gold ETF as per choice, consent or directions of the

client.

Securities

Investments will be made in Stocks and other investment options like Mutual Funds, Exchange Traded Funds

(ETF) as per choice, consent or direction of the client.



in Mutual Funds and ETFs will be valued on the day end’s NAV Investment.

Page | 12

Optima Portfolio The Optima Portfolio is designed for those investors who seek capital appreciation from their asset allocation

to Equities, debt, preference capital and gold.


The investment objective of the Strategy is to generate capital appreciation of wealth through a portfolio of

debt, preference capital, pass through certificates, Equity and Gold securities which is rebalanced regularly

and the allocation between Debt, Equity and Gold ETFs is done on the basis of the risk profile of the investor in


Asset Allocation


of the client.




Investment can be made in other asset classes as per choice, consent or directions of the client.

Securities

Investments will be made in Stocks, Mutual Funds, Exchange Traded Funds (ETF), Non-Convertible

Debentures, and Bonds, preference capital (perpetual, optionally convertible, compulsorily redeemable), pass

through certificates and other investment options as per choice, consent or direction of the client.



in Mutual Funds and ETFs will be valued on the day end’s NAV Investment in NCDs, bonds and other debt

Instruments will be valued at closing price, if listed, or as per valuation provided by the issuer.

Omega Portfolio

The Omega Portfolio is designed for those investors who seek long-term capital appreciation from their asset

allocation to equities, debt, gold and other asset classes which are available through either exchange traded




portfolio of debt, equity, gold ETFs and other asset classes which are available through either exchange traded

products or through mutual funds and the allocation amongst the asset classes is done on the basis of the risk

profile of the investor in consultation with and as per directions or consent of the client.

Asset Allocation


of the client.



Page | 13


The amount of Portfolio invested in other asset classes which are available through either exchange traded

products or through mutual funds will be between 0% - 100% of the Portfolio.

Investment can be made in other asset classes as per choice, consent or directions of the client.

Securities

Investments will be made in Stocks, Mutual Funds, Exchange Traded Funds (ETF), Non-Convertible

Debentures, and Bonds. The Portfolio will also use derivative instruments – Futures and Options – for hedging

and rebalancing of the portfolio and other investment options as per choice, consent or direction of the client.

Derivative Instruments shall, however, not be used in case of NRI investors.



in Mutual Funds and ETFs will be valued on the day end’s NAV. NAV Investment in NCDs, bonds and other

debt Instruments will be valued at closing price, if listed, or as per valuation provided by the issuer.

Investment in “Futures and Options”, used for hedging, shall be valued at actual cash margins paid against

F&O contracts, summed with Mark to Market profit / loss computed on the basis of closing price of such

contracts. Derivative Instruments shall, however, not be used in case of NRI investors.

Advisory Services

Equity Advisory Portfolio

Introduction

This portfolio is designed for those investors who seek aggressive capital appreciation from their equity asset

allocation. The portfolio will invest in stocks across sectors, market capitalization categories and investment

themes.


The investment objective is to provide returns and capital appreciation through broad based participation in

equity markets with investments in companies which have sustainable business model and high growth.

Asset Allocation


of the client.


Investment can be made in other asset classes like debt, Gold ETF as per choice, consent or directions of the

client.

Securities Investments will be made in Stocks and other investment options like Mutual Funds, Exchange Traded Funds

(ETF) as per choice, consent or direction of the client.

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in Mutual Funds and ETFs will be valued on the day end’s NAV Investment.

The term “Strategy” or “Strategies” referred in this document is not prima facie the strategy(s) devised to

organize investment portfolios, rather these are various investment categories/ frameworks on the basis of

which investment portfolio of a subscriber can be tailored. Reference to the term “Strategy” or “Strategies”

however helps in defining and communicating fee structure to a subscriber in a simple and transparent

manner.

The final fee structure and fee charging frequency may vary with every client and would be pre decided

between the portfolio manager and the client. This may be changed during the term of the PMS arrangement

upon mutual consent by the investor and the portfolio manager.

The fee portion below is common for all strategies whether Discretionary and Non Discretionary Product

PLACEMENT FEE:

A Placement fee will be charged as a percentage of corpus over and above the fixed management fee and

performance fee. The placement fee shall also be charged each time corpus is infused/ brought in by the client

during the lifetime of the portfolio investment. The placement fee shall be computed as a percentage of the

initial corpus brought in by the client and if subsequent to account opening, additional corpus brought in by

such client then it shall be computed as a percentage of the additional corpus brought in. The placement fee

so computed shall be completely recovered from client’s portfolio within the first year of receiving corpus. The

Placement fee shall be deducted from client’s portfolio at end of each calendar quarter till completion of one

year of receiving corpus. For clients starting their PMS in between any quarter, the placement fee will be

proportionately charged for that quarter and thereafter on quarterly basis till recovery of full placement fee. If

client closes his portfolio account prior to recovery of entire placement fee, the Portfolio Manager shall

deduct the balance Placement Fee from the proceeds payable to the client upon portfolio closure. For details

kindly refer the annexure to this Risk Disclosure Document.

FIXED MANAGEMENT FEE: The Fixed fee Shall be applicable by the Portfolio Manager will not exceed 3.00%

p.a. charged up to 0.75% at the end of every quarter / month [as may be agreed with clients] on the daily

average Net Asset Value of the Portfolio (inclusive of all securities and cash/bank balance).

PERFORMANCE FEE: The Performance fee shall not exceed 25% of incremental gains beyond annualized

hurdle rate not exceeding 12% on the basis of High Water Mark Principle over the life of the investment. For

existing clients, the performance fee is being computed on a High Watermark Principle over the life of the

Investment at the end of every financial year on financial year basis. From 1st August, 2012, for new clients the

performance fees is being charged on completion of 12 months (anniversary basis) and not financial year

basis.

SECTION II: FEES AND EXPENSES PERTAINING TO THE PORTFOLIO STRATEGIES

Page | 15

PREMATURE REDEMPTION CHARGES/ EXIT CHARGES: If the redemption is done prematurely at the option of

the client, the Portfolio Manager shall levy the Premature Redemption Charges/ exit charges as may be agreed

upon between the Portfolio Manager and the clients when signing the Portfolio management Services

Agreement.

Further, the below general costs and expenses shall be borne by the clients availing the services of the

portfolio manager.

1. Custodian/ Depository Participant Fee:

The charges relating to opening and operation of demat accounts, custody and transfer charges for

shares, bonds and units, dematerialization and rematerialization, pledge and removal of pledge, etc.

will be as per the actual charged by the Depository Participant/Custodian.

2. Registrar and transfer agent fee:

Charges payable to the Registrar and Share Transfer Agents in connection with effecting transfer of

any or all securities and bonds, units, etc. including stamp charges, cost of affidavits, notary charges,

postage/courier charges and other related charges will be recovered on actual

3. Brokerage and transaction cost:

The Brokerage and other charges like Goods and Services tax, Stamp duty, Security Transaction Tax,

SEBI Fees, Bank charges, Turnover tax, and other charges (if any), as per the rates existing from time

to time, will be charged on actual.

4. Securities Lending Charges:

If utilized, the charges pertaining to lending of securities, costs associated with transfer of securities

connected with lending transfer operations, Depository Participant Charges, Share Transfer Agent

Charges, etc. would be recovered on actual.

5. Certification Charges or Professional Charges:

Any charges payable for outsourced professional services like accounting, taxation, auditing, and any

legal services, notarizations, etc., incurred on behalf of the Client by the Portfolio Manager, will be

charged from the client on actual.

6. Fees, entry/exit loads and charges in respect of investment in mutual funds:

Mutual funds may be recovering expenses or management fees, entry/exit loads and other incidental

expenses along with services tax, if any, on such recoveries and such fees, entry/exit loads and

charges including services tax on such recoveries, as per the relevant regulation shall be paid to the

asset management company of these Mutual Funds on the clients’ account. Such fees and charges are

in addition to the Portfolio Management fees described above.

7. Incidental Expenses:

Charges in connection with day to day operations like courier charges incurred in providing physical

reports relating to client’s portfolio / welcome letter / account statements/ other communication to

clients, stamp duty, Goods and Services tax, postal, telegraphic expenses, opening and operation of

bank and demat accounts or any other out of pocket expenses incurred by the Portfolio Manager, on

behalf of the client, would be recovered from the client. All incidental and ancillary expenses not

Page | 16

covered above but incurred by the Portfolio Manager on behalf of the client would be recovered from

the client.

SECTION III: COMMON FEATURES OF THE PORTFOLIO STRATEGIES {common features applicable to all strategies}


Liability of a client shall not exceed client’s investment with the portfolio manager.

The Portfolio Manager shall charge audit fees, custodial/ AMC charges and other charges/costs, attributable

to the Portfolio Management Services on actual.

Any charges payable for outsourced professional services like accounting, taxation, auditing, and any legal

services, notarizations, etc., incurred on behalf of the Client by the Portfolio Manager, will be charged from

the client on actual.

The Client may withdraw whole or part of the funds or securities from the portfolio account by giving advance

notice and the Portfolio Manager will endeavor to liquidate the securities held in the strategy and return the

funds or securities of the strategy, as the case may be, to the client within reasonable time. In case the

Portfolio Manager is for any reason unable to sell the securities, the Client shall be obliged to accept the

securities in the portfolio.

The Portfolio Manager will provide periodical reports as required under the regulations at the communication

address provided by the client at time of account opening. In case Portfolio Manager is unable to provide the

periodic reports in physical copy, the same shall be provided to clients via email at the email id registered by

clients at time of account opening.

The portfolio account will be audited by the Independent Chartered Accountant every year and copy of the

Certificate issued by the Chartered Accountant will be given to the Client.

GLOSSARY OF TERMS USED IN THE RISK DISCLOSURE DOCUMENT AND ANNEXURE A

Discretionary portfolio: A portfolio where the funds of each client are managed individually and independently by the fund manager in accordance with the needs of the client.

Non discretionary Portfolio: A portfolio where the funds are managed by the fund manager in accordance with the directions of the client. Hurdle rate: The rate over which profit sharing / performance related fees are usually charged by portfolio managers. This is not a fixed number and would be specified in the agreement signed with the client. High Water Mark Principle: As defined by SEBI, High Water Mark shall be the highest value that the

portfolio/account has reached. Value of the portfolio for computation of high watermark shall be taken to be

the value on the date when performance fees are charged. The portfolio manager shall charge performance

based fee only on increase in portfolio value in excess of the previously achieved high water mark

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