MIP – SUMMER PROJECT REPORT

Study of Mutual Funds & other Investment Products in India

Zfunds Financial Services

Project Guide:
Mr. Gaurav Seth
Head – Research & Content

Submitted in partial fulfillment of the Post Graduate Programme in Management

at TAPMI, Manipal by:

(Nagarajan P - 19S627)
(17th July 2020)
(Batch – 2019-2021)
Completion Certificate:

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Acknowledgement:
I would like to extend my sincere gratitude to ZFunds (Financial Services) for providing
me a brilliant opportunity to work in their organization, after my earlier internship in a
different organization got revoked amidst the Covid-19 situation.

I take this opportunity to express my heartfelt thanks to Mr. Gaurav Seth (Head –
Research & Content) & Mr. Manish Kothari (Co-founder) for inducting me into their
company. Mr. Gaurav Seth had been guiding me in the project in an exceptional way, by
giving me adequate freedom to express my viewpoints and fine-tune me wherever
necessary.

I would also like to convey my thanks to Mr. Akshit Girhotra (Mutual Fund Analyst) for
counselling me at various points in the entire internship duration on how to analyze
financial products and write on them.

Finally, I would like to thank the management of TAPMI to provide an opportunity to

work on the internship for honing our skillset and enabling us to gain corporate exposure.

Thank You,

Nagarajan P.

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Executive Summary:
Zfunds is a financial services company that works with a mission to democratize
investments across the country. As most of the financial products are still considered an
urban concept, the firm makes quality financial advice accessible and approachable to
people, through WhatsApp. The firm manages a team comprising of numerous experts in
the financial space (especially Mutual Funds industry) to offer advice to the clients and
clarify their financial doubts. There are good number of articles and videos posted on the
company’s official website about different schemes and financial products and also
happenings in the world of finance. The organization also offers the provision for clients
to choose the right mutual fund scheme filtered by fund house, fund category,
subcategory and ratings.

The main objective of the internship project is to research & analyze various financial
products. In addition, the major task involved in the project is writing content on the
analyzed financial instruments so as to create awareness among clients and viewers.
Apart from publishing content, the firm acts as an aggregator platform for mutual funds.
This is a major revenue stream for the organization. The content published on the
company’s website helps them to create traffic in the site, thereby increasing the
visibility. This in turn helps the company to generate more conversions & profits.

In the initial week of my internship, I was assigned the task of writing a full-fledged
article about ‘Kisan Credit Cards’. Around that time, the government had announced a
stimulus package to boost the economic activity after the lockdown. An important
announcement was made by the Finance Minister regarding a concessional credit offered
to farmers through Kisan Credit Cards. Hence, the article on it gained a lot of traction
and benefitted the company.

In the weeks that followed, the tasks allocated to me was mostly in the area of writing
content, especially for the backlink. The articles written for backlink plays a vital role in
the Search Engine Optimization process. A lot of the articles allocated to me were
surfaced as backlinks in several popular websites. Once people start tapping the same
backlink from different websites, it makes the search engine to list the company’s site in
a SERP (Search Engine Results Page).

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During the later portion of the internship, the tasks were inclined towards the research
and analysis of instruments. The theme of research was ‘Pharma (Sectoral) Mutual
Funds’. A study that overviewed the entire pharma industry, the types of pharma
companies, the challenges faced, means of investment in these companies was
conducted. Also, the sectoral mutual funds that invest most of the corpus in the pharma
sector are chosen for the research. These funds were evaluated on the basis of their
performance (based on historical returns), valuation, risk factors, concentration and few
other factors. These analyses would be highly advantageous for the investors to choose
their mode and scheme for investments.

Another analysis was done on the ‘Index Mutual Funds’. Index funds are passively
managed mutual funds which tries to replicate the index. The performance of these funds
is compared opposite to the actively managed mutual funds. A study was conducted as
how many active funds outperformed the index over different time horizons. As a
conclusive task, an article on the ‘Economic Impact of Indo-China Feud’ was also
drafted to get published in the website.

Prior to the internship, I did not possess satisfactory knowledge about financial
instruments, especially the mutual funds. This project provided me with ample awareness
and gave me a grasp in the functioning of these funds. The knowledge thus developed
was also relevant to the methods adopted to analyze various schemes and functions of
various roles in the industry.

The internship was well designed to make me aware about wealth management, mutual
funds industry, government investment schemes, functioning of backlinks, etc. The
company’s website contains imposing amount of content for investors and knowledge
seekers. However, the volume of traffic created does not do justice to the volume of
content available. Hence, better methods like Social Media Marketing could be adopted
to enhance the user engagement and scale up the business.

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Table of Contents
Certificate……………………………………………………………………………ii

Acknowledgement…………………………………………………………………...iii

Executive Summary………………………………………………………………….iv

Table of Contents……………………………………………………………………vi

List of Figures……………………………………………………………………….vii

List of Tables ……………………………………………………………………….vii

1.0 Introduction to Project……………………………………………………….…...1

1.1 Problem Statement…………………………………………………...……1
1.2 Research Objectives……………………………………………….………1
1.3 Scope of the Project……………………………………………………….2
2.0 Company Profile……………………………………………...…………….…….3
2.1 Introduction ……………………………………………………………….3
2.2 Vision…………………………………………………………….………..4
2.3 Industry Overview…………………………………………………..…….4
3.0 General Findings & Learnings……………………………………..……………..6
3.1 Research Articles…………………………………………………….……6
3.1.1 Pharma Mutual Funds……………………………...………….6
3.1.2 Index Mutual Funds…………………………………...……..18
3.2 Full-fledged Articles (Non-Research)……………………………………26
3.2.1 Kisan Credit Cards……………………………………...……26
3.2.2 Economic Impacts of Indo-China Feud………………….…..29
3.3 Backlink Articles……………………………………………………..…..34
3.3.1 How to Invest in Gold?............................................................34
3.3.2 What is under 80C?..................................................................35
3.3.3 Is SIP Safe?..............................................................................36
3.3.4 What are RBI Bonds?...............................................................37
4.0 Limitations…………………………………………………………………..……39
5.0 Suggestions……………………………………………………………………….39
6.0 References…………………………………………………………………..…….40

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List of Figures:

Figure 1.1: ZFunds Website Home Page…………………………………………...4

Figure 3.1: Active Funds Vs Benchmark – 1 Year………………………….22

Figure 3.2: Active Funds Vs Benchmark – 3 Years………………………...23

Figure 3.3: Active Funds Vs Benchmark – 5 Years………………………...23

Figure 3.4: Active Funds Vs Benchmark – 10 Years……………………….24

Figure 3.5: KCC Loan Rates………………………………………………..28

Figure 3.6: India’s Trade Deficit with China……………………………….30

List of Tables:

Table 3.1: Top Pharma Mutual Funds……………………………………...14

Table 3.2: Performance of Active Mutual Funds Vs The Benchmark……………………19

Table 3.3: Imports from China……………………………………………………………………….…..30

Table 3.4: Exports to China……………………………………………………….30

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1. Introduction to The Project:

1.1 Problem Statement:

To perform a study on Mutual Funds & other financial instrument in the country and to write
research articles on them, in order to create awareness among the viewers of company’s
website (who might also be converted as customers) and hence scale up the business.

1.2 Research Objectives:

1.2.1 Analysis of Financial Products:

The organization had been publishing research articles on its website to lure investors. One of
the major objectives of the internship project is to analyse a variety of financial products,
especially mutual funds. As a sequel, the research articles on these instruments ought to be
published on the company’s website.

1.2.2 Full-fledged articles:

Apart from the research articles, the project also involves writing on the financial and
economic events, which cause dramatic change in the market. Also, different schemes
launched by the government are also covered under the articles section.

1.2.3 Backlink Articles:

The backlinks serve as an important factor for the process of Search Engine Optimization.
Writing summarized content for these backlinks was also an important objective of the
internship.
1.3 Scope of the Project:

1.3.1 Deliverables:

 Research Articles
 Pharma Mutual Funds
 Index Mutual Funds
 Full-fledged (Non-Research) Articles
 Kisan Credit Cards
 Economic Impacts of Indo-China Feud
 Backlink Articles
 Sovereign Gold Bonds & Other forms of investments in gold
 Tax Saving Investment options
 Investments through Systematic Investment Plans (SIPs)
 Post Office Savings Schemes
 RBI Bonds
 Retirement Planning
 Worksheet containing analysis
 Charts & Graphs

1.3.2 Milestones:

 Going through the existing content to prepare backlink summaries

 Get familiar with Government schemes
 Enhance the acquaintance with financial instruments
 Obtain more insights about Mutual Funds & the industry
 Learn to analyze funds on the basis of numerous parameters

1.3.3 Constraints:

 Total duration of the project is 6 weeks

 Verified sources must be used and mentioned
 Benchmarking is of high importance in research articles

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2. Company Profile
2.1 Introduction:
Zfunds is a financial services company that works with a mission to democratize investments
across the country. The company began functioning in 2019, started by Mr. Manish Kothari
and Mr. Gaurav Seth. As of now, the company operates with 15 members, with people
working in different verticals including the following:

 Research & Content

 Mutual Fund Distribution
 Technical Support
 Search Engine Optimization
 Human Resource Management

As most of the financial products are still considered an urban concept, the firm makes
quality financial advice accessible and approachable to people, through WhatsApp. The
firm manages a team comprising of numerous experts in the financial space (especially
Mutual Funds industry) to offer advice to the clients and clarify their financial doubts.
This is being done in 4 different languages: English, Hindi, Bengali and Punjabi.
According to the company, the organisation gives utmost importance to the quality of
service they provide. Hence, they fact check every expert who is associated with them.

There are good number of articles and videos posted on the company’s official website
about different schemes and financial products and also happenings in the world of
finance. Some of the most popular articles have fetched a lot of customers (investors) to
the firm. The organization also offers the provision for clients to choose the right mutual
fund scheme filtered by fund house, fund category, subcategory and ratings.

In the various means that were discussed above, the company operates as a mutual fund
aggregator. They have been into the mutual fund aggregation services, wherein the
content published, analysis provided and the advice given over WhatsApp help them in
the distribution of products of different fund houses. This mutual fund aggregation
enabled through sales personnel, fetches a major portion of the company’s revenue.

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[Figure 1.1: ZFunds Website Home
Page]

2.2 Vision of the Company:

The organization operates with a vision of ‘Democratizing investments across Bharat’. The
salient aim of the founders of the organization is to make investments simpler for the users.
And they believe that’s what drives the organization forward.

2.3 Industry Overview:

The Mutual Fund Aggregator industry has been growing in tandem with the growth of mutual
funds over the last few years. There are several fund houses or Asset Management
Companies (AMCs) like ICICI Prudential Mutual Funds, UTI Mutual Funds, Motilal Oswal,
Aditya Birla, HDFC Mutual Funds, etc. However, one does not need to open an account in
every AMC in order to invest in their plans. Investors can choose to open a single account
with a Mutual Fund Aggregator and invest in schemes of different fund houses. They are the
easiest solution to keep track of mutual funds.

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Some of the most popular aggregators include:

 PaisaBazaar
 Groww
 ClearFunds
 Kuvera
 Goalwise
 PayTM Money

These Mutual Funds Aggregators, including ZFunds, help the investors to monitor the
performance of their investments over time. Also, the investment formalities are simpler and
less cumbersome thanks to the assistance provided by the aggregators.

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3. General Findings & Learnings
3.1 Research Articles:
These articles involve in-depth exploration of financial products (especially mutual fund
categories) and elaborate description of the same. Out of all types of content that was
assigned to me, these articles were given a longer window for adequate research and writing.
The research articles are very detailed and comprises of wide variety of information. At the
same time, various funds in the research articles are compared against their benchmark to
gauge their performances. The 2 research articles I had been allotted in my internship
duration are:

 Pharma Mutual Funds

 Index Mutual Funds

3.1.1 Pharma Mutual Funds:

The following were the learnings from the study on Pharma mutual funds.

Sectoral Overview – Pharmaceuticals:

In India, pharmaceuticals have been one of the fastest growing sectors, catering to the
domestic as well as global markets. The Indian Pharma industry is serving about 40% of the
demand in the US market for generic medicines and around 25% of the medicinal demand of
all sorts in the UK. Indian companies export medicinal supplies to about 200 countries
around the world, while the US is the market of focus. Both the domestic market and exports
have been on the rise in recent years. Our country being a consumer market, the local
consumption has been about USD 20 Billion for the year 2019 (grown by 9.6% yoy). Also,
the pharmaceutical exports were valued at around USD 19 Billion for FY19. Annually, the
industry also earns foreign exchange (net) of USD 10 Billion. Our exports include drugs &
drug formulations, surgical, herbal products, intermediates, etc. Overall, the pharma industry
was valued at USD 38 Billion in 2017, and expected to be around USD 65 Billion by 2020. 

The pharmaceutical sector is considered by professionals as a ‘Sunrise Sector’ on a global

scale and it provides a competitive advantage to our country. The introduction of Ayushman
Bharat Scheme by the Government of India to provide free health coverage has played a vital

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role in a resultant positive outlook for the Pharma sector at the beginning of 2020. This
scenario was prevalent before the COVID-19 outbreak. The pandemic has halted progress for
a lot of industries and has also led to the complete shutdown of several businesses. Amidst all
this crisis, the pharma sector has remained optimistic.

At the beginning of COVID outbreak in China, the Indian pharmaceutical companies got a
hit, as we depend on Chinese raw materials (Active Pharmaceutical Ingredients – APIs) for
the manufacture of several drugs. The Indian pharma industry has taken the crisis as an
opportunity to flourish and grow largely on a global scale. There is a major uncertainty about
the time that would take for the introduction of vaccines and the type of recovery the
economies are going to have. In a condition of extended lockdowns, companies must be
looking for digitalization in various aspects, conservation of supplier relationships,
maintaining liquidity, scaling API investments, etc.

Challenges Faced:

Most of these pharma companies have been valued at their peaks around 2015, and have been
facing difficult times thereafter. The prime issues they faced in the last 5 years were the price
drops up to 10% in the US market for the generic drugs and the regulatory compliance issues
under the USFDA (US Food and Drug Administration). Other issues involving the US
healthcare policy reviews and slowing economy in emerging markets contributed to the
headwinds faced by the pharma industry. However, the conditions have been improving
recently. 

Types of Pharma Companies in India:

Out of the pharma companies that are operating in India, not all of them are of the same
nature. They differ based on the market they serve, kind of operations performed, types of
offerings, market capitalization, etc. As we are aware that our pharmaceutical sector is
actively involved in imports and exports, let us try to understand the different types of
Pharma companies based on the market served. 

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MNCs based in India:

A list of companies found in India were able to serve the domestic market, as well as capture the
market overseas. These companies were boosted by the Patent Act 1970, which allowed the patent of
process and later for products as well. Some of our Indian pharma companies are the major player in
serving the US and European pharma market. The following companies are among the MNCs that
were founded in India.

 Sun Pharmaceutical Industries Ltd.

 Cipla Ltd.

 Lupin Ltd.

 Dr Reddy’s Laboratories Ltd.

 Aurobindo Pharma Ltd.

 Cadila Healthcare Ltd.

MNCs based outside India:

Though we have top performing companies founded in India serving domestically, we have also been
consumers for MNCs based outside India. These companies founded abroad have managed to tap the
Indian pharma market and provide their services:

 Pfizer Ltd.

 GlaxoSmithKline (GSK) Ltd.

 Merck & Co.

 Novartis International AG

 Eli Lilly & Co.

 Abbott Laboratories.

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Non-MNCs in India:

Apart from the global players, we also have Non-MNCs in the pharmaceutical sector. Though these
companies have their exports overseas, they mainly operate and cater to our local pharma needs.

 Arvind Remedies Ltd.

 RPG Life Sciences Ltd.

 Jagsonpal Pharmaceutical Ltd.

 Marksans Pharma Ltd.

 Mangalam Drugs & Organics Ltd.

 Themis Medicare Ltd.

In addition to the classification of the pharmaceutical companies based on the markets they
serve, these firms can also be categorized based on the offerings. The products of pharma
firms can vary from APIs, medical devices, surgical products, dietary supplements, whereas
the services could include pharma manufacturing, pharma marketing & distribution, pharma
retail, hospitals, etc. 

API (Active Pharmaceutical Ingredient) firms:

Until the outbreak of COVID-19, the Indian pharma companies have relied heavily on
Chinese manufacturers for APIs. The level of dependence was up to 60-70% for most of the
drugs and even 100% in a few critical drugs. However, the production halt due to the
lockdown in China made our government allocate USD 1.3 Billion to incentivize local
manufacture of APIs. 

In addition to the big players producing APIs, the following companies also produce these
active ingredients:

 Lasa Supergenerics

 Shilpa Medicare

 Gujarat Themis

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 Solara Active Pharma

Medical-Devices:
The following companies in the pharma sector are involved in manufacturing of medical
devices. Their offerings include innovations in imaging & radiology, in-vitro diagnosis,
radiation protection, surgical blades, syringes, needles and other disposables.

 TransAsia Biomedicals Ltd.

 Trivitron Healthcare

 Polymed Medical Devices

 Hindustan syringes & Medical Devices (HMD)

 Sahajanand medical technologies

 Meril Life Sciences

Dietary Supplements:

The following companies produce dietary supplements as their main offering. Individuals
who need to meet the deficiency of nutrients:

 Biophar Lifesciences

 Nucleus Inc.

 Zeon Biotech 

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Hospital Chains:

The hospital chains play a major role in the performance of other pharmaceutical products.
These entities muster the trust of people and are valued more in the industry. The following
are the top hospitals (Non-government) that are widely regarded in the industry.

 Medanta - The Medicity

 The Christian Medical College

 Apollo Hospitals

 King Edward Memorial Hospital

 Sir Ganga Ram Hospital

Future prospect of industry:

Although FY20 has not registered a substantial growth, forecasts suggest that the sector could
see a 5% growth in the current fiscal year. A few analysts are highly optimistic about the
pharma industry earnings could double in 4 to 5 years period. The sequence of events that
occurred after the upsurge of COVID-19 cases in China has dramatically contributed to the
enhanced perspective on the Indian pharmaceutical industry.

• Most of the drug manufacturing companies were solely dependent on China for
chemicals and other raw materials. Due to the initial outbreak of COVID-19 and the local
lockdown following that in January, the Chinese supplies could not reach the customers.
Since then, there has been a widespread ideology to diversify supply chains and decentralize
production. Also, there is a politically negative sentiment prevailing over China due to the
controversial reporting on COVID outbreak. To capture this opportunity, the Indian pharma
companies are trying to lure investors by positioning themselves as the best alternative for
Chinese manufacturers. The Indian government too recognised this chance and announced an
incentive package of USD 1.3 Billion for local drug production of drugs. 

• The Indian government reportedly was ready to offer twice the size of Luxembourg
(i.e., 461,589 hectares) for the manufacturing companies moving out of China. Apart from

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this, the states are also involved in bringing foreign investments. Pharma is one of the 10
sectors that could immensely benefit from this move.  

While the COVID-19 outbreak has set the base for the growth of Indian pharma, all of the
following factors contribute to the prospects of the industry, which is quite positive.  

• The accessibility of Medical infrastructure is expected to improve to a great extent,

wherein around USD 200 Billion is to be spent in the next 10 years. And 1,60,000 hospital
beds are to be added on a yearly basis.

• India has the highest number of USFDA approved manufacturing facilities outside the
US. Also, we have more than 1300 manufacturing plants compliant with WHO Good
Manufacturing Practices. 

• Pharmaceutical firms have increased their expenditure in order to tap the rural market.
By 2024, the hospital market size is expected to grow by USD 200 Billion.

• The cost of production by Indian companies is just 40% of what it costs in the US and
about 50% of the production costs in Europe.

• Moreover, India is a large exporter of pharmaceuticals and equipment, wherein the

transaction happens using the US Dollar. The value of USD has been appreciating for quite
some time and is expected to remain the same in near future. The Indian pharma companies
are expected to gain short-term benefits from this forex scenario as well.

• In comparison with several other countries, India has a skilled workforce with better
technical and managerial skills. The cost of labour is also lower in our country. 

• The pool of patients is also anticipated to rise by about 20% (over the next decade)
owing to change in lifestyle, rise in population and new diseases. 

• The government has also been supportive to the industry by allowing Foreign Direct
Investment in the sector. The FDI policy was amended in 2016, allowing 100% FDI in
greenfield pharma projects and up to 74% FDI in brownfield projects through automatic route
(beyond which government approval can be demanded). The foreign investors are expected
to leverage this in the forthcoming years.

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Investments in the Pharma Sector:

The last time there was a bullish run in the pharma sector was from 2009-2016, providing a
CAGR of almost 30%. After a drop in growth for the next 4-5 years, the sector is viewed as
prepared for the next bullish run. The above discussed factors make the pharma sector an
attractive investment. One can consider the following means of investing.

• Pharma Stocks: Investing in pharma stocks involves the direct purchase of stocks of
pharma companies. A thorough knowledge in the market and sector is a prerequisite for
investing in Pharma stocks directly. Also, there is a minimal scope for diversification in
pharma stocks and hence high risk. Moreover, there are high trading costs as well. 

• Pharma ETFs: Exchange Traded Funds (ETFs) are those funds which carry all the
stocks in the same weights as that of the underlying index. A sector ETF similarly tracks the
performance of a particular industry / sector. The Pharma ETFs are good options in case of
liquidity and short-term returns. Though the cost of management is lower in case of ETFs, the
purchase or sale results in the cost of commissions. 

• Pharma Funds: These are equity-based mutual funds that invest in the
Pharmaceutical sector. They provide the necessary diversification (in comparison to stocks)
by investing in most of the companies in the industry. Like any other mutual funds, these are
managed by professional fund managers who take active investment decisions, ensuring
better returns. These funds invest in pharmaceutical companies which form the major portion
of their portfolio. In addition, they also invest in related entities like hospitals, chemical
manufacturing companies, biotechnology, healthcare services and relevant financial services
stocks (like insurance companies). There are different sector funds performing brilliantly on a
rotational basis. The forthcoming years are considered to be in favour of pharma funds.
Experts and advisors suggest that pharma funds are set to provide excellent returns in the near
future. However, they advise investors to not just invest based on the myopic gains that could
be provided by the COVID scenario, rather to invest for at least 5 years. In mutual funds,
there is also a facility of staggered investment through SIPs, which provides the benefit of
rupee-cost averaging during volatile markets and can prove to be a safer method for long
investment horizons.

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Top Pharma Mutual Funds:

There are quite a few Pharma Mutual Funds available in the Indian market. The following
funds have been performing well and investors could consider opting them in their
investment portfolio. 

5-yr
Asset Under 1-yr 3-yr
Name of the Fund retur
Management return return
n

-
S&P BSE Healthcare TRI - 30.02% 5.21% 0.30%

Nippon India Pharma Fund 2992 34.54% 14.13% 8.06%

ICICI Prudential Pharma Healthcare

and Diagnostic (P.H.D) Fund 1460 35.36% - -

UTI Healthcare Fund - Regular Plan 475 33.94% 8.01% 3.27%

Mirae Asset Healthcare Fund -

Regular Plan 581 40.77% - -

[Table 3.1: Top Pharma Mutual Funds]

ICICI Prudential Pharma Healthcare And Diagnostics (P.H.D) Fund:

Although this fund was launched by ICICI Prudential Mutual Fund very recently (2018), the
assets under its management have grown rapidly up to Rs 1460 crore. The fund has been
managed by Mr. Dharmesh Kakkad since May 2020. This fund has invested in as many as 33
stocks related to the sector (46% in large caps) and it provides necessary diversification
within the sector. Hence, this fund becomes an excellent option for moderate risk investors.
The top holdings in this ICICI pharma fund are Cipla, Sun Pharma and Lupin Ltd. 

Also, its PB ratio (of 2.62) and PE ratio (of 19.52) are the lowest among its peers, making this
fund a potential investment option. This signifies that the underlying stocks are not as highly
valued as others, indicating a potential growth of the fund forthcoming. 

This fund has generated higher year-to-date return (26.21%) than the benchmark (20.88%)
and pharma sectoral equity (23.74%). The fund has provided a 14.57% return since launch.
However, the 1-year return has been brilliant at 35.36%. 
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The rate at which the investments in this fund grow can be understood with the following
comparison:

Rs 1 lakh (Lump Sum) for 1 Year → Rs 1.39 Lakh

Rs 10000 (Monthly SIP) for 1 Year → Rs 1.53 Lakh

Nippon India Pharma Fund: 

Launched by the fund house Nippon India Mutual Fund in June 2004, and has been managed
by Mr. Sailesh Raj Bhan since 2005. This is the fund with highest Assets Under Management
of Rs 2992 crore. 

The Nippon India Pharma fund has generated better returns than benchmark S&P BSE
Healthcare TRI and Pharma sector equity over time. Also, the risk factor (standard deviation
of 20.11%) is lower than the above said entities (S&P BSE Healthcare TRI - 23% & Pharma
sector equity - 20.23%). The return since launch is impressive at 20.12%. While the 1 year
return is 34.54%, the 3-year (14.2%) and 5-year returns (7.69%) of this fund are also top
amongst its peers. 

In spite of the fact that the returns are commendable, the Nippon Indian Pharma fund is
advisable for more seasoned investors. This is due to the high concentration risk carried by
the fund. The fund has invested in least number of stocks (18) compared to other funds in the
category. The high PE (3.65) and PB (31.65) ratio also might also prove risky under the
circumstances of market correction. But, these high ratios might not necessarily interpret
overvaluation. This also indicates that investors are willing to pay more considering the
underlying assets as growth stocks. 

The rate of growth of investment in this fund can be understood as:

Rs 1 lakh (Lump Sum) for 5 Years → Rs 1.44 Lakh

Rs 10000 (Monthly SIP) for 5 Years → Rs 7.95 Lakh

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UTI Healthcare Fund - Regular Plan:

The UTI Mutual Fund house introduced UTI Healthcare Fund in 1999, and is currently
managed by Mr V Srivatsa. This fund manages assets worth Rs 475 crore. 

The fund proves to be better than the benchmark S&P BSE Healthcare TRI in terms of year-
to-date returns. Also, the standard deviation of returns (20.68%) is better compared to the
benchmark (23%). The return since inception of this fund stands at 13.33%. The UTI
Healthcare fund also looks promising to investors as April 2020 being its best performing
month so far.

The PB ratio (3.95) is the highest among other funds, and the PE ratio is also higher (29.56).
One possible significance of this is that investors foresee a potential growth of these stocks in
the future and are willing to pay for it. However, one must be cautious about the volatility
factor as well, since these ratios are higher.

Another fact to be considered is that this fund has 24 underlying stocks. Though this is
comparatively better, the top 5 stocks account for 43%. But, the investments include a major
portion of large caps ensuring safe returns. The top holdings of this fund are Dr Reddy’s,
Cipla and Aurobindo Pharma. There is a small portion invested in an FMCG stock
(Advanced Enzyme Technologies). 

To visualize the returns: 

Rs 1 lakh (Lump Sum) for 5 Years → Rs 1.14 Lakh

Rs 10000 (Monthly SIP) for 5 Years → Rs 7.21 Lakh

Mirae Asset Healthcare Fund - Regular Plan:

The Mirae Asset Mutual Fund launched this pharma fund in July 2018, and it has generated
18.71% returns since then. Mr Vrijesh Kasera has been managing the fund since inception,
and currently this fund manages an asset of Rs 581 crores. The Mirae Asset Healthcare fund
has enticed the investors for the spectacular 1-year return of 40.77%. Also, this fund has
outperformed S&P BSE Healthcare TRI and the equity of the pharma sector under the year-
to-date return parameter. 

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While the PB ratio is 3.65, the PE ratio (19.52) shows that the underlying stocks are not
highly overvalued. Around 38% of the investment is made in small & mid caps, while the rest
62% is in giant and large caps. This is the same proportion observed in the category. The
fund possesses 28 underlying stocks, with the major holdings being Sun Pharma, Dr Reddy’s
and Divi’s Laboratories. Apart from the investments in the pharma sector, the fund has also
invested a small portion in the financials and chemicals industry. 

The fund is capable of providing returns like the following:

Rs 1 lakh (Lump Sum) for 1 Year → Rs 1.42 Lakh

Rs 10000 (Monthly SIP) for 1 Year → Rs 1.54 Lakh

Investment Strategy for Pharma Funds

Sectoral funds are preferable only when the investors are highly confident about performance
of the industry in the upcoming scenarios. However, in order to ensure the diversification of
an investment portfolio, it is advisable to allocate only up to 5%-15% of the assets in a sector
fund, depending on the investors risk profile. The investor must also account for the shares
invested in ETFs (if any), which might have invested in the same sector. Moreover, the
appropriate investment horizon for a sectoral fund should be at least 5 years, and one must
avoid looking for myopic gains. Considering the mode of investment, it is quite wise to opt
for staggered investment via the SIP mode than the lump sum mode.

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3.1.2 Index Mutual Funds
The insights gained about the Index Funds are summarised as follows:

What are Index Funds?

Index Mutual Funds are passively managed funds, wherein the fund manager tries to reduce
the risk factor by mirroring the index. The Index funds invest in all the securities in the
market (or a segment of the market), in the same proportion as in the index. These Index
funds do not tend to beat the index, rather they just replicate the performance of the index.
One of the major advantages of the index funds is that they are not actively managed, and
hence have lower expense ratios. 

Several researches have proved that beating the benchmark index every year is quite
impossible. The funds that are actively managed by managers have failed to beat the market a
few times in the past. In such circumstances, the index funds have proved to generate better
returns by just tracking the index performance.

How do these funds work?

An Index is basically a group of securities that resembles the market or its segment. The most
popular indices in India are NSE Nifty (50 stocks) and BSE Sensex (30 stocks). The fund
managers of the index funds procure the same securities as in the index, in the same
proportion and form the index fund. The index fund just tracks the performance of the index
and generates more or less the same returns. The index fund invests in securities that are
present in the index, and makes occasional changes only when there is a variation in the
benchmark. 

Passive Fund Management:

The Index funds adopt a strategy of passive management. On the other hand, several mutual
funds follow active fund management. In case of ‘Active Management’, the fund managers
are involved in activities like market analysis, stock picking, forecasting and timing the
market, etc. The mutual funds are managed by an individual or a group of fund managers
backed by a team of analysts. These professionals utilize their experience and knowledge to
outperform the market. 

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However, the Index funds just follow the opposite strategy. The USP of index funds is the
lower expense ratio as compared to active funds. The management expense of a fund includes
the fees paid to the management team, transaction costs, accounting fees and taxes. When it
comes to index funds, there is no requirement for analysts and the fees paid for fund
management is not as high as active funds. Also, the number of transactions is much less and
hence the cost associated with transactions is minimized to a great extent. 

The index funds come with a lower expense ratio of around 0.2% to 0.5% (which could be
even as low as 0.05% in some funds). The active funds have comparatively higher expense
ratios in the range of 1% to 2.5%, depending on the fund type (direct or regular plan). This
difference in expense ratio directly impacts the performance of a fund, and results in
significant variation of returns generated over long term. 

Performance of Active Mutual Funds Vs The Benchmark:

[Table 3.2: Performance of Active Mutual Funds Vs The Benchmark]

(Source: Valueresearchonline)

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Large Cap: 

The Large Cap Mutual funds invest the corpus of investors in stocks that have higher market
capitalization. As these stocks are of large firms, the risk factor is low. At the same time,
most of these organizations have crossed the growth phase. Hence, they provide
comparatively lower, but safe and steady returns. One of the popular ‘Benchmark Index’ for
large cap securities is S&P BSE 100 TRI. 

In the table given above, the performance of the benchmark index is compared with a few of
the actively managed funds. Top performing funds in the large cap category, like Axis
Bluechip Fund, ICICI Pru Bluechip fund, Mirae Asset Large Cap fund have beaten the
benchmark index in the 5-year, 7-year and 10-year investment horizon. These funds seem to
benefit the investors even after accounting for the expense ratio. Other funds like Indiabulls
Bluechip fund, Invesco India Largecap fund, JM Largecap fund, Kotal Bluechip fund have
performed moderately. Although these funds have outperformed the index for short-term, the
long-term returns (say 10 year returns) does not have a significant difference. Moreover, the
expense ratios of these funds range from 1.5% to 2.5%. This directly affects the overall
returns of the active funds and results in lower gains. 

On the other hand, passively managed large cap index funds have expense ratios ranging
from 0.05% to 0.5%. Some of the top performing index funds in the large cap category
includes Nippon India Index Sensex, ICICI Prudential Nifty Index Fund, HDFC Index
Sensex Fund and UTI Nifty Index Fund. Hence, they provide returns which are more or less
the same as the benchmark. 

Mid Cap: 

Mid Cap stocks are those of the companies which are in the middle range, when ranked
according to the market capitalization. To be precise, SEBI has defined that the companies
which are ranked from 101 to 250 (based on the market capitalization) come under the
category of mid caps. The Mutual funds that invest a major portion of their funds are known
as mid cap funds. ‘S&P BSE 150 MidCap TRI’ is one of the popular benchmark indices for
the mid cap funds. 

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The funds like Axis Midcap fund and DSP Midcap fund have given brilliant returns over the
years. They have been outperforming the index quite consistently. 

The benchmark index has also given attractive returns over the 5-year(6.49%), 7-
year(14.87%) & 10-year(9.66%) horizons. Other actively managed funds like ‘Edelweiss Mid
Cap Fund-Reg(G)’, ‘Tata Mid Cap Growth Fund(G)’ and ‘Taurus Discovery (Midcap) Fund -
Reg’ have generated similar returns as a result of active management by the fund managers
and analysts. However, the expense ratios associated with these active midcap funds are quite
higher and curtails the overall returns. Motilal Oswal Nifty Midcap 150 Index Fund is a
popular Index Fund available in the Midcap category.

Small Cap: 

When ranked according to the market capitalization, the stocks below the top 250 companies
are regarded as small caps. These stocks appeal to the investors due to the high returns they
generate (as these organisations are in their growth phase). The mutual funds that invest in
these stocks are known as small caps and one of their popular benchmark indices is S&P BSE
250 Small Cap 250 TRI. 

Observing the data furnished in the table above, we could see that the small cap funds like
SBI Small Cap fund and Nippon India Small Cap fund have generated excellent returns for
its investors. Whereas, the ICICI Prudential Smallcap fund has performed quite similar to the
benchmark index. 

In the Smallcap category, the index fund that is quite popular among investors is Motilal
Oswal Nifty Smallcap 250 Index Fund. 

Multi-Cap:

Multi-Cap funds are mutual funds that invest their assets in the companies across the market
capitalizations. These funds provide diversification benefits to the investors through their
holdings in large-cap, mid-cap & small-cap stocks. Most of the funds in the multi-cap
category use the benchmark “S&P BSE 500 TRI” which constitutes the top 500 companies
listed on BSE in terms of market capitalization. 

There are also index funds for Multicap category (Motilal Oswal Nifty 500 Fund - Regular
Plan, SBI Focused Equity Fund & Kotak Standard Multicap Fund Regular Plan) and Foreign

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Equity Index Funds (Motilal Oswal S&P 500 Index Fund - Regular Plan & Franklin India
Feeder Franklin US Opportunities Fund)

Active Funds Performance over their Benchmarks

In our analysis, we have gathered the returns data of the equity fund categories: Large cap,
mid cap & small cap funds as well as the returns generated by their respective benchmarks to
compare their performances return wise over the periods of 1 year, 3 years, 5 years & 10
years.Through this, we have came out with the following findings:

1 Year Period:

[Figure 3.1: Active Funds Vs Benchmark – 1 Year]

Over the 1 year period, 17 funds (or 58.62%) out of the 29 active funds in the large-cap
category, have managed to beat the returns of their respective benchmark indices. The
numbers are higher for midcap funds & small-cap funds i.e in the mid-cap category, out of
the 23 active funds 17 (about 73.91%) have managed to beat their respective benchmark’s
returns and in the small-cap category,15 out of 21 active funds (or 71.42%) have been able to
beat the returns of their respective benchmark indices. 

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3 Year Period:

[Figure 3.2: Active Funds Vs Benchmark – 3 Years]

Over the 3 year period, only 3 out of the 28 active funds in the large-cap category have
managed to beat the returns of their respective benchmark indices. Whereas, the numbers are
notably higher for midcap funds & small-cap funds i.e in the mid-cap category, out of the 22
active funds 15 funds (about 68.18%) have managed to beat their respective benchmark’s
returns and in the small-cap category,12 out of 14 active funds (or 85.71%) have been able to
beat the returns of their respective benchmark indices. 

5 Year Period:

[Figure 3.3: Active Funds Vs Benchmark – 5 Years]

Over the 5 year period, most of the small-cap active funds have been able to beat the returns
of their respective benchmarks whereas most of the large-cap active funds have not been able
to do so. In the mid-cap category, only 9 out of 21 funds (or 42.86%) have been able to beat
their respective benchmark’s returns.

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10 Year Period

[Figure 3.4: Active Funds Vs Benchmark – 10 Years]

Over the 10 year period, only less than half of the large cap active funds (11 out of 23) have
been able to beat their respective benchmark’s returns. Whereas, all the Small cap funds in
the category have been able to beat the returns of their respective benchmarks. Also, most of
the midcap funds(15 of 17) have managed to beat their benchmark’s returns. 

Conclusion:

In each category, we have funds that have been able to outplay the benchmark indices pretty
consistently. These funds leverage the experience and skills of the fund managing team to
beat the market on a regular basis. At the same time, there were also instances where the
benchmark has bettered certain funds over time. This is on grounds of the diversification
advantage provided by the index. This enables the Index funds to exceed the performance of
a few active funds. The index funds as they have minimal expenses, which is way lower than
the actively managed mutual funds. The index based funds are hassle free and do not require
much information about the market for stock selection, analysis, timing, etc.

Also, the mutual funds market is getting highly competitive. It has become quite difficult to
choose the right fund manager who might provide extraordinary returns than the others. One
might consider that they could choose funds based on their historical performances and their
rankings. At the same time, we must not forget that the ranking keeps changing from time to
time. This clearly implies that it is difficult for a fund manager to outperform the market at all
points of time. 

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In addition to all the above said factors, we could also see that investors flock towards index-
based instruments like ETFs and Index funds, whenever there is high economic uncertainty in
the market. As it becomes hard to predict a highly volatile market in a crisis, investors could
realise that investing in tools replicating the whole market might be safer. In our country, the
Index funds could be considered for investments in the future more than what it is now.

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3.2 Full-fledged (Non-Research) articles:
In this type, not a lot of research goes into the article. Rather, it generally explains a
product/scheme or an event in the world of finance. The core intention of these articles is to
make the readers (or clients) understand the subject with utmost clarity.

3.2.1 Kisan Credit Cards

Kisan Credit Cards (KCC) Scheme:

As most people think, Kisan Credit Card scheme is not fancy product of digital India. Believe
it or not, the KCC scheme had been introduced in August 1998 by the banks of India. It was
announced as a part of 1998-99 budget, with an intention of satisfying the financial needs of
farmers through institutional credit. On the recommendations of R.V. Gupta committee, the
model scheme was prepared & proposed by NABARD (National Bank for Agricultural and
Rural Development) and the RBI. The participating entities are Co-operative banks, Regional
Rural Banks (RRB) and all commercial banks as well.

The basic objective of the scheme is to offer loans to the farmers at a concessional rate, for
various stages of agricultural activities. This could save farmers from getting stuck in a debt
spiral, as local moneylenders could charge at rates as high as 60-70%. Although the KCC
helps farmers get an emergency credit for short-term needs, they can also take term loans for
various substantial needs.

Features of Kisan Credit Card:

 Revolving Credit: If the borrower is not able to pay within time, the amount can be
added to next month’s statement, after charging a minimal interest.

 Flexible payments: On occurrence of a calamity or a pest attack, the beneficiary is

allowed to reschedule payments.

 Simplicity: The processes including application for KCC, screening of borrowers and
credit disbursement are all simple and hassle-free.

 Insurance Coverage: The borrowers are covered up to Rs 50000 for death and Rs
25000 for accidents resulting in disability.

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 The farmers are issued a debit card in addition to the Kisan Credit Card

 On grounds of good credit record, the credit limit can be extended to borrowers at the
discretion of the issuing bank,

 The scheme is not limited to owner-cultivators. It also covers those farmers who
cultivate on others’ land (tenant farmers), Joint liability groups and sharecroppers.

 The Kisan scheme now includes fisheries and animal husbandries as beneficiaries.
This encompasses inland / marine fishery, poultry and diary.

Kisan Credit Card Loan:

The term loans offered under the Kisan Credit Card scheme is one of its salient features. The
credit given using the card might suffice only short-term requirements. However, for
significant expenses like equipment purchase, fertilizers procurement and other agricultural
expenses. Numerous factors are considered before disbursing KCC loans to the farmers. It
includes credit record, type of crop, land area cultivated etc. On satisfactory terms, the loan
amount could be even up to Rs 3 lakhs. The issuing bank makes the decision of securing
collateral for the loan and repayment duration, depending on the abovesaid factors.

Interest & other charges:

The rate of interest charged on a KCC loan is dependent on different criteria including crop
type, land area cultivated, loan amount claimed, value of land etc. However, on an aggregate
level we can see that the KCC interest rates fall in the range of 7% to 12%. Apart from the
interest charges, banks also collect service charges for collateral valuation, insurance
premium, processing fee, land mortgage deed charges etc. These charges vary with the
lending bank. SBI waives off these charges for loans up to Rs 3 lakhs.

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[Figure 3.5: KCC Loan Rates]

The above rates of interest might change on grounds of conditions like government
subvention, prompt repayment etc.

Success story of Kisan Credit Cards in Agriculture sector:

Prior to the introduction of Kisan credit card yojana, farmers had to apply for loans every
cropping season. This hiccup was resolved by KCC scheme where revolving cash credit was
made available. Also, the card is valid for 5 years which is a big relief for farmers. The
interest rates are quite low as compared not only to local moneylenders, but also in
comparison with a lot of other schemes in Scheduled Commercial Banks. In addition to this,
at various points of time the government gave subvention to these interest rates, bringing it
down effectively to around 4%. We could also see a major share of farm loans are now given
by SCBs, thanks to the advent of KCC plan. As per the latest statistics, there are around 90
million operational accounts utilizing the scheme. Since its inception, the scheme has become
the main vehicle of short-term credit for agricultural consumption needs.

Challenges faced:

Though the KCC scheme seems to have aided farmers in various fronts, we could not witness
any significant improvement in agricultural productivity. This could be attributed to various
factors including failing monsoons. Since the plan is only for short term consumption, we
may not be able to address a substantial turnaround in the agricultural sector. Another issue
faced by the scheme is farmers making arbitrage gains, thanks its attractiveness. Due to the
low interest rates, borrowers divert these funds to personal financial consumption rather than

28
agricultural consumption. However, adequate vigilance by the lending banks could help cease
this issue.

Latest improvements in the KCC scheme:

 On 21st April 2020, the RBI asked banks to extend the interest subvention of 2%.
Also, they prompted banks to provide a moratorium of 3 months.

 The RBI announced on 5th May 2020, KCC could use their cards for household
expenses (Max. 10% of loan amount).

 On 14th May, FM Nirmala Sitharaman revealed that GoI will extend 2 lakh crore
concessional credit under Kisan Credit Card yojana.

3.2.2 Economic Implications of the Indo-China Feud

In the latest set of events, we have seen that the two most populous nations of the world
facing dispute over the border. The two Asian giants India and China, have lost their soldiers
in a clash over the Line of Actual Control in Ladakh, thousands of feet above sea level. It
could further injure the already hit economies that are trying to recover from the damage
caused by the COVID-19 outbreak and the lockdowns that followed. Feuds like that
happened in Galwan Valley have the ability to cause serious repercussions for highly
interdependent economies like India and China. While India is a highly lucrative market to
Chinese firms, Indian companies have been dependent on Chinese supplies for their
operations.

Overall Trade Scenario:

The interdependencies of trade are deep rooted for both the countries. Especially, India has
been relying the Chinese firms in various markets from toys to drugs. In the early 2000s,
there were years in which, India was having a trade surplus with China i.e., the value of
exports from India to China was more than the value of imports from China. However, in the
last decade, the world has seen the impressive rate at which the Chinese economy grew. Our
local market was also visibly flooded with increasing number of Chinese goods. Eventually,
India has been having an increasing trade deficit over years. The table and the chart below

29
gives a fair idea of our imports and exports in the last 10-year period (Source: Indian
Embassy, Beijing).

Imports from China (in $ Billion) Exports to China (in $ Billion)

2010 40.92 2010 20.84
2011 54.7 2011 18.1
2012 54.7 2012 13.57
2013 52.24 2013 14.82
2014 54.24 2014 16.41
2015 58.26 2015 13.39
2016 59.43 2016 11.75
2017 68.1 2017 16.34
2018 76.87 2018 18.83
2019 68.4 2019 17.28

[Table 3.3: Imports from China] [Table 3.4: Exports to China]

India's Trade Deficit with China (in Billion US$)

58.04
51.76 51.12
47.68
44.87
41.13
36.6 37.42 37.83

20.08

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

[Figure 3.6: India Trade Deficit with China]

We must also pay attention to another aspect in the trade equation with China. In the latest
fiscal year, India’s export to China included a total of 3284 product categories. A majority of
the exports include mineral oils, mineral fuels, organic chemicals, ores, slag and ash, and
other industry products. In the same year, China has exported a whopping 6809 product
categories to India. A major portion of Indian imports from China comprises of electronics,
pharmaceuticals, engineering goods and automobile components. Out of these goods, the
import of electronics alone constitutes for $ 18 Billion. Nuclear reactors, machinery and parts
are imported at a value of $12 Billion. Our inclination towards Chinese products can be

30
understood from the fact that, the value of top 6 products from China is higher than the value
of top 50 items exported from India to China.

In India’s basket of top 50 items imported from China, they are our largest foreign supplier in
44 of those. Also, in the top 50 items exported from here to China, they are the largest foreign
markets in 31 of those 50. Our trade linkages with China does not stop with finished goods.
We have deep-rooted relationship with China for even raw materials, ingredients and
intermediaries. In a lot of APIs (Active Pharmaceutical Ingredients), our dependence on
China is as high as 99%. Their share of Indian imports of plastic dolls is 93%, integrated
circuits is 97%, etc.

Chinese Investments in India:

Gateway House has conducted a research over the last year to study the Chinese investments
in India. The research has shown striking results. Out of 18 in 30 Unicorn start-ups (more
than $1 Billion valuation) of India were having a Chinese investor (data as of March 2020).
The study also found that the Chinese tech investors have invested up to $4 Billion in our
start-ups. This shows how strongly China is embedded in our technology ecosystem.

Lead by Chinese giants like Tencent, Alibaba and Bytedance, several tech companies of
China have funded over 92 Indian start-ups (including the likes of Byju’s, Oyo, Paytm and
Ola). These start-ups are involved in e-commerce, fintech, social media, aggregation services,
logistics, etc. Companies like Paytm (funded by Ant Financials - Alibaba) has become one of
the leading players in the payment industry by leveraging the superior fintech experience of
Alibaba. Ola was funded by Didi, while Delhivey raised funds from Fosun International.
Tencent have their investments in Swiggy and Dream11. The above facts indicate how salient
is the contribution of China in terms of FDI in India.

Sectoral Impact:

Pharma Industry:

One of the key learnings from the COVID-19 outbreak is our pharmaceutical firms’ reliance
on raw materials from China. China has been the major supplier of Key Starting Materials
(KSMs) and Active Pharmaceutical Ingredients (APIs) for majority of the drugs produced in
India. As we have seen earlier, for some of the drugs (like penicillin manufacture) China has
been the major supplier of chemicals and ingredients. Consequently, the government had

31
announced an allocation of $1.3 Billion in order to incentivize local production of APIs.
However, we cannot ignore the fact that our pharma industry might take a huge blow if the
Indo-China trade relations continue to grow bitter.

Automobile Industry:

According to experts, if there are 2 sectors that would be majorly hit because of the India-
China standoff, they would definitely be pharma and automobile industries. Data from Auto
Component Manufacturer’s Association of India (ACMA) reveals that over 25% ($4.2
Billion) of India’s auto part imports, including engine and transmission parts are from China.
Manufacturing locally or importing from other countries are not as cheaper. It is quite
obvious that imposing curbs on imports from China without a cheaper alternative would
affect the local businesses drastically. The price advantage and the lack of technological
competence of local manufacturers in various segments including BS VI components have
been the sole reasons behind imports from China.

Consumer Durables:

Around 45% of our consumer durables are imported from China. During the lockdown, this
industry had been considered to be in a danger zone as the supply chain was disrupted. There
were also instances where leading manufacturers of consumer durables like Godrej were
considering price revision as a result of an affected import scenario from China. Despite
growing pollution levels, China had set up numerous chemical factories across the country in
the last 20 years. This was a major reason for the rise of Chinese chemical industry and the
economy as a whole. The consumer durables industry has grown in tandem with the chemical
manufacture, mainly due to the excessive production of varieties of plastic. Just like the auto
industry, local production of consumer durables are not as cheap as Chinese imports.

Technology and Telecom:

The growth of Chinese technology firms in the last 5 years is commendable. Alibaba
operated ‘UC Browser’ is a very popular browser in terms of page views. The Chinese app
TikTok already overtook YouTube with more than 200 million followers. For some of the
Chinese tech companies, India is their largest market. Xiaomi, Lenovo and Haier see a huge
chunk of their revenue coming from India. The smartphone market in India is led by brands
like Xiaomi and Oppo (market share of 72%) side lining other brands. The brands like Apple
and Google do not even possess 1% of the market share. The Korean manufacturer, Samsung,
is the only company which has some market share to claim other than Chinese firms. The

32
routers of Huawei are very popular and widely used. Huawei and ZTE were initially sought
after for building 5G network in India.

Latest Outcomes:

As a recent incident, India has said ‘No’ to Chinese 5G. The US had already banned
companies like Huawei and ZTE from building 5G infrastructure for their country, citing
national security. As these companies were having close ties to the Chinese government US
suspected these companies could access sensitive data and might misuse them. However, the
Indian government had allowed Huawei to take part in the 5G network trials. But the scenario
has changed after the clash between army personnel at the border and 20 of our soldiers were
martyred. The government has announced that BSNL and MTNL would stop using Chinese
equipment for upgrading to 5G. The private telecom operators are also reportedly asked to
stop depending on Chinese telecom gear.

According to Automotive Component Manufacturers Association, the auto industry has

begun to de-risk itself following the pandemic that stunned the supply chains. The industry
has started to look inwards and is working on deep localization. The feud between China and
India at the border would further hasten the process of localization.

There are also downsides for Indian industries. Tata Motors owner Jaguar Land Rover was
witnessing rise in the sales in China, as their economy began opening up. It was an
imperative development for Tata Motors which was struggling with losses. This might be
affected due to the growing tension at the border.

Way forward: Boycott China?

We have got a clear picture that China has a strategic role in India’s development by
investing in our start-up ecosystem. Hence, completely boycotting China would have its
aftermath. Preferably, ways must be considered to boost local manufacture which would
compete against Chinese firms in both quality and cost. India’s expenditure on R&D is way
lower than other global superpowers, making us lack in innovation. So, schemes to encourage
R&D must be executed. Apart from localisation, steps ought to be taken to diversify the
import basket as well.

33
An abrupt action of Boycotting might not only hurt the Chinese firms, but also the Indian
distributors associated with those brands and the Indians employed in those companies
locally. Rather, a detailed blueprint must be laid and followed in the process of dissociating
us from Chinese products and becoming self-reliant. Instead of rhetorically avoiding the
imported goods, local manufacture must be adequately incentivised.

3.3 Backlink articles

The summaries written for the purpose of backlinks enable the company’s website to gain
more traction by Search Engine Optimization. The company has tied up with different sites
for them to add the backlinks in their websites which links back to ZFunds’ web page. Users
accessing the site from different domains help in the improvement of rankings in Search
Engine Results Page and hence benefits the company. In my internship period, around 45
such backlink articles in different themes were assigned to me. A few of them are as follows:

3.3.1 How to Invest in Gold

Gold is not only considered a metal with high socio-cultural value, but also a commodity that
could save you from the high volatility in the bourses. Whenever there is a macro-economic
uncertainty, like what we are witnessing now, gold emerges as a safe haven for parking the
investors’ wealth. At various points of time, we have seen gold outperforming other securities
in a catastrophic scenario. Let us have a look at the means of gold investments.

 Physical Gold:
Individual investors usually possess gold in the form of jewels and coins. As there are
additional costs incurred in terms of making charges & wastage, the preferable form is coins.
Also, large organizations purchase gold in the form of bars. One of the significant advantages
of owning physical gold is the liquidity it offers. But there are risks associated with this form
of gold investment like threat of theft, purity check etc.
 Gold ETFs:

Gold ETFs are digital means of investing in gold. They are open-ended funds which are
traded in stock markets. Fund managers usually keep track of daily gold prices and trade 995
purity gold as an underlying asset. As these are traded in exchanges, they offer a better

34
liquidity. However, one must possess a Demat account for handling ETFs and bear the
associated expenses. There are no exit loads involved with Gold ETFs.

Gold Mutual Funds:

Purchase of a Gold Mutual Fund is hassle-free for an investor because one doesn’t need a
Demat account for this purpose. Gold mutual funds invest in Gold ETFs and other relevant
securities as underlying assets. An investor can opt for the SIP route to invest in these funds.
The liquidity is comparatively lesser in Gold funds and the exit load is slightly higher than
Gold ETFs.

 Sovereign Gold Bonds (SGBs):

Sovereign Gold Bonds are the paper form Gold investment, where you buy government
bonds through RBI. The significance here is these bonds are denominated in grams and take
999 purity gold as an underlying security. There is no security threat as it cannot be stolen.
But the biggest challenge is liquidity constraints. The maturity period is 8 years, when the
investors are paid an interest of 2.5% apart from the price appreciation benefits. The tax
benefit provided by SGBs also make this an attractive investment.

3.3.2 What is Under 80C?

Section 80C always catches a lot of attention in our country before the annual budget is
presented every year. The rationality behind this is that 80C has been an important tax-saving
tool since its inception. There are a considerable number of investments and expenses
included under 80C, which could be deducted from the taxable income. Making informed
decisions to invest in these inclusions might help an investor deduct up to Rs 1,50,000 from
their income before it is taxed. Parking one’s income in the following Tax Saving Investment
options under Sec 80C could earn benefits.

 Fixed Deposits: FD schemes in banks / post-offices allows deductions up to Rs 1.5

lakh. Usually low-risk and the lock-in period is 5 years. Interests earned are not tax-
free.
 ELSS: Equity Linked Savings Schemes generate higher returns than other options,
and hence carries associated risks. The lock-in period of 3 years is the least

35
comparatively. While the investments can be as low as Rs 500, there are options to
invest monthly via SIP. ELSS is the only mutual fund option which assists in tax-
saving.
 PPF: Public Provident Fund is a long-term instrument as the lock-in period is 15
years (further extendable). Since the tool is government-backed, it is a risk-free option
to park the income. There are also provisions to take loans against the balance in PPF
account. Though the government fixes the interest rates every quarter, interest gets
deposited only by March 31st, every year.
 EPF: Employee Provident Fund is a scheme, where an employer makes an equal
contribution as that of the employee on a monthly basis. As it is managed by EPFO,
the scheme is regarded risk-free. The investment, interest & withdrawal are all tax-
free (EEE status). However, this benefit will not be provided if withdrawal is done
before maturity (5 years).
 Investments in Senior Citizens Savings Scheme is also covered under 80C. Since
there is a government backing, the scheme is considered risk-free. The interest rate is
comparatively higher, but the interests paid are taxable.
 Savings made for the future of a girl child under Sukanya Samriddhi Yojana are
also qualified for tax deduction claims under Sec 80C.
 Investments made in National Savings Certificate and ULIPs (Unit Linked
Insurance Plan) are also eligible tax-saving tools under 80C.
 Expenses like Home Loan repayment, tuition fees paid for 2 children up to Rs
1,50,000 can also be deducted from the income before taxation.

3.3.3 Is SIP safe?

In the recent times, mutual funds have grown as a preferable form of investments, especially
among the individuals in their 30s. This is due to a common perception that mutual funds are
the best investment plans in long-term. As everyone needs a reliable future post retirement,
mutual funds have risen in popularity. There are 2 common ways of investing in mutual
funds, either as a lumpsum or via a Systematic Investment Plan (SIP). SIPs are the most
sought-after method, particularly among salaried individuals. Through SIPs, investors can
deposit a value of investment periodically, at their choice of frequency (weekly, monthly or
quarterly).

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There are multiple benefits of parking one’s income in mutual funds through SIPs. Investing
in funds like ICICI Prudential Freedom SIP can even offer financial liberty to the individuals.
Let us take a glimpse of those advantages and analyse how safe is an SIP.

Both RDs & debt mutual funds have similar levels of risk (low-risk options). Making
investments in a debt mutual fund offers higher returns than in Fixed / Recurring deposits. In
order to generate higher returns than that of debt mutual funds, one can opt for equity funds
via SIP. While it goes unsaid that the equity market is volatility at its best, we must
understand how SIPs safeguard the investments against these fluctuations. Systematic
Investment Plans function on the concept of ‘Rupee Cost Averaging’. In simple words, one
gets more units of funds when the market is downwards and lesser units in a bullish market.
In long-term, the fluctuations are thus averaged out, and the investor receives a considerable
number of units. Considering the historical upward movement of Global equity markets, SIPs
tend to provide a safe and impressive returns.

Another strong feature of SIPs is the power of compounding. The monthly investments made
keeps compounding and end up generating imposing returns over a period. This is the sole
reason behind the fact that individuals are asked to begin investing at a very early stage. This
allows the investors reap the benefit of long-term investment. While the above discussions
have made it clear that SIPs are a safe means of investment, one must also consider the
following facts.

 Choosing Growth plans over the ones giving dividends, would be more beneficial.
 The fluctuations are mitigated over time. Hence, investing early would provide a
window for corrections in the market.
 Timing the market is redundant, but an investor has to rebalance a continuously
underperforming fund.

3.3.4 What are RBI bonds?

With the rise in awareness about importance of investing, we could see a lot of individuals
begin saving at early stages. There are numerous options available in the market that helps
investors to build a corpus for the future as well as to save their wealth from an economic
crisis. These options include equity / debt bourses, mutual funds, commodities, banks etc. To
encourage the habit of investing, the government has also come up with a lot of schemes
from time to time. This move from the governments reduces the risks involved with these

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financial instruments as there is a sovereign backing. One such tool is the RBI bonds, which
is also known as the Government of India Savings (Taxable) bonds. Only Indian citizens
qualify for investing in these bonds. The following are the salient features of these RBI
bonds:

 Interest Rates: The rates of interest on these bonds are quite attractive compared to
other savings schemes. While we are already heading towards a low interest regime,
these bonds offer an interest rate of 7.75%.
 Maturity period: The lock-in period for the RBI bonds is 7 years. So, this scheme is
suitable for those investors who are not preferring liquidity in the short-run.
Premature withdrawals are allowed only for senior citizens (Age 60-70: 6 years; Age
70-80: 5 years; Age 80+: 4 years).
 Payout options: RBI savings bonds come with two types of payout options:
Cumulative & Non-cumulative. The cumulative option does not make any payout
during the lock-in period, leading to a well-built corpus at the end of 7 years as a
result of compounding. On the other hand, payouts are made on a half-yearly basis for
the non-cumulative option.
 Taxability: The minimum investment that has to be made is Rs.1000, while there is
no upper cap on investments. The significant part to be noted is that the income from
these bonds are not tax exempted. They are taxed based on the income slab of the
investors. Hence, this would be a relevant investment choice for those investors in the
lower income brackets and also who have exhausted their Rs. 1.5 lakhs deduction
claims under Section 80C).
 These bonds can neither be traded nor be transferred.

However, as a major turn of events, the RBI has announced in its press release that these
bonds will cease for subscription with effect from the end of business hours on 28 th May
2020. So, investors with a higher risk aversion might look for lower-risk options including
the following as alternatives:

 Tax-free bonds: These bonds are suitable for investors in the higher income tax
bracket. These bonds also come with tax benefits. As of now, these bonds are
available in the secondary market and accessed through a demat account.

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 Debt Funds: Mutual funds that invest in debt market is also a viable option for risk-
free returns. Due to the rate cuts by RBI, the bond yields have declined. So, it is
advisable to opt for short-term debt funds.
 Corporate Bonds: Corporate bonds yield higher returns as compared to government
bonds. Also, they ensure a regular stream of income unlike equity instruments.

4. Limitations:
The following are some of the shortcomings of the project that was took up in the
organization:

 Although there is abundant content available in the company’s website, the articles and
videos do not get adequate views.

 Sometimes, the content published might not appear highly relevant at that point of time.

 References are not specified in case of research & non-research articles.

 Most of the processes (in case of writing content) are yet to be standardized.

5. Suggestions:
 The sources referred for drafting various articles must be documented, so that they could
be used in the future.

 The content must be promoted excessively through the right channels, so that it reaches
more investors.

 Social media marketing could be deployed to get the sufficient traction the content
deserves.

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 Standardization of processes could be looked upon, so that the articles get published at
the right time, when the subject is being spoken all over.

6. References:
Backlinks

 https://www.financialexpress.com/money/is-tax-free-bond-with-5-5-yield-better-than-7-75-
taxable-investment-find-out/1943954/
 https://www.coverfox.com/personal-finance/fixed-deposit/fd-vs-post-office-saving-scheme-
which-is-better/
 https://www.motilaloswal.com/article.aspx/1966/
 https://life.futuregenerali.in/tax-hacks/15-tax-saving-options-other-than-section-80c.html
 https://www.icicibank.com/Personal-Banking/investments/sovereign-gold-bond/benefits.page?
#Features

Economic Impacts of Indo-China Feud:

 https://www.ft.com/content/c22cbd52-fa50-4cbc-9dd5-4f30557a283f
 https://auto.hindustantimes.com/auto/news/india-s-auto-sector-not-ready-to-quit-china-habit-
41593137651083.html
 https://thewire.in/trade/china-goods-boycott-atmanirbhar-bharat

Index Funds

 https://groww.in/mutual-funds/motilal-oswal-nifty-smallcap-250-index-fund-direct-growth
 https://www.valueresearchonline.com/funds/1368/hdfc-index-fund-nifty-50-plan/
 https://www.fincash.com/l/best-index-funds

KCC

 https://www.paisabazaar.com/credit-card/kisan-credit-card-loan/
 https://www.livemint.com/news/india/rs-2-trillion-concessional-credit-to-be-extended-to-farmers-
through-kisan-credit-cards-sitharaman-11589473321109.html

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 https://indianexpress.com/article/business/business-others/agriculture-finance-the-success-story-
of-kisan-credit-cards-and-the-way-forward-4821415/

Pharma funds

 https://www.ibef.org/industry/pharmaceutical-india.aspx
 https://www.bain.com/insights/how-pharmaceutical-companies-in-india-can-succeed-in-the-age-
of-covid-19/
 https://health.economictimes.indiatimes.com/news/pharma/2020-indian-pharma-sunrise-segment-
prognosis-positive-for-healthcare-sector/73004341
 https://www.theweek.in/news/biz-tech/2020/03/23/indias-pharma-industry-see-opportunity-
amidst-threats-in-the-covid-19-crisis.html
 https://www.ft.com/content/0db2a921-8a2b-4f06-b775-8e2853894ad7

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