PMS RDD - Karvy Capital

Transcription

KARVY CAPITAL LIMITED
PORTFOLIO MANAGEMENT SERVICES
DISCLOSURE DOCUMENT
[As required under Regulation 14 of SEBI (Portfolio Managers) Regulation, 1993]
1. This document supercedes the Disclosure document dated November 5, 2014 filed
with Securities and Exchange Board of India (SEBI) on November 10, 2014 .
2. This Disclosure Document has been filed with SEBI along with the certificate from
independent chartered accountant in the prescribed format in terms of Regulation
14 of the SEBI (Portfolio Managers) Regulations, 1993 as amended till date.
3. The purpose of this Disclosure Document is to provide essential information about
the portfolio management services offered by Karvy Capital Limited in such manner
as to assist and enable the investors in making informed and considered decision for
engaging Karvy Capital Limited as a Portfolio Manager.
4. This document contains the necessary information about the Portfolio Manager
required by an investor.
5. Karvy Capital Limited is permitted to provide Portfolio Management Services
pursuant to its registration as a Portfolio Manager with SEBI vide Registration
number INP000004524 dated June 10, 2014.
6. Investors should carefully read this entire document before making a decision to
avail portfolio management services from Karvy Capital Limited and retain this
document for future reference. Any other relevant information may be provided
upon request.
7. No person has been authorized to give any information or to make any
representations not confirmed in this draft Disclosure Document in connection with
the services proposed to be provided by the Portfolio Manager, and any information
or representations not contained herein must not be relied upon as having been
authorized by the Portfolio Manager.
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8. The Principal Officer designated by Karvy Capital Limited, the Portfolio Manager is:
Name of the Principal Officer
Ms. KANIKA KHORANA
Tel No:
022 6149 1500
Email :
Address:
[email protected]
702, Hallmark Business Plaza,
Sant Dnyaneshwar Marg,
Bandra (E), Mumbai 400 051
* The Principal Officer has been changed from Mr. Swapnil Pawar to Ms. Kanika Khorana
with effect from March 13, 2015.
9. This disclosure document is dated March 30, 2015.
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Portfolio Management Services
KARVY CAPITAL LIMITED
INDEX
Sr No
Contents
1
2
3
i
Disclaimer
Definitions
Description - The Portfolio Manager
History, Present Business and background of the Portfolio Manager.
Page
Number
4
4
8
8
ii
Promoters of the Portfolio Manager, Directors and their background.
9
iii
Details of the top 10 group companies of the Portfolio manager
based on turnover as on March 31, 2014
11
iv
Details of Services being offered.
12
4
Penalties/Pending Litigations/Proceedings etc
12
5
Services offered
13
6
Risk Factors
16
7
Client Representation
20
i
Category of clients as on February 28, 2015
20
ii
Complete disclosure in respect of transactions with related parties as
per the standards specified by the Institute of Chartered
Accountants of India (as on March 31,2014)
Financial Performance of Portfolio Manager, Karvy Capital Limited
21
Portfolio Management Performance of the Portfolio Manager for last
3 years
Nature of Expenses
Taxation
Accounting Policies
Investor Services
Grievances Redressal
Dispute Settlement Mechanism
General
23
8
9
10
11
12
13
14
15
16
22
24
25
30
31
32
32
33
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Section 1:
DISCLAIMER
This document has been prepared in accordance with the Securities Exchange Board of India
(Portfolio Managers) Regulations, 1993, as amended from time to time and other circulars
issued by SEBI from time to time and has been filed with SEBI. This Document has neither
been approved nor disapproved by SEBI nor has SEBI certified the accuracy or adequacy of
the contents of this Document.
This information is not for public distribution and has been furnished to you solely for your
information and may not be reproduced or redistributed to any other person.
Section 2:
DEFINITIONS
In this Agreement, unless otherwise clearly indicated by or inconsistent with the context, the
following expressions shall have the meaning assigned to them hereunder respectively:
“Act” – means the Securities and Exchange Board of India Act, 1992.
“Agreement” means the agreement that shall be entered between Karvy Capital Limited, the
Portfolio Manager and the client for the management of funds or securities of the client in
terms of Regulation 14 of the SEBI (Portfolio Managers) Regulations, 1993 and SEBI (Portfolio
Managers) Amendment Regulations, 2002 issued by the Securities and Exchange Board of
India and as may be modified from time to time and shall include all schedules and
annexures thereto and shall also include all modifications, alterations, additions or deletions
made thereto in accordance with the terms thereof.
“Board” means the Securities and Exchange Board of India.
“Bank Account” means one or more bank accounts opened, maintained and operated by the
Portfolio Manager in the name of clients or a pool account in the name of the Portfolio
Manager in which the funds handed over by the client shall be held by the Portfolio Manager
on behalf of the Client.
“Chartered Accountant” means a chartered accountant as defined in clause (b) of subsection (1) of section 2 of the Chartered Accountants Act, 1949 (38 of 1949) and who has
obtained a certificate of practice under sub-section (1) of section 6 of that Act.
“Client” means anybody corporate, partnership firm, individual, HUF, association of person,
body of individuals, trust, statutory authority, or any other person who enters into
agreement with Karvy Capital limited, the Portfolio Manager for availing the Portfolio
Management Services
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“Custodian” means any person who carries on or proposes to carry on the business of
providing custodial services in accordance with the regulations issued by SEBI from time to
time.
“Depository” means Depository as defined in the Depositories Act, 1996 (22 of 1996) and
currently includes National Securities Depository Limited (NSDL) and Central Depository
Services (India) Limited (CDSL).
“Depository Account” means any account of the client or for the client with an entity
registered as depository participant under sub-section 1A of Section 12 of the Act or any
other law for the time being relating to registration of depository participants in which the
securities comprising part of the Portfolio of the Client are kept by the Portfolio Manager.
“Discretionary Portfolio Management Services” means the discretionary portfolio
management services to be rendered to a Client by Karvy Capital limited, the Portfolio
Manager pursuant to the terms and conditions contained in the Portfolio Management
Services Agreement, where under the Portfolio Manager exercises absolute and unfettered
discretion, with regards to the investments and management of the portfolio of securities or
the funds of the client, as the case may be.
“Disclosure Document” means this draft disclosure document for offering Portfolio
Management Services.
“Financial year” means the period of twelve months commencing on 1st April every year and
ending on 31st March of the following year.
“Funds” means the monies placed by the Client with the Portfolio Manager and any
accretions thereto and also includes any further monies placed by the client with the
Portfolio Manager to be managed pursuant to the Agreement, the proceeds of the sale or
realization of the portfolio and any interest, dividend or other monies so long as the same is
being managed by the Portfolio Manager.
“Funds managed” means the market value of the Portfolio of the Client as on date.
“Fund Manager” (FM) means the individual/s appointed by the portfolio manager who
manages, advises or directs or undertakes on behalf of the client (whether as a discretionary
portfolio manager or otherwise) the management or administration of a portfolio of
securities or funds of the client, as the case may be.
“Initial Corpus” means the value of the funds and the market value of securities brought in
by the client and accepted by the Portfolio Manager at the time of registering with the
Portfolio Manager for the portfolio management services. The Initial corpus brought in by
the Client in the form of securities shall be valued at the closing market price of such
securities, prevailing on recognised stock exchange [NSE/ BSE (only if security is not listed on
NSE)] on the previous working date of activation of client’s portfolio management account
by the Portfolio Manager or of the previous working day of the transfer of such securities
from client’s account to the Depository account whichever is later. The Portfolio Manager
shall not accept from the client, funds or securities worth less than Twenty five lakh rupees.
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“Investment Advisory Services” means the non exclusive, non binding services, where the
Portfolio Manager advises Clients on investments in general or gives specific advice
required by the Clients as agreed upon in the Agreement. Advice,whether general or specific
is non-binding in nature and it is entirely at client’s discretion to follow the advice.
“Non-Discretionary Portfolio Management Services” means the non-discretionary portfolio
management services to be rendered to a Client by the Portfolio Manager on the terms and
conditions pursuant to the Agreement, where under the Portfolio Manager invests and
manages the Funds of the Client based on the instructions of the Client.
“Net Asset Value” or “NAV” means the market value of the Assets managed by the Portfolio
Manager, as calculated by the Portfolio Manager from time to time, depending on the
Strategy chosen by the Client.
“Person directly or indirectly connected” means any person being an associate, subsidiary,
inter connected company or a company under the same management within the meaning of
section 370(1B) of the Companies Act, 1956 or in the same group.
“Portfolio” means the total holdings of securities and / or funds belonging to the client.
“Portfolio Manager” (PM) means Karvy Capital Ltd., a company incorporated under the
Companies Act, 1956 and registered with SEBI as a Portfolio Manager in terms of SEBI
(Portfolio Managers) Regulations 1993 vide registration no. INP000004524 and having its
Registered Office at its PMS dealing office at 702, Hallmark Business Plaza, Sant
Dnyaneshwar Marg, Bandra (E), Mumbai 400 051[ but may add more dealing offices in
future] and who pursuant to a contract or arrangement with a client, advises or directs or
undertakes on behalf of the client (whether as a discretionary Portfolio Manager or
otherwise) the management or administration of a portfolio of securities or the funds of the
client, as the case may be.
“Portfolio Management Services” means the Discretionary Portfolio Management Services,
and/or the Non-Discretionary Portfolio Management Services, and/or the Investment
Advisory Services, as the case may be.
“Portfolio Value” means the aggregate of the Portfolio Funds and Value of Portfolio
Securities.
“Principal Officer” means a director/an employee of the portfolio manager who is
responsible for the activities of portfolio management and has been designated as principal
officer by the portfolio manager.
“Regulations” – means the Securities and Exchange Board of India (Portfolio Managers)
Regulations, 1993, as amended by SEBI from time to time and includes Securities and
Exchange Board of India (Portfolio Managers) Amendment Regulations, 2012, and rules,
guidelines or circulars issued in relation thereto from time to time.
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“Strategy” means any of the Portfolio Investment categories mentioned herein or that may
be introduced by the Portfolio Manager from time to time. The Term Strategy may be
interchanged with Plans/Products/Options.
“SEBI” means the Securities and Exchange Board of India established under sub-section (1)
of Section 3 of the Securities and Exchange Board of India Act, 1992.
“Securities” means securities as defined under the Securities Contracts (Regulation) Act,
1956 and includes:
(i)
shares, scrips, stocks, bonds, debentures, debenture stock or other marketable
securities of a like nature in or of any incorporated company or other body
corporate
(ia) derivative;
(ib) units or any other instrument issued by any collective investment Strategy to the
investors in such Strategies;
(ic) security receipt as defined in clause (zg) of section 2 of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;
(id) units or any other such instrument issued to the investors under any mutual fund
Strategy;
(ii)
Government securities;
(iia) such other instruments as may be declared by the Central Government to be
securities; and
(iii)
Rights or interest in securities.
A descriptive, but not the exhaustive list of “Securities” is given hereunder:
Shares (whether dematerialized or otherwise), derivatives (futures and options, Interest rate
swaps & Forward rate agreements etc), scrip, stocks, bonds (whether dematerialized or
otherwise), warrants, convertible debentures (whether dematerialized or otherwise), nonconvertible debentures (whether dematerialized or otherwise), securitised debt (whether
dematerialized or otherwise), fixed return investments, floating rate instruments linked to
MIBOR/ call money etc., equity shares and equity linked instruments or other marketable
securities of a like nature in or of any incorporated company or other body corporate,
negotiable instruments, including usage bills of exchange, trade bills, deposits or other
money market instruments, derivatives, commercial paper, certificates of deposits, units
issued by Unit Trust of India, units issued by Mutual Funds, units issued by SEBI registered
Alternative Investment Funds, mortgage backed or other asset backed securities issued by
any institution or corporate, cumulative convertible preference shares issued by any
incorporated Company and securities issued by the Central Government or a State
Government , Pass Through Certificates , RBI auctions, open market sales conducted by RBI
or any other securities that may be issued from time to time.
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“Securities lending” means the securities lending as per the Securities Lending Scheme, 1997
and related guidelines specified by SEBI.
“Structured Products” means products returns on which may be linked to Equity Index, Debt
instruments, Non Convertible Debentures and may also be based on Basket of stock, index or
stock futures with pre-defined capital protection. These are normally third party products.
The terms that are used herein and not defined herein, except where the context otherwise
so requires, shall have the same meanings as are assigned to them under the Act, the
Regulations or the Rules.
Words importing the singular include the plural and vice-versa. Words importing a gender
include the other gender.
Section 3
DESCRIPTION
i. HISTORY, PRESENT BUSINESS AND BACKGROUND OF THE PORTFOLIO MANAGER :
Karvy Capital Limited, a wholly owned subsidiary of Karvy Stock Broking Limited, was
incorporated under the Companies Act, 1956 as amended from time to time as a Private
Limited Company on December 31, 1981 with the name ‘Grant Holding and Trading
Company Private Limited’. On June 30, 2011, the name of the company was changed to
Karvy Capital Private Limited. The name of the company was further changed from Karvy
Capital Private Limited to Karvy Capital Limited with effect from February 8, 2012 and
presently Karvy Capital Limited is a Public Company domiciled in India.
Karvy Capital Limited has its Registered Office at 702, Hallmark Business Plaza, Sant
Dnyaneshwar Marg, Bandra (E), Mumbai – 400051.
Karvy Capital Limited is principally engaged in business of trading of shares and securities.
Karvy Capital Limited has been registered with Reserve Bank of India (‘RBI’) to carry on the
business of non-banking financial institution with effect from March 24, 1998.
Karvy Capital Limited is also acting as a Sponsor and Manager to Karvy Capital Alternative
Investment Fund (Trust) for which it has obtained Category III License on April 10, 2013.
Karvy Capital Limited is registered with SEBI as a Portfolio Manager vide registration number
INP000004524, for the period 10th June 2014 to 9th June 2017.
Karvy Capital Limited started proprietary trading in August 2010 with a focus on Quantitative
and Absolute Return strategies. Currently, Karvy Capital Limited acts as an Investment
Manager to Karvy Capital Alternative Investment Fund – a category III Alternative Investment
Fund.
Karvy Capital Limited also has a retail debt business and acts as a facilitator for structured
finance deals. Karvy Capital Limited is also a direct sales associate and main distributor to the
various products and services being offered by Karvy Group.
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Karvy Capital Limited aims to be a reputable asset manager providing comprehensive
investment solutions across asset classes to its investors. To diversify the set of offerings,
Karvy Capital Limited intends to provide customized and focused portfolio management
solutions to investors. These services would include discretionary portfolio management
services, non discretionary portfolio management services and advisory services.
Karvy Capital Limited is a group company of the KARVY Group, which is a premier integrated
financial services provider, and ranked amongst the leading corporate in the country in all its
business segments, servicing over millions of individual investors in various capacities, and
provides investor services to many corporates, comprising the who’s who of Corporate
India. KARVY group companies cover the entire spectrum of financial services such as Stock
Broking, Depository Participants, Distribution of financial products – mutual funds, bonds,
fixed deposit, equities, Insurance Repository , Commodities Broking, Personal Finance,
Advisory Services, Merchant Banking & Corporate Finance, placement of equity, IPOs,
services related to data management and Non Banking Financial company among others.
KARVY Group has a professional management team and ranks among the best in technology
and operations.
ii.
DETAILS OF PROMOTERS,DIRECTORS AND THEIR BACKGROUND:
The directors of Karvy Capital Limited as on March 27, 2015 and their background are as
follows:
Name and age:
Mr. Swapnil Pawar, aged 34 years
Designation:
Business Head and Whole time Director.
MBA from IIM-Ahmedabad and B.Tech (Aerospace
Qualification:
Engineering) from IIT-Mumbai
Experience (General and
Swapnil was the co-founder of PARK Financial Advisors, a
specific Intermediaries
wealth management venture which was acquired by Karvy
activity):
Group. PARK Financial Advisors was managing over 1000
clients and had made significant headway in building a
robust analytical framework for financial planning and
investment advisory.
Swapnil has deep expertise in quantitative methods,
corporate finance and macroeconomics.
He published a book on Global Financial Crisis – titled
‘Anatomy of Froth – Demystifying the Global Financial
Crisis and Lessons to Learn’ in December, 2010.
March 26, 2011
Date of appointment:
Other directorships:
Previous Positions held:
Not Applicable
Prior to PARK Financial Advisors, Swapnil worked with The
Boston Consulting Group – a strategy consulting firm. He
advised clients across financial services, banking,
engineering and technology sectors on business strategy
and execution.
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Name and age:
Designation:
Qualification:
Mr. G. Krishna Hari, aged 57 years
Name and age:
Designation:
Qualification:
Mr. V. Mahesh, aged 50 years
Director
Bachelors degree in Commerce and an associate member
of the Institute of Chartered Accountants of India (ICAI)
Experience (General and He has over 27 years of experience in the areas of finance
specific Intermediaries and accounts functions encompassing fund raising,
financial reporting, management accounting, working
activity):
capital management, budgeting and forecasting and
financial due diligence reviews for mergers & acquisitions
and investment proposals. He has been associated with
the Karvy Group for the past 15 years.
September 27, 2012
Name of Company
Date of appointment
Karvy Holdings Limited
March 1, 2013
Karvy Realty & Services March 2 , 2015
Limited
Prior to joining Karvy, he was the head of finance &
accounts division in Asia Pacific Investment Trust Limited,
Hyderabad (Formerly Nagarjuna Investment Trust Limited)
an NBFC Company.
Experience (General and
specific Intermediaries
activity):
Director
Graduate in BA - Corporate Secretary ship from University
of Madras. He also holds a Post Graduate degree in
Commerce from University of Madras (M.Com) and a Post
Graduate Diploma in Computer Applications.
He has work experience spanning over two decades and
has in depth exposure to operations on most financial
services businesses. Commencing his professional stint
with Karvy’s Registry business where he has to his credit
managing over 300 Initial Public Offerings and other forms
of offerings, he was amongst the first few to work closely
on the Book Building process initiated by SEBI in 1995
June 29, 2011
Name of Company
Buoyant Consultants Pvt.
Ltd
Karvy Realty (India) Limited
Contours Motors & Dealers
Private Limited
Karvy Data Management
Services Ltd. [Managing
Director]
Efin Services (India) Private
Limited
Date of appointment
April 1, 2002
August 31, 2006
December 14, 2007
April 21, 2008
February 20, 2009
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Karvy Financial Services
Limited
Karvy Forex & Currencies
Private Limited
Karvy Insurance Repository
Limited
Karvy
Global
Services
Limited
Karvy Solar Power Limited
Karvy Insights Limited
Karvy Analytics Limited
July 17, 2009
March 10, 2011
November 30, 2011
January 21, 2014
January 28 , 2015
February 19, 2015
March 02 , 2015
Mr. V Mahesh resigned from Karvy Holdings Limited
w.e.f.09.02.2015 and Karvy Realty & Services Limited
w.e.f.02.03.2015.
After initially working with Mass Computer Services Ltd
(MCS) as an Assistant Vice President, he moved to Karvy
Mr. Hrishikesh Parandekar, erstwhile director of Karvy Capital Limited has tendered his
resignation effective October 8, 2014.
iii
DETAILS OF THE TOP 10 GROUP COMPANIES/ FIRMS BASED ON TURNOVER AS ON
MARCH 31, 2014 [ based on audited financials]:
S.
NO
Name of the
Company
Nature of Business
Status
Turnover (in
Rs)
Group
company
2,94,01,86,003
1
Karvy Financial
Services Ltd.
Financial Services-NBFC
2
Karvy Stock
Broking Limited
SEBI Registered Stock broker,
Depository Participant, Portfolio Parent
Manager
Company 2,84,06,43,123
3
Karvy
Computershare
Pvt. Ltd.
SEBI Registered Registrar and
Share Transfer Agent
Group
company
2,47,28,12,421
4
Karvy Data
Management
Services Ltd
Transaction Processing
Group
company
1,95,22,07,870
Karvy Comtrade
Ltd.
FMC/ NCDEX /MCX/NMCE/ACE /
ICEX/ NCDEX Spot Exchange /
National Spot Exchange registered
commodity broker
Group
company
34,99,63,220
5
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6
Karvy
Consultants
Limited
7
Karvy Holdings
Limited
Consultancy and advisory services
Group
company
23,45,25,362
Consulting and Advisory Services
Group
company
19,53,77,751
8
Karvy Realty
(India) Ltd.
Realty Services
Group
company
17,01,79,052
9
Karvy Investor
Services Ltd.
SEBI Registered Merchant Banker
and Underwriter.
Group
company
8,51,87,260
10
Karvy Middle
East LLC, Dubai
Commercial Broker
Group
company
5,25,83,337
iv
DETAILS OF THE SERVICES BEING OFFERED:
Karvy Capital Limited, Portfolio Manager, offers Discretionary, Non discretionary & Advisory
services as per the preference and agreement with the individual client. For details of the
services offered kindly refer Annexure A.
Section 4:
PENALTIES, PENDING LITIGATION OR PROCEEDINGS, FINDINGS OF
INSPECTION OR INVESTIGATIONS FOR WHICH ACTION MAY HAVE BEEN TAKEN OR
INITIATED BY ANY REGULATORY AUTHORITY
I
All cases of penalties imposed There are no penalties imposed or litigation
by the Board or the directions pending against the Karvy Capital Limited.
issued by Board under the Act Details of litigations pending against group
or Rules or Regulations made companies/ associates of the portfolio manager
there under
have been provided as Annexure B to this
document.
II
The nature of penalty/direction
Not Applicable
III
Penalties imposed for any Not Applicable
economic offence and/or for
violation of any securities laws
IV Any
pending
material Not Applicable
litigation/legal
proceedings
against
the
Portfolio
Manager/key personnel with
separate disclosure regarding
pending criminal cases, if any
V Any deficiency in the systems Not Applicable
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and operations of the Portfolio
Manager observed by the Board
or any regulatory agency
VI Any
enquiry/adjudication
proceedings initiated against
the Portfolio Manager or its
directors, principal officer or
employee or any person directly
or indirectly connected with the
Portfolio Manager or its
directors, principal officer or
employee, under the Act or
Rules or Regulations made
there under
Section 5:
Not Applicable
SERVICES OFFERED
5.1 The Portfolio Manager offers the following three types of Services
a. Discretionary Services
The Portfolio account of the client is managed at the full discretion and liberty of Karvy
Capital limited, the Portfolio Manager.
Under these services, the choice as well as the timings of the investment decisions on an ongoing basis rest solely with the Portfolio Manager. The Portfolio Manager may at times and
at its own discretion, adhere to the views of the Client pertaining to the investment
/disinvestment decisions in the Client’s Portfolio. The Portfolio Manager shall have the sole
and absolute discretion to invest in respect of the Client’s account in any type of security as
per the Agreement and make such changes in the investments and invest some or all of
funds in the Client’s account in such manner and in such markets as it deems fit. The Client
may give informal guidance to customize the portfolio strategies; however, the final decision
rests with the Portfolio Manager. The securities invested / disinvested by the Portfolio
Manager for Clients in the same Strategy may differ from one Client to another Client. The
Portfolio Managers’ decision (taken in good faith) in deployment of the Clients’ account is
absolute and final and can never be called in question or be open to review at any time
during the currency of the agreement or any time thereafter except on the ground of
malafide, fraud, conflict of interest or gross negligence. This right of the Portfolio Manager
shall be exercised strictly in accordance with the relevant Acts, Rules, and Regulations,
guidelines and notifications in force from time to time.
Under these services, the Clients may authorize the Portfolio Manager to invest their Funds
in specific financial instruments or a mix of specific financial instruments or restrict the
Portfolio Manager from investing in specific financial instruments or securities. Periodical
statements in respect of Client’s Portfolio shall be sent to the respective Clients.
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Details of the strategies being offered by the Portfolio Manager are contained in Annexure A.
b. Non Discretionary
In Non-Discretionary Portfolio management, the Portfolio Manager would manage the
client’s portfolio in consultation with and as per the directions or consent of the client.
Under these services, the Clients decide their own investments with the Portfolio Manager
only facilitating the execution of transactions. The Portfolio Manager’s role would include
but not limited to providing research, structuring of clients’ portfolios, investment advice and
guidance and trade execution at the Client’s request. The Portfolio Manager shall execute
orders as per the mandate received or consent obtained from the Client. The deployment of
the Client’s Funds by the Portfolio Manager shall be as per the instructions or consent of the
Client. The rights and obligations of the Portfolio Manager shall be exercised strictly in
accordance with the Act, Rules and/or Regulations, guidelines and notifications in force from
time to time. Periodical statements in respect of Client’s Portfolio shall be sent to the
respective Clients. Details of strategies offered by the Portfolio manager under non
discretionary services can be viewed in Annexure A.
c. Advisory
Portfolio Manager will provide advisory services, as per the Regulations, which shall be in the
nature of investment advice and shall include the responsibility of advising on the portfolio
strategy, investment, disinvestment of the various securities in the client’s portfolio, for an
agreed fee, entirely at the client’s risk. The Portfolio Manger will render the best possible
advice to the client having regard to the client’s needs and the requirements, using his own
professional skills. This service will be purely of advisory in nature under an agreed fee
structure with the client. It is up to the client to accept the recommendations/advice of
Portfolio Manager and Portfolio Manager will not be held responsible for any consequence
arising out of acceptance of Portfolio Manager’s advice under this service.
5.2
Present Investment Objective
The General Objective is to formulate and device the investment philosophy to
achieve long term growth of capital by investing in assets, which generate
reasonable risk–adjusted return . The actual portfolio management style will vary in
line with profile of each client with regards to his risk tolerance levels and specific
preferences or concerns. (The specific objective will be as mentioned in the
agreement with the client).
5.3
Types of securities
The Portfolio Manager/Fund Manager shall invest in all such types of Securities as
defined (kindly refer to the definition) and in all such Securities as permissible from
time to time.
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5.4
Investment in Group / associate companies
The Portfolio Manager/Fund Manager may invest in Securities of the
associate/group companies subject to the applicable laws/ regulations/ guidelines.
These investments will be carried out to achieve the investment objectives and
strategies and in the normal course of investment activity subject to the applicable
laws/regulations.
The Portfolio Manager / Fund Manager may invest in any unlisted securities of any
associate/group companies of the Portfolio Manager/ promoter. The Portfolio
Manager / Fund Manager may also invest in privately placed securities issued by
Associate/Group companies of the promoter.
5.5
Minimum Investment Amount
The Portfolio Manager shall not accept funds and/or securities from new clients,
cumulative value of which is less than Rupees Twenty Five Lakhs or as specified in
the agreement with the Portfolio Manager or as amended/specified in the SEBI
(Portfolio Managers) Regulations, 1993.
5.6
Conflict of Interest
Karvy Capital Limited, Portfolio Manager is also the Investment Manager to a
Category III Alternate Investment Fund (AIF). Since the entity is the same, the
management for both the portfolio management division and Investment
Management division remains the same. However, the personnel such as fund
manager(s), teams involved in order generation and execution will be independent
of the personnel involved in the same activity for portfolio management services.
Further, the services offered by Karvy Capital Limited under the AIF offering and the
Portfolio Management services to clients are inherently very different. The key
difference is that while the investments under the AIF route are primarily in the
derivative segment, investments made as a portfolio manager may encompass the
entire gamut of products in the financial space. Further, trades in the AIF are
generated through the system by use of defined algorithms whereas the portfolio
manager uses a lot of thought process in picking the instrument based on
fundamental analysis for investment be it equity, debt or mutual funds.
Nonetheless, the management will provide their guidance and insight with relation
to monitoring of overall functioning of both the AIF and portfolio management
services and their broad macro views on the investment front shall be used for both.
As described above, due to the difference in the nature of the investments under AIF
and portfolio management services offered, it may happen that a scrip is purchased /
held for a client of the Karvy Capital Limited, the portfolio manager while the
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algorithm which dictates trades in the AIF generates an opposite signal say “sell”
instruction for the same scrip usually as the trigger for a trade could be a
quantitative factor rather than a fundamental factor. Further, the holding period for
the trade may be shorter for the AIF .Therefore Karvy Capital Limited, the
Investment Manager to the AIF may sell the same scrip while maintaining “buy” for
the same scrip for its portfolio management clients. Such a situation could show
opposite trading positions in the AIF and Portfolio Management Services.
The portfolio manager being an NBFC purchases securities as a part of its routine
business activity. These securities may be bought for investment or trading
purposes. Therefore Karvy Capital as discretionary portfolio manager may buy the
securities from Karvy Capital limited {NBFC}. These securities would be purchased at
a price deemed fit by the portfolio manager and may also at times be at a premium
depending on the demand for the security. Additionally, depending on reasons such
as demand for the security prevalent at the time of purchase by Karvy Capital as
discretionary portfolio manager from itself as an NBFC , the portfolio manager may
get different prices for the same security. Effectively it is a possibility that the price
of the security bought by the portfolio manager in the above manner may differ
interse the clients of the portfolio manager on account of the same being bought at
different points of time. Karvy Capital , discretionary portfolio manager shall ensure
that its rationale for all its decisions to purchase securities in the abovesaid manner
shall be documented and approved by its Investment Committee.
Section 6:
RISK FACTORS
1. Investments in securities are subject to market risks including price volatility and
liquidity risk and there is no assurance or guarantee that the objectives of the
strategy will be achieved. The investment may not be suited for all categories of
investors. The past or present performance of these strategies does not indicate the
future performance of the same strategy or any other future strategies launched
subsequently by Portfolio Manager. With reference to appreciation on the portfolio,
the investors are not being offered any guaranteed or indicative returns through any
of the strategies. The Portfolio Manager also does not guarantee any capital
protection for any strategy.
2. There are inherent risks arising out of investment objectives, investment strategy,
asset allocation and non-diversification of portfolio. The investment objective,
investment strategy and asset allocation may differ from client to client. However,
generally, highly concentrated portfolios with lesser number of stocks will be more
volatile than a portfolio with a larger number of stocks. Portfolios with higher
allocation to equities will be subject to higher volatility that portfolios with low
allocation to equities. Diversified portfolios (allocated across companies and broad
sectors) generally tend to be less volatile than non diversified portfolios. The names
of the various strategies do not in any manner indicate their prospects or returns.
Page 16 of 33
3. Investment decisions made by the Portfolio Manager may not always be profitable
since actual market movement may be at variance with anticipated trends.
4. ETF may trade above or below their NAV. The NAV of ETF will fluctuate with changes
in market value of scheme’s holdings of underlying stocks. However, given that ETF
can be created and redeemed only in creation units directly with the Mutual Fund, it
is expected that large discounts or premiums to the NAVs of ETFs will not sustain due
to availability of arbitrage possibility. Any changes in trading regulations by the
Exchange (s) or SEBI may affect the ability of market maker to arbitrage resulting into
wider premium / discount to NAV for ETFs.
5. The performances of the strategies depend on the performance of the market and
the individual companies in which investment have been made under strategies
relative to industry specific and macro economic factors. The Portfolio Manager does
not assure or guarantee that Performance of Portfolio of the Investor shall better the
Performance of any Benchmark Index.
6. The tax benefits described in this Disclosure Document are as available under the
present taxation laws and are available subject to conditions. The information given is
included for general purpose only and is based on advice received by the Portfolio
Manager regarding the law and practice in force in India and the investors should be
aware that the relevant fiscal rules or their interpretation may change. As is the case
with any investment, there can be no guarantee that the current tax position or the
proposed tax position prevailing at the time of an investment in the Portfolio will
endure indefinitely. In view of the individual nature of tax consequences, each
investor is advised to consult his/her own professional tax advisor regarding the
taxation aspects of his/ her portfolio investments.
7. Prospective investors should review/ study this Disclosure Document carefully and in
its entirety and shall not construe the contents hereof or regard the summaries
contained herein as advice relating to legal, taxation, or financial/investment matters.
Prospective investors are advised to consult their own professional advisor(s) as to
the legal, tax, financial or any other requirements or restrictions relating to the
subscription, gifting, acquisition, holding, disposal (sale or conversion into money) of
Portfolio and to the treatment of income(if any), capitalization, capital gains, any
distribution, and other tax consequences relevant to their portfolio, acquisition,
holding, capitalization, disposal (sale, transfer or conversion into money) of portfolio
within their jurisdiction of nationality, residence, incorporation, domicile etc. or
under the laws of any jurisdiction to which they or any managed funds to be used to
purchase/gift portfolio of securities are subject, and also to determine possible legal,
tax, financial or other consequences of subscribing/gifting, purchasing or holding
portfolio of securities before making an investment.
8. The debt investments and other fixed income securities may be subject to interest
rate risk, liquidity risk, credit risk and reinvestment risk. Liquidity in these
investments may be affected by trading volume, settlement period and transfer
procedures. Issuer of fixed income security may default or may be unable to make
timely payments of principal and interest. Net Asset Value of portfolio may be
affected due to perceived level of credit risk as well as actual event of default.
Page 17 of 33
9. The corporate debt market is relatively illiquid vis-à-vis the government securities
market. There could therefore be difficulties in exiting from corporate bonds in times
of uncertainties. Further, liquidity may occur only in specific lot sizes. Liquidity in a
security can therefore suffer. Even though the Government securities market is more
liquid compared to that of other debt instruments, on occasions, there could be
difficulties in transacting in the market due to extreme volatility or unusual
constriction in market volumes or on occasions when an unusually large transaction
has to be put through. There can be no assurance that the requirements of the
securities market necessary to maintain the listing of specified debt security will
continue to be met or will remain unchanged.
10. Exposure to select Sector(s) carries the performance risk of the relevant sector, which
could outperform or underperform the market and/or various indices.
11. Technology and pharmaceutical stocks and some of the investments in niche sectors
run the risk of volatility, high valuation, obsolescence and low liquidity.
12. Frequent rebalancing of portfolio may result in higher brokerage / transaction cost.
Also the allocation to different securities can vary from 0 to 100 %, hence there can
be a vast difference between the performance of the products and returns generated
by underlying securities.
13. Information available on some companies in which the Portfolio manager has made
investments may be limited.
14. The performance of the strategies may be affected by change in Government Policies
including taxation, and certain unforeseen developments in political or general areas
at the national or international level. Also, the investments are subject to external
risks such as war, natural calamities and policy changes of local / international
markets which affect stock markets.
15. The performance of the strategies may also be affected and investor could lose
money over short periods due to fluctuation in NAV of Portfolio arising out of
fluctuations of interest rates, credit risk, political and geopolitical risk, currency risk,
foreign exchange risks, foreign investments, risks arising from changing business
dynamics, risk associated with investment in securities debt, risk due to movement in
Futures and options markets, changes in the general market conditions, forces
affecting the capital markets, closure of stock exchange due to circuit filter rules or
otherwise and risks associated with trading volumes, settlement periods, transfer
procedures, liquidity and settlement systems in equity and debt markets.
16. There is a possibility that loss may be sustained by the Portfolio as a result of the
failure of another party (usually referred as the “Counter party”) to comply with the
terms of the derivative contract.
17. Portfolio Manager, subject to authorization in writing by the client, may participate in
securities lending. Engaging in securities lending is subject to risks related to
fluctuations in collateral value/settlement/liquidity/default from counter party,
including corporate benefits accrued thereon. This may lead to the risk of Approved
Intermediary unable to deliver back the securities. Portfolio Manager cannot be held
liable for any loss arising out of operation of such strategies.
Page 18 of 33
The portfolio manager may in the course of its activities, avail the services of persons
/ bodies who are not employees of the portfolio manager. The portfolio manager
would exercise due diligence when employing such persons, however there may be
losses incurred on account of any act or omission on part of such persons or bodies.
The portfolio manager disclaims liability for any loss in the portfolio on this account.
All portfolios under portfolio management are subject to change at anytime at the
discretion of the Portfolio Manager.
18. In the case of stock lending, risks relate to the defaults from counterparties with
regard to securities lent and the corporate benefits accruing thereon, inadequacy of
the collateral and settlement risks. The Portfolio Manager is not responsible or liable
for any loss resulting from the operations of the strategies/options.
19. Investments in the Market Linked Debentures (MLDs) are also subject to model risk.
The MLDs are created on the basis of complex mathematical models involving
multiple derivative exposures which may or may not be hedged and the actual
behaviour of the securities selected for hedging may significantly differ from the
returns predicted by the mathematical models.
20. Strategies may use derivative instrument like futures and options (index as well as
individual securities), warrants, convertible securities, swap agreements, etc. for the
purpose of hedging and/or portfolio balancing, as permitted under the
Regulations/guidelines. Strategies using such derivative products may be affected by
risks different from those associated with stock and bonds. Such derivative products
are highly leveraged instruments and their use requires a high degree of skill,
expertise and diligence. Small price movements in the underlying security may have a
large impact on the value of the derivatives and futures and options and may also
result in loss. Some of the risks relate to mis-pricing or the improper valuation of the
derivatives/futures and option and the inability to correlate the positions with the
underlying assets, rates and indices. The risk of loss associated with futures contracts
is potentially unlimited due to the low margin deposits required and the extremely
high degree of leverage involved in futures pricing. Also, the derivatives/future and
options market is nascent in India.
The liquidity of the investments is guided by trading volumes in the securities in
which it invests. Although securities may be listed on the Exchange(s), there can be
no assurance that an active secondary market will develop or be maintained. This
may limit the Portfolio Manager’s ability to freely deal with securities in the Portfolio
and may lead to incurring of losses till the security is finally sold. Different segments
of the financial markets have different settlement periods and such periods may be
extended significantly due to unforeseen circumstances. The inability of a Portfolio to
make intended securities purchase due to settlement problems could cause the
portfolio to miss certain investment opportunities. Similarly, the inability to sell
securities held in the portfolio due to absence of a well developed and liquid
secondary market would at times result in potential losses in the Portfolio, in case of
a subsequent decline in the value of securities held in the Portfolio.
Page 19 of 33
21. The Portfolio Manager may invest in non-publicly offered debt securities and unlisted
securities. This may expose client’s portfolio to liquidity risks.
22. Securities, which are not listed on the Stock Exchanges, are inherently illiquid in
nature and carry a larger amount of liquidity risk, in comparison to securities that are
listed on the Exchanges or offer other exit options to the investor. The Portfolio
Manager may, at its discretion, invest in lower rated/unrated securities that offer
attractive yield, which may increase the risk of the Portfolio. Such investments shall
be subject to the scope of investments laid down in the executed agreement.
23. The Portfolio Manager may seek to create value by investing in stocks that trade
below the estimated fair value of the Company, which shall be judged by various
quantitative valuation parameters. But due to various reasons, it may so happen that
such stocks continue to languish and are not able to attain the price discovery.
Accordingly, this may have material adverse impact on the performance of the
portfolio.
24. After accepting the corpus for management, the Portfolio Manager may not get an
opportunity to deploy the same or there may be delay in deployment. In such
situation the clients may suffer opportunity loss.
Section 7:
CLIENT REPRESENTATION
i.
Category of clients as on February 28 2015:
Category of Clients as on 28th Feb, 2015 :
Category of Clients
No of Clients Funds Managed
(Rs. In Crs)
Associate/ Group Companies
As on 28th Feb, 2015.
0
0
As on 31st March 2014.
0
0
0
0
0
0
Others
Remarks
Discretionary
Discretionary
Discretionary
Discretionary
143
0
0
0
56.71
0
0
0
Discretionary
Discretionary
Discretionary
Discretionary
143
0
0
0
56.71
0
0
0
Discretionary
Discretionary
Discretionary
Discretionary
Total
Page 20 of 33
ii.
Sr.
No
1.
Complete disclosure in respect of transactions with related parties as per the
standards specified by the Institute of Chartered Accountants of India (as on 31st
March 2014)
Name of the related
party
Karvy Stock Broking
Limited
Nature of Transaction
Amount
2013-14
2012-13
- 40,000,000
Issuance of Equity Share
Capital
Margin deposit received back,
- -10,000,000
net
Loans given / (refunded)#
191,550,000 99,550,000
Loans taken / (repaid)#
39,000,000 26,940,000
Interest income
3,147,865
1,884,939
Interest expense
106,669
389,646
Brokerage on trading in
145,576
445,119
securities*
Shared Services of Expenses/
40,165,888 15,288,984
(revenue), net
Karvy Financial Services Loans taken / (repaid)#
18,000,000 125,000,000
2.
Limited
Interest expense
80,814
234,839
1,711,931
(revenue), net
Karvy Realty (India)
Loans given / (refunded)#
7,000,000
3.
Limited
Interest income
5,178
24,970,000 -19,000,000
(revenue), net
Karvy Comtrade
Brokerage on trading in
15,789
9,119
4.
Limited
securities*
Karvy Investor Services Loans taken / (repaid)#
20,000,000
5.
Limited
Interest expense
22,192
Karvy Forex &
10,548
6.
Currencies Pvt. Ltd.
(revenue), net
Systematic Edge Fund
Investments made
27,500,000
7.
Fee income
3,331,551
Mr. Hrishikesh
Loans taken / (repaid)#
10,000,000
8.
Parandekar
Interest expense
26,302
Mr. Swapnil Pawar
Managerial Remuneration
7,456,464
3,044,655
9.
paid
# Maximum loan given / taken at any time during the year
* Trading in Securities is carried out in the normal course of business at the prevailing market
prices
Section 8:
FINANCIAL PERFORMANCE OF PORTFOLIO MANAGER (BASED ON AUDITED
FINANCIAL STATEMENTS})
As at
March 31, 2014
Rs in Lakhs
(Audited)
As at
March 31, 2013
Rs in Lakhs
(Audited)
As at
March 31, 2012
Rs in Lakhs
(Audited)
Page 21 of 33
SOURCES OF FUNDS
Shareholders' Funds
859.15
599.52
262.37
-
-
-
2,080.62
1,127.39
150.00
0.53
-
-
2,940.30
1,726.91
412.37
48.64
42.51
51.17
-
-
-
279.00
4.00
4.00
2,719.06
1,708.53
408.04
(1,064.05)
(118.57)
(121.20)
Net Current Assets
2,612.66
1,589.96
286.84
Deferred Tax Asset
-
90.44
70.35
2,940.30
1,726.91
412.37
Share Application Money
Loan Funds
Deferred Tax Liability
Total
APPLICATION OF FUNDS
Net Fixed Assets
Stock Exchange Membership Cards
Investments
Current Assets
Less: Current Liabilities and Provisions
Total
Summarized Financial Statement - Profit and Loss Account
For the year
ended
March 31, 2014
Rs. In Lakhs
For the year
ended
March 31, 2013
Rs. In Lakhs
Total Income
1,403.95
682.50
98.75
Total Expenses
1,023.70
753.34
325.69
380.25
(70.84)
(226.94)
15.00
12.11
8.46
Profit before Depreciation and Tax
Depreciation/Amortisation
For the year
ended
March 31, 2012
Rs. In Lakhs
Page 22 of 33
Profit before Tax
365.24
(82.94)
(235.40)
Provision for Tax
105.61
(20.09)
(70.38)
Profit After Tax
259.63
(62.85)
(165.03)
Section 9: PORTFOLIO MANAGEMENT PERFORMANCE OF PORTFOLIO MANAGER FOR THE
LAST THREE YEARS. IN CASE OF DISCRETIONARY PORTFOLIO MANAGER, DISCLOSURE OF
PERFORMANCE INDICATORS CALCULATED USING WEIGHTED AVERAGE METHOD IN TERMS
OF REGULATION 14(2)(b)(iv) OF THE SEBI (PORTFOLIO MANAGERS) REGULATIONS, 1993
01.07.2014 28.02.2015*
Period
01.04.2013 –
31.03.2014
01.04.2012 –
31.03.2013
Discretionary PMS Resident
Portfolio
Performance
Benchmark
Performance
Demeter Strategy
12.5%
-
NSE G-Sec Sub
maturity 1-3 Yr-TRI
5.01%
-
Discretionary PMS Non- Resident
Portfolio
Performance
Demeter Strategy
-
-
-
Benchmark
Performance
NSE G-Sec Sub
maturity 1-3 Yr-TRI
-
-
-
*The first client in the portfolio was activated on July 1, 2014. Hence, the performance has
been provided from July 1, 2014 instead of April 1, 2014.
Section 10:
NATURE OF EXPENSES
The following are the general costs and expenses to be borne by the Client availing the
services by the Portfolio Manager. However, the exact nature of expenses relating to each of
the following services is provided in the annexure to this Risk Disclosure Document and in
the Schedule of Charges signed by the client in respect of each of the services provided.
(i) Portfolio Management and Advisory Fees
Page 23 of 33
This fee relates to the portfolio management services offered by Portfolio Manager
(including advisory services) to the clients. The fee may be a Fixed Charge on the quantum of
the funds being managed (or) charges linked to portfolio return (or) combination of both. For
details kindly refer the annexure to this Risk Disclosure Document.
(ii) Premature Redemption Charges
If the redemption is done prematurely at the option of the client, the Portfolio Manager shall
levy the Premature Redemption Charges. For details kindly refer the annexure to this Risk
Disclosure Document.
(iii) Custodian/Depository Participant fee
The charges relating to opening and operation of demat accounts, custody and transfer
charges for shares, bonds and units, dematerialization and rematerialization, pledge and
removal of pledge, etc. will be as per the actual charged by the Depository
Participant/Custodian. For details kindly refer the annexure to this Risk Disclosure
Document.
(iv) Registrar and transfer agent fee
Charges payable to the Registrar and Share Transfer Agents in connection with effecting
transfer of securities and bonds, units, etc. including stamp charges, cost of affidavits, notary
charges, postage/courier charges and other related charges will be recovered on actual. For
details kindly refer the annexure to this Risk Disclosure Document.
(v) Placement fee :
A Placement fee not exceeding 5% on the investment value will be charged in some of the
strategies over and above the fixed management fee and performance fee. The placement
fee, if charged, shall be deducted from client’s initial corpus. For details kindly refer the
annexure to this Risk Disclosure Document.
(vi) Brokerage and transaction cost
The Brokerage and other charges like Service tax and related charges such as Education cess,
Stamp duty, Security Transaction Tax, SEBI Fees, Bank charges, Turnover tax, and other
charges (if any), as per the rates existing from time to time, will be charged on actual. For
details kindly refer the annexure to this Risk Disclosure Document. The investment by
Portfolio Manager will be done through such SEBI registered Stock Broker(s) as may be
empanelled by the Portfolio manager only and would as per the rates negotiated between
Portfolio Manager and such stock broker. The charges relating to brokerage as per the
related party transactions charged by Karvy Capital Limited or through any SEBI Registered
stock broker will be recovered on actual by the Portfolio Manager
(vii) Securities Lending and Borrowing Charges
If utilized, the charges pertaining to lending of securities, cost of borrowing including interest
and costs associated with transfer of securities connected with lending and borrowing
transfer operations, Depository Participant Charges, Share Transfer Agent Charges, etc.
Page 24 of 33
would be recovered on actual. For details kindly refer the annexure to this Risk Disclosure
Document.
(viii) Certification Charges or Professional Charges
Any charges payable for outsourced professional services like accounting, taxation, auditing,
and any legal services, notarizations, etc., incurred on behalf of the Client by the Portfolio
Manager, will be charged from the client on actual. For details kindly refer the annexure to
this Risk Disclosure Document.
(ix) Incidental Expenses
Charges in connection with day to day operations like courier charges incurred in providing
physical reports relating to client’s portfolio / welcome letter / other communication to
clients , stamp duty, service tax, postal, telegraphic expenses, opening and operation of bank
and demat accounts or any other out of pocket expenses incurred by the Portfolio Manager,
on behalf of the client, would be recovered from the client. For details kindly refer the
annexure to this Risk Disclosure Document.
Section 11:
TAXATION
General
It may be noted that the information given hereinafter is only for general information
purposes and is based on the advice received by the Portfolio Manager regarding the law
and practice currently in force in India and the Investors should be aware that the relevant
fiscal rules or their interpretation may change or it may not be acceptable to the tax
authorities. As is the case with any interpretation of any law, there can be no assurance that
the tax position or the proposed tax position prevailing at the time of an investment in the
strategy/plan/option will be accepted by the tax authorities or will continue to be accepted
by them indefinitely.
Further statements with regard to tax benefits mentioned herein below are mere
expressions of opinion and are not representations of the Portfolio Manager to induce any
investor to invest whether directly from the Portfolio Manager or indirectly from any other
persons by the secondary market operations. In view of the above, and since the individual
nature of tax consequences may differ in each case on its merits and facts, each Investor is
advised to consult his / her or its own professional tax advisor with respect to the specific tax
implications arising out of its participation in the PMS strategy/plan/option, as an investor.
In view of the above, it is advised that the investors appropriately consult their investment /
tax advisors in this regard.
Portfolio Manager cannot be held responsible for assisting or completing the fulfillment of
the client’s tax obligations.
Income arising from purchase and sale of securities under Portfolio Management Services
can give rise to business income or capital gains in the hands of the Client. The issue of
Page 25 of 33
characterization of income is relevant as the tax computation and rates differ in either of the
two situations. The said issue is essentially a question of fact and depends on whether the
shares are held as business trading assets or on capital account. Based on judicial decisions,
the following factors need to be considered while determining the nature of assets as above:
a. Motive for the purchase of securities
b. Frequency of transactions
c. Length of period of holding of the securities
d. Treatment of the securities and profit or loss on their sale in the accounts of the assessee
and disclosure in notes thereto
e. Source of funds out of which the securities were acquired - borrowed or own
f. Existence of an objects clause permitting trading in securities – relevant only in the case of
corporate.
g. Circumstances responsible for the sale of securities
h. Acquisition of the securities -from primary market or secondary market Infrastructure and
set - up employed for undertaking the securities transactions by the client
Any single factor discussed above in isolation cannot be conclusive to determine the exact
nature of the shares. All factors and principles need to be construed harmoniously.
Investors may refer to CBDT instruction no. 1827 dated August 31, 1989 read with CBDT
Circular no. 4 dated June 15, 2007 for further guidance on the matter.
Tax implications under the Income Tax Act, 1961 ("IT Act") arise in the hands of the Clients
(resident as well as the non-resident) under both the scenarios, viz:
a. Securities in the Portfolio held as business asset; and
b. Securities in the Portfolio held on capital account.
Additionally, non-residents (including Flls/FPIs) are governed by the applicable Double Tax
Avoidance Agreement ("DTAA), which lndia has entered into with the country of residence of
the non-resident, if that is more beneficial. The same would have to be considered on a caseto-case basis depending upon the applicable DTAA. Ordinarily, capital gains and interest
income are taxable in lndia in the manner and at the rates prescribed under the relevant
DTAA or the relevant rates applicable in India, whichever is beneficial to the assessee.
Further, business income is normally not taxable in lndia.
Tax Deducted at Source
Presently, tax is withheld at source for non-residents. If any tax is required to be withheld on
account of any future legislation, Portfolio Manager shall be obliged to act in accordance
with the regulatory requirements in this regard.
Advance Tax installment obligations
Page 26 of 33
It shall be the client’s responsibility to meet the advance tax obligation installments payable
on the due dates under the Income Tax Act, 1961.
Tax Implications - Investment in Shares or units of Equity Oriented Mutual Fund
Dividend
Dividend received by shareholders is exempt from tax- section 10 (34) of IT Act.
Profits from sale / transfer of shares (or units of equity oriented mutual fund)
• If considered as capital gains: (capital gains = sale consideration – cost of acquisition–
expenses incurred in connection with such transfer)
Capital Gains
Listed Shares
(Where STT is
paid)
Listed Shares
(Where STT is
not paid)
Unlisted Shares
Long term Capital Gains (LTCG)
Period of
Rate
holding
More than 1
Exempt u/s.
year
10(38)
Short term Capital Gains (STCG)
Period of
Rate
holding
1 year or less
15%
More than 1
year
1 year or less
maximum
marginal rate of
tax or at slab
rates, as the
case may be
1 year or less
maximum
marginal rate of
tax or at slab
rates, as the
case may be
More than 1
year
20% with
indexation or
10% without
indexation
(whichever is
more beneficial
to clients)
20% with
indexation
• If considered as business income - net income taxable at maximum marginal rate of tax or
at slab rates, as the case may be.
Note: Education Cess & Surcharge &Higher Education Cess and surcharge (if applicable) will
be charged additionally. Clients are requested to contact their tax consultant to determine
their exact tax status.
Tax Implications - Investment in Derivative instruments
Investment in derivative instruments is considered as business income & is taxable at
maximum marginal rate of tax or at slab rates, as the case may be.
Note: E.Cess & S.&H.E.Cess and surcharge (if applicable) will be charged additionally. Clients
are requested to contact their tax consultant to determine their exact tax status.
Page 27 of 33
Tax Implications - Investment in Debentures or bonds
Interest income
Interest received by debenture holder is taxable under the head “Income from other
sources” at slab rates or at maximum marginal rate of tax as the case may be
Profits from sale / transfer of Debentures (or bonds)
Capital Gains
Period of
Rate
holding
Period of
Rate
holding
Listed
Debenture or
bonds
More than 1
year
1 year or less
maximum
marginal rate of
tax or at slab
rates, as the
case may be
Unlisted
Debenture or
bonds
More than 3
years
3 years or less
maximum
marginal rate of
tax or at slab
rates, as the
case may be
20% with
indexation or
10% without
indexation
(whichever is
more beneficial
to clients)
20% with
indexation
Tax Implications - Investment in Debt Oriented Mutual Fund
Dividend
Dividend received by shareholders is exempt from tax- section 10 (34) of IT Act.
Profits from sale / transfer of units
Capital Gains
Period of
Rate
holding
Period of
Rate
holding
Page 28 of 33
Debt MF units
More than 3
years
20% with
indexation
3 years or less
maximum
marginal rate of
tax or at slab
rates, as the
case may be
Capital loss
Losses under the head 'capital gains' cannot be set off against income under any other head.
Further, within the head 'capital gains', long-term capital losses cannot be adjusted against
short-term capital gains. However, short-term capital losses can be adjusted against any
capital gains. Unabsorbed long-term capital loss can be carried forward and set off against
the long-term capital gains arising in subsequent eight assessment years. Unabsorbed shortterm capital loss can be carried forward and set off against the income under the head
capital gains in subsequent eight assessment years
Securities Transaction Tax
Securities Transaction Tax is the tax leviable on the taxable securities transactions i.e.
transaction of:
(a) Purchase or sale of an equity share of a listed companies (whether delivery based or nondelivery based) or a derivative or a unit of an equity oriented fund, entered into in a
recognized stock exchange; or
(b) Sale of a Unit of an equity oriented fund to the Unit Trust of India or Mutual Fund.
The income arising from the securities transactions shall be taxed at applicable rates under
the Income Tax Act, 1961 if Securities Transaction Tax is not applicable in respect of such
transactions.
Section 12:
ACCOUNTING POLICIES
The following is the accounting policy followed by the Portfolio Manager while accounting
for the portfolio investments of the clients.
Page 29 of 33
Investment in equities will be valued on the closing price of that equity at NSE. In case of any
investments done in any equity listed on BSE only, the same will be valued based on the
closing price of that equity in BSE. In case the prices are not available from NSE or BSE, then
any other stock exchange shall be considered. These shall include the Equity shares including
Indian Depository Receipts and other instruments, as the case may be. In case a share is not
traded on a valuation date, latest closing price of either principal / secondary or any other
stock exchange would be used.
Equity shares which are not listed on stock exchanges are included in portfolio valuation at
fair/cost value. In case an Equity share is suspended/non-traded/ awaiting Corporate
Actions, then the valuation of such equity share shall be done on the basis of good faith
relying upon prevailing practices elsewhere.
In case of the warrants been traded separately they would be valued as an equity share and
valued accordingly. In case of the non traded warrants, the warrants will be valued at the
value of the share which would be obtained on exercise of the warrant less the amount
payable on exercise of the warrant. On exercise of warrant, the warrants would be
transferred to the normal equity and valued accordingly.
For valuation of the derivatives contract, the open positions, as on the date of valuation,
shall be valued as per the last traded prices available from the relevant stock exchange, and
will be valued on the mark to market method.
In case of Mutual Fund, investments in mutual funds shall be valued at the latest available
NAV of the respective scheme. Investment in Exchange listed (ETF) shall be valued at the
closing price on the relevant exchange. If on a valuation date Exchange Traded Funds (ETF) is
not traded either on the primary or secondary stock exchange, ETF shall be valued at the
latest available NAVs of the ETF Scheme.
Investment in debt instruments will be valued at the market value of the debt instrument as
on cut off date (or) the latest available price on the relevant exchange or the most recent
NAV will be reckoned. For illiquid securities, the valuation may be provided by the issuer on a
periodic basis and/or as required by the portfolio manager.
Realised gains/losses will be calculated on the basis of First in First out (FIFO) basis.
Transaction date will be the trade date and not the settlement or auction date.
For derivatives transactions (if any), the unrealized gains/losses on open position will be
calculated on the mark to market method.
Unrealized gain/losses means the profit/loss not yet booked and the same will be the
difference of the current market price or NAV minus the actual purchase price (or) the
historical cost of the securities.
All income will be accounted on accrual or receipt basis, whichever is earlier. All expenses
will be accounted on due or payment basis, whichever is earlier.
Page 30 of 33
Purchase and sale transactions are accounted for on contract date basis. Cost of purchase
and sale includes consideration for scrip and brokerage but excludes Securities Transaction
Tax, Service Tax & other charges paid on purchase/sale of securities. Other expenses like
Custodian charges (Safe keeping charges, Transaction charges, Fund Accounting charges, Out
of Pocket expenses) shall be accounted for as & when debited by the Custodian.
Any corporate benefits like dividend on shares, mutual fund units, interest on debt
instruments, stock lending fees etc. shall be accounted on accrual basis except interim
dividend which would be accounted on receipt basis.
Bonus shares are recorded on the ex-benefit date (ex-date). Dividend income is recorded on
the ex-dividend date (ex-date)
Tax deducted at source on interest on instruments such as Fixed Deposits etc. /Dividend is
considered as withdrawal of corpus and debited accordingly.
Portfolio Manager and the Client, on case to case basis, can mutually agree to any specific
norms or methodology for valuation of investment and/or accounting
The Client may contact the Portfolio Manager for the purpose of clarifying or elaborating on
any of the above.
Section 13:
INVESTOR RELATIONS OFFICER - IRO
The below mentioned employee has been nominated as the Investor Relations Officer by
Portfolio Manager who will attend to the investor queries and complaints:
Mr. Pankaj Bhagat
Karvy Capital Limited
702, Hallmark Business Plaza,
Sant Dnyaneshwar Marg, Bandra (E),
Mumbai 400 051.
Tel No. (B) 022-33055000
Tel No. (D) 02261491622
Fax No. 022-61491577
Email ID – [email protected]
Section 14:
GRIEVANCE REDRESSAL
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The Portfolio Manager has dedicated an email id [email protected] for all the
investors to lodge their grievance. Apart from this, the portfolio clients can get in touch with
the IRO in person, over phone or through written communication.
Portfolio Manager will ensure that the above IRO attends to all investor grievance/service
issues with promptness and Portfolio Manager will ensure that this IRO is vested with
necessary authority, independence and the means to handle investor grievance effectively
and immediately, within reasonable period of time.
If not satisfied with our response, you may approach SEBI with your grievance through SEBI’s
web based centralized grievance redressal system (SCORES) on http://scores.gov.in or may
also write to SEBI in physical form.
Section 15:
DISPUTE SETTLEMENT MECHANISM
All disputes, differences, claims and questions, whatsoever, which shall arise either during
the subsistence of the agreement with the Client or afterwards, with regard to the terms
thereof or any clause or thing contained therein or otherwise in any way relating to or arising
there from or the interpretation of any provisions therein shall be, at the first instance,
settled by mutual discussions, failing which the same shall be referred settled in accordance
with the provisions of The Arbitration and Conciliation Act, 1996 in the form existing at the
point of time. Such arbitration proceedings will be held at Mumbai or any other place where
the Portfolio Manager thinks fit and will be conducted in English.
The agreement with the Client shall be governed by, construed and enforced in accordance
with the laws of India. Any action or suit involving the agreement with a Client or the
performance of the agreement by either party of their obligations will be conducted
exclusively in Courts located within the city of Mumbai in the State of Maharashtra, India.
Page 32 of 33
A. Discretionary Portfolio Management Services
1. Demeter Portfolio
Introduction
Demeter Portfolio is designed for investors seeking income and capital appreciation from
their asset allocation to debt.
Investment Objective
The investment objective of the strategy is to generate long term capital appreciation and
income through interest and trading (both in the short term and over the long term) of
securities in the secondary markets. The portfolio will primarily consist of high yielding debt
securities.
Investment Horizon and Risk Return Profile
Demeter portfolio is recommended for investors seeking to hold a debt portfolio with
moderate to high risk appetite expecting a moderate return over a long term horizon.
Asset Allocation
The portfolio will be predominantly invested in debt using the securities defined below. The
portfolio manager may decide to hold cash/liquid funds if required.
Securities
Investments would be made in all types of debt securities (which may or may not be in
dematerialized form) including but not limited to debentures of any maturity (fixed, floating,
Variable Coupon, and equity index /stocks /stocks basket linked, real estate backed) which
may be listed, unlisted, convertible, non-convertible, secured, unsecured, rated or unrated,
Securitised Debt, instruments with debt like features (eg. Compulsorily redeemable
preference shares), Pass Through Certificates, Bonds, Government securities issued or
guaranteed by Central or State Government, corporate debt of both public and private
sector undertakings, securities issued by banks (both public and private sector) and
development financial institutions, fixed deposits, commercial papers, certificate of deposit,
trade bills, treasury bills and other money market instruments, units of mutual funds,
Exchange Traded Funds, units of SEBI registered Alternative Investment Funds, floating rate
debt securities and fixed income derivatives like interest rate swaps, forward rate
agreements and the like as may be permitted by the Act, Rules and/or Regulations,
guidelines and notifications in force from time to time. These securities may be acquired
through primary market issuances such as subscription to Initial public offers, Follow on
Public offers, Rights issues and private placements of securities, secondary market
purchases, auctions held by the Reserve Bank of India, open market sales of securities
conducted by Reserve Bank of India and the like.
The Portfolio manager may buy securities which have equity like nomenclature while the
features in terms of returns and convertibility will be like debt. These instruments would
include but not be limited to securities like non convertible compulsorily redeemable
preference shares and some Optionally convertible debentures.
Investment in listed/publicly traded securities will be valued on the day end’s NAV/closing
price. Investment in other debt instruments will be valued as per valuation provided by the
Issuer.
With respect to the debentures being bought by Karvy Capital Limited as Discretionary
Portfolio Manager for its clients in Demeter strategy, clients may please note the following:
Karvy Capital Limited as an NBFC / any Karvy Group entity has assisted the Issuer to
structure the debenture issuance for the purpose of raising capital through the private
placement route. Karvy Capital Limited as an NBFC / any Karvy Group entity has actively
associated with the Issuer for structuring of the security in relation to the debentures,
preparation of the term sheets and related documents for sharing product details with
prospective clients and for appointment of key agents such as trustee, escrow agent, legal
counsel and the like.
Karvy Capital Limited is also the “Debenture Holder Representative and Calculating Agent”
thereby having the power to approve amongst other things - dilution of promoter stake in
the Issuer company, disbursal of amounts from escrow account to the Issuer , any change in
the security cover for the debentures and without whose consent the above cannot occur.
As a Calculating Agent, Karvy Capital Limited calculates the amount of interest and final
redemption amount due to the debenture holders.
For this, Karvy Capital Limited as an NBFC / any Karvy Group entity has received a payment
from the Issuer which could be structured as advisory fee, discount on such debentures to
Karvy Capital Limited [NBFC] or the Karvy group entity at the time of first purchase or a
combination of the two.
Karvy Capital Limited as an NBFC / any Karvy Group entity is also the first subscriber to such
privately placed debentures. Therefore Karvy Capital as discretionary portfolio manager will
buy the debentures from Karvy Capital limited {NBFC} or any Karvy Group entity [first
subscriber]. Such downselling by Karvy Capital Limited {NBFC} to Karvy Capital Limited
{Portfolio manager} / any Karvy Group entity may be done at a premium.
Alongside, Karvy Capital Limited as an NBFC shall continue to undertake distribution activity
with regard to the said debentures i.e to downsell the debentures to prospective clients
other than the PMS customers.
In addition to downselling by Karvy Capital Limited {NBFC} as mentioned above, Karvy Capital
Limited (Portfolio Manager) may purchase debentures for clients of the Demeter strategy
through the below routes as well:
a. Primary issuance of debentures by an Issuer
debentures by Karvy Capital PMS
b.
Purchase of debentures by Karvy Capital PMS.
Additionally,
a. the debentures which the Portfolio Manager may invest in for the client
will usually have some form of collateral backing them. Such collateral
may include one or more amongst the following – real estate assets,
shares of the issuing company, shares of other companies related to the
issuing company, other listed or unlisted shares, escrow of cashflows,
brand, patents, fixed assets of the company etc. However, depending on
the specific collateral used and as per the interpretation of the
Companies Act, 2013 the debentures may be deemed to be secured or
unsecured in nature.
b. Owing to the credit risk of high yield debt that the strategy is investing
into, the preservation of capital is not guaranteed. In case of a default by
issuer in any of the underlying securities, the trustees would endeavour
to recover the principal and the interest for the investors but there is a
risk of erosion of the principal invested in the strategy by the investor.
Additionally, the recovery process in case of a default may take time to
be implemented. Hence, at the level of each individual instrument, there
exists a risk of partial or complete capital erosion in case of a default by
the issuer.
c. The high yield debentures invested into by the Demeter strategy will
have credit quality of a wide range and hence a varying amount of credit
risk. Such debentures may be rated or unrated. The issuing company
may be rated or unrated and if rated, the latest available credit rating
will be considered.. The rating of the debentures or the issuing company
may be investment grade or speculative grade.
The debentures investments in the Demeter strategy could carry their own set of risks. Some
of these could include:
(i) Operational Risk: The risks that arise out of systemic issues within an
organization. Operational risk is intrinsic to any business. Every company may
have sector and company specific risks which may affect operations.
(ii) Regulatory Changes
These risks may arise if various concerned authorities amend the regulatory
framework, which could impact the Issuing Company.
(iii) Downturn in the market
There can be a down turn in the market in which the issuing Company operates
which can lead to decrease in profit margins of the Issuing company.
The Demeter strategy will undertake to an extent as deemed fit by the Portfolio Manager,
opportunistic buying and selling of debt securities to improve the returns earned by
investors. However, in this endeavour, the portfolio manager may on some occasions not
receive suitable exit for the securities thus bought in the portfolio. In such cases, the
portfolio manager may either decide to hold such security to maturity or to exit it at a loss
when compared with the purchase price. For investors entering the strategy partially or
wholly through their current holdings of debt instruments, the portfolio manager will seek to
diversify these holdings to reduce concentration of credit risk. As a possible implication, the
yield in Internal Rate of Return [IIR] terms and income paid out through regular coupons of
the portfolio thus achieved may be different (and lower) from that of their current holdings.
Kindly refer Section III below for other features of this strategy.
Fees and Expenses: Defined in Section II below
2. Soteria Portfolio
Introduction
Soteria Portfolio is a strategy focusing on debt investments across maturities, credit quality
and yields aiming to provide investors regular income and capital appreciation from their
investments.
The investment objective of the strategy is to generate long term capital appreciation and
income through interest and trading of securities (both in the short term and over the long
term) in the secondary markets.
Soteria portfolio is recommended for investors seeking to hold a debt portfolio with low to
moderate risk appetite expecting a moderate return over a long term horizon using short
term transactions in fixed income instruments.
Asset Allocation
The portfolio will be predominantly invested in debt using the securities defined below. The
portfolio manager may decide to hold cash/liquid funds if required.
Securities
dematerialized form) including but not limited to debentures of any maturity (fixed, floating,
Variable Coupon, and equity index /stocks /stocks basket linked, real estate backed) which
may be listed, unlisted, convertible, non-convertible, secured, unsecured, rated or unrated,
Securitised Debt, instruments with debt like features (eg. Compulsorily redeemable
preference shares), Pass Through Certificates, Bonds, Government securities issued or
guaranteed by Central or State Government, corporate debt of both public and private
sector undertakings, securities issued by banks (both public and private sector) and
development financial institutions, fixed deposits, commercial papers, certificate of deposit,
trade bills, treasury bills and other money market instruments, units of mutual funds,
Exchange Traded Funds, units of SEBI registered Alternative Investment Funds, floating rate
debt securities and fixed income derivatives like interest rate swaps, forward rate
agreements and the like as may be permitted by the Act, Rules and/or Regulations,
guidelines and notifications in force from time to time. These securities may be acquired
through primary market issuances such as subscription to Initial public offers, Follow on
Public offers, Rights issues and private placements of securities, secondary market
purchases, auctions held by the Reserve Bank of India, open market sales of securities
conducted by Reserve Bank of India and the like.
The Portfolio manager may buy securities which have equity like nomenclature while the
features in terms of returns and convertibility will be like debt. These instruments would
include but not be limited to securities like non convertible compulsorily redeemable
preference shares and some Optionally convertible debentures.
Investment in listed/publicly traded securities will be valued on the day end’s NAV/closing
price. Investment in other debt instruments will be valued as per valuation provided by the
Issuer.
Fees and Expenses: As defined in Section II below
3. Metis Portfolio
Introduction
Metis Portfolio is designed for investors who seek long-term capital appreciation from their
asset allocation to equities. The portfolio will invest in stocks across sectors, market
capitalization categories and investment themes.
The investment objective of the strategy is to generate growth of capital through a blend of
value, growth opportunistic and event driven investing.
This Portfolio is recommended for investors seeking to hold a diversified equity portfolio
with moderate risk appetite expecting a moderate return over medium term horizon.
Asset Allocation
The Portfolio will seek to remain substantially invested in Equities or Equities related
instruments at all times. Cash in the portfolio may be invested in Liquid schemes of Mutual
Funds or Liquid Bees.
Securities
Investments will be made in various equity and equity related securities including but not
limited to stocks, convertible/non-convertible and/or cumulative/non-cumulative preference
shares, convertible and/or cumulative/non-cumulative debentures, bonds and warrants
carrying the right to obtain equity shares, units of mutual funds, Exchange Traded Funds and
other eligible modes of investment as may permitted by the Regulations from time to time.
Investments may be made in securities acquired through secondary market purchases, open
market sales/auctions, Initial Public Offers (IPOs), other public offers, placements, rights,
offers and the like. These securities may be listed or unlisted.
The Portfolio will also use derivative instruments – Futures and Options – for hedging and
rebalancing of the portfolio. Derivative Instruments shall, however, not be used in case of
NRI investors.
4. Aegis Portfolio
Aegis Portfolio is designed for those investors who seek long-term capital appreciation from
their asset allocation to equities, debt, gold and other asset classes which are available
through either exchange traded products or through mutual funds.
The investment objective of the Strategy is to generate long term capital appreciation of
wealth through a portfolio of debt, equity, gold ETFs and other asset classes which are
available through either exchange traded products or through mutual funds.
This Portfolio is recommended for investors seeking to hold a diversified multi asset portfolio
with moderate risk appetite expecting a moderate return over medium term horizon.
Asset Allocation
The portfolio will be invested in Equities, Debt, Gold ETFs and other asset classes in a
proportion deemed appropriate for the investor and the in accordance with the market
scenario.
Securities
carrying the right to obtain equity shares, units of mutual funds, ETFs and other eligible
modes of investment as may permitted by the Regulations from time to time. Investments
may be made in securities acquired through secondary market purchases, open market
sales/auctions, Initial Public Offers (IPOs), other public offers, bilateral offers, placements,
rights, offers, negotiated deals, etc. These securities may be listed or unlisted.
dematerialized form) including but not limited to listed, unlisted, convertible, nonconvertible, secured, unsecured, rated or unrated debentures of any maturity, and acquired
through secondary market purchases, RBI auctions, open market sales conducted by RBI etc.,
other public offers, bilateral offers, placements, rights, offers, negotiated deals, etc. They
could include Securitised Debt, instruments with debt like features (eg. Compulsorily
redeemable preference shares), Pass Through Certificates, Debentures (fixed, floating,
Variable Coupon, and equity index /stocks /stocks basket linked, real estate backed), Bonds,
Government securities issued or guaranteed by Central or State Government, corporate
debt of both public and private sector undertakings, securities issued by banks (both public
and private sector) and development financial institutions, fixed deposits, commercial
papers, certificate of deposit, trade bills, treasury bills and other money market instruments,
units of mutual funds, ETFs, units of SEBI registered AIFs, floating rate debt securities and
fixed income derivatives like interest rate swaps, forward rate agreements etc. as may be
permitted by the Act, Rules and/or Regulations, guidelines and notifications in force from
time to time.
Investments will also be made in gold ETFs and other asset classes which are available
through either exchange traded products or through mutual funds.
NRI investors.
Investment in equities will be valued on the closing price of that equity at NSE. In case of
investments in any stocks listed on BSE only, the same will be valued based on the closing
price of that equity at BSE. Investment in Mutual Funds and ETFs will be valued on the day
end’s NAV.
Debt investment in listed/publicly traded securities will be valued on the day end’s
NAV/closing price. Investment in other debt instruments will be valued as per valuation
provided by the Issuer.
5. Caerus Portfolio
Caerus Portfolio is designed for those investors who seek long-term capital appreciation
through opportunistic and event driven trades taken in their portfolio having an allocation to
equities (listed & unlisted), debt (listed & unlisted) and other asset classes which are
available through either exchange traded products or through mutual funds.
wealth through a portfolio of debt, equity and other asset classes which are available
through either exchange traded products or through mutual funds. Capital appreciation will
be generated through opportunistic and event driven trades taken in securities.
This Portfolio is recommended for investors seeking to hold a diversified portfolio with
moderate risk appetite expecting a moderate return over medium term horizon.
Asset Allocation
The portfolio will be invested in Equities, Debt and other asset classes in a proportion
deemed appropriate for the investor and the in accordance with the market scenario.
Securities
modes of investment as may permitted by the Regulations from time to time. These
securities may be acquired through primary market issuances such as subscription to Initial
public offers, Follow on Public offers, Rights issues and private placements of securities ,
secondary market purchases, open market sales/auctions and the like. These securities may
be listed or unlisted.
time to time.
Investments will also be made in other asset classes which are available through either
exchange traded products or through mutual funds.
NRI investors.
end’s NAV.
6. Eos Portfolio
Eos Portfolio is designed for those investors who seek long-term capital appreciation
primarily through Private Investment in Public Equity. The portfolio may consist of
investments in Equity & debt.
wealth through Private Investment in Public Equity. Investments may be done in the form of
Equity or debt. Investments will also be made in the primary market.
This Portfolio is recommended for investors seeking to hold a diversified portfolio with
moderate risk appetite expecting a moderate return over medium term horizon.
Asset Allocation
The portfolio will be invested primarily in Equities & Debt. Allocation will be decided on the
availability of opportunities and as deemed appropriate for the investor.
Securities
modes of investment as may permitted by the Regulations from time to time. These
securities may be acquired through primary market issuances such as subscription to Initial
public offers, Follow on Public offers, Rights issues and private placements of securities,
secondary market purchases, open market sales/auctions and the like. These securities may
be listed or unlisted.
time to time.
Investments will also be made in other asset classes which are available through either
exchange traded products or through mutual funds.
NRI investors.
end’s NAV.
For all strategies mentioned above, the Portfolio Manager shall be entitled to issue one or more
series of the strategy. The portfolio manager may also decide to make periodic payouts to investors.
SECTION II: FEES AND EXPENSES PERTAINING TO THE PORTFOLIO STRATEGIES
The fee portion below is common for all strategies mentioned in Annexure A
PLACEMENT FEE: A placement fee not exceeding 5.00% on the investment will be charged
over and above the Fixed Management Fee and Performance fee as defined below. The
placement fee, if charged, shall be deducted from client’s corpus both initial and at time of
making fresh infusion.
ADDITIONAL DETAIL REGARDING CALCULATION OF PERFORMANCE SHARING FEE:
In case where the portfolio comprises of debentures, the issuers may deduct TDS before
paying out funds to the investors. In case TDS has been deducted, for the purpose of
calculation of profit made by the investor, the TDS amount will be added back. This profit
arrived at (after adding back the TDS amount) will be used to calculate the applicable
performance sharing fee.
The Portfolio Manager shall charge audit fees, custodial/ AMC charges and other
charges/costs, attributable to the Portfolio Management Services at actual.
The Client will also have to bear brokerage charges not exceeding @2.50% of the transaction
value and other incidental charges/fees/duties and taxes including Securities Transaction Tax
at actual.
Clients have the following fee options:
Option 1: Fixed Management Fee up to 5.00% p.a.
FIXED MANAGEMENT FEE: The Fixed fee for all strategies above(without profit sharing)
charged by the Portfolio Manager will not exceed 5.00% p.a. charged up to 1.25% at the
beginning of every quarter on the Net Asset Value of the Portfolio (inclusive of all securities
and cash/bank balance) or the outstanding capital as detailed in the agreement between the
client and the portfolio manager. The portfolio manager may charge the management fee for
the first year on an upfront basis at the time of investment.
Following charges shall be payable by the client upon withdrawal from all strategies above
under Option 1:
Withdrawal when made
Charges payable by Client
In case of withdrawal before 60 months of date from
which client account is activated
a) Fixed Management Fee up to 5% p.a.
and
b) Exit fees up to 5%
When exiting, after completing a period of 60 months
of date from which client account is activated
Fixed management fee up to 5% p.a. till
the day client exits the strategy.
Option 2: Fixed Management Fee NIL & Performance fees up to 30% on all gains
PERFORMANCE FEE: The Performance fee in this option will not exceed 30% of incremental
gains beyond annualized hurdle rate not exceeding 0% on the basis of High Water Mark
Principle over the life of the investment. The performance fee will be charged on quarterly
basis.
under Option 2:
In case of withdrawal before 60
months of date from which client
account is activated
a) Performance fee up to 30% of incremental gains beyond
annualized hurdle rate not exceeding 0% will be charged
(Performance fee payable will be calculated on the NAV on the
day of exit) and
a) Exit fees up to 5%
When exiting, after completing a
period of 60 months of date from
which client account is activated
Performance Fee up to 30% of incremental gains beyond
annualized hurdle rate not exceeding 0% on the basis of High
Water Mark Principle based on the NAV of the day of exit.
Option 3: Fixed Management Fee up to 5% p.a. & Performance fees up to 30%
FIXED MANAGEMENT FEE: The Fixed fee for all strategies above (without profit sharing) will
not exceed 5.00% p.a. which is up to 1.25% at the beginning of every quarter on the Net
Asset Value of the Portfolio (inclusive of all securities and cash/bank balance) or the
outstanding capital as detailed in the agreement between the client and the portfolio
manager. The portfolio manager may charge the management fee for the first year on an
upfront basis at the time of investment.
PERFORMANCE FEE: The Performance fee in this option will not exceed 30% of incremental
gains beyond annualized hurdle rate not exceeding 15% (or a specific benchmark pre-
decided with the client) on the basis of High Water Mark Principle over the life of the
investment. The performance fee will be charged on quarterly basis.
under Option 3:
In case of withdrawal
before 60 months of date
from which client account is
activated
a) Fixed management fee payable up to 5.00% p.a. and
b)
Performance fee payable up to 30% of incremental gains
beyond annualized hurdle rate not exceeding 15% (or a
specific benchmark pre-decided with the client) will be
charged (Performance fee payable will be calculated on the
NAV on the day of exit) and
a) Exit fees up to 5%
When
exiting,
after
completing a period of 60
months of date from which
client account is activated
a) Fixed Management fee up to 3% p.a. and
b) Performance Fee up to 30% of incremental gains beyond
annualized hurdle rate not exceeding 15% (or a specific
benchmark pre-decided with the client) on the basis of High
Water Mark Principle based on the NAV of the day of exit.
The final fee structure and fee charging frequency may vary with every client and would be
pre decided between the portfolio manager and the client. This may be changed during the
term of the PMS arrangement upon mutual consent by the investor and the portfolio
manager.
SECTION III: COMMON FEATURES OF THE PORTFOLIO STRATEGIES {common features applicable to
all strategies}
Minimum investment amount is Rs. 25 Lakhs.
Liability of a client shall not exceed client’s investment with the portfolio manager.
The Portfolio Manager shall charge audit fees, custodial/ AMC charges and other
charges/costs, attributable to the Portfolio Management Services on actual.
Any charges payable for outsourced professional services like accounting, taxation, auditing,
and any legal services, notarizations, etc., incurred on behalf of the Client by the Portfolio
Manager, will be charged from the client on actual.
The Client may withdraw whole or part of the funds or securities from the portfolio account
by giving advance notice and the Portfolio Manager will endeavor to liquidate the securities
held in the strategy and return the funds or securities of the strategy, as the case may be, to
the client within reasonable time. In case the Portfolio Manager is for any reason unable to
sell the securities, the Client shall be obliged to accept the securities in the portfolio.
The Portfolio Manager will provide periodical reports as required under the regulations at
the communication address provided by the client at time of account opening. In case
Portfolio Manager is unable to provide the periodic reports in physical copy, the same shall
be provided to clients via email at the email id registered by clients at time of account
opening.
The portfolio account will be audited by the Independent Chartered Accountant every year
and copy of the Certificate issued by the Chartered Accountant will be given to the Client.
A. Non – Discretionary Portfolio Management Services
The following are illustrative, but not exhaustive, investment strategies which would be
available for client availing Non-Discretionary Portfolio Management Services.
1. Equity oriented strategies
These strategies would include equity focused strategies with the flexibility to invest
across Equity instruments available and across market capitalizations. The strategy
may invest in non convertible debentures with performance linked to an equity
instrument. Specific details of the portfolio would depend on the requirement of the
client.
2. Debt Focused strategies
These strategies would include debt focused strategies with the flexibility to invest
across Debt instruments available including mutual funds, bonds and non convertible
debentures. The strategy may also invest in debentures providing capital protection
and offering debt like returns which may have an equity index, basket of stocks or
commodities as the underlying. Specific details of the portfolio would depend on the
requirement of the client.
3. Multi Asset strategies
These strategies would include investments across Equity, debt, gold and other asset
classes which may be available through exchange traded products or mutual funds.
Non convertible debentures (other than equity or debt) will also be included here.
Specific details of the portfolio would depend on the requirement of the client.
GLOSSARY OF TERMS USED IN THE RISK DISCLOSURE DOCUMENT AND ANNEXURE A
Discretionary portfolio: A portfolio where the funds of each client are managed individually
and independently by the fund manager in accordance with the needs of the client.
Non discretionary Portfolio: A portfolio where the funds are managed by the fund manager in
accordance with the directions of the client.
Hurdle rate: The rate over which profit sharing / performance related fees are usually charged by
portfolio managers. This is not a fixed number and would be specified in the agreement signed with
the client.
High Water Mark Principle: As defined by SEBI, High Water Mark shall be the highest value that the
portfolio/account has reached. Value of the portfolio for computation of high watermark shall be
taken to be the value on the date when performance fees are charged. The portfolio manager shall
charge performance based fee only on increase in portfolio value in excess of the previously achieved
high water mark
Asset allocation: Asset allocation is an investment strategy that attempts to balance risk versus
reward by adjusting the percentage of each asset in an investment portfolio according to the investors
risk tolerance, goals and investment time frame.
Asset Classes: A group of securities that exhibit similar characteristics, behave similarly in the
marketplace, and are subject to the same laws and regulations. Asset classes include but are not
limited to Equities, fixed-income and cash equivalents.
Non convertible debentures: A debenture is a document that either creates a debt or acknowledges
it, and it is a debt without collateral (hence, unsecured debt). Non-convertible debentures are regular
debentures which cannot be converted into equity shares of the liable company.
Investment vehicles: An investment vehicle is a product used by investors with the intention of having
positive returns. Investment vehicles can be low-risk, such as certificates of deposit (CDs) or bonds, or
can carry a greater degree of risk such as with stocks, options and futures.
Alternate asset classes: Alternate asset class is a newer type of asset that was not traditionally
considered to be a part of an investment portfolio. These include but would not be limited to
Derivative instruments, Real Estate, Commodities (including Gold) etc.
ANNEXURE B - Details of all settled and pending disputes against Associates of Karvy Capital Limited as on February 15, 2015
There have been no pending disputes or imposition of any major strictures by any financial sector regulator or by a court of law against Karvy Stock Broking Limited/ its
directors/associates, except as mentioned below:
A.
Sl.no.
1
DETAILS REGARDING SEBI ACTIONS INITIATED/TAKEN/ PENDING AGAINST KARVY STOCK BROKING LIMITED
Details of the case
SEBI observation(s)
Corrective steps taken by Company towards
Pending actions,
observations made by SEBI
if any
(a)
(b)
(c)
(d)
(e)
Inspection of Karvy Stock Based on the findings of (i)Based on the findings of inspection, (i) Copy of order book is maintained physically and NIL
Broking Limited (KSBL) inspection,
adjudication adjudication proceedings were initiated in case of telephonic orders through voice loggers.
proceedings
were
initiated against the Company.
Records of all such transactions are also being
conducted in 2003-04.
against the Company.
maintained in the system.
(ii)The adjudicating officer vide his
order dated November 18, 2005 (ii) Separate teams have been formed for
imposed a penalty of Rs. 2 lakhs on the monitoring different activities relating to trading
and automation of various processes like pay-in
company which has been paid.
and pay-out of securities, providing confirmations
to clients on trades executed etc., getting the
LBC’s and other confirmation documents from the
clients.
1
SEBI Action
2
Two enquiry proceedings No deviation observed by SEBI
were initiated against Karvy in the processes.
Securities Limited (now
merged with Karvy Stock
Broking Limited).
Sl.no.
Details of the case
SEBI
observation(s
)
(b)
(a)
3
(i).Administrative warning issued in the
matter of Software Technology Group
International Limited on August 3, 2004
(ii). Administrative warning issued in the
matter of 10 scrip report (Aarti
Industries Limited, Aarti Drugs Limited,
Havells India Limited, Jindal Polyester
Limited, Kajaria Ceramics Limited, KRBL
Limited, Lyka Lab Limited, Nirma Limited,
Opto
Circuit
(I)
Limited,
Tasc
Pharmaceuticals Limited on October 12,
2
One of the proceedings was dropped vide order dated April 23, 1999 and
another was dropped by Board
Decision in the meeting held on
November 09, 2002. The proceedings
have been dropped by SEBI and no
action has been taken / no penalty was
levied / no warning has been issued to
the Company.
SEBI Action
(c)
NIL
Corrective steps taken by Company towards observations made by SEBI
Pending actions, if
any
(d)
With respect to the administrative warnings dated 03.08.2004 and NIL
12.10.2007 received by the Company from SEBI, the company has redefined
the policy on risk monitoring and has adopted various measures for
improving the processes systems and surveillance for effective control and
monitoring on the trades done by clients.
The complete broking operations based on the feedback received from the
exchanges were redefined and activities/processes reorganized subsequent
to the issuance of adjudication order and administrative warnings to the
company.
i. Risk monitoring and surveillance team has been strengthened for
(e)
2007.
monitoring the trades done by clients continuously.
ii. Separate teams have been formed for monitoring different activates
relating to trading and automation of various processes like pay-in and
pay out of securities, providing confirmations to clients on trades
executed, etc, have been implemented for strengthening the monitoring
procedures and to reduce manual errors.
iii. SMS alerts are sent to clients at the end of the day for trades done by
them. Trade confirmations are also sent to clients through emails at the
end of the day.
iv. The company has ensured that only individuals/entities registered with
SEBI act as sub brokers and all clients dealing through sub brokers
mandatorily open the trading account with the company by submitting
proper KYC documentation.
v. Trading platform has been enhanced by incorporating mechanisms for
effective control on the trades done by clients based on value, scrip and
quantity.
There have also been multiple inspections by both the Exchanges and there
has been no untoward observation with regard to any of the activities pointed
out in the adjudication order of the administrative warnings.
3
Sl.no.
SEBI
observation(s)
Details of the case
4
(a)
(b)
Administrative warning issued by IVD-ID 4 ON
January 19,2009 in the matter of IPO irregularities
(complaint of Shri Vimal Kumar Surana). This
warning was not issued in the matter of IPO
irregularities, but regarding opening of Beneficial
Owner accounts.
-
SEBI Action
(c)
Corrective steps taken by Company towards observations made Pending actions,
if any
by SEBI
(d)
(i) The Company has ensured that demat accounts are opened
only on receipt of valid and completely filled application form
along with proper supporting KYC documents towards Proof of
Identity and Proof of Address.
(ii) The company strictly follows the maker – checker concept for
all processes relating to depository services. On receipt of the
application, the application form and supporting documents are
verified at the branch and a receipt is issued to the client. The
documents provided as POI and POA are verified with the
originals and certified by the official accepting the application
form.
(iii) A detailed scrutiny and verification of the application forms
and the documentation is done once again at the Head Office
before the accounts are opened and activated. The accounts
opened are subject to a 100% concurrent audit by an external
agency. A welcome kit providing complete client master
information of the demat account opened, DIS booklet etc. is
dispatched to the clients for their reference.
(iv) Training is also provided to the staff / officials involved in the
activities of account opening and are kept informed about the
circulars and guidelines issued by the regulatory authorities
regarding demat account opening from time to time.
4
(e)
Sl.no.
SEBI
observation(s)
Details of the case
5
Corrective steps taken by Company towards observations made by Pending actions,
if any
SEBI
SEBI Action
(a)
(b)
(c)
(d)
(e)
SEBI
vide
order
dated
26.05.2006,
directed, Karvy
Stock Broking Ltd. (KSBL), not
to act as a depository
participant, pending enquiry
and passing of final orders,
except for acting on the
instructions
of
existing
beneficial owners ('BOs’). SEBI
also directed KSBL, as a stock
broker, not to undertake any
proprietary
trades
in
securities, either off-market or
on market, pending enquiry
and passing of final orders.
-
(i) Subsequent to the enquiry and
hearing with the whole time
member, SEBI in its final order
dated June 22, 2007, directed that
KSBL as a DP is prohibited from
opening new demat accounts till
December 31, 2007. SEBI also
passed an order that the certificate
of KSBL as a broker be suspended
for a period of 3 months.
(i) Subsequent to PAN being made mandatory by regulators, the
Company has developed a software application wherein the PAN
details provided by the applicants are validated online with the
Income Tax website. Only such applications where PAN details are
valid in all respects are processed for opening BO accounts. The
Company has taken permission from the depository for such
online validation.
NIL
(ii) The concurrent audit has been strengthened by way of 100%
audit of account opening application forms by external agency
with regard to compliance and fulfillment of the documents
(ii) KSBL as a broker had filed an required as per KYC norms.Extensive training sessions to all the DP
appeal no 75 of 2007 on June 25, front office employees has been conducted educating them on the
2007. SAT had stayed the order on scrutiny required to be done while accepting account opening
application form
July 4, 2007.
(iii) KSBL as a DP had filed an
appeal no 111 of 2007 on July 17,
2007. SAT had stayed the order on
August 8, 2007.
(iii) Front office personnel of some of the branches have also been
nominated for NSDL / CDSL training for the purpose of compliance
of NCFM / NCDO certification requirement. Fortnightly review of
the Demat accounts opened with the same address is undertaken
(iv) SAT in its final order by a senior resource
dated June 30, 2008 set
(iv) No applications are accepted and accounts are opened
aside the impugned order
dated June 22, 2007, without an “in-person” verification and re-verification of original
remanding the matter back documents, required as a part of KYC, by an employee of the
to SEBI with a direction to Company. Reporting of off-market transactions submitted for
5
pass
separate
orders
against KSBL – as a Broker
as well as a DP with regard
to the violations emanating
from the enquiry officer’s
report.
The Whole Time Member
had granted a personal
hearing as per the order of
Hon’ble SAT,
wherein
submissions to SEBI have
been
made
by
the
company. SEBI issued final
order in respect of KSBL –
Depository Participant on
28th January, 2014 and has
in paragraph 20 such order
clearly concluded that KSBL
– Depository participant
has already undergone
prohibition from taking up
any new assignment for a
period of 18 months and 26
days and hence there need
not be any further penalty
on KSBL – Depository
Participant.
SEBI issued final order in
respect of KCPL – RTI on
3rd February, 2014 and in
such order stated that
since KCPL has already
undergone
prohibition
from acting as RTI for
6
execution to the DP and Compliance Head on a fortnightly basis.
(v) The above corrective actions taken by the Company have been
intimated to SEBI in our various correspondences during the
process. An inspection has also been conducted by SEBI during
October 2009 to review if the procedures and processes adopted
are in order. There has been no adverse observation by the
inspection team.
approximately 10 months
no further penalty is
warranted.
•SEBI has issued final order dated
14th March, 2014 in respect of
KSBL-Broker wherein it has set
aside the earlier recommendation
of suspension of registration of
KSBL as a stock broker and has
instead directed KSBL to not
undertake any new assignment (i.e
not to take up any new clients) in
its capacity as a stock broker for a
period of six months, which will
come in force one month from the
date of the order. KSBL has
preferred an appeal before the SAT
against the impugned order. SAT
vide its order dated 21st January
2015 has quashed and set aside the
impugned order of SEBI dated 14th
March 2014 and restored the
matter to the file of SEBI for
passing fresh order on merits.
Sl.no.
SEBI observation(s)
Details of the case
(b)
(a)
6
A matter between Shri Jaidev Kumar Jain
, we have received a
KSBL & others is going on before District letter from SEBI that
Consumer Disputes Redressal Forum, Gwalior (EFD DRA the complaint does
7
SEBI Action
(c)
Corrective steps taken by
Company
towards Pending actions,
if any
(d)
(e)
Karvy Comtrade Limited approached the client, Mr.
Jaidev Kumar Jain and resolved the investor
Grievance. Mr. Jaidev Kumar Jain vide its letter dated
NIL
I).
The complainant is a client of our subsidiary company
Karvy Comtrade Ltd., a member of MCX, NCDEX,
National Spot Exchange Ltd. The case was actually filed
against Karvy Comtrade Ltd. As the order of the District
Consumer Forum was unreasonable and also the same
pertains to Karvy Comtrade Ltd, an appeal was filed
before the State Consumer Forum. MP State Consumer
Dispute Redressal Commission, Bhopal in its order dated
24.09.2011 stated that the Appellant is not a consumer
within the meaning under sec2(1)(d) of the act and does
not fall within the parameters of the explanation
hereinabove. Under these circumstances, MP State
Consumer Dispute Redressal Commission found that
both the appeals are not maintainable before the
consumer forum. Both the appeals are dismissed. As a
result, complaint is also dismissed.
Sl.no.
SEBI Observation(s)
Details of the case
(b)
(a)
7
Administrative Warning dated
July 13, 2010 issued in the case
of PAN mismatches in IDR issue
of SCPLC/IPO of Parabolic Drug
Ltd.
8
not come under the
purview of SEBI.
SEBI Action
(c)
17.04.2012 addressed to Karvy Comtrade Limited
submitted the letter of satisfaction.
Pending actions,
if any
(d)
(e)
The PAN mismatches have been identified as those of walk-in clients who are
not registered with clients and have utilized the distribution services of the
company. KSBL has already developed a bidding software application for entry of
the information provided in the IPO bid application form by the client and has
also obtained required permission from the Stock Exchanges for utilizing the
NIL
software for IPO bidding. The bidding application software also has an in built
provision where by the applicant’s details are validated if they are the registered
clients of the Company. KSBL, as a stock broker, is not currently authorized to
utilize the bulk PAN verification facility provided by NSDL and is therefore not
able to validate the PAN of walk in clients. To avoid these PAN mismatches, the
Company is in the process of requesting NSDL to provide the utility for bulk
verification of PAN with the ITD website already provided to the Depository
participants and registrars so that the utility can be incorporated in the bidding
application software developed and validation of PAN is done online at the time
of bidding the application itself.
The Company is also checking and analyzing the viability and methodology of
implementing the concept of maker checker in the IPO bidding process to
minimize the errors as the time frame available for bidding of the application is
very less.
Sl.no.
SEBI Observation(s)
Details of the case
8
SEBI Action
Pending actions,
if any
(a)
(b)
(c)
(d)
(e)
SEBI had initiated proceedings
under section 24 of the SEBI
act, against the three directors
of the company, viz. Mr. C.
Parthasarathy, Mr
M.
Yugandhar,
Mr.
M.
S.
Ramakrishna, and Karvy Stock
Broking Limited which are
pending before the additional
chief metropolitan magistrate,
--
--
--
Pending
9
Mumbai.
Sl.no.
SEBI Observation(s)
Details of the case
9
SEBI Action
Pending actions,
if any
(a)
(b)
(c)
(d)
(e)
A complaint was lodged by SEBI
with Central Bureau of
Investigation,
Mumbai
on
20.02.2006 alleging frauds
committed
by
certain
individuals / entities, in
connivance with certain bank
officials
and
depository
participants in the IPOs of IDFC
and Yes Bank to obtain undue
pecuniary benefits by illegally
cornering large number of
shares which were offered to
Retail Investors by opening
various fictitious / benami bank
accounts and demat accounts.
It was stated by SEBI in the
complaint that Karvy Stock
Broking Ltd had purportedly
relied
upon
the
bogus
documents furnished by the
individuals who acted as front
entities (key operators) to the
ultimate beneficiaries who had
--
--
--
Pending
10
financed
the
fictitious
applications.
Karvy
Stock
Broking Ltd had accepted
letters purportedly issued by
BhOB as POI and POA of the
persons for opening demat
accounts and such documents
purportedly received prima
facie appeared to be forged and
hence it appears that Karvy
Stock Broking Ltd had not done
Know Your Client verifications.
Sl.no.
10
SEBI Observation(s)
Details of the case
SEBI Action
Pending actions,
if any
(a)
(b)
(c)
(d)
(e)
Two cases - BS & FC (RC 3(E)/
2006 and 4(E)/ 2006) under
Sections 120 B r/w 420, 467,
468 & 471 of IPC, under Section
68(A) of the Companies Act
1956 and under Section 13(2)
r/w 13 (1) (d) of the PC Act,
1988 were registered by CBI in
the matter of Yes Bank and
IDFC Ltd. after arraying Karvy
Stock Broking Limited, Karvy
Computershare Pvt. Ltd and
Karvy Consultants Ltd and
other officers of these entities
--
--
--
Pending
11
including Mr. C. Parthasarathy,
as co-accused. The matter is
pending before the Hon’ble
Special judge.
Sl.no.
11
Sl.no.
SEBI Observation(s)
Details of the case
SEBI Action
Pending actions,
if any
(a)
(b)
(c)
(d)
(e)
Subsequently, the Enforcement
Directorate, after relying on the
investigations of CBI and that of
SEBI and on the premise that
Section 467 of IPC framed
against
the
co-accused
represents a predicate offence
which is categorized as a
scheduled
offence
under
Section 2(u) of the Prevention
of Money Laundering Act-2002
(PMLA), has filed a prosecution
complaint bearing no.04/2013,
in terms of the provisions of
PMLA. The matter is pending
before The Appellate Tribunal
PMLA New Delhi
--
--
--
Pending
Details of the case
SEBI observation(s)
(a)
(b)
12
SEBI Action
(c)
(d)
Pending actions,
if any
(e)
12
Inspection
of Portfolio
Management
services
business of Karvy Stock
Broking Limited (KSBL)
conducted in 2013-14.
Based on the findings of
inspection, the company has
received a show cause notice
as to why adjudication
proceedings should not be
initiated against the Company.
Based on the findings of inspection, the
company has received a show cause
notice as to why adjudication
proceedings should not be initiated
against the Company. The Company
has responded to the said show cause
notice in writing
1. The PMS Operations team actively ensures NIL
in coordination with the operations team
at Hyderabad that KYC details of clients
who opt for PMS are uploaded to KRA
2. The PMS Operations team routinely
scrutinizes account opening forms and any
difference in ink if observed between
signatures of client and text written by
client is immediately escalated and the
form rejected for clarification and
confirmation by client
3. All teams are being repeatedly sensitized to
fact that the word “scheme” is not to be
used with respect to PMS documents
4. The PMS Product team is in the process of
introducing a risk profiling tool .
B.
DETAILS REGARDING SEBI ACTIONS INITIATED/ TAKEN/ PENDING AGAINST ASSOCIATES OF KARVY STOCK BROKING LIMITED
13
Sl.no.
Details of the case
1
(a)
In the matter of IPO of Rajesh
Exports Ltd.,
2
SEBI observation(s)
(b)
In the matter of transfer of equity The following alleged violations have
shares of Bellary Steels and Alloys been cited in the notice (i) failure to
comply with SEBI Circular No. 001
Limited
(2000-2001)
dated
09-05-2001
(clauses 7 & 11) and (ii) failure to
exercise due diligence, care and skill
expected from a professional SEBI
registered
market
intermediary
(clause 2,3 & 16 of Schedule III read
with Regulation 13 of Securities and
Exchange Board of India (Registrars to
an Issue and Share Transfer Agent)
Regulations, 1993.
14
SEBI Action
(c)
A warning letter dated October, 10, 2002,
directing us to be cautious in future and
to adhere to all the Rules, Regulations,
Circulars and Guidelines issued by SEBI
strictly.
After receipt of the copies of the
documents relied upon by SEBI, reply to
the notice was filed on 09-04-2009. KCPL
attended a personal hearing on May 11,
2009 and also subsequently submitted
the written submissions on 15th May,
2009. After a detailed investigation and
personal hearing, the adjudication
proceedings were disposed off in favour
of the company vide order dated January
5, 2010, without levying any penalty,
monetary or otherwise.
Company towards observations
made by SEBI
(d)
Pending actions, if
any
(e)
NIL
Not applicable as the Company NIL
has not been reprimanded /
warned for non-compliance nor
was any penalty levied / action
taken against the company.
Sl.no.
Details of the case
SEBI
observation(s)
SEBI Action
3
(i) SEBI had initiated enquiry proceedings
against Karvy Consultants Limited (KCL)
(whose Certificate of Registration was
transferred to Karvy Computershare Private
Limited (KCPL) under regulation 6(1) of the
Enquiry Regulations.
(ii) SEBI had initiated adjudication proceedings in
the year 2004 in matter of issuance of physical
shares against the applications for electronic
allotment (DEMAT).
KCL which acted
as registrars to
the IPO of UCO
Bank Limited in
September 2003
had not abided
by the code of
conduct
as
specified by SEBI
in schedule III
read
with
Regulation 13 of
SEBI (Registrar to
Issues and Share
Transfer Agents)
Regulations
1993.
Subsequent to the personal hearing on November 6,
2009, with the enquiry officer, the proceedings
against the company were disposed off vide order
dated 12th July, 2010 in favour of the company,
without levying any penalty.
15
A penalty of Rs. 10 lakhs was imposed by the AO
which was subsequently reduced to Rs. 1.50 lakhs
by Hon’ble Securities Appellate Tribunal (SAT).
Pending actions,
Company towards
if any
The Company had reviewed NIL
the processes and had
ensured a second level
verification of the details
captured from the IPO
application forms to ensure
that such errors do not occur
again. Also, the company
has been strictly adhering to
the various norms, rules and
regulations laid down by
SEBI and other regulatory
authorities in IPO processing
from time to time.
4
Vide order dated 26.05.2006, KCPL was directed
not to act as a registrar to an issue and as a share
transfer agent, pending enquiry and passing of
final order, except for the assignment already
contracted before passing of interim order dated
April 27, 2006. The direction was not applicable to
KCPL as Registrar and Transfer Agent to Mutual
Funds.
Failure
to
exercise
due
diligence
in
weeding
out
multiple
and
fictitious
/
benami
applications,
issuance
of
consolidated
refund
orders
and failure to
maintain
arms
length distance
with other Karvy
entities
Subsequent to the enquiry and hearing with the
whole time member, SEBI in its order dated
22.02.2007 lifted the directions issued vide an earlier
order dated 26.5.2006 without prejudice to the
pending enquiry proceedings against its associate
company Karvy stock Broking Limited (KSBL),
without any further directions. Subsequent to the
enquiry and hearing granted to the associate
company, KSBL, SEBI passed a another order dated
June 22, 2007 wherein it reiterated that KCPL is
prohibited to act as Registrars to the issue for a
period of 9 months and since KCPL had already
undergone prohibition for more than the said 9
months period, therefore, there shall be no further
directions against KCPL. KCPL had filed an appeal no
153 of 2007 before Securities Appellate Tribunal
(SAT) challenging the order dated June 22, 2007. SAT
after the hearing, vide it order dated June 30, 2008
set aside the impugned order dated June 22, 2007
and referred the matter back to SEBI for passing a
separate and distinct order after giving a fresh
hearing to the company.
SEBI issued final order in respect of KCPL – RTI on 3rd
February, 2014 and in such order stated that since
KCPL has already undergone prohibition from acting
as RTI for approximately 10 months no further
penalty is warranted.
16
The company has already NIL
undergone prohibition of not
acting as a RTI for more
than 10 months. The
changes in the regulations
such as making PAN
mandatory has helped in
implementing the revised
process
for
verifying
duplication of PAN numbers
in weeding out multiple
applications in addition to
matching
the
names,
addresses and the DP ID and
Client IDs of the applicants.
The refund amounts are
being credited electronically
directly to the bank accounts
of the applicants through
RTGS, ECS and NEFT.
C. Details of action initiated / taken/pending, i f a ny , by SEBI against Karvy Investor Services Limited., Group Company.
Sl.no.
1
Details of the case
SEBI observation(s)
(a)
(b)
Advisory letter was issued to Karvy investor services Limited SEBI
has
given
an
administrative
warning
vide
as a Merchant Banker in the year 2005.
letter
dated
IVD/ID5/MSR/PB/47713/05 dated
August
22,
2005for
providing incorrect and
misleading information /
particulars to the Board
that
no
pre-IPO
presentations were made
by the company, Fortune
Informatics Ltd.
KISL vide its letter dated
September 10, 2005 has
assured that it shall ensure
that there would be no
deviations in compliance of
the
regulatory
requirements.
17
SEBI
Action
(c)
Pending actions, if
any
(d)
(e)
In depth training has been imparted to the NIL
personnel involved in the merchant banking
activities. Scrutiny of every document diligently is
being done by a senior official and verification of
all the facts and figures mentioned in the
document is also done before the same is filed
with SEBI. Checklist of documents being filed
done to ensure all the documents and
information is being provided to SEBI.
2
An administrative warning was given by SEBI vide letter
reference no CFD/DIL/ISSUES/SC/65284/2006 dated April 20,
2006 when DRHP of Shirt Company (India) Ltd. was filed
without incorporating the suggestions made earlier by SEBI in
respect of the risk element when the DHRP Opto Circuits Ltd.
was filed.
It was confirmed vide letter dated April 24, 2006 NIL
not
to SEBI that adequate steps have been taken to incorporated.
ensure that the risk element is reflected
appropriately in the headings of risk factors
appearing in the DRHPs submitted.
In reply, KISL has submitted that the DRHP of Shirt Company
(India) Ltd was filed much before the DRHP of Opto Circuits
Ltd. and hence the observations suggested by SEBI could be
incorporated
3
SEBI has given a warning vide letter reference no CFD/DIL/ SC
/ISSUES/54996/2005 dated November 30, 2005 highlighting the
deficiencies such as, inconsistent disclosures, statements
without supporting facts and non-compliance with various
provisions of the SEBI (DIP) Guidelines, 2000 in the draft Letter
of Offer of Agro Dutch Industries Ltd.
In response, it was informed by KISL to SEBI vide letter dated
April 13, 2006 that KISL would ensure that it shall henceforth
submit offer documents of good standard quality.
18
In depth training was imparted to the personnel NIL
involved in the merchant banking activities.
Scrutiny of every document diligently is being done
by a senior official and verification of all the facts
and figures mentioned in the document is also
done before the same is filed with SEBI. Checklist
of documents being filed done to ensure all the
documents and information is being provided to
SEBI.
be
C.DETAILS REGARDING ANY OTHER LITIGATION PERTAINING TO ASSOCIATES OF KARVY STOCK BROKING LIMITED
(I)
ARBITRATION PENDING AT NSE PERTAINING TO KARVY STOCK BROKING LIMITED
Name of the
Applicant
Baljit Singh Dagar
Ram
Chandra
Nayak
Sanjeev Kumar
Chadha
Aarthi Acharaya
Sonam Gailson
B K Mishra
Radheshyam
Biyani
Harbans Kaur
NSE Region
Remarks
Status
Delhi
Kolkata
We have filed Appeal u/s 34 at District court New Delhi, Court proceedings are going on
We have filed Appeal u/s 34 at District court Cuttack, Court proceedings are going on
Appeal under process
Amount in
INR
108700
176099
Delhi
We have filed Appeal u/s 34 at District court New Delhi, Court proceedings are going on
271792.05
Chennai
Delhi
Kolkata
Delhi
100000
303531
534592.48
600527
131231
Poonam Sharma
Delhi
96477
K.S.Malayappan
Thangammal
Sibnath Das
Chennai
Chennai
Kolkata
We have filed Appeal u/s 34 at District court Bangalore, Court proceedings are going on
We have filed Appeal u/s 34 at District court Jammu, Court proceedings are going on
We have Appealed u/s 34 at District court Jamshedpur, Court proceedings are going on
Arbitration and Appeal award against us. We have Appealed at district court Delhi u/s 34. Court proceedings are going
on
on
on
Client filed Appeal at NSE and matter is pending .
Client filed Appeal at NSE and matter is pending .
We have filed Appeal at NSE and the matter is pending.
Reserved for award
Reserved for award
at NSE
at NSE
Arbitral award in our
favour. Received on
21-02-2015
Arbitration
under
process
61000
305000
109883
Delhi
Vimal
Kumar Kanpur
Gupta
Govindrao
Bangalore
Kulkarni
We have filed Appeal at NSE and the matter is pending.
G .Babu Rao
We have filed Arbitration and matter is pending
Hyderabad
Client has filed an Arbitration, Hearing over matter reserved for award
19
129279.80
185000
16250
(II) DETAILS OF LEGAL CASES PENDING AGAINST KARVY STOCK BROKING LIMITED
Sl No
Name
1 T P Pramaleela
Amount
Case No.
OS:305/2011
Status/Remarks
The client has preferred Civil Suit against the order of Consumer Forum in Complaint No. 48/2010 which was awarded in our favour
1,00,000
2 S Manu
3 GV
Ramachandra
4 Shashikanth
Thimmapur
5 ARVIND
KUMAR
6 TAPAN
KUMAR
BISWAL
7 MOHAN
SINGH
8 SANJAY
KUMAR
AGARWAL
2,15,000
Appeal No.
1049/2011
Complaint No. 64/2010 was awarded in our favour at Consumer forum in Tumkur Branch, aggrived by the order of the CF, the client has
preferred appeal before the State Commission - Bangalore, appeal admitted awaiting the further legal process, argument complete by
both the parties posted for orders. (Member retired fresh hearing)
4,50,000
Appeal:
2323/2011
Claiming for losses on the ground of old age, health and ignorance of trade done in his account, client is disputing signature on contract
and the same was referred to handwriting experts. The complaint was dimssed on the grounds that he is not a consumer on
10/11/2010, now after 190 days he has filed the appeal before the State Commission.
CRP No:
258/2012
Setting aside the impugned order dated 30/3/12 and B Report filed by IO of Market Police Station in Crime No. 29/2009 at IV JMFC,
Belgaum. The matter is under process.
1328/2009
Delays in payments of dues by the client. Arbitration award was in favor of KSBL. Client filed the case in alipore court against arbitration
award.
174/2009
Cheque bounce case against the client. Arbitration award was in favor of KSBL. Client filed the case in district court against arbitration
award
5400000
3,44,830
63,000
Cheque bounce case against the client. Client has filed counter case in Sahibgunj Court alleging unauthorized trade and debit.
4,77,429
CCN.602/200
9
CCN.604/200
9
2,89,624
F&O/M072/2008/C
93,278
F&O/K0041/2009
The Client refused to pay the outstandings. We had filed for arbitration against the client and got award in our favour. In between the
client got transferred from Ambikapur to Dhamtari. We have filed a recovery suite against the client in Dhamtari Court. Last time after a
lot of dates and persuasion we were supposed to get the case registered against the client, in between the judge got transferred. Now
again the hearing process is going on.
Delays in payments of dues by the client. Arbitration award was in favor of KSBL. Execution petition has been filed before the Chief Judge
at City Civil Court Bilaspur.
3,63,112
9 SHOBHA SONI
10 ASHISH
SHARMA
20
Cheque returned uncleared. Arbitration award was in favor of KSBL. Client has filed appeal petition against Arbitration Award in Dist
Judge Darjeeling.
11 AJAY
CHANDRA
SATPATHY
12 SANJAY
BHATTER
13 ASIM
CHATTERJEE
14 AJOY KRISHNA
ROY
15 LAL BAHADUR
SINGH
S.NO
1
PARTIES
NAME
Srichand
Rupeja
127/2009
Cheque bounce case against the client. Arbitration award was in favor of KSBL. Execution Petition has been filed in Kolkata, however
client has moved to undisclosed location and cannot be contacted.
1106/08
The client has filed arbitration against us. Arbitration Award was in our favour but the client is absconding and is not traceable.
84,057
1788/2011
The criminal complaint filed against the Company along with Aritration case. But the Arbitrator passed award against the Client. Based
on the award passed by the Arbitrator, we are asking for dismiss of complaint filed by the Client.
Client filed the complain for unauthorised trade in his trading a/c in Consumer Forum.
75,000
60/2011
Client sent legal notice through District Comsumer forum , Buxar, for oppurtunity loss due to trade square-up by KSBL.
1,12,000
CASE NO.
600/2011
NAME OF
COURT
CDRF,
Lucknow
2
Ankur Mahal
334/2011
CDRF, Meerut
3
Vidya Sagar
awasthi
R.S.No.13/
2006
D. J. ,
Lucknow
4
Durgesh N.
Khanna
Complaint
No.08/200
8
CDRF, Kanpur
Nagar
21
CASE DETAILS
Amount
The client has filed this complaint against KSBL before the CDRF, Lucknow, and has claimed
1,50,000
Rs.1,50,000/- alongwith 18% interest. He has made allegation that many unauthorised trades have been
executed in his trading account without his instruction betweenOctober 2009 to Feb 2010.
The complainant has claimed that due to deficiency in service of the O. P. his late father Mr. Rajpal Singh
2,25,490
suffered a loss of Rs. 2,25,490/- from his demat account No.366407. Which he has prayed to be
compensated alongwith 18% interest.
The client had claimed through arbitration Rs.32,857/- for loss against unauthorised trades which was
rejected on account of lack of merrits by the arbitrator on18-02-2006. Thereafter, the application of the
client u/s 34 of the arbitration act was dismissed by the D. J. , Lucknow, on 06-02-13.
The complaint/claim of the client for for rs.1,77,549/- was dismissed by the consumer Forum, Kanpur, by The case was dismissed on
the order dated 29-12-12 on account of lack of evidences against which this Appeal has been filed by the 29/12/2012 as the
client for a decree of Rs.1,10,992.75 and 50000/- for mental agony and rs.2000/- as cost of the case. complainant was not been
hence his total claim is for Rs.1,62,992.75.
considered to be a
consumer.
5
Manish Kumar
vs KK Sharma
& Others
Mrs. Suruchi
Atreja Singh,
J. M., Rohtak.
6
Rakesh
chandra
7
Parth Singh
Rai
8
Surendra
Singh
690/2007
9
Gurbux Singh
691/2007
10
Harsh
Kr.Chawla
1111/2009
CDRF-I, Lko
11
Ayodhya Nath
Chaturvedi vs
Dhirendra
Mohan
Chaturvedi &
others
407/2012
Civil
Judge(S.D) II,Mathura
12
Daya Shankar
Dubey
451/2012
CDRF, Jaipur
R. S.
No.12/200
6
Case
No.418/12
Mr. Manish Kumar (the complainant) has filed this complaint against Mr. K. K. Sharma, Rakesh Negi &
Sarvesh Pandey due to dispute in payment for computer systems supplied by him to karvy branches.
As per complaint the claim
amount is Rs.1,66,799/-
D. J., Lucknow The client had claimed Rs. 1,36,880/- through arbitration against the unauthorised trades which was Case was dismissed by D. J. ,
rejected by the arbitrator on account of merrits on 18-02-2006. Thereafter, the application of the client Lucknow on 06-02-13
u/s 34 of the arbitration act was dismissed by the D. J. Lucknow on 06-02-13.
CDRF, Jaipur
This complaint has been filed by Parth Singh Roy (UCC - 111591) against the loss of Rs. 300000/- (Rs.
Three Lacs) caused by employees of Jaipur branch of KSBL in his Trading account which was adjusted by
sale of shares from his demat account.
CDRF -II, Lko
This complaint has been filed by Mr. Surendra Singh (Client Id. - 21177324) against the fraudulent
transfer and sale of 50 shares of Matrix Lab Limited on 21-12-2004 and 35 shares on 23-12-2004 from
his demat account without his instruction.
CDRF -II, Lko
This complaint was filed by Guru Bux Singh (died on 19-03-2009) and his wife Smt. Sheela Kaur who's
joint demat a/c no. is 21160811. They alleged that O. P. no. (1) , (2) and (3) have fraudulently transferred
and sold 300 equity shares of HDFC from their joint demat account in collusion with each other . So,
they have claimed the shares or the value of the same along with 15% interest.
22
80,000
This complaint has been filed by Harsh Kumar Chawala U C C - 233L 4263 and Clint Id - 21332619. He has
alleged that unauthorised trades were executed in his trading account from 18-05-2007 to 07-06-2007
due to which he incurred a loss of Rs. 80000/- in his trading account. So, this amount he has claimed
along with other reliefs.
As per para (25) of the Plaint, this suit / Injunction petition has been filed by the plaintiff Ayodhyanath
No specific claim of any
Chturvedi for order of injunction against the defendant no. (1) Dhirendra Mohan Chaturvedi and
amount has been made by
defendant no. (2) Virendra Mohan Chaturvedi and all the other defendants that the shares which have
the complainant from Karvy
been transferred by the defendant no. (1) and (2) by way of cheating from the demat account of the
in this case.
plaintiff be not further transferred to any other's demat or trading account and the same be not sold by
any of the defendants or the proceeds of the same be not given to defendant no. (1) or (2) by any other
defendant. So, the court has summoned KSBL i. e. defendant no. (3) and (4) for submission of the status
of the demat or trading acounts lying with Karvy in the name of the plaintiff and the defendant no. (1)
and (2).
In this complaint, the client Mr. Daya Shankar Dubey has denied from his trades and has allegated that
6,20,000
the trades have been executed in his trading account without his instruction except a few trades. And,
he has claimed for the amount of cheques he had given for purchase of some particular shares i. e.
valued at Rs.6,20,000/- along with compensations.
13
Raj Narayan
Tandan
Case
no.87/09
CDRF Sitapur
As per complaint, the client Mr. Raj Narain Tandon has clained Rs.44795/- for the loss caused to him
because 60 shares of Imfosys Technology could not be sold as per his instruction and time and he had to
pay Rs.3430/- for the shares auctioned. Hence, he suffered a loss of Rs.48225/-. further, he has claimed
Rs. 10000/- as cost of the case and Rs.15000/- for mental agony and harassment and Rs.23000/- for
deficiency in service. Therefore, total claim = Rs.96225/- which he has wrongly mentioned in complaint
as Rs.98225/- along with interest @ 18% per month.
14
Ram Gopal
Verma
CDRF
Mirzapur
15
Nirupama
Shrivastava
Case
No.137/20
08
326 / 2009
16
Amisha
47 / 2011
ADJMandsaur
17
Smt. Santosh
46 / 2011
ADJMandsaur
As per complaint, client Ram Gopal Verma has claimed the value of 300 shares of allahabad bank @
Rs.99/- per share = Rs. 29700/- along with 5% interest from 02-01-05 = Rs.35640/- , Rs. 25000/- for
mental agony and harassment and Rs.20000/- for cost of the case. hence, Total = Rs.80640/The complainant Nirupama Srivastav has claimed 1000 shares of DCW Ltd., 1000 shares of IGL, 50 shares
of Maruti Suzuki India Ltd. And 37 shares of Allahabad Bank from the O.P. KSBL along with cost of
mental agony and the cost of the case.
As per arbitration award dated 10-11-2008 Amisha Modi had to pay to the applicant Karvy Rs.3,10,796/within 30 days from the date of award against which the client has filed an application u/s 34 of the
arbitration act before the D. J. Mandsaur, is pending. The counter claim of the client of Rs.15,55000/was rejected by the arbitrator.
As per arbitration award dated 07-11-2008 Smt. Santosh had to pay to the applicant Karvy the claim
amount of Rs. 1,14,539.89 within 30 days from the date of award against which the client has filed an
application u/s 34 of the arbitration act before the D. J. , Mandsaur, which is pending thereat now. And,
the counter claim of the client of Rs.7,50,000/- was rejected by the arbitrator.
18
Banita Jain
Comp
517/2008
CDRF, Kanpur
Dehat
The complainant has alleged that she had given a cheque of Rs.300400/- to the O.P. towards her Trading
account no.285500003 which was duly received by the O.P. on 11-08-2007. But she had not given any
instruction for execution of any trade in her account. Whereas, the O.P. has executed many trades
without her instruction and has caused loss to the complainant to the tune of Rs. 300400/- and again a
debit of Rs.70022.35 is reflecting in her trading account for which the O.P. is responsible. So, the
complainant has claimed a sum of Rs. 300400/- along with cost and compensation towards the interest,
cost and litigation.
19
Priti Poddar
706 /2009
Civil Judge (S
D), Kanpur
Nagar
This suit has been filed by the plaintiffs for mandatory injunction against the defendants. In this suit the
value of shares have been mentioned in three parts such as Rs.7,41,629.95 and Rs.2,01,821.35 and
Rs.9,43,451.30 which have been transferred fraudulently from the demat accounts of the plaintiffs and
proforma defendant no.4 and 5. In this suit, defendant no. 3. (1) and (2) i.e. Karvy Stock broking Limited,
are the proforma parties. And the demat accounts related to this suit have been freeged as per
instruction of the court.
CDRF - I,
Lucknow
23
Case was dismissed against
the complainant on 13-09-13
for non presentation of
evidences by the
Complainant.
20
Sudesh Kr.
Gupta
D. J., Patiala
House,
This objection petition u/s 34 of the Arbitration Act has been filed by Mr. Sudesh Kumar Gupta against
the award dated 11-08-2012 passed by the Arbitrator in favour of KSBL. As per award, the amount of
Rs.8,18,026.16 is recoverable from the the respondent Sudesh Kumar Gupta on account of trades
carried out by him in his account.
8,18,026
21
Sanjogita
Gupta
D. J., Patiala
House,
5,04,199
22
Alpana Malik
D. J., Patiala
House,
23
Manju
Saraswat
This objection petition u/s 34 of the Arbitration Act has been filed by Smt. Sanjogita Gupta against the
award dated 01-08-2008 passed by the arbitrator in vafour of the applicant KSBL. As per award, the
respondant Sanjogita Gupta shall pay Rs.5, 04,198.84 to the applicant KSBL along with simple interest @
10 % p a from the date of award till the date of payment.
This objection petition u/s 34 of the Arbitration Act has been filed by Smt Alpana Malik against the
award dated 24-07-2008 passed by the arbitrator in favour of the applicant KSBL. As per award, the
respondant shall pay Rs.1,38,916.91 to the applicant along with simple interest @ 10% p a from the date
of order till the date of payment.
This Execution case was filed by Smt. Manju Saraswat and her daughters for enforcement of the order
dated 26-04-2011 passed by the CDRF Kanpur Nagar in complaint no. 362/2008. The Consumer Forum,
Kanpur Nagar has issued certificate of recovery against the O.P. KSBL against which an Appeal has been
filed by KSBL before, the State Commission at Lucknow, upon which the proceeding of recovery has
been stayed.
24
Kamala Devi
Execution
Case
No.62/201
1 - In Re:
Complaint
No.362/20
08
Title Suit
No.
CDRF, Kanpur
Nagar
Civil Judge (J
D), Patiala
24
This suit has been filed by Smt. Kamala Devi against KSBL and others for injunction (against the
respondants) on transfer or sale of her 1200 shares of ESSIL Packaging Ltd. From the demat account
where the same has been wrongly transferred and for decree of declaration of title in favour of the
plaintiff. The said shares were purchased by the plaintiff in her Trading account (with Karvy branch at
Patiala) which were then kept in her demat account (with Karvy branch at Patiala) and thereafter
transferred to the demat account of defendant no. (2), as per plaint. W. S. on behalf of Karvy has been
filed.
1,38,917
25
Zakiya Sultana
Execution
case
no.03/2013
against
Complaint
No.
58/2008
CDRF,
Jaunpur
This complaint has been decided on 07-09-2012 in favour of the complainant. As per judgment, the
complainant had opened a demat account no.20863866 with Karvy at Jaunpur, in which she had
deposited 45 shares of Reliance Industries and 45 shares of Reliance communication. The O.P./ Karvy
had already provided DIS Booklet to Zakiya. However, another DIS Booklet was issued in the name of
Zakiya Sultana, without due inquiry or verification of the signature of the client, when one Arshad Ali
presented a printed application form in the name and signature (which was not matching) of Zakiya
Sultana (to karvy branch) which authorised Mr. Arshad Ali to receive DIS slips on behalf of Zakiya
Sultana. And, thereafter the shares in question were transferred through two of those DIS slips bearing
signature of Zakiya Sultana which were not matching with the signature of the client (given on Member Client - Agreement) to the demat account of one Mr. Pramod Kumar Verma of Abhipra Capital at
Jaunpur. The O.P. Karvy had absolutely denied the allegations of the complainant. But, as per order, the
O.P. will either provide 45 shares of Reliance Industries and 45 shares of Reliance Communication to the
complainant within one month or the value of those shares as per value on the date of transfer of the
same along with Rs.1000/- as cost of the case.
26
Smt. Saroj
Gupta
comp.203/
2010
CDRF - I,
Lucknow
The complainant Saroj Gupta has claimed Rs. 97,379.30 as cost and compensation towards the loss
caused to her shares and the litigation. She has alleged that she has kept many shares in her demat
account no.11153499 which was suspended by the O.P. for a long time even after depositing the A M C
and the required address proof to the O.P. She could not make transaction of her shares lying in the
demat account. So, she suffered loss in respect of value of the shares.
27
Praveen Kr.
1091/12
Singh
Banwari Pd.
366/2012
Mourya and
Brij Mohan
Mourya
Tribhuwan Das 73/2013
CDRF,
Lucknow
CDRF,
Gorakhpur
Complaint of unauthorized trades executed in trading account.
CDRF,
MATHURA
The complainant had claimed that the O.P. had executed unauthorized trade in his acount and caused a
loss of Rs. 259903/- and Paise 75. But this claim has already been decided by the Arbitrator Mr. Divakar
Dev in favour of the O.P. and the application was rejected.
Abhinandan
Jain
Lokpal Sharma
1529/13
CDRF, jaipur
278/12
CDRF, Jaipur
The complainant Abhinandan Jain (client of Jaipur) has claimed as follows: Rs.15000/- for the loss caused
in trading, Rs. 11000/- as cost of the case and Rs. 10000/- as compensation for mental agony.
The Complainant has demanded Rs.150000/- for the loss incurred by him in his trading account and Rs.
21000/- for Advocate's fee along with other compensation.
28
29
30
31
25
1,15,548
97,379
5,50,000
Complaint of unauthorized trades
2,59,904
32
Anil Kumar
Taneja
Contempt
Case
No.78/201
3 In Re:
Complaint
No.296/20
11
Appeal No.
A/2013/62
1
CDRF, Ajmer
As per order of the CDRF, Ajmer, O. P. No.3, KSBL, Ajmer, has to pay Rs. 49000/- of the application Case Closed on 21-11-2013
amount with interest @ 9% and Rs. 1000/- as cost of the case.
after compliance of the
order passed in Complaint
No.296/2011, on payment of
Rs.63230/to
the
complainant.
33
Durgesh
Narain Khanna
State
Commission,
Lucknow
Amarjit Singh
Case No.
271/2013
CDRF, Ambala
City
This appeal has been filed by Durgesh N. Khanna against the impugned order dated 29-12-12 of the The
complainant
had
CDRF, Kanpur.
claimed Rs.110992/- along
with compensation in his
Complaint No.08/2008 filed
before the CDRF, Kanpur
Nagar.
The Complainant gave a cheque of Rs.5000/- to the O. P. for purchase of shares which was cleared by The
Complainant
has
the O.P. But, this amount was wrongly crdited to the trading account No.343160 of the Complainant's claimed Rs.5000/- with
wife in place of the trading account No.343197 of the Complainant, without the consent of the interest
@
18%
and
complainant. And, the O. P. failed to rectify the error even after legal notice from the Complainant.
Rs.20000/- towards mental
agony and Rs.5000/- as cost
of the case.
34
35
KailashChande
r Trama
Cr. Appeal --/2013
This appeal has been filed by the appellant against his conviction in cheque bounce case against two
cheques of Rs.100000/- each.
36
Avtar Singh
Gill
Consumer
Complaint
Dist. &
Sessions
Judge
CDRF,
Ludhiana
37
Patwant kaur
Gill
Consumer
Complaint
CDRF,
Ludhiana
This Complaint has been filed for reversal of 2000 shares of Ispat Industries, 2000 shares of J P Complainant has claimed
Hydro,2255 shares of Venkey's India Ltd. And 7000 shares of Zee News or the value of the shares in the shares in question or the
question as on 19/12/2009 along with compensation.
value of the same as on
19/12/2009.
26
This Complaint has been filed for reversal of 1000 shares of Idea, 4000 shares of J P Hydro and 3000
shares of R P L or the value of the shares in question along with compensation.
Complainant has claimed
the shares in question or the
value of the same as on
19/12/2009.
S.No
1
2
CASE
NO
O P No.
106 of
2013
NAME OF
THE PARTIES
Sujatha Gattu
and others
Vs. KSBL and
others
O S No.
1084 of
2013
Srivalli Vs.
Jyothy and
others
COURT
SUBJECT
AMOUNT (Rs.)
I Senior Civil
Judge,
Hyderabad
The Plaintiff filed petition before the Civil Court for granting Not applicable, since KSBL is formal party The matter posted for
Succession Certificate. As her deceased husband was and there is no liability to KSBL. KSBL will enquiry.
holding some shares. The matter posted for enquiry.
implement the orders of the Court.
District Judge,
L B Nagar,
The Civil Suit filed for partition and allotment of share in the Not applicable, since KSBL is formal party The matter posted for
property left over by deceased Sri. S Bhaskar Rao. The and there is no liability to KSBL. KSBL will enquiry.
shares of the deceased are said to lying in DP account implement the orders of the Court.
maitained by KSBL. Hence, suit filed for their share, both in
movable and immovable.
MATTER PERTAINING TO KARVY STOCK BROKING LIMITED PENDING BEFORE THE NATIONAL CONSUMER COMMISSION, NEW DELHI
1
Revision C H N V Sri
The National
The Complaint filed before the District Forum,
40 shares of MRF (Rs. 9,05,650/)
Petition Ram Vs. KSBL Consumer
Machilipatnam for transfer of 40 shares of MRF along with
No. 39
Commission,
costs of Rs. 10000/ and Rs. 20000/ as compensation. But the
of 2013
New Delhi
Forum granted 40 shares of MRF along with costs of Rs.
1000/ and Rs. 5000/ as compensation. Against the said
orders, KSBL filed appeal before the State Commission,
Hyderabad. In the said appeal the Commission set aside the
orders passed by the District Forum. Now, the Complainant
filed Revision Petition before the National Consumer
Commission, New Delhi.
S.No.
1
Name of the Client
Bhaskar M Pandya
Amount
Exchange
NSE-Mumbai
13,58,486
27
REMARKS
On receipt of the notices
from the National
Commission, New Delhi, we
have engaged the services of
Mr. PK Seth and filed vakalat
before the Commission. The
matter posted for arguments
of Complainant's Counsel.
Remarks
Client appealed in Bombay High Court. On receipt of the Award passed by the Arbitrator, the Cleint filed appeal against
the award and the same is pending for hearing.
2
NSE-Mumbai
Jitendra Chaudhary
5,56,823
No
Client Name
S.Narayanasamy
1
Amount
Case Number
os 486/2008
1ST ADM,Coimbatore
Court Name
OS 851/2010
PDM,Coimbatore
OS 654 / 2010
1 ADJ, Coimbatore
EP 225/2010
DJ, Coimbatore
EP 226/2010
DJ, Coimbatore
EP 227/2010
DJ, Coimbatore
EP 228/2010
DJ, Coimbatore
50,000
P.Shanmugam
2
4,000
Thilago Sulochana
3
15,54,000
Tamilarasi
4
3,20,856
V Chidambaram
5
5,89,628
C Indhra
6
73,171
V Arumugam
7
Client appealed in Bombay High Court. On receipt of the Award passed by the Arbitrator, the Cleint filed appeal before the
High Court of Mumbai, but, the High Court dismissed the Appeal. Once again, the Client preferred an appeal before the
Supreme Court of India.
2,31,408
Service tax matters, under dispute
The Department of Central Excise and Customs has raised a demand with respect to the Service Tax on brokerage/commission earned on distribution
of mutual funds of Rs. 5,157,611 (Previous year: Rs. 5,157,611) which has been contested by the erstwhile Karvy Securities Limited, now merged with
the Company, before the Honourable High Court of Andhra Pradesh. The entire amount had been paid under protest. The High Court of Andhra
Pradesh has quashed the said circular vide order dated 1 September 2004. Aggrieved by the said order, the Department of Central Excise and
Customs has filed a Special Leave Petition with the Honourable Supreme Court of India, which is pending for hearing.
28
DETAILS OF LITIGATION/ DISPUTES PERTAINING TO KARVY COMPUTERSHARE PRIVATE LIMITED
Contingent Liability as of March, 2014 - Corporate Registry Division
Case No.
Court/ Forum
Complainant name
Unit
66/98
Rajnandgoan
Ms Sunitha
Corporation Bank
Non receipt of share cert after transfer
Contingent
Liability (in Rs.)
17,800.00
2
647/98
Mylapore
V Ramachandran & Padma
Ramachandran
IDBI - equity
return of interest & deficiency of service
1,03,120.00
3
1/99
Nalbary
Dulal Deka
IDBI - equity
transfer of shares & mental agony
30,000.00
4
CD /98
Chennai
Nitya Mohan Kolipakkam
IDBI - equity
non receipt of fully paid stickers & compensation
50,000.00
5
148/98
Chennai
Ghanshyam Sahu
IDBI - equity
non receipt of fully paid stickers & compensation
2,00,000.00
6
CDRF
Karnal
Narendra Kumar
Flexi Bonds II
issue of Deep Discount Bonds or refund of amount and costs
9,500.00
7
CDRF
Raebarelli
Ram Prakash Trivedi
Bank of Baroda
Waive interest on call money and compensation for delay in
service and costs
21,000.00
8
CDRF
Raebarelli
Jagdish Saran Agarwal
Bank of Baroda
transfer of shares, compensation & costs
25,000.00
9
CDRF
Karnal
Pradeep Kumar
Bank of Baroda
issue of fully paid stickers, compensation & costs
50,000.00
10
CDRF
Pratapgarh
Shiripal Mishra
Bank of Baroda
issue of fully paid stickers and dividend for the year 1997-98,
compensation & costs
67,290.00
11
CDRF
Jhunjhunu
Ratan Lal
Bank of Baroda
issue of fully paid stickers and dividend for the year 1997-98,
compensation & costs
6,240.00
12
148/98
Chennai
C L Choudhary & others
Agro Dutch
transfer of shares, compensation & costs
13,200.00
13
ID
584/2000
Hyderabad
Sudha Rani
Karvy
Matter posted for trial, cross examination
56,448.00
Sl
No.
1
29
Nature of complainant
14
126/2008
Jhansi
Meera Devi Gupta
Power Grid
allotment of shares, financial loss, legal expenses, mental agony
15
244/2008
Shivpuri
Lokesh Sharma
Power Grid
non-credit of shares and refund
16,000.00
16
214/2008
Jalandhar
Ashok Kumar Arora
REC
non credit of shares, refund, legal expenses, travelling expenses,
court fee, mental agony, etc
22,941.00
17
131/2009
Bareilly forum
Kanhaiyalal Agarwal
Bank of Baroda
Transmission of his name as karta in place of the deceased karta.
25,000.00
18
38/2009
Consumer forum at
Kota
Arun Kumar Sharma
Strides Arcolabs
Claim for 25 shares of the company in lieu of the old shares.
50,000.00
19
752/09
Jaipur forum
Mohit Agarwal
JSW Steel
claim for 130 shares after merger and benefits.
50,000.00
20
872/09
Jaipur Forum
Neeraj Gupta
GMRI
DETAILS OF LITIGATION/ DISPUTES PERTAINING TO KARVY COMTRADE LIMITED
S.
Client Name Client
Branch
Region
Amount
Appeal
NO.
Code
involved
filed by
1
Pooja Cold
Storage
2
Amarnath
Cheppali
800727
Vanita
Luthra
56158
3
Sri Ganganagar
Rajasthan
PUNE (Sub
Brok)
Maharashtra
MUMBAI
COMM (Sub
brok)
Maharashtra
22,36,703
30
15,000
Court
Status as on 31-3-2014
Nature of case
KCTL
City Civil
Court
Hyderabad
Awaiting for Judgement
Civil suit filed for freeze other accounts of the client.
KCTL
Criminal
Court
erramanzil
Case transferred to Pune
Criminal court
Cheque bounce case for recovery of the amount,
Criminal case.
KCTL
Nampally
Criminal
court
Investigation by the police
done
Private complaint for recovery of the amount from
the client.
1,94,850
59,00,000
Non refund in IPO
1,25,402.00
4
Sivashakthi
36428
ERODE
Coimbatore
KCTL
Nampally
Criminal
court
done
Private complaint for recovery of the amount from
the client.
KCTL
Bangalore
Criminal
Court
Appearance of the client
Criminal case.
KCTL
Criminal
court Kochi
Criminal case.
Client
Rajasthan
High court
Stay of all proceedings
Cheating case filed by the client against NCDEX and
also made KCTL as a party, criminal case in FIR No.
2/12. There after KCTL has filed Quash Petition in the
High Court of Jodhpur, Rajasthan challanging the FIR
No. 2/12. The same is pending.
8,00,000
5
Arun Kumar
36490
CHITRADURGA
SOUTH
KARNATAKA
6
Nazar
55083
KOCHI
Kerala
36,255
2,52,192
7
Purushotam
Nagapal and
State of
Rajasthan
Sri Ganganagar
Rajasthan
DETAILS OF LITIGATION/ DISPUTES PERTAINING TO KARVY INVESTMENT ADVISORY SERVICESLIMITED [FORMERLY KNOWN AS KARVY INSURANCE BROKING LIMITED]
Sl.No
Name of the
Matter
Case Description
Amount
Remarks/Next Hearing Date
Complainant
Pending
Claimed
before
1 Arvind Kumar Singh
2 T R Mohana
3 Kamuben Patel
Consumer
Forum
Customer was sold the policy as a single premium but the policy had a 3 year premium
paying term. The customer has already sent a notice to SBI life on 16/05/2011 for which
SBI has sent response on 24/05/2011 denying the refund of Rs.25000 premium
Consumer
Forum
Customer has taken NHP group insurance policy with NICL for 1 year. Claim rejected due
to non submission of Customer id proof.
26,131
Consumer
Forum
Customer has taken a NHP group insurance policy with sum insured for 4.00 lac. The
customer was diagnosed with "Bilateral Osteoarthritis of Knee Joint" and undergone a
surgery. Claim rejected due to non submission of Original Money receipt for Rs.4,01,391/and also non submission of Customer id proof.
4,05,835
31
25,000
Appealed
against
the
Judgement/Order of the consumer
Forum. Next hearing dt is on 2nd
Sep'14
Case dismissed in our favour.
19th Aug'14
4 Naeem Khan
Consumer
Forum
As per customer he was promised that a coverage for Rs.1,52,000 but policy was issued for
SA of Rs.82,192.
• Policy was not cancelled even after submission of all relevant documents
40,200
• Was not provide the free accidental cover of Rs.100,000
• Customer is now claiming for cancellation of policy + refund of premium Rs.15200+
Rs.25000 expense for treatment on account of ill health + 10000 miscellaneous expenses.
5 Shamshad Begum
6 Ashok Modi
7 BETHA RAMA RAO
Legal Notice The complainant has taken the medical insurance policy to cover health insurance from
National Insurance Company Limited vide Policy Nos.154400/46/10/8500000691, UHID
No.NIC0008462907. The part settlement was already done by NICL. Remaining is pending
due to submission of incomplete documentation.
Consumer
Claim rejected due to the complainant has declared his previous aliments.
Forum
Pending
2,50,000
6th Aug'14
63,457
27th Aug'14
Consumer
Forum
Claim rejected due to non submission of Doctor's certificate, past prescription, Original
medicine bills, Original Investigation bills, Customer Id proof and age proof, etc.,
35,000
1st Sep'14
8 B Radhakrishna
Consumer
Forum
Customer has taken an mediclaim policy for 1.00 lac sum insured. Complaint received
towards non renewal of NHP Policy.
3,711
Pending
9 Parul Saxena
Legal Notice Free Look Cancellation case. TALIC has responded confirming that the policy documents, as
per their dispatch records, was received by the customer on 02nd Feb 2011 & cancellation
request was received on 03rd Nov 2011. Hence request for cancellation & subsequent
refund has been rejected.
10 Ashok Kumar
Chaubey
11 Kanthi Nagaraj
Legal Notice Customer has taken a mediclaim policy under NHP. Customer's wife has undergone
pregnancy & had a benefits upto to 25,000/-. Due to non submission of documents in
required time, hence the claim got rejected.
Consumer
Customer has taken NHP group insurance policy with NICL for 1 year. Customer has
Forum /
undergone eye treatment and paid Rs.24,000/- towards treatment charges. Due to non
Legal Notice submission of required documents in time, the claim got rejected.
32
14th Aug'14
25,000
Pending at Forum, Next hearing
19th Sep'14
24,000
5th Aug'14
DETAILS OF ARBITRATION CASE FILED AGAINST KARVY INVESTOR SERVICES LIMITED
S.
Case
Name of the
Court & Place
Subject
No. No.
Party
1
NA
Escorts Services
Limited
Sole Arbitrator,
Sri
Rajeev
Saxena,
Advocate, New
Delhi.
Signature of the Directors
Sl.No.
Name of the Director
1
SWAPNIL PAWAR
2
Escorts filed Arbitration Petition for recovey of 1486350.00
amounts from Karvy Investor Services Ltd., (along with interest)
towards their charges for introducing of client as
per MOU dated 30.10.2002.
Signature
V MAHESH
Place
MUMBAI
HYDERABAD
Place: Mumbai
Date: March 30, 2015
33
Claim Amount (Rs.)
Remarks
The Company appointed Counsel and filed Vakalat. In
written statement, the Company informed that they have
not signed any MOU on behalf of the Company and the
alleged MOU signed by Mr. PB Ramanujam, is not valid,
since he doesn't have any authorisation issued by the
Company to sign on the documents on behalf of the
Company.

PMS RDD - Karvy Capital

Transcription

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