-
1
Disclosure Document
for
Portfolio Management Services
Being Offered by
ICICI PRUDENTIAL ASSET MANAGEMENT COMPANY LIMITED
- The Disclosure Document has been filed with the Board along with the
certificate in the prescribed format in terms of Regulation 14 of the
Securities and Exchange Board of India (Portfolio Managers)
Regulations, 1993 as amended from time to time.
- The purpose of the Disclosure Document is to provide essential
information about the portfolio services in a manner to assist and
enable the investors in making informed decision for engaging a
Portfolio Manager.
- The Disclosure Document contains the necessary information about the
Portfolio Manager, required by an investor before investing, and the
investors are advised to retain the document for future reference.
PRINCIPAL OFFICER:
Mr. Nimesh Shah - Managing Director
Tel no. 91-22-26525000
Email: [email protected]
Dated: January 13, 2020
mailto:[email protected]
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2
Sr. No. Particulars Page No.
1. Definitions 3-4
2. Description
(i) History, Present Business and Background of the
Portfolio Manager
5
(ii) Promoters of the Portfolio Manager, directors and their
background:
5-21
(iii) Top 10 Group companies/ firms of the Portfolio Manager
on turnover basis
21
(iv) Details of the services being offered 22-23
3. Penalties & Pending Litigation 23-24
4. Services Offered
(i) Investment objectives and policies
(ii) Asset Classes generally considered for deployment of
Investment Amount
(iii) Policies including the types of securities in which
Portfolio Manager generally invests/ will generally
invest
(iv) The policies for investments in associates/ group
companies of the Portfolio Manager
(v) Types of services / products offered
24-31
5. Risk Factors 31-56
6. (i) Client Representation
(ii) Disclosure in respect of transactions with related parties
as per the standards specified by ICAI.
56
7. The Financial Performance of the AMC 56
8. Performance of the Portfolio Manager for the last three years 56
9. Nature of expenses 56-57
10. Taxation 58 -78
11. Accounting policies 78 - 80
12. Investors services
(i) Investor Relation Officer
(ii) Grievance redressal and dispute settlement mechanism
80 - 81
13. Annexure I
14. Annexure II
15. Annexure III
16. Annexure IV
DISCLAIMER CLAUSE:
The Disclosure Document has been prepared in accordance with the SEBI (Portfolio
Managers) Regulations, 1993 and filed with Securities and Exchange Board of India
(SEBI). This Document has neither been approved nor disapproved by SEBI nor has
SEBI certified the accuracy or adequacy of the contents of the Document.
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3
1) DEFINITIONS:
In this Disclosure Document, the following words and expressions shall have
the meaning specified herein, unless the context otherwise requires:
Asset Management Company or
AMC or Portfolio Manager or
Company
ICICI Prudential Asset Management
Company Limited, (the Asset
Management Company) incorporated
under the Companies Act, 1956, and
registered with SEBI to act as a Portfolio
Manager in terms of SEBI (Portfolio
Managers) Regulations, 1993 vide
Registration No. PM/INP000000373. The
registration granted by SEBI is perpetual.
AUM Assets Under Management
Advisory Services Advisory Services means services
whereby the Portfolio Manager provides
non-binding advise to the Clients on
investments as described in the
Agreement between the Client and the
Portfolio Managers.
Portfolio Portfolio means the total holdings of
securities and funds belonging to any
person/investor.
Client Client means any person/entity
who/which enters into the Agreement
with the Portfolio Manager for availing
the Portfolio Management Services.
Discretionary Portfolio Management
Services
Discretionary Portfolio Management
Services mean Portfolio Management
Services provided by the Portfolio
Manager exercising its sole and absolute
discretion to invest in respect of the
Client‘s account in any type of security as
per an Agreement relating to portfolio
management, for an agreed fee structure
entirely at the Client‘s risk.
Non-discretionary Portfolio
Management Services
Non-discretionary Portfolio Management
Services means Portfolio Management
Services under which the Portfolio
Manager, subject to express prior
instructions issued by the Client from
time to time in writing, for an agreed fee
structure and for a definite described
period, invests in respect of the Client‘s
account in any type of security entirely at
the Client‘s risk.
ICICI Bank ICICI Bank Limited
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4
FPI Foreign Portfolio Investor registered with
SEBI
Investment Amount The money or securities accepted by the
Portfolio Manager from the Client in
respect of which the portfolio
management services are to be rendered
by the Portfolio Manager.
NRI Non- Resident Indian
Disclosure Document This document issued by ICICI Prudential
Asset Management Company Limited for
offering portfolio management services
and prepared in terms of Schedule V of
the SEBI (Portfolio Managers)
Regulations, 1993.
Prudential plc Prudential plc, of the U.K. and includes
(wherever the context so requires) its
wholly owned subsidiary Prudential
Corporation Holdings Limited.
Neither ICICI Prudential Asset
Management Company Limited nor
Prudential plc is affiliated with Prudential
Financial Inc, a company whose principal
place of business is in the United States
of America or with the Prudential
Assurance Company, a subsidiary of
M&G plc, a company incorporated in the
United Kingdom
RBI Reserve Bank of India, established under
the Reserve Bank of India Act, 1934, as
amended from time to time
SEBI/the Board Securities and Exchange Board of India
established under Securities and
Exchange Board of India Act, 1992, as
amended from time to time
The Regulations Securities and Exchange Board of India
(Portfolio Managers) Regulations, 1993
as amended from time to time
The Agreement The agreement executed between the
Portfolio Manager and its clients in terms
of Regulation 14 of SEBI (Portfolio
Managers) Regulations, 1993 and any
modifications or amendments thereto
issued by the Securities and Exchange
Board of India
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5
2) DESCRIPTION
i) History, Present Business and Background of the Portfolio Manager
ICICI Prudential Asset Management Company Limited (―the AMC‖/―ICICI
Prudential AMC‖), is a company incorporated under the Companies Act, 1956
on June 22, 1993 having its Registered Office at 12th Floor, Narain Manzil, 23,
Barakhamba Road, New Delhi – 110 001. ICICI Bank Ltd. holds 51% of the share capital of the AMC and Prudential plc, through its wholly owned
subsidiary, Prudential Corporation Holdings Ltd., holds 49%.
The AMC is registered with SEBI as Portfolio Manager under the Regulations.
The AMC has obtained a license from SEBI for offering Portfolio
Management Services in 2000.
As on December 31, 2020, the AMC has been rendering portfolio
management services to 6,852 clients with assets under management to the
extent of Rs. 30.70 billion.
In addition, the AMC is appointed as the Investment Manager for ICICI
Prudential Mutual Fund which is registered under Securities and Exchange
Board of India (Mutual Funds) Regulations, 1996.
As permitted by SEBI, the AMC is also rendering advisory services to
offshore funds and investment management services to Alternative
Investment Funds under SEBI (Alternative Investment Funds) Regulations,
2012.
ii) Promoters of the Portfolio Manager, directors and their
background
a) Promoters
ICICI Bank Limited
ICICI Bank is leading private sector bank in India. The Bank‘s consolidated
total assets stood at Rs. 12.50 trillion at June 30, 2019.
Prudential plc
Prudential plc is an international financial services group with significant
operations in Asia, the US and the Africa. Prudential plc serves around 26
million insurance customers and have £ 657 billion of assets under
management (as on December 31, 2018).
Prudential was founded in London in 1848 on the principles of integrity,
security and prudence, and still adhere to those values today.
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6
b) Particulars of Directors
Sr.
No.
(I)
Name of
Director(s)
Address &
Qualification
(II)
Experience
(III)
Date of
Appointme
nt (DOA) &
Previous
Position
held
(IV)
Other
Directorships
in companies
(V)
1. Mr. Anup Bagchi
(bearing DIN:
00105962)
ICICI Bank Limited
Bandra Kurla
Complex
Bandra (East),
Mumbai – 400051
B. Tech and
Management
degree from the
Indian Institute of
Management.
Mr. Anup Bagchi is an
Executive Director on the
Board of ICICI Bank since
February 1, 2017. Prior to
this, Mr. Bagchi was the
Managing Director & CEO
of ICICI Securities
Limited. Under his
leadership, ICICI
Securities won several
prestigious awards in the
financial services space.
In his present role in ICICI
Bank, Mr. Bagchi is
responsible for managing
retail banking, rural and
inclusive banking,
treasury control and
services, operations,
infrastructure, and the
corporate brand for the
bank. Additionally, he
heads the ICICI
Foundation for Inclusive
Growth, the CSR arm of
the ICICI Group.
Mr. Bagchi joined the
ICICI Group in 1992 and
has worked extensively
in the areas of retail
banking, corporate
banking and treasury and
investment banking. He
represents the ICICI
Group in various
regulatory committees of
key bodies such as RBI
and SEBI. He is a
member of RBI‘s Expert
Committee on Micro,
DOA
15/10/2018
Previous
Position
held- as per
column III
ICICI Bank
Limited
ICICI
Prudential
Life
Insurance
Company
Limited
ICICI
Securities
Limited
ICICI Home
Finance
Company
Limited
Comm
Trade
Services
Limited
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7
Sr.
No.
(I)
Name of
Director(s)
Address &
Qualification
(II)
Experience
(III)
Date of
Appointme
nt (DOA) &
Previous
Position
held
(IV)
Other
Directorships
in companies
(V)
Small & Medium
Enterprises and of SEBI‘s
Committee on Financial
and Regulatory
Technologies (CFRT)
among others.
In the past too Mr. Bagchi
has been a member in
several committees of
various organisations. He
was on the Executive
Committee of National
Securities Depository
Ltd., (NSDL), Advisory
Committee of BSE
Limited and was co
Chairman of FICCI‘s
Capital Markets
Committee. He was also
a member of SEBI‘s
Secondary Markets
Advisory Committee
(SMAC), Fair Market
Conduct Committee and
Committee on Financial
and Regulatory
Technologies and Risk
Management Review
Committee.
Mr. Bagchi has a
management degree
from the Indian Institute
of Management,
Bangalore and an
engineering degree from
the Indian Institute of
Technology, Kanpur. He
has been honoured with
The Asian Banker
Promising Young Banker
Award and `Industry
Newsmaker Award‘ by
Zee Business.
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8
Sr.
No.
(I)
Name of
Director(s)
Address &
Qualification
(II)
Experience
(III)
Date of
Appointme
nt (DOA) &
Previous
Position
held
(IV)
Other
Directorships
in companies
(V)
2. 2
.
Mr. Sandeep
Batra
(bearing DIN:
03620913)
ICICI Bank Limited
Bandra Kurla
Complex
Bandra (East),
Mumbai – 400051
B. Com, F.C.A and
A.C.S.
Mr. Sandeep Batra has
been working with the
ICICI Group for the last 18
years and is currently the
President – Corporate
Centre at ICICI Bank. As
President – Corporate
Centre, Mr. Batra
oversees the risk, internal
audit, financial crime
prevention, government
relations, compliance,
secretarial, and corporate
communication functions
at the Bank. He is also on
the boards of several
ICICI Group companies
like ICICI Prudential Life
Insurance Company
Limited, ICICI Lombard
General Insurance
Company Limited, ICICI
Prudential Asset
Management Company
Limited and ICICI Bank
UK Plc.
Mr. Batra has been a
founder member of the
ICICI Prudential Life
Insurance team and has
worked with the said
organization as its Chief
Financial Officer from
September 2000 till 2006
till he joined ICICI Bank as
its Group Compliance
Officer.
Mr. Batra rejoined ICICI
Prudential Life Insurance
as its Executive Director
and a member of its
board in 2014. At ICICI
Prudential Life Insurance,
DOA
15/10/2018
Previous
Position
held- as per
column III
ICICI
Prudential
Life
Insurance
Company
Limited
ICICI
Lombard
General
Insurance
Company
Limited
Cheryl
Advisory
Private
Limited
ICICI Bank
UK Plc.
ICICI
Venture
Funds
Managemen
t Company
Limited
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9
Sr.
No.
(I)
Name of
Director(s)
Address &
Qualification
(II)
Experience
(III)
Date of
Appointme
nt (DOA) &
Previous
Position
held
(IV)
Other
Directorships
in companies
(V)
he oversaw the finance,
investments, actuarial,
and risk and compliance
functions. He was also
instrumental in leading
the said company to
India‘s first IPO in the
insurance space.
3. 3
.
Mr. C. R.
Muralidharan
(bearing DIN:
02443277)
29A, Kamala
Street, Nehru
Nagar,
Chromepet,
Chennai 600044
B Sc. and CAIIB.
Mr. C. R. Muralidharan
was a Whole-Time
Member of Insurance
Regulatory and
Development Authority,
Hyderabad (IRDA) and
was looking after the
compliance by the
insurers of the
regulations on
investments, analysis of
financial statements of
insurance companies, on
and off-site supervision
of insurance companies
as well as other
regulatory issues
including the registration
of new insurance
companies.
Prior to joining IRDA, he
worked in RBI for more
than three decades in
various capacities. He
was heading the
Department of Banking
Operations and
Development (DBOD) of
RBI, which is responsible
for laying down a
regulatory framework on
a wide range of
operations for Indian
commercial banks to
promote a sound and
DOA:
20/05/2010^
Previous
Position
held- as per
column III
GMR
Infrastructur
e Limited
Sriman
Madhwa
Sidhantaonn
ahini
Permanent
Nidhi
Limited
Shriram City
Union
Finance
Limited
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10
Sr.
No.
(I)
Name of
Director(s)
Address &
Qualification
(II)
Experience
(III)
Date of
Appointme
nt (DOA) &
Previous
Position
held
(IV)
Other
Directorships
in companies
(V)
competitive banking
system consistent with
the emerging
international best
practices. He assisted
IMF in two overseas
assignments and was
associated with several
High Level Working
Groups on Banking
Regulation.
Besides, he was also
actively involved in the
role of promotion of rural
credit as well as in the
development of HR for
the central bank.
4. 5
.
Mr. Suresh Kumar
(bearing DIN:
00494479)
Values Group
Business Village,
B Block
Office 932, 9th
Floor Entrance 02,
Next to Gold‘s
Gym & Mashreq
Bank
Port Saeed
P.O. Box 71342
Deira, Dubai
B.Com,
Post Graduate
Investment
Management
Programme
conducted jointly
by the Stanford
University and the
London School of
After graduating from the
Sydenham College of
Commerce & Economics
of the University of
Bombay with a Bachelor
of Commerce (Honors)
degree in 1971, Mr.
Suresh Kumar completed
a post-graduate
Investment Management
Programme conducted
jointly by the Stanford
University and the
London School of
Business. He then went
on to pursue an
Advanced Management
Programme at the
Columbia Business
School. In commendation
of his academic
achievements, he has
been the recipient of
many prestigious awards
including the Rotary
International Scholarship
DOA:
07/06/2011^
Previous
Position
held- as per
column III.
Values
Alternative
Investment
International
Private Limited
Tricolour
Values
Investments
PSC – Dubai,
United Arab
Emirates
Aster DM
Healthcare
Limited
ICICI Lombard
General
Insurance
Company
Limited
Tricolour
Financial
Services
Private Limited
Equitativa
(Dubai) Ltd.
(formerly
-
11
Sr.
No.
(I)
Name of
Director(s)
Address &
Qualification
(II)
Experience
(III)
Date of
Appointme
nt (DOA) &
Previous
Position
held
(IV)
Other
Directorships
in companies
(V)
Business.
Advanced
Management
programme at the
Columbia
Business School.
(1977) tenable in
California (U.S.A.), the
Lord Aldington Banking
Fellowship (1978) and
Fellow of the Indian
Institute of Bankers.
Mr. Kumar began his
long and illustrious
career in banking as
Probationary Officer and
Manager at the Iron Ore
Division (Overseas
Branch) of State Bank of
India, Mumbai in 1972.
Later he took on the role
of Senior Treasury and
General Management
positions with the
Government of Dubai,
after which he became
Member of the Senior
Management and
Executive Committee
(ExCo) of the Emirates
Bank Group. While with
the Group, between 1985
and 2012 he successively
headed the corporate
banking, remedial credit
management, treasury &
capital markets, asset
management and
investment banking
companies as the
General Manager / CEO.
Mr. Kumar is currently a
Member on the Boards of
a number of offshore
private equity firms. He
regularly writes for
English and Arabic
newspapers in the UAE
and has addressed
known as
Emirates Reit
Management
Private
Limited)
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12
Sr.
No.
(I)
Name of
Director(s)
Address &
Qualification
(II)
Experience
(III)
Date of
Appointme
nt (DOA) &
Previous
Position
held
(IV)
Other
Directorships
in companies
(V)
several symposia on
financial and non-
financial subjects in print,
television and other
media.
5. 6
.
Ms. Lakshmi
Venkatachalam
(bearing DIN:
00520608)
G 01 Cricket
House 34, 16th
Cross, 10 A Main
Malleshwaram
Bangalore 560055
Master in English
and Post-
Graduation in
Economics and in
Business
Administration,
from Boston
University, U.S.A
and Diploma in
French from the
Alliance
Francaise.
Ms. Lakshmi
Venkatachalam held the
office of the Vice
President for Private
Sector and Co-financing
Operations in the Asian
Development Bank (ADB)
between 2010-2015
where she was
responsible for leading
and managing ADB‘s
private sector investment
operations and its official
co-financing activities.
She was ADB‘s first vice
president assigned with
this responsibility, and
was instrumental in
realizing the broad
objectives to be relating
to private sector
development and
operations, as enshrined
in its Strategic Plan
(Strategy 2020).
Prior to her stint at the
ADB, she had a career in
public service, spanning
for more than 30 years,
where she held various
positions in Government
the most recent one
being as a Director
General of Shipping and
ex-officio Additional
Secretary to the
Government of India,
Ministry of Shipping, in
DOA:
22/09/2015
Previous
Position
held- as per
column III.
Brigade
Enterprises
Limited
The Sandur
Manganese
And Iron Ores
Limited
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13
Sr.
No.
(I)
Name of
Director(s)
Address &
Qualification
(II)
Experience
(III)
Date of
Appointme
nt (DOA) &
Previous
Position
held
(IV)
Other
Directorships
in companies
(V)
capacity of which, she
was the head of the
Maritime Administration,
implementing the Indian
Merchant Shipping Act,
which regulates shipping
activities under the aegis
of the International
Maritime Organization.
Her previous extended
assignments were in the
field of industry and
urban development. She
worked as a director in
the Ministry of Steel,
Government of India
from 1990 to 1995,
following which she was
Commissioner of the
Bangalore Development
Authority from 1995 to
1999. During her stint as
Chairperson of the Coffee
Board of India, (a
statutory body, under the
Ministry of Commerce,
Government of India)
between 2000 and 2005,
she represented the
Government of India at
the International Coffee
Organization, located in
London. She was also
Chairperson of the
International Coffee
Council in 2001-02, the
first Indian to hold the
position. Between 2005
to 2008, Ms.
Venkatachalam held the
position of Principal
Secretary to the
Government of Karnataka
in the Departments of (1)
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14
Sr.
No.
(I)
Name of
Director(s)
Address &
Qualification
(II)
Experience
(III)
Date of
Appointme
nt (DOA) &
Previous
Position
held
(IV)
Other
Directorships
in companies
(V)
Commerce and Industry,
(2) Urban Development
and (3) Planning,
Program Implementation,
Economics and Statistics,
respectively.
She graduated from the
Convent of Jesus and
Mary, Baroda. She
continued with her
college and university
education in Kolkata,
where she graduated
with a Master‘s Degree in
English in 1975, from
Jadavpur University.
Later, in 1988, she
obtained two Post-
Graduate Degrees in
Economics and in
Business Administration,
from Boston University,
USA. She is recipient of a
diploma in French from
the Alliance Francaise.
She is a frequent speaker
at international events -
addressing topics such
as infrastructure finance,
public-private
partnerships, inclusive
business, affordable
housing, the financial
sector, renewable
energy, agribusiness,
clean technology, etc.
-
15
Sr.
No.
(I)
Name of
Director(s)
Address &
Qualification
(II)
Experience
(III)
Date of
Appointme
nt (DOA) &
Previous
Position
held
(IV)
Other
Directorships
in companies
(V)
6. 7
.
Mr. Ved Prakash
Chaturvedi
(bearing DIN:
00030839)
Flat D-3301/2,
Ashok Tower,
63/74 Dr.
Babasaheb
Ambedkar Marg,
Parel, Mumbai
400012
Bachelor
of Engineering,
MBA (IIM
Bangalore)
Mr. Ved Prakash
Chaturvedi is an Engineer
and an MBA from IIM
Bangalore. He was a
member of the founding
team at CRISIL. Mr.
Chaturvedi has been
associated with Indian
capital market for more
than 27 years.
During 2002 to 2010 he
held the position of
Managing Director and
Chief Executive officer of
Tata Asset Management
Limited. Further, from
2011 to 2014 he held
position as Member of
the Management Council
of L&T Finance Holdings
Limited and Board
member of L&T
Investment Management
Limited.
During his career he has
been involved in building
investment management
and asset management
businesses both
organically and through
acquisitions. The rapid
growth of the Tata
Mutual Fund business
and later, the acquisition
of Fidelity Fund
Management India
business by L&T
Investment Management
Limited have been
notable achievements of
his leadership while he
served the respective
companies.
DOA:
14/07/2016
Previous
Position
held- as per
column III.
ICICI
Lombard
General
Insurance
Company
Limited
-
16
Sr.
No.
(I)
Name of
Director(s)
Address &
Qualification
(II)
Experience
(III)
Date of
Appointme
nt (DOA) &
Previous
Position
held
(IV)
Other
Directorships
in companies
(V)
He has also served on
the Board of the
Association of Mutual
Funds in India. He has
been a founding Board
member of the Financial
Planning Standards
Board in India and has
also served the
Confederation of Indian
Industry and several
other regulatory
committees including the
mutual fund advisory
committee of SEBI.
He is presently the
partner of Kaylon
Advisors LLP.
7. 8
.
Mr. Dilip Karnik
(bearing DIN:
06419513)
―SHRIRAM‖,
1102/B-4, Shivaji
Nagar,
Near Model
Colony Telephone
Exchange,
Pune - 411016
Bachelor of
Science and LL.B
from Pune
University
Mr. Dilip G. Karnik has
completed Bachelor of
Science from University
of Pune in the year 1969
and is also a Gold
medalist in Law from
University of Pune.
He was elevated as
Additional Judge of
Hon‘ble Bombay High
Court on October 12,
2001 and was sworn in as
a permanent Judge on
October 4, 2004. He
retired on May 9, 2012
and is presently
practicing as Arbitration
and Legal Consultant. Mr.
Karnik is currently an
Independent Director on
the Boards of ICICI
Securities Primary
Dealership Limited, ICICI
Prudential Life Insurance
Company Limited, Birla
DOA:
06/03/2017
Previous
Position
held- as per
column III
ICICI
Securities
Primary
Dealership
Limited
ICICI
Prudential
Life
Insurance
Company
Limited.
Birla
Corporation
Limited
Vindhya
Telelinks
Limited
Universal
Cables
Limited.
-
17
Sr.
No.
(I)
Name of
Director(s)
Address &
Qualification
(II)
Experience
(III)
Date of
Appointme
nt (DOA) &
Previous
Position
held
(IV)
Other
Directorships
in companies
(V)
Corporation Limited,
Vindhya Telelinks Limited
and Universal Cables
Limited.
8. 9
.
Mr. Nimesh
Vipinbabu Shah
(bearing DIN:
01709631)
ICICI Prudential
AMC Ltd
One BKC 13th
Floor, Bandra
Kurla Complex,
Mumbai – 400051
Chartered
Accountant and
Cost Accountant.
Mr. Nimesh Shah joined
the Company in July
2007 as Managing
Director and Chief
Executive Officer. He has
been instrumental in
laying a foundation for
building a superior asset
management firm with a
process-driven approach
that is aligned to the
interest of the investors.
His focus has always
been on investor
centricity, consistent
investment performance,
maintaining high levels of
transparency and
disclosures besides
sticking to basics.
Under his leadership, the
AMC has been winning
several fund level
awards. He was also
conferred with the CEO
of the Year – 2014 in
Asset Management -
India for his remarkable
contribution. Recently,
Global Banking & Finance
review honored him with
the Best Asset
Management CEO India –
2017. During his
leadership, ICICI
Prudential Mutual Fund
became the largest
mutual fund in India and
the Company has grown
in stature as an equity
DOA:
26/07/2007
Previous
Position
held- as per
column III.
Association Of
Mutual Funds
In India
-
18
Sr.
No.
(I)
Name of
Director(s)
Address &
Qualification
(II)
Experience
(III)
Date of
Appointme
nt (DOA) &
Previous
Position
held
(IV)
Other
Directorships
in companies
(V)
fund manager while
continuing to do well in
the debt segment.
Mr. Nimesh Shah has 28
years of experience in the
banking and financial
services industry. Prior to
his current role, he was
serving the ICICI Group
as a Senior General
Manager at ICICI Bank
where he held several
key roles in project
finance, corporate
banking and international
banking functions.
Mr. Nimesh Shah is also
a Director of the Mutual
Fund industry trade body
AMFI and the Chairman
of the Financial Literacy
Committee of AMFI.
9. Mr. Sankaran
Naren (bearing
DIN:
07498176)
ICICI Prudential
AMC Ltd
One BKC 13th
Floor, Bandra
Kurla Complex,
Mumbai – 400051
B.Tech (IIT
Chennai) and
MBA in Finance
(IIM – Kolkata)
Mr. Sankaran Naren has
been associated with the
AMC since October 2004.
He oversees the entire
investment function
across the Mutual Fund
and the International
Advisory Business of the
Company. He has overall
experience of around 27
years across the financial
services industry and
investment management.
After obtaining a B.Tech
degree from IIT Chennai,
Mr. Naren completed his
MBA in Finance from IIM-
Kolkata.
During his career, he has
DOA:
22/04/2016
Previous
Position
held- as per
column III.
Nil
-
19
Sr.
No.
(I)
Name of
Director(s)
Address &
Qualification
(II)
Experience
(III)
Date of
Appointme
nt (DOA) &
Previous
Position
held
(IV)
Other
Directorships
in companies
(V)
also worked with
organizations such as
Refco Sify Securities
India Pvt. Ltd, HDFC
Securities Ltd, and Yoha
Securities in various
capacities.
He currently manages
some of the flagship
schemes of the ICICI
Prudential Mutual Fund.
10. Mr. Bernard Teo
(bearing DIN:
08584418)*
9 Cypress
Avenue,
Singapore 279835
Bachelor of
Arts in
Philosophy,
Politics and
Economics and
Master of
Business
Administration
Bernard Teo is Director of
TMBAM Eastspring at
Eastspring Investments,
the Asian asset
management business of
Prudential plc. He is a
member of the
Eastspring Management
Committee.
Bernard joined
Eastspring as Head of
Corporate Strategy,
Mergers & Acquisitions in
2016 and led the
acquisition of a 65%
stake in Thailand‘s TMB
Asset Management in
2018 and the signing of a
memorandum of
understanding to acquire
TFUND in Thailand in
2019.
He took up his current
role in August 2019, with
responsibility for
integrating TMBAM
Eastspring into the
broader Eastspring
business. Bernard also
oversees Eastspring‘s
three joint ventures –
DOA:
23/10/2019
Previous
Position
held- as per
column III
BOCI-
Prudential
Asset
Management
Limited
Eastspring
Investment
(Hong Kong
Limited)
Eastspring Al-
Wara
Investment
Berhad
Eastspring
Investment
Berhad
Eastspring
Investments
Management
(Shanghai)
Company
Limited
TMB Asset
Management
Co., Ltd
-
20
Sr.
No.
(I)
Name of
Director(s)
Address &
Qualification
(II)
Experience
(III)
Date of
Appointme
nt (DOA) &
Previous
Position
held
(IV)
Other
Directorships
in companies
(V)
ICICI-Pru, CITIC-Pru and
BOCI-Pru – and the
development of
Eastspring‘s wholly
foreign-owned enterprise
in China. This sees him
focus on maximising
growth opportunities in
the India and China
markets.
Prior to Eastspring,
Bernard worked in the
investment banking
industry, focusing on
financial institutions. He
spent 12 years at
Goldman Sachs, where
he was a Managing
Director and Co–Chief
Operating Officer of Asia
Pacific (excluding Japan)
for the Financial
Institutions Group (FIG)
and Head of China FIG.
Bernard was responsible
for clients in Greater
China and South East
Asia and co-managed a
group of 50 APxJ FIG
bankers. Before this,
Bernard was with
Lehman Brothers/Nomura
International, where he
was Senior Vice
President and Managing
Director of the Financial
Institutions Group in the
Investment Banking
Division.
Note: ^ Mr. C.R. Muralidharan was reappointed as Independent Director of the
Company w.e.f July 1, 2019.
^^ Mr. Suresh Kumar was reappointed as Independent Director of the Company
w.e.f July 1, 2019.
-
21
*Mr. Bernard Teo was appointed as Nominee Director of Prudential Corporation
Holdings Limited on the Board of ICICI Prudential Asset Management Company
Limited with effect from October 23, 2019.
iii) Top 10 Group companies/ firms of the Portfolio Manager on turnover
basis as of March 31, 2019
Sr.
No.
Name of the Company Turnover
(Rs. In Million)
1. ICICI Bank Limited 634,011.93
2. 2
.
ICICI Prudential
Life Insurance Company Limited
309,297.70
3. 3
.
ICICI Lombard General Insurance Company
Limited 147,892.10
4. 4
.
ICICI Securities Limited 17,042.00
5. 7
.
ICICI Home Finance Company Limited 11,580.40
6. 5
.
ICICI Securities Primary Dealership Limited 11,160.70
7. 6
.
ICICI Bank Canada 10,897.40
8. 8
.
ICICI Bank UK PLC 9,635.30
9. 9
.
ICICI Venture Funds Management Company
Limited 551.70
10. 0
.
ICICI Securities Inc. 200.60
4,5&6
Number as per respective entity Ind AS financial statements pursuant to
migration to Ind AS by these entities.
7
The financial information of ICICI Bank Canada is for the period January 1,
2018 to December 31, 2018, being their financial year.
The financial information of ICICI Bank Canada has been translated into Indian
Rupees at the closing rate at December 31, 2018 of 1 CAD = ` 51.2400. 8
The financial information of ICICI Bank UK PLC and ICICI International Limited
has been translated into Indian Rupees at the closing rate at March 31, 2019 of
1 USD = ` 69.1550.
The aforesaid table does not include the details of the Portfolio Manager.
For the purpose of this report the Portfolio Manager has considered the group
companies of the parent company of the Portfolio Manager, i.e. ICICI Bank
Limited.
-
22
iv) Details of the services being offered:
DISCRETIONARY SERVICES:
The Portfolio Manager shall be acting in a fiduciary capacity with regard to the
Client‘s account consisting of investments, accruals, benefits, allotments, calls,
refunds, returns, privileges, entitlements, substitutions and/or replacements or
any other beneficial interest including dividend, interest, rights, bonus as well
as residual cash balances, if any (represented both by quantity and in
monetary value). The Portfolio Manager shall act in a fiduciary capacity and as
a trustee and agent of the clients' account.
The Portfolio Manager will provide Discretionary Portfolio Management
Services which shall be in the nature of investment management, and may
include the responsibility of managing, renewing and reshuffling the portfolio,
buying and selling the securities, keeping safe custody of the securities and
monitoring book closures, dividend, bonus, rights etc. so that all benefits
accrue to the Client‘s Portfolio, for an agreed fee structure entirely at the
Client‘s risk. The Securities transacted by the Portfolio Manager for Clients in
the same strategy may differ from Client to Client.
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 executed
Agreement and make such changes in the investments and invest some or all
of the Client‘s account in such manner and in such markets as it deems fit
would benefit the Client. The Portfolio Manager‘s decision (taken in good faith)
in deployment of the Clients account is absolute and final and cannot 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, 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.
NON- DISCRETIONARY SERVICES:
The Portfolio Manager will provide Non-discretionary Portfolio Management
Services as per express prior instructions issued by the Client from time to
time, in the nature of investment consultancy/management, and may include
the responsibility of managing, renewing and reshuffling the portfolio, buying
and selling the securities, keeping safe custody of the securities and
monitoring book closures, dividend, bonus, rights etc. so as to ensure that all
benefits accrue to the Client‘s Portfolio, for an agreed fee structure entirely at
the Client‘s risk.
ADVISORY SERVICES:
The Portfolio Manager will provide Advisory Services, in terms of the SEBI
(Portfolio Manager) Regulations 1993, which shall be in the nature of
investment advisory and shall include the responsibility of advising on the
portfolio strategy and investment and divestment of individual securities on
the Client‘s portfolio, for an agreed fee structure entirely at the Client‘s risk.
-
23
The Portfolio Manager shall be solely acting as an advisor to the portfolio of
the client and shall not be responsible for the investment / divestment of
securities and/or administrative activities on the client‘s portfolio. The Portfolio
Manager shall, provide advisory services in accordance with such guidelines
and/or directives issued by the regulatory authorities and /or the Client, from
time to time, in this regard.
Minimum Investment Amount:
The minimum amount to be invested under any portfolio is Rs.25,00,000/-
(Rupees Twenty Five Lacs Only).
3) 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 the Board
under the Act or Rules or
Regulations made thereunder.
: Nil except for the details mentioned in
point no. (iii).
(ii) The nature of the
penalty/direction.
: Not applicable
(iii) Penalties imposed for any
economic offence and/or for
violation of any securities laws.
: Basis certain alleged violations observed
during the inspection of ICICI Prudential
Mutual Fund under SEBI (Mutual Funds)
Regulations, 1996, for the period from
April 01, 2014 to March 31, 2016, quasi-
judicial proceedings had been initiated
by SEBI, with respect to following
matters:
a) investment made in three
companies by ICICI Prudential
FMCG Fund,
b) rebalancing of close-ended debt
schemes on account of
downgrade in debt instruments of
JSPL, and
c) procedural compliance with
respect to declaration of dividend
by the schemes of ICICI
Prudential Mutual Fund
In reference to the above, the AMC and
ICICI Prudential Trust Limited (the
Trustee Company) had received a show
cause notice on August 28, 2018. In
response to the same, the AMC and the
Trustee Company had made a written
-
24
submission to the Adjudicating Officer
(AO) and also presented their case at a
hearing. Pursuant to the above, SEBI has
issued an Adjudicating Order dated
December 23, 2019 wherein a penalty of
Rs. 300,000/- and Rs. 200,000/- has been
imposed on the AMC and the Trustee
Company respectively. The AMC is in the
process of taking suitable action in this
regard.
(iv) Any pending material
litigation/legal proceedings
against the Portfolio
Manager/key personnel with
separate disclosure regarding
pending criminal cases, if any.
: Nil
(v) Any deficiency in the
systems and operations of the
Portfolio Manager observed by
the Board or any regulatory
agency.
Nil
(vi)Any enquiry/ adjudication
proceedings initiated by the
Board 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 thereunder.
: Nil
Note: The information in this section pertains to the penalties levied on the AMC or
litigations against the AMC with respect to its regulated activities.
4. Services Offered
I. The present investment objectives
The Portfolio Manager provides various investment products/services based on
the mandate of the Client and subject to the scope of investments as agreed
upon between the Portfolio Manager and the Client in the Agreement. The
investment objectives of the portfolios of the Clients depending on the Clients‘
needs would be one or more of the following or any combination thereof to:
a) generate capital appreciation/regular returns by investing in
equity/derivatives/debt/money market instruments and equity related
securities.
-
25
b) generate regular returns by primarily investing in debt and money market
instruments.
c) generate capital appreciation/ regular returns by investing in exclusively gilt
securities issued by the Central/State Government securities.
d) generate capital appreciation by actively investing in equity, derivatives and
equity related securities and for defensive considerations, the Portfolio
Manager may invest in debt, money market instruments and derivatives.
e) endeavour to preserve certain percentage of investment amount by investing
in a mix of fixed income and equity derivatives in such a manner so as to aim
to secure/preserve certain percentage of investment amount while
attempting to enhance returns by the use of equity derivatives.
f) endeavour to earn relatively high returns by buying/selling derivatives
product/ instruments.
g) earn returns through selling options while remaining covered by an
equivalent position in the underlying securities.
h) generate capital appreciation / regular returns by investing in equity/
derivatives / debt/ money market instruments and equity related securities,
units of mutual fund schemes and such other investment
instruments/markets as the Portfolio Manager deems fit would benefit the
client.
II. Asset Classes generally considered for deployment of Investment
Amount
The Portfolio Manager shall invest in respect of the Client‘s Account in capital
and money market instruments or in fixed income securities or variable
securities of any description, by whatever name called including: -
Equity and Equity related securities, Convertible Stock and Preference Shares
of Indian Companies;
Debentures, Bonds having payout profiles linked to various asset classes and
Secured Premium Notes, Swaps, Options Futures, Tax-exempt Bonds of
Indian Companies and Corporations.
Government and Trustee Securities;
Units and other instruments of Mutual Funds.
Bank Deposits/ Post Office Saving Schemes
Money Market Instruments;
Commercial Papers, Certificates of Deposit and other similar Money Market
instruments;
Derivatives, both equity & fixed income as permitted under the Regulations.
Units of Venture Funds
-
26
Securitisation Instruments
Foreign securities (upto the permissible limit as permitted by applicable
Regulations)
Schemes of SEBI registered Mutual Funds and Exchange traded Funds
Other eligible modes of investment and/or forms of deployment within the
meaning of the Regulation issued by SEBI as amended from time to time,
(hereinafter collectively referred to as ―Securities‖)
Until such time the Portfolio Manager finds appropriate investment opportunities,
the Portfolio Manager may at its discretion, in all the Portfolios, invest the Clients
funds in bank deposits, units of Mutual Funds, money market instruments and/or gilt
securities issued by Central/State governments.
Asset Classes for deployment shall be always subject to the scope of investments as
agreed upon between the Portfolio Manager and the Client in the Agreement.
III. Policies including the types of securities in which Portfolio Manager
generally invests/ will generally invest
As mentioned above, the scope of investments shall be as agreed upon between
the Portfolio Manager and the Client in the Agreement.
Investment Style
The investment style would vary depending upon the specific requirements of the
client and depending upon the type of the portfolio. The broad investment style for
discretionary equity portfolios is outlined below:
Stock picking
The top-down approach is used to identify key macroeconomic and sectoral
themes and subsequently helps identify stocks that will benefit from the
same. The Portfolio Manager also adopts bottom-up approach, as there are
always good companies to invest in irrespective of the market conditions.
The Portfolio Manager looks to identify and invest in such companies.
Diversification
The Portfolio Manager shall endeavour that the portfolios are invested in
baskets of stocks with no undue concentration in any stock or sector, unless
specifically mentioned in the investment mandate. The process of
diversification may help control risk in the portfolio.
Investment style anchored in value
In this investment style, the Portfolio Manager typically is looking to invest in
stocks which offer growth and are available at reasonable valuations. The
valuation measures typically used are PEx, PBx, PEG, etc. Notwithstanding
the above, the Portfolio Manager is not averse to participating in momentum
within reasonable limits.
-
27
Taking advantage of market opportunities
Active management of the portfolio is essential in dynamic times. The
Portfolio Manager may attempt to take advantage of market opportunities in
an attempt to maximise returns to investors.
Using tactical asset allocation
The Portfolio Manager may move between asset classes i.e. equity and fixed
income and cash depending upon market conditions. This is done mainly
with an objective of protecting capital when markets are uncertain or have a
downward bias.
Use of derivatives
The use of derivatives will vary from portfolio to portfolio which shall be in
accordance with applicable regulations. In the pure equity portfolios,
derivatives will be used primarily for hedging and portfolio rebalancing
purposes. Hedging will be used with an objective of attempting to preserve
capital in uncertain times, while portfolio rebalancing would include investing
in derivatives instead of a direct investment in the cash market if the Portfolio
Manager feels a certain position can be more effectively created using
derivatives.
IV. The policies for investments in associates/ group companies of the
Portfolio Manager and the maximum percentage of such
investments therein subject to the applicable
laws/regulations/guidelines
The Portfolio Manager will, before investing in the securities of
associate/group companies, will evaluate such investments, the criteria for
the evaluation being the same as is applied to other similar investments to be
made under the Portfolio. The Portfolio Manager may also make investments
under the schemes of ICICI Prudential Mutual Fund. Investments under the
Portfolio in the securities of the group companies will be subject to the limits
prescribed in the Agreement (if any) executed with the respective Client and
the same would be subject to the applicable laws/regulations/guidelines
V. Types of services/products offered
The Portfolio Manager shall provide services to all eligible category of investors
who can invest in Indian market including resident Indians, NRIs, FPI‘s, FIIs, etc.
Investment objectives may vary from client to client. Depending on the
individual Client requirements, the portfolio can also be tailor-made based on the
Client‘s specifications. Currently the Portfolio Manager offers following
categories of different portfolios. The features of the products are given below:
i) Aggressive Portfolio
The portfolio endeavours to generate long-term capital appreciation by
investing into large cap stocks while retaining flexibility to invest a part of the
portfolio in mid, small and micro cap stocks. The portfolio will endeavour to
invest in stocks with attractive growth prospects that are available at
reasonable valuations. The Portfolio Manager maintains a diversified
portfolio by investing in stocks across select sectors.
-
28
The portfolio may be actively traded to take advantage of certain market
trends with an endeavour to enhance returns.
(ii) Dividend Yield Portfolio
This portfolio endeavours to generate risk-adjusted returns through a
combination of dividend income and capital appreciation. This portfolio may
be considered appropriate for investors with a relatively low risk appetite,
who wish to potentially earn relatively higher returns, offered through the
equity markets. It is also suitable for investors looking for tax-efficient
investment options that offer the scope for relatively high-returns.
Investments are proposed to be made primarily in stocks that offer an
attractive dividend yield. Portfolio Manager seeks to pay particular attention
to the dividend track record, sustainability of free cash flows/dividends,
industry prospects, management quality, business fundamentals etc., with an
attempt to include only high-quality companies in the portfolio.
(iii) Deep Value Portfolio
The Deep Value portfolio endeavours to generate capital appreciation over
the long term, by investing in a diversified portfolio of significantly
undervalued stocks relative to its intrinsic value.
Various parameters may be used to judge the degree of under valuation of
the stocks including, but not limited to, price/earnings (p/e), price/book
(p/book), dividend yield (DY), price/cash flow, replacement cost, valuations
relative to history/sector/markets, etc. Due attention will be paid to qualitative
parameters such as management quality, industry prospects, liquidity etc.
(iv) The Focused Portfolio
The Focused Portfolio endeavours to generate capital appreciation in the
long term by investing in stocks while striking an appropriate balance of
concentration and diversification. The Portfolio Manager retains the flexibility
to invest across market capitalisation and sectors. The Portfolio Manager
may choose to have a greater degree of concentration across stocks and
sectors in an attempt to enhance returns.
The performance of the portfolio may be closely linked to the concentrated
positions in the portfolio, at various points in time.
(v) Non-Discretionary Portfolio
In the case of non-discretionary portfolios, the investment objectives and the
securities to be invested would be entirely decided by the Portfolio Manager
based on the Agreement executed with the Client. The same could vary
widely from client to client.
(vi) Defined Tenure Series Portfolio
Under this portfolio, the Portfolio Manager will seek to manage the funds of
the client by investing in equity and equity linked securities, debt instruments
including debt instruments having payout profiles linked to various asset
classes and subscribing to units issued by SEBI registered mutual funds and
venture capital funds which may have open ended/close ended or defined
tenure structures which may be both long/short term in nature as may be
agreed with the client.
-
29
(vii) Alpha Portfolio
The Alpha Portfolio seeks to capture Alpha, which is out performance to
index in the client‘s portfolio. The entire portfolio will be hedged against
overall market movements by using Index futures. The portfolio would
remain fully hedged at all times. The hedged portfolio would aim to reduce
market risk (beta) by insulating the portfolio against market movements.
(viii) Principal Protected Portfolio
The portfolio aims to achieve capital growth with relatively low capital risk.
The portfolio would have a defined tenure and a defined principal protection
level. This objective is achieved by investing a part of the capital in an
actively managed equity portfolio, while rest of the capital is invested in fixed
income on a notional basis, which forms the floor for capital preservation.
The portfolio may provide capital preservation with the help of a third party
guarantee. In such a case, the third party guarantee would be invoked if the
portfolio falls below a certain threshold level.
(ix) Infrastructure Portfolio
The infrastructure portfolio will invest in companies that are directly or
indirectly linked to the infrastructure theme. This could include sectors such
as construction, capital goods, power, cement, metals, banking, logistics and
other related sectors/sub-sectors.
(x) Diversified Portfolio
The Portfolio Manager has discretion to invest in a combination of different
asset classes including but not limited to listed equities, equity related
instruments, or other unlisted securities/instruments (private equity)
including but not limited to units issued by SEBI Registered Venture Capital
Funds and money market instruments. The terms of tenure of the product,
subscription and redemption etc. will be as per the agreement executed with
the Investor. The portfolio may offer third party guarantee on performance of
one or more of the underlying funds/portfolios/securities /instruments.
(xi) The Absolute Return Portfolio
The Portfolio Manager endeavours to deliver absolute performance
irrespective of the direction of the markets. The portfolio would buy the ideas
with the highest scope for outperforming/appreciation. The Portfolio
Manager would sell stocks, which seem overvalued and may under perform.
The portfolio would invest / trade in cash equities and futures and options.
Futures and Options could be on both stocks and indices. Futures/options
maybe both bought/sold. Buying of stocks could be through cash equities
and/or futures/options. Selling of stocks could be done through the use of
futures and/or options. Given the use of futures in the portfolio, the notional
value of all the portfolio positions may exceed the amount invested.
However, at all points of time sufficient cash will be maintained to enable
payment of margins and it will be ensured that in line with the SEBI Portfolio
Manager Regulations, at no point of time will the portfolio be borrowing for
the purpose of taking its exposures.
-
30
(xii) India Opportunities Portfolio
The objective of this close-ended portfolio is to endeavour to generate
superior risk-adjusted returns over the long term by investing in instruments
including but not limited to equity, equity-linked products / securities, debt,
units, hybrid products, convertibles, mortgage backed securities, commercial
paper(s), notes and instruments offered by unlisted and listed companies
involved in, investing in, developing, constructing, owning, asset managing,
project / facility managing and operating real estate assets and related
infrastructure opportunities. The portfolio manager would seek to generate
capital appreciation as well as regular returns / income (annual dividends /
interest) through such investments. Until such time the portfolio manager
finds appropriate investment opportunities, the Portfolio Manager may, at its
discretion invest the funds in bank deposits, units of Mutual Funds, money
market instruments and / or gilt securities issued by central / state
governments.
The Portfolio Manager would be entitled to issue one or more series of
varying tenures of issuances under this Portfolio with different underlying
assets.
(xiii) Multi Manager Portfolio
The Portfolio Manager under this portfolio will invest in units of SEBI
Registered Mutual Funds as set out in the agreement between the Portfolio
Manager and the client. The Portfolio can be typically open ended or close
ended in nature for a defined tenure with an option for liquidity at specified
intervals with appropriate exit loads as agreed between the Client and the
Portfolio Manager. The Portfolio may offer the option of providing a pre-
determined return pay off profile which may be linked to the performance of
the underlying units of selected Mutual Funds. This is achieved through a
contractual commitment by a reputed counter party with financial standing
typically with a Banking/Investment Banking background. However such
contractual commitment would be subject to the credit risk of the counter
party. Moreover, there is no assurance of returns being offered by the
Portfolio Manager under this portfolio.
(xiv) Rising India Series
The objective of the series is to seek to generate capital appreciation by
investing into sectors that may be the enablers of economic growth and / or
sectors that may be the significant beneficiaries of economic growth. The
portfolio may invest into listed/unlisted, equity, equity linked
products/securities and/or hybrid products, convertibles etc. The Portfolio
Manager may offer one or more themes of varying tenures / nature (defined
tenure or otherwise) including but not limited to:
Build India Portfolio
The portfolio aims to generate capital appreciation over the medium term by
investing into sectors that are expected to drive economic growth. Given the
on-going infrastructure thrust by the government, the portfolio could
presently invest into infrastructure and related sectors including but not
limited to the following sectors:
-
31
Infrastructure
Financial Services
Utilities (Roads, Aviation, telecom etc)
Energy
Logistics etc.
However the portfolio manager may also invest in other sectors, which
would meet the investment objective of the Build India Portfolio.
India Prosperity Portfolio
The portfolio aims to generate capital appreciation over the medium term by
investing into sectors that are expected to benefit from the rising prosperity
levels in India. India has the youngest and the largest working population in
the world. The productivity of this huge working population is expected to
translate into economic growth and in turn, raise income levels of Indians in
general. With rising incomes comes the ability to spend more. The portfolio
will invest in sectors that would benefit from such changes in lifestyle. Some
of the indicative sectors would be:
Media & Entertainment
Retailing
Mobility (auto, telecom etc)
Financial Services
Housing & Real Estate
Consumer Durables etc.
However, the portfolio manager may also invest in other sectors, which
would meet the investment objective of the Build India Portfolio.
(xv) PIPE Portfolio Series
The portfolio aims to generate capital appreciation by taking meaningful
stake in companies. Typically, such companies tend to be smaller, out of
favor or for some reason offer significant potential for returns. The portfolio
seeks to identify such companies and take relatively higher exposure. Such
companies may be listed or unlisted. And the holdings could be in the form
of equity, fixed income instruments, hybrid products, convertibles,
preference equity, or any other structure as allowed by the applicable
regulations.
5. RISK FACTORS
A) General Risk Factors applicable to investments:
Securities investments are subject to market risks and there is no assurance
or guarantee that the objective of investments will be achieved.
Past performance of the portfolio manager does not indicate its future
performance.
-
32
Investors are not being offered any guaranteed or assured return/s i.e. either
of Principal or appreciation on the portfolio.
Investors may note that Portfolio Manager‘s investment decisions may not be
always profitable, as actual market movements may be at variance with
anticipated trends.
Investors may not be able to voluntarily withdraw from the portfolio. In
addition, they may not be able to transfer any of the interests, rights, or
obligations with regard to the Portfolio except as may be provided in the
client agreement and the applicable regulations.
The portfolio may be affected by settlement periods and transfer procedures.
The Portfolio Management Service is subject to risk arising from the
investment objective, investment strategy and asset allocation.
The Portfolio Manager is not responsible for the ongoing risk profiling of its
existing investors. The investor should read the disclosure document and
terms and conditions of the product properly before making any investment
decision
The Portfolio Manager would be acting on the advise of experts in the
relative fields but would not be responsible for any loss occasioned by any
act or omission on the part of such persons.
A portfolio which tends to concentrate on a specific asset class or a specific
sector could carry the risk with regard to non-diversification of the portfolio
and hence, the scope for diversification could be limited at times. There
could be instances when the portfolio might have an unusually high
exposure to a few stocks.
The investments are vulnerable to movements in the prices of securities
invested by the portfolio, which could have a material bearing on the overall
returns from the portfolio. The value of the portfolio investments, may be
affected generally by factors affecting securities markets, such as price and
volume, volatility in the capital markets, interest rates, currency exchange
rates, changes in policies of the Government, taxation laws or any other
appropriate authority policies and other political and economic
developments which may have an adverse bearing on individual securities, a
specific sector or all sectors including equity and debt markets.
B) Risks related to Equity and Equity Linked Investments:
The liquidity of the Portfolio‘s investments is inherently restricted by trading
volumes in the securities in which it invests.
The valuation of the Portfolio‘s investments, may be affected generally by
factors affecting securities markets, such as price and volume volatility in the
capital markets, interest rates, currency exchange rates, changes in policies
of the Government, taxation laws or any other appropriate authority policies
and other political and economic developments which may have an adverse
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bearing on individual securities, a specific sector or all sectors including
equity and debt markets. There will be no prior intimation or prior indication
given to the Clients when the composition/ asset allocation pattern changes.
Trading volumes, settlement periods and transfer procedures may restrict
the liquidity of the investments made by the Portfolio. Different segments of
the Indian financial markets have different settlement periods and such
periods may be extended significantly by unforeseen circumstances. The
inability of the Portfolio to make intended securities purchases due to
settlement problems could cause the Portfolio to miss certain investment
opportunities. By the same rationale, the inability to sell securities held in the
portfolio due to the absence of a well-developed and liquid secondary
market for debt securities would result, at times, in potential losses to the
Portfolio, in case of a subsequent decline in the value of securities held in the
Portfolio.
In case of Dividend Yield Portfolios, returns of the Portfolio could depend on
the dividend earnings and capital appreciation, if any, from the underlying
investments in various dividend yield companies. The dividend earnings of
the portfolio may, vary from year to year based on the philosophy and other
consideration of each of the high-dividend yield companies. Further, it
should be noted that the actual distribution of dividends and frequency
thereof by the high-dividend yield companies in future would depend on the
quantum of profits available for distribution by each of such companies.
Dividend declaration by such companies will be entirely at the discretion of
the shareholders of such companies, based on the recommendations of its
Board of Directors. Past track record of dividend distribution may not be
treated as indicative of future dividend declarations. Further the dividend
yield stocks may be relatively less liquid as compared to growth stocks.
Securities, which are not quoted 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 choose to invest
in unlisted securities that offer attractive yields. This may however increase
the risk of the portfolio. Such investments shall be subject to the scope of
investments as laid down in the Agreement.
While securities that are listed on the stock exchange carry relatively lower
liquidity risk, the ability to sell these investments is limited by the overall
trading volume on the stock exchanges. Money market securities, while fairly
liquid, lack a well-developed secondary market, which may restrict the selling
ability of the Portfolio(s) and may lead to the investment(s) incurring losses
till the security is finally sold.
The Portfolio Manager may, subject to authorisation by the Client in writing,
participate in securities lending. The Portfolio Manager may not be able to
sell/lend out securities, which can lead to temporary illiquidity. There are
risks inherent in securities lending, including the risk of failure of the other
party, in this case the approved intermediary to comply with the terms of the
agreement. Such failure can result in a possible loss of rights to the
collateral, the inability of the Approved Intermediary to return the securities
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deposited by the lender and the possible loss of corporate benefits accruing
thereon.
To the extent that the portfolio will be invested in securities denominated in
foreign currencies, the Indian Rupee equivalent of the net assets,
distributions and income may be adversely affected by changes in
regulations concerning exchange controls or political circumstances as well
as the application to it of other restrictions on investment.
C) Risks related to investments in debt and debt related instruments:
Interest Rate Risk: As with all debt securities, changes in interest rates
may affect valuation of the Portfolios, as the prices of securities generally
increase as interest rates decline and generally decrease as interest rates
rise. Prices of long-term securities generally fluctuate more in response to
interest rate changes than prices of short-term securities. Indian debt
markets can be volatile leading to the possibility of price movements up or
down in fixed income securities and thereby to possible movements in the
valuations of Portfolios.
Liquidity or Marketability Risk: This refers to the ease with which a
security can be sold at or near to its valuation yield-to-maturity (YTM). The
primary measure of liquidity risk is the spread between the bid price and the
offer price quoted by a dealer. Liquidity risk is today characteristic of the
Indian fixed income market.
Credit Risk: Credit risk or default risk refers to the risk that an issuer of a
fixed income security may default (i.e., will be unable to make timely
principal and interest payments on the security). Because of this risk
corporate debentures are sold at a higher yield above those offered on
Government Securities which are sovereign obligations and free of credit
risk. Normally, the value of a fixed income security will fluctuate depending
upon the changes in the perceived level of credit risk as well as any actual
event of default. The greater the credit risk, the greater the yield required for
someone to be compensated for the increased risk.
Reinvestment Risk: This risk refers to the interest rate levels at which cash
flows received from the securities under a particular Portfolio are reinvested.
The additional income from reinvestment is the ―interest on interest‖
component. The risk is that the rate at which interim cash flows can be
reinvested may be lower than that originally assumed.
Currency Risk: The Portfolio Manager may also invest in overseas Fixed
Income or other Securities/ instruments as permitted by the concerned
regulatory authorities in India. To the extent that the portfolio of the Scheme
will be invested in securities/ instruments denominated in foreign currencies,
the Indian Rupee equivalent of the net assets, distributions and income may
be adversely affected by changes/fluctuation in the value of certain foreign
currencies relative to the Indian Rupee. The repatriation of capital to India
may also be hampered by changes in regulations concerning exchange
controls or political circumstances as well as the application to it of other
restrictions on investment.
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The Portfolio Manager may, considering the overall level of risk of the
portfolio, invest in lower rated/ unrated securities offering higher yields. This
may increase the risk of the portfolio. Such investments shall be subject to
the scope of investments as laid down in the Agreement.
D) Risk factors specific to Fixed Defined Tenure Series Portfolio
The additional risk factors in this portfolio relate to lack of liquidity of
instruments including units, frequency of disclosure of valuation of
underlying instruments, valuation risks, risk of change in underlying due to
changes or factors which may affect the issuer of units/ decisions of the
unitholders and changes in regulation which may adversely affect the
interest of the clients.
Given that the Portfolio Manager may be investing in instruments being non-
exchange traded instruments, the risks of investment in such non-exchange
instruments include counterparty default risks and liquidity risks.
Some underlying sectors based on which units are issued may tend to be
illiquid and the illiquidity of the sector may translate into illiquidity of the
holdings and hence this portfolio may be exposed to a higher level of
liquidity risks than normal portfolio risks exposed only to equity/exchange
listed instruments.
E) Specific Risk factors pertaining to Diversified Portfolio
The Portfolio Manager may make substantial investment in unlisted
securities/instruments (private equity). The investment in private equity may
be made in the units issued by SEBI registered Venture Capital Fund or any
other instrument available in the market. The major risk factors pertaining to
investment in Venture Capital Fund are given herein below. Investors are
advised to read carefully the product specific risk factors mentioned in detail,
in the Agreement to be executed with Portfolio Manager, before making
investment.
F) Specific Risk factors pertaining to nature of investment
The Portfolio Manager may invest in such Venture Fund (the Fund), which
may invest in companies that are experiencing or have experienced severe
financial difficulties. Many of such investments made by the Fund may be
illiquid, and there can be no assurance that the Fund will be able to realize
profits on its investments in a timely manner.
Since the Fund may make only a limited number of investments and these
may involve a high degree of risk, poor performance by even a few of these
investments could lead to adverse effects on the returns received by
investors.
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G) Risks specific to investments in Multi Manager Portfolio relating to
investment in securities/mutual fund schemes
Mutual Funds and securities investments are subject to market risks and
there is no assurance or guarantee that the objectives of the Schemes will be
achieved. The various factors which impact the value of the Scheme‘s
investments include, but are not limited to, fluctuations in markets, interest
rates, prevailing political and economic environment, changes in government
policy, tax laws in various countries, liquidity of the underlying instruments,
settlement periods, trading volumes etc.
As with any securities investment, the Net Asset Value (NAV) of the Units
issued under the Schemes can go up or down, depending on the factors and
forces affecting the capital markets.
Past performance of the Sponsors, Asset Management Company
(AMC)/Fund does not indicate the future performance of the Schemes of the
Fund.
The Portfolio Manager shall not be responsible for liquidity of the Scheme‘s
investments which at times, be restricted by trading volumes and settlement
periods. The time taken by the Scheme for redemption of units may be
significant in the event of an inordinately large number of redemption
requests or of a restructuring of the Scheme‘s portfolio.
The Portfolio Manager shall not responsible, if the AMC/ Fund does not
comply with the provisions of SEBI (Mutual Funds) Regulations, 1996 or any
other circular or acts as amended from time to time.
The Portfolio Manager shall not be liable for any changes in the offer
document(s)/Scheme Information Document(s) of the scheme(s), which may
vary substantially depending on the market risks, general economic and
political conditions in India and other countries globally, the monitory and
interest policies, inflation, deflation, unanticipated turbulence in interest
rates, foreign exchange rates, equity prices or other rates or prices, the
performance of the financial markets in India and globally.
The Portfolio Manager shall not be liable for any default, negligence, lapse
error or fraud on the part of the AMC/the Fund.
While it would be the endeavour of the Portfolio Manager to invest in the
schemes in a manner, which will seek to maximize returns, the performance
of the underlying schemes may vary which may lead to the returns of this
portfolio being adversely impacted.
The scheme specific risk factors of each of the underlying schemes become
applicable where the Portfolio Manager invests in any underlying scheme.
Investors who intend to invest in this portfolio are required to and are
deemed to have read and understood the risk factors of the underlying
schemes.
The Portfolio Manager does not offer any guaranteed or assured returns to
the investors.
H) Risk Factors on India Opportunities Portfolio
An investment in the India Opportunities Portfolio (IOP) involves certain
considerations and noteworthy risks. Whilst IOP will be investing into securities
and instruments which may be listed/unlisted, the underlying assets to these
securities/instruments would have prominent exposure to
infrastructure/properties. Accordingly, before deciding to invest in the IOP,
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prospective Clients must carefully study the specific risks described below
together with all the information contained in this Disclosure Document, and
seek independent investment and tax advice at their own expense. Additional
risks and uncertainties not presently known to the Portfolio Manager, or that it
currently deem immaterial may also have an unfavorable impact on the IOP and
business. There can be no assurance that the IOP‘s investment objective will be
achieved. Few of the risks specific to investments in IOP relating to investment in
securities/instruments with underlying assets associated with Indian real estate
and infrastructure are as follows:
Risks specific to investments in India Opportunities Portfolio (IOP)
relating to investment in securities/instruments with underlying assets
associated with Indian real estate and infrastructure
Title
The method of documentation of land records in India has still not been fully
computerized. In the cities where the system is yet to be computerized, the
maintenance and updation of land records is done manually which means that
the records of all land related documents are physically updated. This could
result in the updation process taking a significant amount of time or being
inaccurate in certain aspects. In some states, the process of computerization of
records is underway which is a long drawn and time consuming process and
because of the sheer number of records, the possibility of inaccurate records
cannot be ruled out. As a result, the title of the real property that the underlying
assets might be invested in, or represent, may not be clear or may be in doubt to
the non-availability of accurate and / or updated land records.
Land Acquisition
The right to own property in India is subject to restrictions that may be imposed
by the Government. Particularly, the Government has the right to acquire any
land or a part thereof if such acquisition is for a ‗public purpose‘ after paying the
owner some reasonable compensation. However, this compensation may not be
at the fair market value i.e. the price that such property might have fetched if it
were sold in the open market.
Therefore, the real property or a part that the underlying assets represent, might
be acquired by the Government, if the Government is of the view that such
property has to be used for a ‗public purpose‘. Further, the compensation paid
for this purpose may not be adequate to recompense for the loss of such real
property which may have an adverse impact on th