moamc pms disclosure document 7.11.10

8/6/2019 MOAMC PMS Disclosure Document 7.11.10

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Motilal Oswal Asset Management Company Limited

Portfolio Management Services

D I S C L O S U R E D O C U M E N T

Make the MOSt of our expertise

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Form CSecurities & Exchange Board of India

(Portfolio Managers) Regulations 1993,Regulation 14

Name of the Portfolio Manager: Motilal Oswal Asset Management Company Limited

Regd. Office Address: 81/82, Bajaj Bhavan, Nariman Point, Mumbai - 400 021.Tel.: 91-22-3980 4263 Fax: 91-22-2281 6161 Email : [email protected]

We confirm that:

i) The Disclosure Document forwarded to the Securities & Exchange Board of India (SEBI)is in accordance with the SEBI (Portfolio Managers) Regulations, 1993 and theguidelines and directives issued by SEBI from time to time;

ii) The disclosures made in the document are true, fair and adequate to enable theinvestors to make a well informed decision regarding entrusting the management ofthe portfolio to us/ investment in the Portfolio Management Services;

iii) The Disclosure Document has been duly certified by an independent CharteredAccountant - Mr. Aneel Lasod, a Partner of M/s. Aneel Lasod And Associates, CharteredAccountants, having membership no. 40117 and office at A-801-802, CorporateAvenue, 8th Floor, Sonawala Road, Goregaon (East), Mumbai - 400 063 on November24, 2010.

For and on behalf of Motilal Oswal Asset Management Company Limited

Sd/-

Nitin RakeshPrincipal Officer

Date: November 24, 2010

Place: Mumbai

Motilal Oswal Asset Management Company Ltd.81/82, Bajaj Bhavan, Nariman Point,

Mumbai - 400 021Tel.: +91 22 39804263Fax : +91 22 22816161

E-mail : [email protected]


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For Aneel Lasod And AssociatesC h a r t e r e d A c c o u n t a n t s.

Aneel LasodProprietor

M.No.40117

Place:- MumbaiDate :- 24th November, 2010.

CERTIFICATE

We hereby certify that the disclosures made in the enclosed Disclosure Documentdated 24th November, 2010, prepared and forwarded by Motilal Oswal AssetManagement Company Ltd. in terms of the Fifth Schedule of Regulation 14 of theSecurities and Exchange Board of India (Portfolio Managers) Regulations 1993 andthe guidelines and directives issued by the Board from time to time, are true, fair andadequate to enable the investors to make a well informed decision.

This certificate is issued on the basis of the information and documentsgiven/produced before us and on the basis of representations made by Motilal OswalAsset Management Company Limited.

ANEEL LASOD AND ASSOCIATESC H A R T E R E D A C C O U N T A N T S

We Believe In Value, Trust And Execution

A-801-802 Corporate Avenue 8th Floor, Sonawala Road, Near Udyog Bhavan, Goregaon (E), Mumbai - 400063.Tel. : 022-26865408 / 26860878 M : 9820141771 Website : www.aneellasod.comEmail: [email protected], [email protected], [email protected]

Sd/-


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DISCLOSURE DOCUMENT

(As per the requirement of Fifth Schedule of Regulation 14 of Securities and Exchange Board of

India (Portfolio Managers) Regulation 1993)

I) The Disclosure Document has been filed with the Securities & Exchange Board ofIndia along with the certificate in the prescribed format in terms of Regulation 14of the SEBI (Portfolio Managers) Regulations, 1993.

ii) The purpose of the Document is to provide essential information about theportfolio management services in a manner to assist and enable the investors inmaking informed decision for engaging Motilal Oswal Asset ManagementCompany Limited as a Portfolio Manager.

iii) The Disclosure Document contains the necessary information about the PortfolioManager, required by an investor before investing, and the investor may also beadvised to retain the document for future reference.

iv) The name, phone number, e-mail address of the principal officer so designated bythe Portfolio Manager is:

Name of the Principal Officer

Phone

Email

Address

Mr. Nitin Rakesh

91-22-39804263

[email protected]

81/82, Bajaj Bhavan, Nariman Point, Mumbai - 400 021


Motilal Oswal Asset Management Company Ltd.81/82, Bajaj Bhavan, Nariman Point,

Mumbai - 400 021Tel.: +91 22 39804263Fax : +91 22 22816161

E-mail : [email protected]


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Index of contents

1 Disclaimer clause 1

2 Definitions 1

3 Description 2

4 Penalties, pending litigations or proceedings, findingsof inspections or investigations for which actions mayhave been taken or initiated by any regulatory

authority. 5

5 Services offered 5

6 Risk Factors 8

7 Client Representation 9

8 The Financial Performance of Portfolio Manager 11

9 Portfolio Management Performance of the Portfolio Manager 11

10 Nature of Expenses 12

11 Taxation 12

12 Accounting Policies 12

13 Investor Services 13

ItemNo.

Contents PageNo.


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1) Disclaimer Clause: (i) Custodian means any person who carries onThe particulars given in this Document have or proposes to carry on the business ofbeen prepared in accordance with the SEBI providing custodial services in accordance with

(Portfolio Managers) Regulations, 1993 and the regulations issued by SEBI from time to

filed with SEBI. This Document has neither been time.

approved nor disapproved by SEBI nor has SEBI (j) Depository Account means one or moreaccount or accounts opened, maintained andcertified the accuracy or adequacy of theoperated by the Portfolio Manager with anycontents of the document. This document is notdepository or depository participant registeredfor public distribution and has been furnished tounder the SEBI (Depositories and Participants)you solely for your information and may not beRegulations, 1996 in accordance with thereproduced or redistributed to any other person.agreement entered into with the Client.

(k) Discretionary Portfolio Management Services2) Definitions:means the portfolio management servicesUnless the context or meaning thereof otherwiserendered to the Client by the Portfolio Managerrequires, the following expressions shall have theon the terms and conditions contained in themeaning assigned to them hereunder respectively:-agreement, whereunder the Portfolio Manager(a) Act means the Securities and Exchangeexercises any degree of discretion in theBoard of India, Act 1992 (15 of 1992).investments or management of assets of the(b) Agreement means agreement betweenClient.Portfolio Manager and its Client and shall

(l) Discretionary Portfolio Manager means ainclude all Schedules and Annexures attachedPortfolio Manager who exercises or may, underthereto.a contract relating to portfolio management,(c) Application means the application made byexercise any degree of discretion as to thethe Client to the Portfolio Manager to place itsinvestments or management of the portfolio offunds and/or securities with the Portfoliosecurities or the funds of the Client, as the case

Manager for Portfolio Management Services. may be.Upon execution of the Agreement by the(m) Document means th is D isc losurePortfolio Manager, the Application shall be

Document.deemed to form an integral part of the(n) Financial Year means the year starting fromAgreement. Provided that in case of any

April 1 and ending on March 31 of theconflict between the contents of thefollowing year.Application and the provisions of the

(o) Funds means the monies managed by theAgreement, the provisions of the AgreementPortfolio Manager on behalf of the Clientshall prevail.pursuant to Portfolio Investment Management(d) Assets means (i) the Portfolio and/or (ii) theAgreement and includes the moniesFunds.

mentioned in the Application, any further(e) Body Corporate shall have the meaning monies placed by the Client with the Portfolioassigned to it in or under clause (7) of section 2Manager for being managed pursuant toof the Companies Act, 1956 (91of 1956);Portfolio Investment Management Agreement,(f) Bank Account means one or more accountsthe proceeds of the sale or other realization ofopened, maintained and operated by thethe Portfolio and interest, dividend or otherPortfolio Manager with any of the Scheduledmonies arising from the Assets, so long as theCommercial Banks in accordance with thesame is managed by the Portfolio Manager.agreement entered into with the Client.

(p) Partiesmeans the Portfolio Manager and the(g) Board means the Securities and ExchangeClient; and Party shall be construedBoard of India established under sub-sectionaccordingly.(1) of Section 3 of the Securities and Exchange

(q) Person includes any individual, partners inBoard of India Act. partnership, central or state government,(h) Client means the person who enters into ancompany, body corporate, cooperative society,Agreement with the Portfolio Manager forcorporation, trust, society, Hindu Undividedmanaging its portfolio and /or funds.

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Family or any other body of persons, whetherincorporated or not.

(r) Portfolio means the Securities managed bythe Portfolio Manager on behalf of the Clientpursuant to the Portfolio InvestmentManagement Agreement and includes any

Securities mentioned in the Application, anyfurther Securities placed by the Client with thePortfolio Manager for being managedpursuant to the Portfolio InvestmentManagement Agreement, Securities acquiredby the Portfolio Manager through investmentof Funds and bonus and rights shares orotherwise in respect of Securities forming partof the Portfolio, so long as the same ismanaged by the Portfolio Manager.

(s) Portfolio Manager shall have the same

meaning as given in regulation 2(cb) of theSEBI (Portfolio Managers) Regulations, 1993 asamended from time to time.

(t) Principal Officer means an employee of thePortfolio Manager who has been designated assuch by the Portfolio Manager.

(u) Regulations means the Securities andExchange Board of India (Portfolio Managers)Regulations, 1993, as may be amended fromtime to time.

(v) Scheduled Commercial Bank means any

bank included in the second Schedule to theReserve Bank of India Act, 1934 (2 of 1934).

(w) SEBI means the Securities and ExchangeBoard of India established under sub-section(1) of Section 3 of the SEBI Act.

(x) Securities includes: Securities as definedunder the Securities Contracts (Regulation)Act, 1956 as amended from time to time andincludes:(i) Shares, scrips, stocks, bonds, debentures,

debenture stock or other marketable

securities of a like nature in or of anyincorporated company or other bodycorporate;

(ii) derivative;(iii) units or any other instrument issued by any

collective investment scheme to theinvestors in such schemes;

(iv) security receipt as defined in clause (zg) ofsection 2 of the Securitisation andReconstruction of Financial Assets andEnforcement of Security Interest Act,

2002;(v) units or any other such instrument issued

to the investors under any mutual fundscheme;

(vi) Government securities;(vii) such other instruments as may be

declared by the Central Government to besecurities;

(viii) rights or interest in securities;(ix) Exchange Traded Funds; and

(x) Liquid Funds.

Words and expressions used in this disclosuredocument and not expressly defined shall beinterpreted according to their general meaningand usage. The definitions are not exhaustive. Theyhave been included only for the purpose of clarityand shall in addition be interpreted according totheir general meaning and usage and shall alsocarry meanings assigned to them in regulationsgoverning Portfolio Management Services.

3) Description:

i) History, Present Business and Backgroundof the Portfolio Manager:

Motilal Oswal Asset Management CompanyLimited (Motilal Oswal AMC) is a companyincorporated under the Companies Act, 1956on November 14, 2008, having its RegisteredOffice at 81/82, Bajaj Bhavan, Nariman Point,Mumbai - 400021. Motilal Oswal AMC is awholly owned subsidiary of Motilal OswalSecurities Limited. (MOSL), which in turn iswholly owned subsidiary of Motilal OswalFinancial Services Limited (MOFSL).

Motilal Oswal Securities Limited wasregistered with SEBI as a Portfolio Managervide registration no. INP 000000670 underSEBI (Portfolio Managers) Regulations, 1993.In order to consolidate all its assetmanagement business under one entity,MOSL made an application to SEBI for transfer

of Portfolio Management Services (PMS)business along with SEBI registrationcertificate to its wholly owned subsidiary,Motilal Oswal AMC. SEBI vide its letter havingreference number IMD/DOF I/SKS/10449/2010dated June 30, 2010 granted its approval fortransfer of PMS business from MOSL to MotilalOswal AMC subject to compliance of therequirements specified by SEBI.

MOSL entered into an agreement with MotilalOswal AMC for transferring its PMS business.Pursuant to the transfer, MOSL assigned toMotilal Oswal AMC all its rights andobligations under the Portfolio Investment


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Management Agreement executed with itsClients and other documents executedpursuant thereto and Power of Attorney(POA) conferred by Clients in favour ofMOSL.

Thus, Motilal Oswal AMC is entitled to exerciseall powers and functions conferred orcontained in the POA, which were originallyexercised or performed by MOSL. Onconfirmation to SEBI that Motilal Oswal AMChas complied with the requirements specifiedby SEBI in respect of transfer of PMS business,SEBI has endorsed the original certificate ofregistration of Portfolio Management Servicesin favour of Motilal Oswal AMC w.e.f. October21, 2010.

Motilal Oswal AMC holds Certificate ofRegistration No. INP000000670 datedOctober 21, 2010 issued under SEBI (PortfolioManagers) Regulations, 1993 to act as aPortfolio Manager and the certificate ofregistration is valid till September 15, 2011. Inaddition to acting as a Portfolio Manager,Motilal Oswal AMC is also an AssetManagement Company to Motilal OswalMutual Fund under an InvestmentManagement Agreement dated May 21,

2009. Motilal Oswal Mutual Fund is registeredwith SEBI as a Mutual Fund under SEBI (MutualFunds) Regulations, 1996 vide registration no.MF/063/09/04 dated December 29, 2009.

As on October 30, 2010, Motilal Oswal MutualFund has assets under management of Rs.315.80 Crores. Presently, Motilal Oswal AMC ismanaging one Scheme, Motilal Oswal MOStShares M50 ETF, an open ended ExchangeTraded Fund.

ii) Promoters of the Portfolio Manager,Directors and their background:

Promoter:

Motilal Oswal Asset Management CompanyLtd. is promoted by Motilal Oswal SecuritiesLtd. (MOSL). MOSL is a wholly ownedsubsidiary of Motilal Oswal Financial ServicesLtd. (MOFSL). MOSL has its origin in a smallpartnership formed between two charteredaccountants, Mr. Motilal Oswal and

Mr. Raamdeo Agrawal in 1987. They acquiredmembership at the Bombay Stock Exchange(BSE) in the year 1990 in the name of Motilal

Oswal. Right from this stage of venture,approach was Research Based Broking.Subsequently, few more memberships of BSEwere acquired. In the year 1994, membershipof NSE was also acquired.

In the year 1994, Motilal Oswal wasincorporated into a company, which is nowknown as Motilal Oswal Securities Limited.Subsequently, Wealth Creating Study wasinitiated to identify the biggest wealth creatingcompanies in Indian Stock Exchanges. This wasalso coupled with a formal equity researchknown as Inquire. The company becameDepository Participant of Central DepositoryServices (India) Limited in the year 1999 andNational Securities Depository Limited in theyear 2000.

The Company is one of the leading BrokingHouses in the Retail as well as Institutionalsegment of the Capital Market. The majoractivities and offerings of MOSL are EquityBroking, Depository Participant Services,Investment Advisory, Fund ManagementServices, Institutional Broking and ResearchServices.

Directors and their background:

a) Mr. Raamdeo Agrawal

Mr. Raamdeo Agrawal is a Director on theBoard of the Company. He is a CharteredAccountant by qualification. He is Co-Authorfor the book Corporate Numbers Game in1986. He has extensive experience in CapitalMarkets and particularly in Equity Research /Investment Management.

b) Mr. Kanu Doshi

Mr. Kanu Doshi was inducted as a Director onthe Board of the Company with effect fromApril 8, 2009. He is Chartered Accountant byqualification. He specialises in corporatetaxation and has got insight into financialmatters of corporate particularly companiessetting up new projects and seeking financialassistances from financial institutions.

c) Mr. Lawrence Haber

Mr. Lawrence Haber was inducted as a Directoron the Board of the Company with effect from

April 8, 2009. He is MBA and CPA byqualification. He has rich and varied experiencein the field of finance and investments. He has


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held various senior positions in financial rolesat Coopers & Lybrand (now Price WaterhouseCoopers) Salomon Bros (now Citigroup),Merrill Lynch and Credit Suisse.

d) Mr. Vijay Mehra

Mr. Vijay Mehra was inducted as a Director onthe Board of the Company with effect fromSeptember 22, 2009. He is MBA and a Mastersin Systems Engineering and a Bachelor ofScience (Operations Research and IndustrialEngineering) and a Bachelor of Arts(Economics) by qualification. He is a seasonedinformation technology leader with a strongfoundation in general management andsignificant experience in operations andbusiness strategy.

e) Mr. Nitin Rakesh

Mr. Nitin Rakesh was appointed as a ManagingDirector of the Company with effect fromOctober 7, 2009. He is B.E. (Computers) &MBA (Finance) by qualification. He hasextensive experience in multiple areasincluding asset management, transactionprocessing, offshore fund structuring andventure capital. He was the CEO and ExecutiveDirector of the JV between State Street Bank,U.S. and Syntel Set up in 2005, the JV primarilyruns an India based operations hub for STT'sglobal business operations.

iii) Group company information ( i .e .information related to top 10 GroupCompanies / firms of the Portfolio Manageron turnover basis) (as per the auditedfinancial statements for the year endedMarch 2010):

1. Motilal Oswal Securities Limited

2. Motilal Oswal Investment Advisors Private

Limited3. Motilal Oswal Financial Services Limited

4. Motilal Oswal Private Equity Advisors PrivateLimited

5. Passionate Investment Management PrivateLimited

6. Motilal Oswal Commodities Broker PrivateLimited

7. Antop Traders Private Limited

8. Nagori Agro & Cattle Feeds Private Limited

9. Textile Exports Private Limited

10. Rishabh Securities Private Limited

iv) Details of the services being offered:

a) Discretionary Services:

Under these services, the choice as well as thetimings of the investment decisions rest solelywith the Portfolio Manager and the Portfolio

Manager can exercise any degree of discretionin the investments or management of assets ofthe Client. The Securities invested / disinvestedby the Portfolio Manager for Clients may differfrom Client to Client. The Portfolio Manager'sdecision (taken in good faith) in deployment ofthe Client's fund's is absolute and final and cannever be called in question or be open toreview at any time during the currency of theagreement or at any time thereafter except onthe ground of fraud, malafide, conflict of

interest or gross negligence. This right of thePortfolio Manager shall be exercised strictly inaccordance with the relevant Acts,Regulations, guidelines and notifications inforce from time to time. Periodical statementsin respect to Client's Portfolio shall be sent tothe respective Client.

Based on the Client's profile, overall investmentobjective and other relevant factors, thePortfolio of the Clients are at present managedunder one or more of the following

Investment Strategies,:a) Value Strategy

b) Bulls Eye Strategy

c) Discover Value Strategy

d) Discover Dynamic Strategy

e) Next Trillion Dollar Opportunity Strategy

f) Focused (Series III)-A Target Returns Strategy

g) Focused (Series IV)-A Flexi Cap Strategy

h) Focused (Series V)-A Contra Strategy

i) Optima Strategyj) Liquid Strategy

k) Structured Products Investments Strategy

l) Prodigy Investment Strategy

m) Invest India Strategy

n) Bluechip Prodigy Strategy

b) Non - Discretionary Services:

Under the Non-Discretionary PortfolioManagement Services, the portfolio of the

Client shall be managed in consultation withthe Client. Under this service, the Assets will bemanaged as per the requirements of the Clientafter due consultation. The Client will have

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complete discretion to decide on theinvestment (Stock Quantity and Price oramount). The Portfolio Manager inter aliamanages transaction execution, accounting,recording or corporate benefits, valuation andreporting aspects on behalf of the Client.

c) Advisory Services:

Under these services, the Portfolio Managerprovides only investment advice. Entry / exittiming, execution and settlement is solely theClient's responsibility.

4) Penalties, pending litigation or proceedings,findings of inspection or investigations forwhich action may have been taken orinitiated by any regulatory authority:

No penalties / directions have been issued bythe SEBI under the SEBI Act or Regulationsmade there under relating to PortfolioManagement Services. There are no pendingmaterial litigations or legal proceedings,findings of inspections or investigations for

which action has been taken or initiated by anyregulatory authority against the PortfolioManager or its Directors, principal officers oremployees or any person directly or indirectlyconnected with the Portfolio Manager underthe SEBI Act and Regulations made thereunder relating to Portfolio ManagementServices.

1. All cases of penalties imposed by the Board or the directions issued by the Board underthe Act or Regulations made there under relating to Portfolio Management Services. N.A.

2. The nature of the penalty/direction. N.A.

3. Penalties imposed for any economic offence and/or for violation of any securities lawsrelating to Portfolio Management Services. N.A.

4. Any pending material litigation/legal proceedings against the Portfolio Manager/keypersonnel with separate disclosure regarding pending criminal cases, if any. N.A.

5. Any deficiency in the systems and operations of the Portfolio Manager observed by the

Board or any regulatory agency in relation to Portfolio Management Services for whichaction may have been taken or initiated. N.A.

6. Any enquiry/adjudication proceedings initiated by the Board against the PortfolioManager or its directors, principal officer or employee or any person directly or indirectlyconnected with the Portfolio Manager or its directors, principal officer or employee,under the Act or Regulations made thereunder relating to Portfolio Management services. N.A.

5) Services offered:

The Portfolio Manager manages the Assets ofthe Client using the following Strategies:

a) Value Strategy:

Fund Manager: Mr. Manish Sonthalia

The Strategy aims to benefit from the long termcompounding effect on investments done ingood businesses, run by great businessmanagers for superior wealth creation.

Features:

Follows a value based stock selection strategy

Investment Approach : Buy & Hold

Investment Horizon: Medium to Long term

Maximize post tax return due to Low Churn

b) Bulls Eye Strategy:


The Strategy aims to deliver returns in the short

to medium term by investing in fundamentallysound stocks coupled with active profitbooking.

Features:

Actively managed multi cap strategy.

Investment Approach: Capitalizing on short tomedium-term market opportunities

Regular Profit booking based on stock andmarket movements

c) Discover Value Strategy:



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The Strategy aims to deliver returns over a longterm by investing in large-cap stocks across 6-8sectors. The focus is to identify large unpopularbusinesses with dominant market share andpotential for growth.

Features:

Follows a value based stock selection strategy

Investment Approach : Buying undervaluedstocks and selling overvalued stocks irrespectiveof market behaviour while maintainingpurchase price discipline


Follow a focused strategy construct

Maintaining a low churn thereby enhancing thestrategy returns

d) Discover Dynamic Strategy:

Fund Manager : Mr. Manish Sonthalia

The strategy aims to deliver returns in the shortto medium term by investing in stocks acrossmarket capitalization.

Features:


Investment Horizon : Short to Medium term

Investment Approach: Capitalizing on positivecorporate developments , corporaterestructuring and other events

Active Profit booking based on marketconditions.

e) Next Trillion Dollar Opportunity Strategy


The strategy aims to deliver superior returns byinvesting in focused themes which are part ofthe next Trillion Dollar GDP growthopportunity. It aims to predominantly invest inSmall & Mid Cap stocks with a focus onIdentifying Emerging Stocks/Sectors.

Features:


Investment Approach: Buy & Hold strategy

Focus on Sectors and Companies which promisea higher than average growth

Concentration on emerging Themes

f) Focused (Series III)-A Target Return Strategy


The Strategy aims to invest in the fund managerstop 10 stock ideas from the Nifty, which areexpected to do better than Nifty for a 12-18

month period.Features :

Actively managed strategy focusing on 8-10stocks.

Investment Horizon: Medium Term.

Investment Approach: Fundamental Stockselection approach.

Regular Profit booking based on predefinedprice targets.

active asset allocation call between cash &equity

Cash Out Strategy: Automatic payout ofappreciation amount when the Client's AUMappreciates by 20%

g) Focused (Series IV) - A Flexi Cap Strategy


The Strategy aims to generate superior returnsover a medium to long term by investing in only

8-10 companies across market capitalization.The Fund Manager will take active assetallocation calls between cash & equity. Thestrategy will also take active equity allocationcalls between investments in large caps & midcaps & it will follow a policy of profit bookingwith predefined price targets.

Features:



Investment Approach: Capitalize on Top Down& Bottom Up strategies of investing.

Cash Out Strategy: Automatic payout ofappreciation amount when the Client's AUMappreciates by 15%

h) Focused (Series V) - A Contra Strategy


The strategy aims to invest in fundamentallysound companies that can benefit fromchanges in a company's valuation whichreflects a significant change in the marketsview of the company over a horizon of three


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years. The Strategy focuses on investing instocks that can benefit from growth inearnings, re-rating of business or highervaluation of assets. Objective is to increasereturn rather than reduce risk for Investors.

Features:

Follows the principle to pick best ideas ratherthan diversification

Concentrated Strategy Structure of less than 10stocks


Investment Approach: Follows a Buy and holdphilosophy with low to medium churn

i) Optima Strategy

Fund Manager: Mr. Amit Bhadang

The Strategy aims to generate superior returnsover the long period by investing in companieswith growth potential and which are availableat reasonable market price.

Features:

Situation based Multi Cap Approach


Investment Approach: Active Portfolio

Rebalancing with Top Down & Bottom Up StockSelection Approach

Active asset allocation calls between Cash &Equity

j) Liquid Strategy


To predominantly make investments in LiquidMutual Funds, short-term debt funds, moneymarket mutual funds, and other debt funds to

facilitate investors to take Asset Allocation callsbetween Cash and Equity

k) Structured Products Investments Strategy


The investment objective of the PortfolioManager shall be preservation and growth ofcapital and at the same time endeavour toreduce the risk of capital loss. The PortfolioManager may design and develop variousseries keeping in mind market conditions and

may be customised for client's specific need /profile.

Features:

The Portfolio Manager will invest in NonConvertible Debentures (NCDs) issued by NonBanking Financial Companies.

These Non Convertible Debentures may havepayoffs, which may be based on stand alone orcombination of all or some of the financial

instruments such as equity, debentures,derivative instruments, swaps, swaptions abasket of securities, options, indices,commodities, debt issuances and/or foreigncurrencies, Secured Premium Notes, moneymarket instruments, etc. to cater to specificClients requirements.

l) Prodigy Investment Strategy


The Strategy will aim to predominantly invest ina universe of stocks which are in a secularuptrend based on Relative StrengthComparative Indicator. The strategy also aimsto invest in asset classes other than equity thatmay be in a secular uptrend, based on RelativeStrength Comparative Indicator versus themain equity indices. However, this will only bedone through the use of listed ExchangeTraded Funds.

Features:

The Strategy aims to deliver returns by investingin such companies based on both earningsmomentum and price momentum.

Basically for Investors with a medium termhorizon who are looking for a proactiveapproach to investing.

m) Invest India Strategy


The Strategy aims to generate long term capital

appreciation by creating a focused portfolio ofhigh growth stocks having the potential togrow more than the nominal GDP for next 5-7years across market capitalization and whichare available at reasonable market prices.

Features:

Investment Approach: BUY & HOLD strategy

Investment Horizon: Long Term

Low to medium churn resulting in enhancedpost-tax returns

Basically for Investors keen to generate wealthby participating in India's growth story over aperiod of time.


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n) Bluechip Prodigy Strategy


The strategy aims to generate steady returnsover the long term by investing in wellestablished, large size, large cap companies.

The strategy also aims to invest in listedExchange Traded Funds of asset classes otherthan equity that may be in a secular uptrendcompared to the main equity indices, based onRelative Strength Comparative Indicator.

Features:

The strategy would invest in companies basedon price momentum (using Relative StrengthComparative indicator)

Investment Horizon - medium to long term

The Portfolio Manager may design and developvarious series keeping in mind market conditions andmay be customised for Client's specific need /profile. The Portfolio in all cases will be guidedstrictly by the relevant guidelines, Acts, Rules,Regulations, and notifications prevailing in forcefrom time to time. The instrument may be principalprotected or non-principal protected, which mayhave fixed or variable pay-offs. The investmentobjective of the Portfolio Manager shall bepreservation and growth of capital and at the same

time endeavour to reduce the risk of capital loss.However, while the aforesaid is the objective, itneeds to be reiterated that there can be noassurance and/or guarantee of such growth oreven as regards preservation of capital or of therebeing no capital loss. The amount invested by theClients under this strategy may be subject to a lockin period as detailed in the Schedule to theagreement between the Client and the PortfolioManager.

All the abovementioned strategies are used under

the discretionary portfolio management services asper the Regulations specified by SEBI.

The main features under Discretionary PortfolioManagement Services are:

Minimum Portfolio Size: Rs. 5 Lakhs or anyamount not less than the statutory minimum asmay be specified by the Portfolio Managerfrom time to time.

Periodic valuation Report (if, any).

Periodic transaction Statement (if, any).NOTE:

Investment under Portfolio Management

Services will be only as per the SEBIRegulations on PMS

The uninvested amounts forming part of theClient's Assets may be at the discretion of thePortfolio Manager be held in cash ordeployed in Liquid fund schemes, Exchange

Traded Index Funds, debt oriented schemesof Mutual funds, Gilt schemes, Bank depositsand other short term avenues forInvestment.

The Portfolio Manager, with the consent ofthe Client, may lend the securities throughan Approved Intermediary, for interest.

The Portfolio Manager will not invest any ofthe funds of the Client in the shares, mutualfunds, debt, deposits and other financial

instruments of group companies of thePortfolio Manager.

Apart from Discretionary Portfolio ManagementServices, the Portfolio Manager also offers Non-Discretionary Portfolio Management Serviceswherein the choice as well as the timings of theinvestment decisions rest solely with the Client. ThePortfolio Manager manages the Assets of the Clientin accordance with the directions given by theClient. Further the Portfolio Manager also offersAdvisory Portfolio Management Services wherein

the Portfolio Manager only renders investmentadvice to the Client in respect of securities.Discretion to execute the transactions andresponsibility for execution /settlement of thetransactions lies solely with the Client.

6) Risk Factors:

The investments made in securities are subject tomarket risk and there is no assurance or guaranteethat the objectives of investments will be achieved.Following are the risk factors as perceived bymanagement:

Investment in equities, derivatives and mutualfunds and Exchange Traded Index Funds aresubject to market risks and there is noassurance or guarantee that the objective ofinvestments will be achieved.

As with any investment in securities, the NetAsset Value of the portfolio can go up or downdepending upon the factors and forcesaffecting the capital markets.

The performance of the portfolio may beaffected by changes in Government policies,general levels of interest rates and risksassociated with trading volumes, liquidity and


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settlement systems in equity and debt markets.

The past performance of the Portfolio Managerdoes not indicate its future performance.Investors are not being offered any guaranteedreturns.

The performance of the Assets of the Client maybe adversely affected by the performance ofindividual securities, changes in the marketplace and industry specific and macroeconomic factors. The investment strategiesare given different names for conveniencepurpose and the names of the Strategies donot in any manner indicate their prospects orreturns.

Investments in debt instruments and other fixedincome securities are subject to default risk,

liquidity risk and interest rate risk. Interest raterisk results from changes in demand andsupply for money and other macroeconomicfactors and creates price changes in the valueof the debt instruments. Consequently, the NetAsset Value of the portfolio may be subject tofluctuation.

Investments in debt instruments are subject toreinvestment risks as interest rates prevailing oninterest amount or maturity due dates maydiffer from the original coupon of the bond,

which might result in the proceeds beinginvested at a lower rate.

The Portfolio Manager may invest in non-publicly offered debt securities and unlistedequities. This may expose the Client's portfolioto liquidity risks.

Engaging in securities lending is subject to risksrelated to fluctuations in collateralvalue/settlement/liquidity/ counter party.

The Portfolio Manager may use derivatives

instruments like index futures, stock futures andoptions contracts, warrants, convertiblesecurities, swap agreements or any otherderivative instruments for the purpose ofhedging and portfolio balancing, as permittedunder the Regulations and guidelines. Usage

of derivatives will expose the Portfolio tocertain risks inherent to such derivatives. Asand when the Portfolio Manager deals in thederivatives market on behalf of the Client,there are risk factors and issues concerning theuse of derivatives that investors shouldunderstand.

Derivative products are specialized instrumentsthat require investment techniques and riskanalyses different from those associated withstocks and bonds. The use of a derivative

requires an understanding not only of theunderlying instrument but of the derivativeitself. Derivatives require the maintenance ofadequate controls to monitor the transactionsentered into, the ability to assess the risk that aderivative adds to the portfolio and the abilityto forecast price or interest rate movementscorrectly. There is the possibility that a loss maybe sustained by the portfolio as a result of thefailure of another party (usually referred to asthe counter party) to comply with the termsof the derivatives contract. Other risks in using

derivatives include the risk of mispricing orimproper valuation of derivatives and theinability of derivatives to correlate perfectlywith underlying assets, rates and indices. Thus,derivatives are highly leveraged instruments.Even a small price movement in the underlyingsecurity could have a large impact on theirvalue.

The Net Asset Value may be affected by changesin settlement periods and transfer procedures.

SN Category of clientsTotal

No. ofclients

Funds managed(Rs. Crores)

Discretionary /Non Discretionary

(if available)

i.

ii.

Associates /group companies(Last 3 years)

NIL NIL

Others: (Last 3 years)

2007-08

2009-102008-09

Discretionary3120 804.23Discretionary

3786

2824

975.29

671.45Discretionary

7) Client Representation:

a) Details of client's accounts activated:

-


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10

Funds Managed indicates market value of AssetsUnder Management. The above figures are given incompliance with amendment to the SEBI (PortfolioManagers) Regulations, 1993 dated August 11,2008.

Note: The above details include the funds

managed by Motilal Oswal Securities Ltd. prior totransfer of PMS Business along with RegistrationCertificate to Motilal Oswal Asset ManagementCompany Ltd. with effect from October 21, 2010.

ii) Transactions with related parties are asunder:

The Portfolio Manager uses the brokingservices of Motilal Oswal Securities Ltd. who isa member of BSE and NSE in cash and

derivative segment.

Names of related parties and nature ofrelationship (as on date) are as under:

A) Holding company:

Motilal Oswal Securities Limited

B) Subsidiary Company:

N. A.

C) Fellow Subsidiaries

N. A.

D) Enterprises in which Key ManagerialPersonnel exercise Significant Influence

N. A.

E) Key Management Personnel (Portfolio Management Services):

Nitin Rakesh Managing Director and Principal Officer

Sinki Jain Compliance Officer

Rajesh Patil Manager - Back Office

Ratna S. Karkera Manager - Servicing & Product

Manish Sonthalia Fund Manager

Amit Bhadang Fund Manager

Transactions with related parties for the year-ended 31.3.2010 (amount in Rupees):

Nature of Transaction Group Company Key Management Personnel

Managerial Remuneration - 7,521,562

Business Support Service (net) - -

Advisory Fees - -

Interest (Paid) 28,890 -

Interest (Received) 692,384 -Electricity Charges - -

Rent 5,580,000 -

Brokerage - -

Subscription/Purchase of Equity Shares 199,500,000 -

Security Deposit - -

Employees Stock Option (In Nos.) 20,000 -

Corporate Guarantees - -

Personal Guarantees - -

Loans (Maximum Balance) 134,839,434 -

Collaterals (Market Value) - -

Outstanding Balances: - -


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8. The Financial Performance of Portfolio Manager(Based on audited financial Statements)Financial highlights of Motilal Oswal Asset Management Company Ltd. for the last 2 years is given as under:

Profit before depreciation & tax & AfterExtraordinary Items (Net of Tax) (587.22) (54.85)

Less: Depreciation 2.52 -

Less: Provision for tax - -

Less/(Add): Deferred Tax (179.23) (16.95)

Less: Fringe Benefit Tax - 0.21

Less: Wealth Tax - -

Less: Provision for Tax (for previous year) - -

Profit/(Loss) for the year after tax (410.51) (38.11)

Add/(Less): Balance B/F from Previous year (38.11) -

Balance carried to Balance Sheet (448.63) (38.11)

Exceptional &

ParticularsYear ended

31st March, 2010(Rs. In Lakhs)

*14th Nov, 2008to 31st March, 2009

(Rs. In Lakhs)

9.case of discretionary Portfolio Manager disclosure of performance indicators calculatedusing weighted average method in terms of regulation 14 of the SEBI (PortfolioManagers) Regulation 1993

Portfolio Management performance of the Portfolio Manager for the last 3 years and in

Strategy Wise Returns (in %)

From April 1, 2010 to

October 31, 2010 FY 10Strategy NameBenchmark

IndexPortfolio Benchmark

Value Strategy

Bulls Eye Strategy

Discover Value Strategy

Discover DynamicStrategy

Next Trillion DollarOpportunity Strategy

Focused (Series 3)Strategy

Focused (Series 4)Strategy

Focused (Series 5)*Strategy

Optima Strategy

Invest India Strategy

Liquid Strategy

Prodigy InvestmentStrategy

Bluechip ProdigyStrategy**

Portfolio

16.45

18.58

15.70

20.92

22.63

13.12

17.29

0.73

18.36

15.65

1.33

43.15

-3.40

15.15

15.08

15.31

14.77

20.44

13.37

14.04

-0.08

15.80

15.03

-

22.79

6.18

79.78

107.13

81.11

111.18

125.12

9.64

1.86

NA

47.11

1.37

3.23

NA

NA

74.57

109.23

75.53

108.48

133.45

19.96

5.29

NA

57.99

5.47

NA

NA

NA

-28.11

-25.62

-29.36

-30.43

-38.83

NA

NA

NA

6.86

NA

NA

NA

NA

- 36.95

- 40.95

-36.80

-41.65

-45.94

NA

NA

NA

8.29

NA

NA

NA

NA

PortfolioBenchmark Benchmark Portfolio Benchmark

18.45

17.87

12.35

-9.98

-34.72

1.53

NA

NA

NA

NA

NA

NA

NA

22.65

23.08

20.21

-4.20

-33.54

1.75

NA

NA

NA

NA

NA

NA

NA

Nifty

BSE-200

Nifty

BSE-200

CNXMIDCAP

Nifty

BSE-200

BSE-200

BSE-200

BSE-200

NA

Sensex

Sensex

FY 09 FY 08

*Motilal Oswal AMC was incorporated on November 14, 2008

*Performance calculated from the date of inception of the Strategy i.e. September 27, 2010 to October 31, 2010

**Performance calculated from the date of inception of the Strategy August 18, 2010 to October 31, 2010.


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Note:

1. Portfolio Returns and Benchmark Indicesreturns are calculated on weightedaverage basis.

2. The Portfolios were managed by Motilal

Oswal Securities Ltd. prior to October 21,2010.

10) Nature of expenses:

i) Investment Management & AdvisoryFees:

Management and Advisory fees chargedmay be a fixed fee or a return based fee or acombination of both as detailed in theSchedule to the Portfolio ManagementServices agreement. The Fees may be

charged upfront and/or at the end of aspecified tenure as agreed between theClient and the Portfolio Manager.

ii) Custodian Fees: As may be decidedbetween the Client and the PortfolioManager

iii) Registrar & Transfer Agent Fees:NIL

iv) Brokerage & Transaction Cost:

The investments under Portfol io

Management would be done throughregistered members of the StockExchange(s) who charge brokerage up to amaximum of 2.5% of contract value. Inaddition to the brokerage, transactioncost like network charges, turnovercharges, stamp duty, transaction costs,turnover tax, Securities transaction tax orany other tax levied by statutory authority(ies), foreign transaction charges (if any)and other charges on the purchase andsale of shares, stocks, bonds, debt,

deposits, other financial instrumentswould also be levied by the broker(including Motilal Oswal Securities Ltd.)Entry or exit loads (if any) on units ofMutual Funds will also be charged fromClients.

v) Service Tax:

As applicable from time to time.

vi) Depository Charges:

As may be applicable from time to time.vii) Entry Load /Exit Load

As may be mutually agreed to between the

Client and the Portfolio Manager

viii) Certification and professional charges:

Charges payable for out sourcedprofessional services like accounting,auditing, taxation and legal services etc.

for documentation, notarisations,certifications, attestations required bybankers or regulatory authorities includinglegal fees etc.

ix) Incidental expenses:

Charges in connection with day-to-dayoperations like courier expenses, stampduty, service tax, postal, telegraphic,opening and operation of bank account,distribution charges or any other out ofpocket expenses as may be incurred by thePortfolio Manager

11) Taxation:

Investment in securities is subject to theprovisions of the Indian Income Tax Act, 1961.Special reference needs to be made in respectof provisions related to capital gains, businessincome and all other provisions of the IncomeTax Act. Provisions related to tax deduction atsource shall also apply, wherever applicable.Interest and dividends would be subject to tax

as per the provisions of the Income Tax Act1961.

12) Accounting Policies:

The following Accounting policy will beapplied for the investments of Clients:

a) Investments in Equities, Mutual funds,Exchange Traded Funds and Debt instrumentswill be valued at closing market prices of theexchanges (BSE or NSE as the case may be) orthe Repurchase Net Asset Value declared for

the relevant scheme on the date of the reportor any cut off date or the market value of thedebt instrument at the cut off date.Alternatively, the last available prices on theexchange or the most recent NAV will bereckoned. In case of structured products, theportfolio will be valued at the face value of theproduct until the expiry of the tenure.

b) Realized gains/ losses will be calculated byapplying the first in / first out and/or weightedaverage principle. The Portfolio Manager and

the Client can adopt any specific norms ormethodology for valuation of investments oraccounting the same as may be mutuallyagreed between them on a case specific basis.


19/2213

c) For derivatives and futures and options,unrealised gains and losses will be calculatedby marking to market the open positions.

d) Unrealised gains/losses are the differences inbetween the current market values/NAV and

the historical cost of the securities.

e) Dividends on shares and units in mutual funds,interest etc. shall be accounted on receiptbasis. The interest on debt instruments shall beaccounted on accrual basis.

13. Investors Services:

(I) Details of investor relation officer who shall attend to the investor queries and complaints ismentioned herein below:

Name of the person: Nitin Rakesh

Designation: Principal Officer

Address: 81/82, Bajaj Bhavan, Nariman Point, Mumbai - 400 021

Email: [email protected]

Telephone: 91-22- 39804263

(ii) Grievance redressal and dispute settlementmechanism:

Grievances, if any, that may arise pursuant tothe Portfolio Investment ManagementAgreement entered into shall as far as possiblebe redressed through the administrative

mechanism by the Portfolio Manager and aresubject to SEBI (Portfolio Managers)Regulations 1993 and any amendments madethereto from time to time. However, all thelegal actions and proceedings are subject tothe jurisdiction of court in Mumbai only andare governed by Indian laws.

The Portfolio Manager will endeavour toaddress all complaints regarding service

deficiencies or causes for grievance, forwhatever reason, in a reasonable manner andtime. If the Investor remains dissatisfied withthe remedies offered or the stand taken by thePortfolio Manager, the investor and thePortfolio Manager shall abide by the followingmechanisms: -

All disputes, differences, claims and questionswhatsoever arising between the Client and thePortfolio Manager and/or their respectiverepresentatives shall be settled throughArbitration process as described in thePortfolio Investment Management Agreementor any Supplemental Agreement thereto.


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For Motilal Oswal Asset Management Company Limited:

Raamdeo AgrawalDirector

Kanu H. DoshiDirector

Vijay MehraDirector

Lawrence Haber

Director

Nitin RakeshManaging Director

Place: Mumbai


Sd/-

Sd/-

Sd/-

Sd/-

Sd/-


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ADDENDUM NO. 1

Addendum dated February 4, 2011 to the Disclosure Document

The following changes have been made to the Disclosure Documentdated November 24, 2010 and filed with SEBI:

1. Under the heading Services Offered, the following changeshave been made:

The Fund Manager of the following Strategies have beenchanged to Mr. Amit Bhadang.

a. Bulls Eye Strategyb. Discover Dynamic Strategy

All other contents of the Disclosure Document remain unchanged.

This addendum forms an integral part of the Disclosure Document ofPortfolio Management Services of Motilal Oswal Asset ManagementCompany Limited.


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Registered Office: 81/82, Bajaj Bhavan, Nariman Point, Mumbai - 400 021Email: @motilaloswal.comTel.: 91-22-3980 4263 Fax : 91-22-2281 6161 pms

SEBI PMS Regn. No. - INP000000670

09Dece

mber,2010


MOStPortfolios

moamc pms disclosure document 7.11.10

Documents