COMPANY PROFILE

INDIABULLS SECURITIES LTD.

Indiabulls Securities Ltd. was taken under reference to analyze the securities of

various sectors. It is a subsidiary of Indiabulls Financial Services Ltd., and is one

of India’s largest brokerage and distribution house. Over the years Indiabulls

Securities has been one of the leading investment service providers catering to

the needs of various investor categories both institutional and non-institutional.

The Private client group (PCG) of the Company provides value added investment

advisory services to high net worth individuals, NRI investors, trusts, corporate

and Banks. The investment product range offered by PCG covers equity

investment and equity trading, equity derivatives, portfolio management, IPOs

and Mutual funds. The Company has a full fledged research division involved in

macro economic studies, sectorial research and company specific equity

research combined with a strong and well networked sales force which helps

deliver current and up to date market information and news.

Indiabulls Securities Ltd., Depository Participant with National Securities

Depository Limited (NSDL) and Central Depository Services Ltd. (CDSL)

provides dual benefit services wherein the investors can use the brokerage

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services of the Company for executing the transactions and the depository

services for settling them. Under the Portfolio Investment Scheme offered by the

Indiabulls Equity Analysis - the retail arm of Indiabulls Securities Ltd.,

offers online (through www.indiabulls.com) and offline services, its well-

researched expertise and financial products to the retail investors.

Indiabulls Securities Ltd., also an Approved Intermediary under the

Securities Lending Scheme, 1997, facilitates clients to borrow and lend

securities.

Indiabulls Securities Ltd, one of India's largest brokerage and distribution house

is a 100% subsidiary of Indiabulls Financial Services Ltd.

Indiabulls Financial Services Ltd. is a public company and listed on the National

Stock Exchange, Bombay Stock Exchange, Luxembourg Stock Exchange and London

Stock Exchange. The company ranks at 82nd position in the list of most valuable

companies in India has a market capitalization of approx US $ 800 million. The

consolidated net worth of the company is approx US $ 400 million. Three Engineers

from IIT Delhi have promoted Indiabulls. The company strives for rapid growth in

profits, leadership in the retail marketplace and better returns to its shareholders.

2

Indiabulls, along with its subsidiary companies, offer consumer loans, brokerage

and depository services, personal loans, home loans and other financial products

and services to the retail markets.

Indiabulls Resources Ltd, a 100 per cent subsidiary of Indiabulls Financial

Services Ltd., has been established with the objective of evolving as an

independent oil company over time. The immediate short-term goal is to partner

with oil companies who are willing to come to India and bid in the current NELP-6

round.

Through its group companies, Indiabulls is also engaged in real estate

development. The company is in the process of developing modern commercial

complexes in the heart of Mumbai.

Indiabulls Estates Pvt Ltd. the real estate arm of Indiabulls Financial

Services, will set up an integrated township spread across 100 acres in Sonepat,

15 km from Delhi.

3

HISTORY OF THE FIRM

Indiabulls Financial Services Limited was incorporated on January 10, 2000 as

Orbis Infotech Private Limited at New Delhi.

The name of the Company was changed to Indiabulls Financial Services

Private Limited on March 16, 2001 due to change in the main objects of our

Company from Infotech business to Investment & Financial Services business.

It became a Public Limited Company on February 27, 2004 and the name of

the Company was changed to Indiabulls Financial Services Limited.

Indiabulls has over 640 branches all over India. The customers of Indiabulls are more

than 4,50,000 which covers from a wide range of financial services and products

from securities, derivatives trading, depositary services, research & advisory services,

consumer secured & unsecured credit, loan against shares and mortgage & housing

finance. The company employs around 4000 Relationship managers who help the

clients to satisfy their customized financial goals. Indiabulls entered the Real Estate

business in the year 2005 with its group of companies.

Indiabulls Financial Services Ltd is listed on the National Stock Exchange, Bombay

Stock Exchange and Luxembourg Stock Exchange. The market capitalization of

Indiabulls is around USD 2500 million (29th December 2006). Indiabulls and its

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group companies have attracted USD 500 million of equity capital in Foreign Direct

Investment (FDI) since March 2000. Some of the large shareholders of Indiabulls are

the largest financial institutions of the world such as Fidelity Funds, Goldman Sachs,

Merrill Lynch, Morgan Stanley and Farallon Capital.

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OBJECTIVE

Year 2000-01: One of India’s first trading platforms was set up by Indiabulls Financial

Services Ltd. with the development of an in-house team.

Year 2001-03: The service offered by Indiabulls was increased to include Equity,

F&O, Wholesale Debt, Mutual fund, IPO Financing/Distribution and Equity Research.

Year 2003-04: In this particular year Indiabulls ventured into Distribution and

Commodities Trading business.

Year 2004-05: This was one of the most important years in the history of Indiabulls. In

this year:

Indiabulls came out with its initial public offer (IPO) in September

2004.

Indiabulls started its Consumer Finance business.

Indiabulls entered the Indian Real Estate market and became the first

company to bring FDI in Indian Real Estate.

Indiabulls won bids for landmark properties in Mumbai.

6

Year 2005-06: The world renowned investment banks like Merrill Lynch and Goldman

Sachs increased their shareholding in Indiabulls. It also became a market leader in

securities brokerage industry, with around 31% share in Online Trading. The world’s

largest hedge fund, Farallon Capital and its affiliates committed Rs. 2000 million for

Indiabulls subsidiaries Viz. Indiabulls Credit Services Ltd. and Indiabulls Housing

Finance Ltd. In the same year, the Steel Tycoon Mr. LN Mittal promoted LNM India

Internet venture Ltd. acquired 8.2% stake in India bulls Credit Services Ltd.

Year 2006-07: In this year, India bulls Financial Services Ltd. was included in the

prestigious Morgan Stanley Capital International Index (MSCI). The company also

received an “in principle approval” from Government of India for development of multi

product SEZ in the state of Maharashtra.

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Securities & Derivatives

Broking

Mortgage & Housing

Finance

Consumer Financing

Financial Products

Distribution

Secured Financing

Diversified Business Group of India bulls

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National Stock Exchange

The two major stock exchanges in India are National Stock Exchange (NSE) and Bombay

Stock Exchange (BSE).With the liberalization of the Indian economy, it was found

inevitable to lift the Indian stock market trading system on par with the international

standards. On the basis of the recommendations of high powered Pherwani Committee,

the National Stock Exchange was incorporated in 1992 by Industrial Development Bank

of India, Industrial Credit and Investment Corporation of India, Industrial Finance

Corporation of India, all Insurance Corporations, selected commercial banks and others.

The National Stock Exchange (NSE) is India's leading stock exchange covering various

cities and towns across the country. NSE was set up by leading institutions to provide a

modern, fully automated screen-based trading system with national reach. The Exchange

has brought about unparalleled transparency, speed & efficiency, safety and market

integrity. It has set up facilities that serve as a model for the securities industry in terms of

systems, practices and procedures. 

Trading at NSE can be classified under two broad categories:

Wholesale debt market

Capital market

Capital market: A market where debt or equity securities are traded.

There are two kinds of players in NSE:

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Trading members

Participants

NSE has several advantages over the traditional trading exchanges. They are as follows:

NSE brings an integrated stock market trading network across the nation.

Investors can trade at the same price from anywhere in the country since inter-

market operations are streamlined coupled with the countrywide access to the

securities.

Delays in communication, late payments and the malpractice’s prevailing in

the traditional trading mechanism can be done away with greater operational

efficiency and informational transparency in the stock market operations, with

the support of total computerized network.

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NSE Nifty:-

S&P CNX Nifty is a well diversified 50 stock index accounting for 22 sectors of the

economy. It is used for a variety of purposes such as benchmarking fund portfolios, index

based derivatives and index funds.

Bombay Stock Exchange:-

The Bombay Stock Exchange is one of the oldest stock exchanges in Asia. It was

established as "The Native Share & Stock Brokers Association" in 1875. It is the first

stock exchange in the country to obtain permanent recognition in 1956 from the

Government of India under the Securities Contracts (Regulation) Act, 1956.

SENSEX :-

The Stock Exchange, Mumbai (BSE) in 1986 came out with a stock index that

subsequently became the barometer of the Indian stock market.

SENSEX is not only scientifically designed but also based on globally accepted

construction and review methodology. First compiled in 1986, SENSEX is a basket of 30

constituent stocks representing a sample of large, liquid and representative companies.

The base year of SENSEX is 1978-79 and the base value is 100. The index is

widelyreported in both domestic and international markets through print as well as

electronic media.

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The Index was initially calculated based on the "Full Market Capitalization" methodology

but was shifted to the free-float methodology with effect from September 1, 2003. The

"Free-float Market Capitalization" methodology of index construction is regarded as an

industry best practice globally. All major index providers like MSCI, FTSE, STOXX,

S&P and Dow Jones use the Free-float methodology.

The SENSEX captured all these events in the most judicial manner. One can identify the

booms and busts of the Indian stock market through SENSEX.

The launch of SENSEX in 1986 was later followed up in January 1989 by introduction of

BSE National Index (Base: 1983-84 = 100). It comprised of 100 stocks listed at five

major stock exchanges. The Exchange launched dollar-linked version of BSE-100 index

i.e. Dollex-100 on May 22, 2006.

The values of all BSE indices are updated every 15 seconds during the market hours and

displayed through the BOLT system, BSE website and news wire agencies.

All BSE-Indices are reviewed periodically by the "Index Committee" of the Exchange.

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Introduction:-

Indiabulls is India’s leading Financial and Real Estate Company with a wide presence

throughout India. Indiabulls Financial Services Limited was established in the year 2000

by three promoters all of whom are engineers from Indian Institute of Technology, New

Delhi, and has attracted over Rs 700 million of investments from venture capital firms,

private equity funds and institutional investors.

History:-

Indiabulls Financial Services Limited was incorporated on January 10, 2000 as

Orbis Infotech Private Limited at New Delhi.

The name of the Company was changed to Indiabulls Financial Services

Private Limited on March 16, 2001 due to change in the main objects of our

Company from Infotech business to Investment & Financial Services business.

It became a Public Limited Company on February 27, 2004 and the name of

the Company was changed to Indiabulls Financial Services Limited.

Indiabulls has over 640 branches all over India. The customers of Indiabulls are more

than 4,50,000 which covers from a wide range of financial services and products

from securities, derivatives trading, depositary services, research & advisory services,

consumer secured & unsecured credit, loan against shares and mortgage & housing

finance. The company employs around 4000 Relationship managers who help the

clients to satisfy their customized financial goals. Indiabulls entered the Real Estate

business in the year 2005 with its group of companies.

13

. The market capitalization of Indiabulls is around USD 2500 million (29th December

2006). Indiabulls and its group companies have attracted USD 500 million of equity

capital in Foreign Direct Investment (FDI) since March 2000. Some of the large

shareholders of Indiabulls are the largest financial institutions of the world such as

Fidelity Funds, Goldman Sachs, Merrill Lynch, Morgan Stanley and Farallon Capital.

Growth of Indiabulls:-

Year 2000-01:One of India’s first trading platforms was set up by Indiabulls Financial

Services Ltd. with the development of an in-house team.

Year 2001-03: The service offered by Indiabulls was increased to include Equity,

F&O, Wholesale Debt, Mutual fund, IPO Financing/Distribution and Equity Research.

Year 2003-04: In this particular year Indiabulls ventured into Distribution and

Commodities Trading business.

Year 2004-05: This was one of the most important years in the history of Indiabulls. In

this year:

Indiabulls came out with its initial public offer (IPO) in September

2004.

Indiabulls started its Consumer Finance business.

Indiabulls entered the Indian Real Estate market and became the first

company to bring FDI in Indian Real Estate.

14

Indiabulls won bids for landmark properties in Mumbai.

Year 2005-06: The world renowned investment banks like Merrill Lynch and Goldman

Sachs increased their shareholding in Indiabulls. It also became a market leader in

securities brokerage industry, with around 31% share in Online Trading. The world’s

largest hedge fund, Farallon Capital and its affiliates committed Rs. 2000 million for

Indiabulls subsidiaries Viz. Indiabulls Credit Services Ltd. and Indiabulls Housing

Finance Ltd. In the same year, the Steel Tycoon Mr. LN Mittal promoted LNM India

Internet venture Ltd. acquired 8.2% stake in Indiabulls Credit Services Ltd.

MISSION

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Indiabulls securities limited: business comprises of Securities & Derivatives

broking.

Indiabulls Credit services limited: business comprises of personal loans, secured

and unsecured loans, and housing and auto loans.

Financial products distribution: distribution of mutual funds and insurance

products.

Indiabulls commodities Pvt ltd: deals with commodity brokerage business

Indiabulls Realities limited: is into development of Real estate and mining.

Indiabulls housing loans: is into mortgage of properties and housing loan business.

Organizational Structure of Indiabulls

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The organizational structure of Indiabulls is Functional, which consist of several

departments.

Functioning Online: serving clients primarily through an Internet based relationship

targeted towards clients who value anytime, anywhere access and can be serviced at low

incremental costs.

Functioning Offline: serving clients primarily through an office based relationship

targeted towards clients who value physical interaction.

Online & offline business consist of following departments

Administration

Operations & Service quality

Technology

Finance

Corporate affairs

Human resources

Marketing

Corporate communications

Legal

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Director-Online Director-Offline

Finance CorporateAffairs

HumanResources

TechnologyOperations &Service

Administration CorporateCommunication

Legal

Customer Service

Recruitment Marketing Training

Sr. Vice President

Regional Manager

Branch Manager

RelationshipManager

Department based Organizational Structure

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Department based organizational Structure of

Indiabulls

Regional Hierarchy of Indiabulls

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Senior Vice President

Regional Manager

Branch ManagerSenior Sales Manager

Support System Sales Function

RM/SRM

ARM

Local ComplianceOfficer

Back OfficeExecutive

Dealer

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Regional hierarchies of Indiabulls

Key Positions

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Chairman

Real Estate

CFO & President

Securities Consumer Finance

Executive Director Chief Executive Officer Executive Director

“Key Positions”

Products and Services of Indiabulls

Indiabulls offer the following products and services in the financial markets:

Stocks

Options and Futures

Depository Services

Commodities

Insurance Products

Mutual Funds

Bonds and Debt Products

Services

Commercial Vehicle Loans:

In April 2006 Indiabulls started Commercial Vehicle Finance under the flagship of

Indiabulls Credit Services Ltd. in order to provide refinance to its commercial vehicle

clients.. Mortgage Loans:

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Consumer Finance:_

Indiabulls is a retail focused organization that fulfills the credit needs of a large

percentage of population in India. The key aspect of Indiabulls business model is to

provide an extremely unique customer experience.

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VISION

Trading requires Opening a Demat account. Demat refers to a dematerialized account.

You need to open a Demat account if you want to buy or sell stocks. So it is just like a

bank account where actual money is replaced by shares. We need to approach the

Depository Participants (DP, they are like bank branches), to open Demat account.

A depository is a place where the stocks of investors are held in electronic form. The

depository has agents who are called depository participants (DPs).

Think of it like a bank. The head office where all the technology rests and details of all

accounts held is like the depository. And the DPs are the branches that cater to

individuals.

There are only two depositories in India –

The National Securities Depository Ltd (NSDL) and the

Central Depository Services Ltd (CDSL).

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SWOT ANALYSIS OF THE FIRM

STRENGTHS:-

Integrated technology platform: - Since the launch of their website,

www.indiabulls.com their online trading platform, they have invested in building

a technology platform. They have also developed software called “power

Indiabulls”. Their trader terminal is an application which allows customers to

trade on both the BSE and the NSE, has features like live intra-day tick by tick

charts, historical charts, price alerts and other features.

Pan India distribution network: - They have 640 branches across India.

These branches help in customer acquisition as well as customer service.

Relationship manager facility: Every customer is provided with a

relationship manager, where in the customers can contact these managers at

anytime of the day to get information on the market or get their queries clarified.

Growth rate: - The Company is growing at a very rapid rate, from 25 branches

in the year 2003 it has grown to 650 branches in the beginning of 2007. Not only

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. They have a customer base of more than 450,000 and over 4500 relationship

managers. Indiabulls has been rated as the “Fastest Growing Large Cap

Company” in India in a report by Business Today magazine in April, 2006.

Power Indiabulls has developed into brands: - Indiabulls.com and

power Indiabulls which is their software are well known brands amongst retail

investors across India..

Strong sales and marketing teams that deliver market leading

product innovation: -. These managers offer personalized services to their

customers and help to build strong and continuing relationships with them. The

marketing associates help the company in client acquisition at minimal cost and

they also help the company and its subsidiaries in increasing their penetration into

smaller towns and cities.

Strong banking relations and credit ratings: - Indiabulls has banking

relation with some of the major banking institutions in the country such as HDFC

Bank, ICICI Bank, Standard Chartered Bank, etc, for easy mobilization of funds

of the customers.

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Strong market presence and increased market share: -

Their growing client base and market share have increased their market presence

and brand recognition has enhanced their profitability. Their brand and

profitability

A the flexibility for them to invest in the business and technology systems these

attributes in turn has a positive effect on the growth of the company.

WEAKNESSES :-

Lack of a banking arm: - Indiabulls does not have a banking arm of its own

which otherwise would have helped the company to a large extent. Whereas a few

of its competitors like HDFC securities, ICICI securities, Kotak securities, etc

have their own banking arms which make the transactions easier and simpler.

Loss of relationship managers leads to loss of clients: - Their business

is dependent on the team of relationship managers who directly manage client

relationships..

OPPORTUNITIES :-

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changing demographics with higher disposable income: - India is one of the

fastest growing economies in the world. It has a large and rapidly growing middle class of

300 million people with increasing levels of discretionary income available for

consumption and investment purposes. The options they

The options they have for investments are fixed deposits, post office deposits etc,.

This gives them a limited interest rate on their investment; where as the stock

market provides a good scope for making good returnsRapid penetration of

internet and computers: -Technology is vastly used in stock market trading.

Now, with the use of the computers and internet the stock market trading has

become fast. The traders can place orders through the internet and execute them.

This saves the time of the investors, who earlier had to make calls to their brokers

in order to trade

Market size and Characteristics : -India is a large and growing economy

with rapidly expanding financial services sector. The sector has witnessed a

transformation over the last decade as a result of the economic liberalization

which started in 1991. India is the world’s 12th largest economy in dollar terms

and the 4th largest in PPP terms.

Diversified business model : -Our Company and our subsidiaries offer various

financial services and products ranging from equity, F & O and wholesale debt,

insurance and IPO distribution, depository services to cater to the specific needs of

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the retail and institutional investors thus providing all these services in a single

platform

THREATS :-

Economic slowdown : - Terrorist attacks and other acts of violence or war,

including those involving India or other countries could adversely affect national

economy or world economy as a whole. Such act may also result in a loss of

business confidence. Travel restrictions as a result of such incidents may have

adverse affect on the ability to operate effectively. This will result in an economic

slowdown (example: the 9/11 attack on the World Trade Centre, New York).

Political instability in the country : - The government of India has pursued

the policy of economic liberalization, including relaxing restriction on the private

sector.

Volatile movement in market indices : - The Indian stock market is very

volatile in nature and is capable of shedding or gaining several points in a single

day

Competition: - Indiabulls faces significant competition from companies

seeking to attract client’s financial assets, including traditional and online

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brokerage firms, mutual fund companies, etc, which are having a wide presence

and strong brand name..

Substitutes: - Various alternative forms of investment including fixed deposits

with banks and post offices etc act as substitutes to retail broking products and

services. The stock market is very unpredictable with fluctuations; this may

prompt many people to invest in fixed deposits, posy office deposits, etc in order

to avoid risk.

Low product differentiation: - The retail broking services provided by the

various companies are homogeneous with very low product differentiation. This

does not allow the company to freely fix their prices due to the threat of

competition, which in turn reduces their profit.

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Indiabulls SecuritiesTrading Products

Cash Account Intraday Account Margin Trading

PRODUCT DECTAILS

Trading Products of Indiabulls Securities

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Trading Products of Indiabulls securities

Indiabulls Securities provide three products for trading. They are

Cash account

Intraday account

Margin trading (Mantra)

Cash account provides the client to buy 4 times of cash balance in his trading account.

Intraday product provides the client to buy 8 times of his cash balance in the trading

account.

Mantra account – called as margin trading, is a special account to buy on leverage for a

longer duration

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OUT LOOK FOR FUTURE:

Income from Online business : The contribution of revenue from Online business

have grown from Rs. 31.85 million in FY 2002 to Rs. 242.26 million in FY 2004 and

from 24.05% of total business in FY 2002 to 34.85% of business in FY 2004. The rapid

growth of the online business is driven by growth in total clients, increasing product

flexibility and quality, enhanced online-only features such as portfolio analysis and

updates, streaming tickers, enhanced product offering of Power Indiabulls.

Brokerage

Equities

F&O

Income from Offline Business: The offline business unit has one of the widest

branch networks in India with a pan India presence with large market share. The revenues

have grown from Rs. 96.02 million in FY 2002 to Rs. 447.25 million in FY 2004 and

have changed from 72.52% of total business in FY 2001 to 64.34% of business in FY

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2004. The rapid growth of the Offline business is driven by growth in total clients,

increased geographical presence

Brokerage

Equities

F&O

Wholesale Debt Markets

RESEARCH OBJECTIVE

In today’s globally competitive world, where investments play a vital role both for the

investors as well as the economy, the financial markets should work to the best of its

capacity.

A detailed study on the working of stock exchange has been conducted keeping in mind a

few objectives.

Primary objectives:-

To know the basic concept of the stock exchanges in India and its need in the

development and growth of the economy.

The stock exchanges incorporate growth for stocks, brokers, investors and the

economy, yet the investors are unable to vest confidence in the same. In light of

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this, we wanted to glow a candle in the dark to have adequate reasons for the

same.

Our objective also was to grab the opinions of the investors about the working of

the stock exchanges in India and suggestions for improving the same.

Secondary objectives:-

To study the working of stock exchanges in India. (N.S.E., B.S.E.)

To analyze the dealings, methodology, and code of conduct with stock brokers.

To review the growth and performance of the stock exchanges.

To recommend the methods for improvement to boost the confidence of the

investors.

Such a study would go a long way in identifying the key problem

areas and would help us in giving our recommendations for

improving the working of the same.

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RESEARCH METHODOLOGY

Mainly exploratory research was carried out for both primary and secondary

research.

Primary Research:

Structured and disguised questionnaire was used to probe individuals

for information. Personal In-depth interviews were conducted to

understand the mindset of the general public. These questionnaires

have been analyzed through ratios, averages, graphs and other

statistical tools.

Secondary Research:

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Secondary data was also collected through various sources like newspapers, books,

magazines, Internet, stock exchange guidelines, etc. and used for certain aspects of the

research like customer’s perception,

current working, pros and cons of the working and other information.

RESEARCH DESIGN

The stock exchange has been defined under Section 2(3) of the securities contract

(Regulation) Act 1956 as “ any body of individuals’ whether incorporated or not,

constituted for the purpose of assisting, regulation or controlling the business of buying,

selling or dealing in securities.” The securities, which are traded in the stock market, are

defined under section 2(b) of the Act as:

Shares, scrip’s, stock, bonds, debentures, debentures stock or other marketable

securities of a like nature in or of any incorporated company or other body

corporate;

Government securities; and

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Rights or interest in securities.

DATA COLLECTION METHOD

Related income comprises revenues earned from market related activities such as

transaction charges, service charges and interest levied on customer transactions. These

charges are dependent on trading volume, number of transactions completed and any

ledger debit amount in the client account.

Income from other Sales including Insurance, Mutual Fund Sales and Other Products

Other income comprises revenues earned from sale of third party products such as

Insurance, Mutual Funds and new services such as Research Services. Revenues are a

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function of volume of mutual funds sold, the type of fund sold (active managed equity,

passive fixed income etc.) and the commissions paid on the funds sold.

Segment wise Sales of Indiabulls securities

for March 20010(in Crore)

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Segmentwise Sales of Indiabulls Securities For March 2005(in Crore)

1.93, 2%

0.84, 1%

9.88, 9%2, 2%

99.65, 86%Brokerage IncomeIncome From Depository ServiceIncome From other Financial ActivityInterestTransaction Charges

Segment wise Sales of IndiaBulls Securities for year

2008Segment wise Sales of Indiabulls securities for March

2010(in Crore)

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Segmentwise sales of Indiabulls Securities For March 2006(in Crore)

261.11, 82%

23.06, 7%9.08, 3%

3.57, 1%

21.16, 7%

Brokerage Income Income From Depository Service

Income From other Financial Activity Interest

Transaction Charges

Financial Ratio Analysis of Indiabulls Securities Ltd

Profitability ratios:

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Indiabulls Securities Ltd. Mar 2008 Mar 2009 Mar 2010

Per cent (Non-Annualized) 12 months 12

months

12 months

-

Margins ratios (%)

-

As % of operating income

PBDT 43.05 44.75 58.76

PBT 41.45 42.87 56.7

PAT 25.92 27.25 37.49

PBDT (NNRT) 43.01 44.52 58.72

PBT (NNRT) 41.41 42.63 56.66

PAT (NNRT) 25.88 27.02 37.45

-

Corporate tax as per cent of PBT 35.83 33.69 32.47

-

Returns ratios (%)

-

As % of total assets

42

PBDT 18.95 31.35

PBT 18.15 30.25

PAT 11.54 20

PAT (NNRT) 11.44 19.98

Operating cash flow 77.78 65.19

-

As % of net worth

PBDT 53.48 128.77

PBT 51.23 124.25

PAT 32.57 82.16

PAT (NNRT) 32.29 82.07

Operating cash flow 219.53 267.75

-

As % of capital employed

PBDT 47.39 58.11

PBT 45.39 56.06

PAT 28.86 37.07

PAT (NNRT) 28.61 37.03

Operating cash flow 194.53 120.82

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-

Appropriation of profits (as % of

PAT)

Dividends 3.89 19.66 0.52

Equity dividends 0.44 2.27 0.07

Preference dividends 3.44 17.39 0.45

Retained profits 96.11 80.34 99.48

-

Dividends / net worth 6.4 0.43

Equity dividends / equity capital 3.98 0.45

Equity dividends / equity cap. & sh.

prem.

3.98 0.45

Liquidity ratios:

Indiabulls Securities Ltd. Mar 2008 Mar 2009 Mar 2010

Times (Non-Annualized) 12 months 12 months 12 months

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-

Short term liquidity

-

Cash / current liabilities &

provisions

0.67 0.86 1.7

Quick ratio 1.6 0.86 1.89

-

Medium to long term liquidity

-

Current ratio 1.776 1.141 2.137

Solvency ratio 1.567 1.561 1.269

Debt equity ratio 1.237 0.848 2.056

-

Interest incidence (%) 11.42 19.13 11.67

-

Interest cover

-

PBIT / interest 3.63 4.01 5.2

PBIT (NNRT) / interest 3.63 4 5.2

Operating cash flow / interest -2.99 11.97 8.91

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-

(Rs. Crore)

Current assets 231.47 261.19 914.49

Current liabilities 130.34 228.86 427.87

Working capital 101.13 32.33 486.62

Net worth 83.34 108.43 181.77

Reserves & surplus 20.24 45.33 163.94

Asset utilization ratios

Indiabulls Securities Ltd. Mar

2008

Mar 2009 Mar 2010

Times (Non-Annualized) 12

months

12 months 12 months

-

Efficiency ratios

-

Operating cash flow / total assets 0 0.78 0.65

Operating cash flow / gross fixed

assets

0 17.46 14.15

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Operating cash flow / capital

employed

0 1.95 1.21

-

Operating income / total assets 0.42 0.53

Operating income / GFA / leased

assets

9.51 11.58

Operating income / capital

employed

1.06 0.99

-

PBDT (NNRT) / total assets 0.19 0.31

PBDT (NNRT) / gross fixed assets 4.23 6.8

PBDT (NNRT) / capital employed 0.47 0.58

-

PBT / total assets 0.18 0.3

PBT / gross fixed assets 4.05 6.56

PBT / capital employed 0.45 0.56

-

PAT / total assets 0.11 0.2

PAT / gross fixed assets 2.57 4.34

47

PAT / capital employed 0.29 0.37

Interpretation

Profitability Ratios: Profitability is the net result of a number of policies and

decisions. The ratios examined thus far provide useful clues to the effectiveness of firms

operations.

48

Liquidity Ratios: liquidity ratios deal with firm’s ability to pay off its debts. It

includes

Current ratio: The current ratio is calculated by dividing current assets by

current liabilities. The current ratio of Indiabulls securities is 1.776, 1.441, &

2.137 for year 2004, 2005 & 2006 respectively.

Current ratio= current assets / current liabilities

Quick ratio (acid test ratio): The quick ratio is calculated by deducting

inventories from current assets and then dividing the remainder by current

liabilities. The quick ratio is a measure of the firm’s ability to pay-off the short-

term liabilities. A large part of the firms current assets are tied up in slow paying

debts. The industry average for Acid test ratio is 2.1, but for Indiabulls securities

quick ratio is 1.6, 0.86 & 1.89 for year 2004, 2005 & 2006 respectively, which is

less than Industry average. The quick ratio should be high which indicates the

company’s ability to pay-off short term obligations.

Debt equity Ratio:

Debt equity ratio is the related contribution of creditors and owners of the business in its

financing.

4.4 Financial performance Year on Year

49

Market share of Indiabulls on NSE trading Volumes

50

Increasing Market Share of Indiabulls on NSE Trading Volumes Increasing Market Share of Indiabulls on NSE Trading Volumes (1)(1)

(1) Source: NSE data from NSE website (Equity Segment)

22.3%

17.5%

18.8%

21.9%

30.7%

2.2%

5.5%3.4

%1.1%

1.9%

0%

5%

10%

15%

20%

25%

30%

35%

FY2002

FY2003

FY2004

FY2005

FY2006

Share in Online Trading

Share in Total Trading

(1)

Market Shares of Top Brokers on NSE Market Shares of Top Brokers on NSE (2)(2)14%

20%

35%

24%

12%

7%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Top 5 Top 10 Top 25

FY02 FY05

UNDERSTANDING CAPITAL MARKET

Project Framework

51

An Outlook on Indian Stock Market

Capital Market Derivative Segment

Intraday Delivery Futures Options

52

SAMPLING

DERIVATIVES:-

By far the most significant event in finance during the past decade has been the

extraordinary development and expansion of financial derivatives. These instruments

enhance the ability to differentiate risk and allocate it to those investors most able and

willing to take it

Definition:

Derivatives are instruments whose value is ‘derived’, in whole or in part, from the value

of one or more underlying assets.

History of Derivatives:-

The history of derivatives is surprisingly longer than what most people think. Some texts

even find the existence of the characteristics of derivative contracts in incidents of

Mahabharata. Traces of derivative contracts can even be found in incidents that date back

to the ages before Jesus Christ. However, the advent of modern day derivative contracts is

attributed to the need for farmers to protect themselves from any decline in the price of

their crops due to delayed monsoon, or overproduction.

53

The first 'futures' contracts can be traced to the Yodoya rice market in Osaka, Japan

around 1650. These were evidently standardized contracts, which made them much like

today's futures.

The Chicago Board of Trade (CBOT), the largest derivative exchange in the world, was

established in 1848 where forward contracts on various commodities were standardized

around 1865. From then on, futures contracts have remained more or less in the same

form, as we know them today.

Derivatives have had a long presence in India. The commodity derivative market has been

functioning in India since the nineteenth century with organized trading in cotton through

the establishment of Cotton Trade Association in 1875. Since then contracts on various

other commodities have been introduced as well.

Exchange traded financial derivatives were introduced in India in June 2000 at the two

major stock exchanges, NSE and BSE. There are various contracts currently traded on

these exchanges. National Commodity & Derivatives Exchange Limited (NCDEX)

started its operations in December 2003, to provide a platform for commodities trading.

The derivatives market in India has grown exponentially, especially at NSE. Stock

Futures are the most highly traded contracts on NSE accounting for around 55% of the

total turnover of derivatives at NSE, as on April 13, 2005.

54

Understanding Derivatives:-

The primary objectives of any investor are to maximize returns and minimize risks.

Derivatives are contracts that originated from the need to minimize risk.

The word 'derivative' originates from mathematics and refers to a variable, which has

been derived from another variable. Derivatives are so called because they have no value

of their own. They derive their value from the value of some other asset, which is known

as the underlying.

“Derivatives are specialized contracts which signify an agreement or an option to

buy or sell the underlying asset of the derivate up to a certain time in the future at a

prearranged price, the exercise price. The contract also has a fixed expiry period

mostly in the range of 3 to 12 months from the date of commencement of the

contract. The value of the contract depends on the expiry period and also on the

price of the underlying asset.”

For Example:-

A farmer fears that the price of soybean (underlying), when his crop is ready for delivery

will be lower than his cost of production.

Let's say the cost of production is Rs 8,000 per ton. In order to overcome this uncertainty

in the selling price of his crop, he enters into a contract (derivative) with a merchant, who

55

agrees to buy the crop at a certain price (exercise price), when the crop is ready in three

months time (expiry period).

In this case, say the merchant agrees to buy the crop at Rs 9,000 per ton. Now, the value

of this derivative contract will increase as the price of soybean decreases and vice-a-

versa.If the selling price of soybean goes down to Rs 7,000 per ton, the derivative

contract will be more valuable for the farmer, and if the price of soybean goes down to Rs

6,000, the contract becomes even more valuable.

This is because the farmer can sell the soybean he has produced at Rs 9000 per ton even

though the market price is much less. Thus, the value of the derivative is dependent on the

value of the underlying.

56

Difference between Commodity Derivative & Financial Derivative

If the underlying asset of the derivative contract is coffee, wheat, pepper, cotton, gold,

silver, precious stone or for that matter even weather, then the derivative is known as a

commodity derivative.

If the underlying is a financial asset like debt instruments, currency, share price index,

equity shares, etc, the derivative is known as a financial derivative.

Derivative contracts can be standardized and traded on the stock exchange. Such

derivatives are called exchange-traded derivatives. Or they can be customized as per the

needs of the user by negotiating with the other party involved.

Such derivatives are called over-the-counter (OTC) derivatives. Continuing with the

example of the farmer above, if he thinks that the total production from his land will be

around 150 quintals, he can either go to a food merchant and enter into a derivatives

contract to sell 150 quintals of soybean in three months time at Rs 9,000 per ton. Or the

farmer can go to a commodities exchange, like the National Commodity and Derivatives

Exchange Limited, and buy a standard contract on soybean.

The standard contract on soybean has a size of 100 quintals. So the farmer will be left

with 50 quintals of soybean uncovered for price fluctuations.However, exchange traded

derivatives have some advantages like low transaction costs and no risk of default by the

other party, which may exceed the cost associated with leaving a part of the production

uncovered.

57

In India we have several derivatives, two of the most famous derivatives traded on

National stock exchange are

Futures

Option

Futures and options are traded on the NSE platform, with a normal IndiaBulls trading

account the client get the access to trade in the F&O contracts.

58

Futures and Forwards

As the name suggests, futures are derivative contracts that give the holder the opportunity

to buy or sell the underlying at a pre-specified price some time in the future.

They come in standardized form with fixed expiry time, contract size and price. Forwards

are similar contracts but customizable in terms of contract size, expiry date and price, as

per the needs of the user.s

Options

Option contracts give the holder the option to buy or sell the underlying at a pre-specified

price some time in the future

An option to buy the underlying is known as a Call Option.

An option to sell the underlying at a specified price in the future is known as Put

Option.

In the case of an option contract, the buyer of the contract is not obligated to

exercise the option contract. Options can be traded on the stock exchange or on

the OTC market.

59

Futures Terminology

Spot Price: the price at which an asset trades in the spot market.

Futures Price: the price at which the futures contract trades in the futures

market.

Contract Cycle : The period over which the contract trades. The index futures

contracts on the NSE have a one-month, two-month and three-month expiry

cycles which expire on the last Thursday of the month. On the Friday following

the last Thursday, a new contract having a three-month expiry is introduced for

trading.

Expiry Date -the date specified in the futures contract. It is the last Thursday of

the month

Contract Size : the amount of asset that has to be delivered less than one

contract. For instance, the contract size on NSE futures market is 100 Niftiest. It is

prescribed by NSE for stocks. Each stock had a different lot size.

Basis – the futures price minus the spot price. There will be a different basis for

each delivery month for each contract. In a normal market, basis will be positive.

This reflects that futures prices normally exceed spot prices.

Cost of Carry – the storage cost plus the interest that is paid to finance the

asset less the income earned on the asset.

60

Initial Margin – the amount that must be deposited in the margin account at

the time the futures contract is first entered into. These margins are prescribed by

the exchange. It varies from stock to stock.

Marking to Market – the adjustment made at the end of each trading day to

the investor’s margin account to reflect the investor’s gain or loss depending upon

the futures closing price. It is the difference between today’s closing price and

yesterdays closing. The MTM profit /loss are credited to the client account on day

to day basis. Thus we call this a T+0 settlement.

Maintenance Margin – somewhat lower than the initial margin; the balance

in the margin account must never become negative and in case it does, the

investor receives a margin call that must top-up the account to the initial margin

level before trade commences the following day.

61

Difference between Long Position & Short Position

A long position is an agreement to buy. You take a long position on a stock when

you are bullish or have a feeling that the stock will move up.

A short position is an agreement to sell. You take a short position on a stock when

you are bearish or have a feeling that the stock will move down.

62

Long => Buy

SHORT => SELL

There are around 152 companies which are underlying for future and options in

NSE. There are

index Futures (Nifty futures, Bank Nifty, CNX IT futures)

Stock Futures (Infosys futures. ITC futures, etc linked to specific stocks)

Index options (linked to indices)

Stock option (linked to specific stocks).

Option Contracts

The owner of an option has the OPTION to buy or sell something at a predetermined

price. Option provides the buyer of the contract the right but not the obligation to

exercise.

Or

You buy a call option when you are bullish or have an upward target.

63

Right to BUY / OWN – CALL OPTION

Right to SELL / WRITE – PUT OPTION

You buy a put option when you are bearish or have a downward target.

Options Terminology:-

Stock options – options on individual stocks. A contract gives the buyer the

right to buy or sell shares at the specified price

Buyer of an option – the one who by paying price (premium) buys the right

but not the obligation to exercise his/her option on the seller/writer

Writer of an option – the one who by receiving premium, is obliged to

sell/buy the asset if the buyer exercises on him

Call Option – gives the buyer the right but not the obligation to buy an asset by

a certain date for a certain price

Put Option – gives the buyer the right but not the obligation to sell an asset by

a certain date for a certain price

Spot Price – the price at which an asset trades in the spot market.

Strike Price – the target price or the expected price.

Contract Cycle – the period over which the contract trades. There are three

month contracts just like the futures.

Expiry Date – the date specified in the option contract. It is the last Thursday

of the month, just as in futures.

64

Contract Size – the amount of asset that has to be delivered under one

contract.

In-The-Money Option (ITM) – an option that would lead to a positive

cash-flow to the holder if it were exercised immediately.

A call option - on the index is said to be ITM if the current index stands higher

than the strike price (Spot Price > Strike Price).

A put option - is ITM if the index is below the Strike price (Spot Price < Strike

Price)

At-The-Money (ATM) – an option that would lead to zero cash flows to the

holder if it were exercised immediately.

Out-Of-The-Money Option (OTM) – an option that would lead to a

negative cash-flow to the holder if it were exercised immediately.

A call option - on the index is said to be OTM if the current index stands at a

level which is less than the strike price (Spot Price < Strike Price).

65

THE COMPETITORS

Major Competitors of Indiabulls Securities Ltd

Indiabulls Securities faces significant competition from companies seeking to attract

client financial assets, including traditional and online brokerage firms, mutual fund

companies and institutional players having wide presence and a strong brand name. They

are;

ICICI Securities Ltd.

Kotak Securities Ltd.

India Infoline

66

SSKI Ltd

Motilal Oswal Securities

Karvy

Geojit Securities

HDFC Securities

India Infoline Ltd:-

India Infoline Ltd is listed on both the leading stock exchanges in India, viz. the Stock

Exchange, Mumbai (BSE) and the National Stock Exchange (NSE). The India Infoline

group, comprising the holding company, India Infoline Ltd and its subsidiaries, straddles

the entire financial services space with offerings ranging from Equity research, Equities

and derivatives trading, Commodities trading, Portfolio Management Services, Mutual

Funds, Life Insurance, Fixed deposits and other small savings instruments to loan

products and Investment banking. India Infoline also owns and manages the websites,

www.indiainfoline.com and www.5paisa.com .

India Infoline Securities Pvt Ltd

India Infoline Securities Pvt Ltd is a 100% subsidiary of India Infoline Ltd, which is

engaged in the businesses of Equities broking and Portfolio Management Services. It

offers broking services in the Cash and Derivatives segments of the NSE as well as the

Cash segment of the BSE.

67

A choice of technologically advanced trading that is with the help of 5paisa.com. 5 paisa

also represents the availability of world class service to investors at the lowest possible

rate - 5 paisa for every trade of Rs100, i.e., a brokerage rate of 0.05%.

Features of 5 paisa.com

Paisa sense –

They offer a good value for money proposition. Their brokerage rates are very

competitive, charging only 5 paise for Rs100 of trade done, which is 0.05% brokerage.

They offer the most reasonable rates, independent of your net worth or volumes. In case

of trades that result in delivery, they charge an additional 0.20% for back office and

securities handling.

Personalized service –

68

At 5paisa.com, they are committed to provide you with unparalleled service, using e-mail,

call centers and support staff. They have also invested in physical infrastructure.

Protection – All transactions of 5paisa.com are secure and confidential. The orders are

electronically routed via sophisticated trading systems for execution. They follow a world

class security system that enables them to protect from any fraud or hacking.

Pedigree - 5paisa.com is a brand renowned for quality of information and services, they

are professionally managed, with a skill set which is of high standard. Their top

management has years of experience in financial services with leading banks and

institutions.

Sharekhan Securities

Sharekhan was created when SSKI Investor Services Pvt. Ltd., a company in the

securities and equities segment decided to harness the power of the Internet and offer

services to its customers through an online stock trading portal. Sharekhan brings and

provides a user-friendly online trading facility. They also have an extensive all-India

ground network of franchisees across the country.

Motilal Oswal:-

Motilal Oswal Securities Ltd. was founded in 1987 as a small sub-broking unit, with just

two people running the show. Motilal Oswal Securities Limited has established itself as

69

the Best Local Brokerage House in India (Asia Money Brokers’ Poll 2005). Their

Institutional Equities Division combines the efforts of the Research and Sales & Trading

departments to best serve clients' needs. Consistent delivery of high quality advice on

individual stocks, sector trends and investment strategy has established them as a reliable

research unit amongst leading Indian as well as international investors.

Their sales & trading team, comprising top equity professionals, translates the research

findings into actionable advice for clients, based on their specific needs. Sophisticated

computerized tools are used to understand client investment profile and objectives, which

ensures proactive and timely service.

FEATURE

Integrity: A company honoring commitment with highest ethical and business

practices.

Team Work: Attaining goals collectively and collaboratively.

Meritocracy: Performance gets differentiated, recognized and rewarded in an

apolitical environment.

Passion & Attitude: High energy and self motivated with a “Do It” attitude.

70

Excellence in Execution: Time bound results within the framework of the

company’s value system.

Karvy

The birth of Karvy was on a modest scale in the year 1982. It began with the vision and

enterprise of a small group of practicing Chartered Accountants based in Hyderabad, who

founded Karvy. They started with consulting and financial accounting automation, and

then carved inroads into the field of Registry and Share Transfers. Karvy has built a

reputation as an integrated financial services provider, offering a wide spectrum of

services for over 20 years.

71

In 1982, a group of Hyderabad-based practicing Chartered Accountants started Karvy

Consultants Limited with a capital of Rs.150, 000 offering auditing and taxation services

initially. Later, it forayed into the Registrar and Share Transfer activities and

subsequently into financial services.

Karvy made inroads into a host of capital-market services, - corporate and retail - which

proved to be a sound business synergy. In January 1998, Karvy became the first

Depository Participant in Andhra Pradesh.

Karvy Securities Limited 

Deals in distribution of various investment products, viz., equities, mutual funds, bonds

and debentures, fixed deposits, insurance policies for the investor. 

Kotak Securities

Kotak Securities Limited,

A subsidiary of Kotak Mahindra Bank, is the stock broking and distribution arm of the

Kotak Mahindra Group. Kotak Mahindra is one of India's leading financial institutions,

offering complete financial solutions that encompass every sphere of life. From

commercial banking, to stock broking, to mutual funds, to life insurance, to investment

banking, the group caters to the financial needs of individuals and corporate.

72

Kotak Securities was set up in 1994. Kotak Securities is a corporate member of both The

Bombay Stock Exchange and the National Stock Exchange of India Limited.

Its operations include stock broking and distribution of various financial products -

including private and secondary placement of debt and equity and mutual funds.

Currently, Kotak Securities is one of the largest broking houses in India with wide

geographical reach. The company has four main areas of business:

Institutional Equities,

Retail (equities and other financial products),

Portfolio Management and

Depository Services.

Kotak Securities Ltd is also a depository participant with National Securities Depository

Limited (NSDL) and Central Depository Services Limited (CDSL), providing dual

benefit services wherein the investors can use the brokerage services of the company for

executing the transactions and the depository services for settling them.

Kotak Securities has 195 branches servicing more than 2, 20,000 customers and coverage

of 231 Cities. Kotaksecurities.com, the online division of Kotak Securities Limited offers

Internet Broking services and also online IPO and Mutual Fund Investments.

Features of Kotak Securities:-

73

AKSESS Kotak securities Electronic Search Service: AKSESS

offers you an easy way to get to Kotak Securities' institutional research. On

this online archive you will be able to access estimates, company reports,

sector reports, strategy reports and a bunch of other products including the

daily India Market Flash produced by Kotak Securities.

High Quality of software (KEAT ): K.E.A.T is special software that

Koataksecurities.com provides its customers using which they can view live

market rates of scrip’s on both the NSE and BSE.

Research Reports : Kotak Securities provide Different reports to investors

which include

Intraday calls

Daily Technical View

Daily Morning Brief

Weekly Technical Report

Sectoral Reports

Stock Ideas

Derivative Reports

SMS Alerts: Kotak Securities also provides SMS alerts to customers

providing useful tips about stocks & shares.

74

ANALYSIS & INTERPRETATION

Indian Retail Brokerage Market

75

The Indian retail brokerage industry consists of companies that primarily act as agents for

the buying and selling of securities (e.g. stocks, shares, and similar financial instruments)

on a commission or transaction fee basis. It has two main interdependent segments:

Primary market and the Secondary market.

Interdependent Segments of Brokerage Market

Objective: The main objective is to

76

Indian Retail Brokerage Market

Interdependent

Segments

Primary Market Secondary Market

Analyze retail brokerage industry taking into account the health of the capital

markets, Derivative Market and the intensity of competition among the brokerage

companies.

Doing Competitive Analysis for Indiabulls

Major growth drivers for brokerage revenue and trading volume

are:

• Continuous fall in brokerage fees

• Adoption of technology — screen-based trading, electronic matching, and

paperless securities.

• Centralized operations, effective risk management, and control on large

interconnected operations spanning multiple locations, which is enabled by telecom

connectivity and low costs

• Increasing access to capital and the ability to provide margin finance

Parameter Assessment for Doing Competitive analysis:-

77

Product Price Service Value Proposition

A differentiating aspect is a comparative assessment of the top retail brokerages on

various value indicators, comprising of

Product

Pricing

Service

Unique Value proposition.

78

Customers need to analyze the Brokerage Firms Based on these 5

Parameters.

Brokerage & Miscellaneous charges

Quote Software

Execution Platform

Demat Account, and finally

Back office Support.

Brokerage & Miscellaneous charges: This accounts for all the charges that you

incur for your trading/investing. A few examples would be: Demat Account maintenance,

Brokerage, Annual account Fee, Telephone based trading charges, trading software usage

charges, etc.

Quote Software: This is used mainly for technical study and for live quotes. Many

people don’t evaluate quote software. Some Investors don’t pay attention to the quality of

data (how accurate it is). Or how fast and often it refreshes. Does it allow us to back test

our strategy? Does it allow customizing technical signals/parameters?? Does it allow us to

79

see historic data? For, what period is intra day data available? They might need all this

information. They should be clear on what they need and ensure quote software provides

it all.

Execution Platform: It’s nothing but a platform that allows us to execute our trade fast. It

should automate trade management and execution, and should automatically give

protection against human errors.

Demat Account: Demat account should only be opened with a well known and

established brokerage firm in the market.

Back office Support: People while trading face lots of problem because of lack of

good back office support. Relationship Managers trading without their client’s

knowledge, funds not being transferred, trades not being executed, slow execution etc are

a few examples.

Brokerage Charges

Intraday Brokerage charges of the Competitors of Indiabulls Securities Ltd

80

Intraday Brokerage Charges

0.1

0.05

0.1

0.25

0.05

0.1 0.1

0

0.05

0.1

0.15

0.2

0.25

0.3

Indiabulls KotakSecurities

India-infoline ICICI direct Karvy Motilaloswal

Sharekhan

Financial Brokerage Firms

Cha

rges

Indiabulls Kotak Securities India-infoline ICICI direct Karvy Motilal oswal Sharekhan

81

Delievery Brokerage Charges

0.50.45

0.5

0.75

0.5 0.5 0.5

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

Indiabulls KotakSecurities

India-infoline

ICICI Direct Karvy Motilal oswal Sharekhan

Financial Brokerage Firms

Char

ges

Indiabulls Kotak Securities India-infoline ICICI Direct Karvy Motilal oswal Sharekhan

Intraday Brokerage Charges

Delivery Brokerage charges of the Competitors of

Indiabulls Securities Ltd

82

Delivery Brokerage Charges

Analyzing the Blogs from Web Site Traderji.com (online community

for Indian Investors & Traders)

We were interpreting the blogs written by customers, their experiences and their review

on brokerage firms.

In this web site they have conducted opinion poll on broker preferences of customers &

reasons for choosing the particular brokerage firm. In this poll opinion, customers have

shared their viewpoint about pros & cons of different brokerage firms.

Experiences of Customers

Poll Options

Which online broker u prefer and why - chose one

5paise

ShareKhan

Motilal Oswal

ICICI Direct

HDFC

India Bulls

Kotak

Any other (mention name)

83

Which Online Broker You Prefer? Poll Results of Blog(Voters 457)

Any other Mention, (58), 13%

Kotak, (34), 7%

Indiabulls, (75), 16%

HDFC, (14), 3%

ICICI direct, (109), 24%

Motilal Oswal, (16), 4%

Sharekhan, (83), 18%

India-Infoline(5paisa), (68), 15%

India-Infoline(5paisa) Sharekhan Motilal Oswal ICICI direct

HDFC Indiabulls Kotak Any other Mention

View Poll Results Vote Now

Poll Results of Blogs: Total Number of Voters =457

84

Pie chart showing Poll results

Competitive Strength of Indiabulls Securities

Indiabulls securities Ltd have a distinct set of competitive advantages that make it

uniquely capable of winning in the marketplace against its competitors

Diverse Branch Network

Bouquet of financial products and services

Advanced technology team that delivers market leading product innovation

Strong sales and marketing teams with continuous reinvestment and training

Strong cross-selling opportunities.

Strong and experienced promoters

Leading product innovation and marketing strategies

Well capitalized player, with strong banking relationships and credit ratings

Ability to combine people and technology in unique ways

85

Strong market presence and increased market share leading to a virtuous cycle of

growth and Profitability.

Core pillars of Business strategy

Increase the number of Client Relationships.

Offer Diversified Financial Products & Services.

Multiple Channels – Enhance Customer Experience and Opportunities.

Low cost and highly scalable business.

Merits of Indiabulls Securities

Low brokerage charges (Competitive) with 0.10 for Intra-day and 0.50 % for

delivery.

Indiabulls securities provide 8 times margin for Intra-day and 4 times margin for

delivery.

Indiabulls is suitable for both Day trading & Long term investment

86

IndiaBulls has software called Power IndiaBulls. It is a Java based application,

with real-time streaming quotes. It is fast in terms of speed and execution

Research reports are free of cost to trading members.

They Provide 3 in 1 interface, i.e. Demat Account, Trading account & bank

account all are linked in one interface.

De-Merits of Indiabulls Securities

You have to open a bank account with the banks mentioned in Indiabulls site

for Credit/ Debit Facility as they don’t have their own bank. And In ICICI

direct , you have a direct debit/credit facility with the bank

Most customers feel that it is difficult to understand the ledger reports of

Indiabulls securities, so proper customer guidance should be given.

Lack of Banking arm

Rural market is yet to be tapped.

More importance should be given to promotions & advertisements.

87

Value Proposition of Indiabulls Securities

ISL provide a very good Trading tools like Power Indiabulls & Indiabulls market

trader.

Power Indiabulls: A desktop Trading application offering clients sophisticated

trading tools accessible at lightning fast speed.

Indiabulls Market Trader: Browser based trading application built for retail

investor.

Indiabulls Equity Analysis: Premium research on 400 plus companies.

Indiabulls Professional Network: Offers real-time prices, detailed data and news,

intelligent analytics and electronic trading capabilities.

Relationship manager: Indiabulls securities robust technology is integrated with

knowledgeable and customer-focused relationship managers who are available

24X7 to assist the clients.

In Depth Market Analysis and Research

Their special research cell bring you intensive research reports on how the stock

market is faring, when is the right time to invest.

88

Branches of Competitors of Indiabulls as per the Year 2005-06

306

667750

257250

500400

0

100

200

300

400

500

600

700

800

Kotak Indiabulls ICICI Sharekhan India-Infoline

Motilal-oswal

Karvy

Competitors

Num

ber o

f Bra

nche

s

Kotak Indiabulls ICICI Sharekhan India-Infoline Motilal-oswal Karvy

Number of Branches of Competitors compared with

Indiabulls securities

89

Number of Customers Using Online Trading Terminal as per Year 2005

675,000

140,000

60,00075,000 90,000

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

Brokerage Firms

Num

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Number of Customers of competitors compared with

Indiabulls

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Merits & De-merits of Competitors

ICICI securities: It provides products & services in fixed income, equity & corporate

finance.

ShareKhan

Merits of ShareKhan Securities

Low brokerage charges, intraday 0.1% and 0.5% for delivery.

Live streaming quotes

Customer support is good

No monthly charges

Can trade in both BSE and NSE

De-Merits of ShareKhan Securities :-

No BTST (buy today sell tomorrow), in ShareKhan you can’t sell a share today which

you bought yesterday.

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You have to open a bank account with the banks mentioned in ShareKhan site.

Streaming quotes requires JVM (Java Virtual Machine); this may be big headache

for customers.

Annual charges are Rs330.

Their trading terminals are certainly not for "investors", only for active traders.

That is because, you have to trade a certain volume every month, otherwise you

end up paying a fine

Can apply IPO online Can apply IPO online

Not necessary while opening a Demat

account you

Need to maintain a minimum

of Rs 5000

Can trade in BSE & NSE Can Trade in BSE & NSE

No Monthly Charges No Monthly Charges

Cannot apply can apply mutual funds

online

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India Infoline

Merits of India Infoline (5 Paisa.com) Securities

Low brokerage charges, intraday 0.10% and 0.50% for delivery and it is

negotiable.

Minimum brokerage per share will be 1 paisa for trading transactions and 5 paisa

for delivery based transactions.

5 paisa provides 6 times margin for Intraday & 8 time’s margin for Delivery.

All customers will get Digital Contract Notes. Physical contract notes could be

provided on request which would entail a nominal charge.

De- Merits of India Infoline (5 Paisa.com) Securities

Registration Fees (one time) Rs.500/ and is non-refundable.

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Software License Fee Rs.799/- per month or 7999/- per annum and is non-

refundable.

There is lot of Hidden costs.

Annual Service Charges Rs.250.

Customers who just want to have a depository relationship will be required to pay

Rs.1000/-, for each Demat account, which will be adjusted against service

charges.

The information in their web based terminal is too much compressed in one

screen.

Trader terminal is good, but the interface is too complicated

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Kotak Securities

Merits

They provide streaming quote software free.

Low Brokerage charges with 0.05% for Intra-day & 0.45% for delivery.

Kotak Securities will offer small-time retail investors with invest able

surpluses as low as Rs.5, 000 a chance to invest in capital markets.

Transactions are transparent with effective back office support.

They provide Simple Ledger reports, which customers feel easy to understand

than any other brokerage firms.

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Mutual fund & IPO facility is available online.

Flexibility of products - Once you invest with Kotak Securities, you can enjoy

access to a wide range of products and services to help you make the most of

your investments.

De-Merits

Unethical act: Geojit Securities Ltd has accused kotak securities stock broking

firm of hacking into its account to steal critical business information and

blocking information access. (Report: dated 2002, Ref: www.domain-b.com).

Some investors have bad experience with accounts opening & they complain

that it takes a long time for opening accounts.

Some customers are not happy with customer care of Kotak securities.

Value Proposition of Kotak Securities

Kotak Securities have a definite policy on brokerage, and they have different

slabs for different clients based on their turnover. You can always choose your

brokerage based on your style and quantum of trading.

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High Quality of software (KEAT)

K.E.A.T is a special software that Koataksecurities.com provides its

customers using which they can view live market rates of scrip’s on both the

NSE and BSE, create a watch list and simultaneously place orders, view order

reports, research companies etc. It is a complete online trading terminal.

Mobile trading

The facility is exclusively designed to give you instant access to the stock

market through mobile phone.

Phone Trading – Call and Trade

Call & Trade is a service offered by Kotak Securities for its customers, which

provides customers with a facility to trade over the phone. Kotak Securities

provides you a toll free number that you can call from anywhere in India.

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CONCLUSION

On the whole, my project at INDIABULLS was worthwhile as I got the opportunity to

learn a lot about the capital market. It was a wonderful experience interacting with

employees of the organization and simultaneously enhancing my knowledge and skills

about stock market operations. I got to know about the process of dematerialization,

account opening and how the trades department settles the various transactions etc.

Working at INDIABULLS and preparing this project report was a learning experience

and I shall make immense use of it in my career.

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RESULT,FINDINGS & SUGGESTIONS

Aggressive Promotions: Indiabulls Securities compared to its competitors

concentrates less on advertising and promotions, especially through electronic media. Its

competitors like Sharekhan, ICICI and Kotak are advertising aggressively through media.

Indiabulls should concentrate more on advertising through print and electronic media.

Tapping Rural Market: The Indian rural investors market are relatively untapped,

with only small and private firms meeting the current demand. Indiabulls Securities can

gain the “First Mover Advantage” over its competitors, especially in areas were

commercial crops are grown and the standard of living is high. These people do not have

much option to invest other than banks and post offices.

Reduce the initial account opening charges: The charge for opening a trading

and demat account in Indiabulls securities is high compared to its competitors. This

influences the potential investors to open their account with another company which

provides the same at lower prices. Thus it acts as a mental barrier for potential customers,

who tend to overlook all other benefits offered by Indiabulls. Hence Indiabulls should

consider reducing their account opening charges.

Bring in more product differentiation: Product differentiation here means that Indiabulls

securities should bring in more customized services and more value proposition for large

investors. It can reduce the brokerage charges for large investors which will encourage

them to invest more in the company.

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Invest more on R&D: Indiabulls should concentrate on its research and development

since most of its competitors are investing on R&D. This will help the company to read

the market better and will also be in a better position to understand the needs of the

customers. This can be extremely beneficial for Indiabulls in the long run.

ANNEXURE

Profit & loss Summary

100

Mar 2007

Mar

2008 Mar 2009

Rs. Crore (Non-

Annualized) 12 months 12 months 12 months

-      

Income 69.48 114.59 317.97

Leasing & hire services 0 0 0

Security transactions 0.18 0 0

Dividend income 0 0.29 0

Interest income 15.36 1.93 21.16

Others 53.94 112.37 296.81

Other income 0 0 0

Non-recurring income 0.03 0.27 0.13

-      

Expenditure      

101

Loss on security

transactions 0 0.28 0.04

Other operating

expenses 3.58 7.92 13.84

Personnel cost 10.72 20.88 50.24

Other expenses 11.33 13.71 21.24

Finance charges 13.97 21.48 46.7

Lease rent 2.19 3.89 3.08

Less: expenses

capitalized 0 0 0

Non-recurring expenses 0 0 0

-      

Profits / losses      

PBDT 29.91 51.28 186.85

Depreciation 1.11 2.16 6.57

PBT 28.8 49.12 180.28

Tax provision 10.79 17.89 61.06

PAT 18.01 31.23 119.22

-      

Appropriation of profit      

102

Dividends 0.7 6.14 0.62

Retained earnings 17.31 25.09 118.6

Format of Questionnaire For Doing Promotions

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The format of Questionnaire given to people is as follows:

Name of Person:

Contact Number:

E-mail Id

Are you interested in Share Market? Yes No Do you invest in Share market? Yes No

Are you aware of Indiabulls? Yes No

Do you have a Demat Account? Yes No

Presently in which security are you trading?

Signature

Brokerage & Tax break up format of Indiabulls

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(For Security reasons all data are not revealed)

Intraday (%) Delivery (%)

Futures (%)

Buy Sell Buy Sell

Buy Sell

Brokerage Charges 0.1 0.1 0.5 0.5

0.1 0.1

Security Transaction 0 0.025 0.125 0.125 0

0.017

Tax (STT)

Service Tax (12.24% on brokerage)

Turn over Tax (TOT)

Stamp duty

Total

105

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Bibliography:-

“Bombay Stock Exchange" Bseindia. 20 Mar. 2007 <http://www.bseindia.com>.

" Indiabulls Securities” Indiabulls.Com. 15 Mar. 2007 <http://www.Indiabulls.com>.

"National Stock Exchange” nseindia. 25 Mar. 2007 <http://www.nseindia.com>.

"Share khan Securities” Sharekhan.Com. 25 Mar. 2007 <http://www.sharekhan.com>.

“India Infoline Securities” India-Infoline.Com. 26 Mar. 2007 <http://trade.indiainfoline.com>.

" India Infoline Securities” 5paisa.Com. 26 Mar. 2007 <http://www.5paisa.com>.

" Kotak Securities” kotak securities.Com. 26 Mar. 2007 <http://www.kotaksecurities.com>.

"ICICI Securities” ICICI securities.Com..25 Mar. 2007 <http://www.ICICIsecurities.com>.

" Karvy” Karvy.Com. 25 Mar. 2007 <http://www.karvy.com>.

“Online Investors & Traders” 2 Apr. 2007 <http://www.traderji.com>.

" Motilal Oswal Securities” . 25 Mar. 2007 <http://www.motilaloswal.com>.

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