A Study onRisk and return analysis for automobile Industry in India

Study conducted at Motilal Oswal Securities Limited

A Synopsis to Visvesvaraya Technology University, BelgaumIn the partial fulfillment of the requirement for the award of the degree of

MASTER OF BUSINESS ADMINISTRATIONSubmitted by:

YESHWANTH .R (USN: 1AT13MBA45) Under the guidance ofINTERNAL GUIDE EXTERNAL GUIDE Mr. Prasanna Byahatti Ph.D Mr. Amzad Shaikh Asst. Professor Branch Manager PG Dept. of Management studies Atria Institute of Technology Motilal Oswal Securities limited Bangalore Bangalore

PG Department of Business AdminstrationAtria Institute of Technology Bengaluru-5600242013-2015

CERTIFICATE

This is to certify that Mr. YESHWANTH . R bearing University Seat Number (USN) 1AT13MBA45, is a bonafide student of Master of Business Administration course of the ATRIA INSTITUTE OF TECHNLOGY - 2013 batch, affiliated to Visvesvaraya Technological University, Belgaum. Internship report on RISK AND RETURN ANALYSIS ON AUTOMOBILE INDUSTRY IN INDIA is prepared by her under the guidance of Mr. AMZAD SHAIKH at MOTILAL OSWAL SECURITIES LTD, Bangalore in partial fulfillment of the requirements for the award of the degree of Master of Business Administration of Visvesvaraya Technological University, Belgaum Karnataka

Signature of Internal Guide Signature of H O D Signature of Principal

DECLARATION

I, Mr. YESHWANTH.R hereby declare that the Internship report entitled RISK AND RETURN ANALYSIS ON AUTOMOBILE INDUSTRY IN INDIA with reference to MOTILAL OSWAL SECURITIES LTD Bangalore prepared by me under the guidance of Mr. PRASANNA BYAHATTI, Asst. Professor of MBA Department, ATRIA institute of technology, Bangalore. and external assistance by Mr. AMZAD SHAIKH, Branch Manager, MOTILAL OSWAL SECURITIES LTD. I also declare that this internship work is towards the partial fulfillment of the university regulation for the awards of degree of Master of Business Administration by Visvesvaraya Technological University, Belgaum.I have undergone a summer project for a period of 12 weeks. I further declare that this project is based on original study undertaken by me and has not been submitted for the award of any Degree/Diploma from any other University/ Institution

Place:Bangalore (Yeshwanth.R)Date:

ACKNOWLEDGEMENT

I have been fortunate enough to get good timely advice and support from a host of people to whom I shall remain grateful.

I take this opportunity to express my heartfelt thanks to Dr. Rajanandam Principal, Atria Institute of Technology Bangalore, for his support and cooperation to undertake and complete the project work.

I am extremely thankful to Dr. K.S. Bhat Head of the Department of Management Studies & Research Centre Atria Institute of Technology Bangalore, for his advice and support throughout the completion of the project work.

It gives me immense pleasure to thank my Internal Guide Mr. Prasanna Byahatti asst. professor of Department of Management Studies & Research Centre Atria Institute of Technology Bangalore, for his valuable guidance and untiring support and cooperation in completing the project work.

I acknowledge the insights provided by my External Guide Mr. AMZAD SHAIKH., Branch Manager, MOTILAL OSWAL SECURITIES LTD. Which helped me to a great extent in completion of the project work.

And finally, there are heartfelt thanks for the patience and cooperation of the family and friends, without whom the endeavor would not have been possible.

(Yeshwanth . R) USN: 1AT13MBA45

TABLE OF CONTENTSCHAPTER NO CONTENTS

PAGE NO

PART A

1GENERAL INTRODUCTION

Statement of the problemObjective of the studyScope of the studyResearch methodologyLimitations of the study

2.COMPANY PROFILE

Background and Inception of the company

a. Nature of Business carried

b. Vision mission and Quality

c. Product/ services Profile

d. Area of Operation

e. Ownership Pattern

f. Competitors inform

g. Infrastructural facilities

h. Achievements

i. Work flow model

j. Future growth and prospects

3.1MCKINSEYS 7S FRAME WORK

3.2SWOT ANALYSIS

3.3ANALYSIS OF FINANCIAL STATEMENT

PART B

4ANALYSIS AND INTERPRETATION

5SUMMARY OF FINDINGS, SUGESSTION

CONCLUSION

6ANNEXTURE

CHAPTER -1

TITLE OF THE STUDY

Risk and Return analysis for Automobile Industry in India: at Motilal Oswal Securities Ltd

INTRODUCTIONGeneral utility theory suggests that the average investor is risk averse. Given the same expected return of two assets with different risks, he would prefer the one with less risk. (This assumption may not be perfectly true for all individuals in all situations, but for the investor community as a whole it is probably true). Therefore, investors demand a higher expected return for riskier assets. Note that a higher expected return does not guarantee a higher realized return. Because by definition returns on risky assets are uncertain, an investment may not earn its expected return For an asset with uncertain cash flows and payoffs, which are normally distributed, the mean of the distribution will be the expected return while the standard deviation forms some kind of risk. Choosing the less risky asset therefore comes down to choosing the asset with the lowest standard deviation in its payout distribution. An investor could also approach the problem from the other direction, choosing among assets with the same risk and then choose the asset with the highest expected return.SCOPE OF THE STUDY The area of study is restricted only to equity diversified funds of automobile sector The calculation of the necessary parameters for each stock are for a period of one year The study does not cover the technical analysis of the stocksOBJECTIVES To Identify the Risk and Return involved in the investment of securities in the market specifically with the Indian automobile industry. To study the price movements of the stock with respect to Nifty index To study the variation involved in the stock with respect to its returns To suggest the investor whether to buy, sell or hold a particular stock based on the analysis.

METHODOLOGYThis research study has adopted descriptive research design .These data were drawn from the historic data from the NSE (National Stock Exchange) both the S&P CNX NIFTY and the Stock Return of the individual firms(TATA, M&M, HERO HONDA, ASHOK LEYLAND & MARUTHI). Internet is used as the primary source to draw the data for the analysis of the risk in the securities of these firms in the automobile industry.

LITERATURE REVIEW American Economic Review by peter c fishburn Vol.67,no 2. March 1999 Mean- Risk Analysis with Risk associated with Target returns it shows modles for choice among mutually exclusive investment opportunities or portfolios having uncertain returns .this group includes a variety of parametric models based on mean, semi variance, variance, loss probabities.etc. A Study on Risk & Return analysis of Automobile industry in IndiaBy Dr P Vikkraman, P Varadharajan (2004-2007) The risk and return analysis linked with any industry reveals the intricacies involved with the particular industry. A close watchon these values throws light on a clear understanding and facilitates in decision making about the investment in securities.. The importance of returns in any investment decision can be traced to the factors: it enables investors to compare alternative investments in terms of what they have to offer the investor, it helps in measuring of historical returns which enables the investors to assess how well they have done, it facilitates in measuring of the historical returns also helps in estimation of future returns Asian Journal of Research in Business Economics and Management Year : 2012, Volume : 2, Risk and return analysis of automobile Since the inception of mankind on earth, the only force that has driven it through the various phases of improvements and advancements is the urge to find solutions better, efficient and quick by way of mobility from one place to another. This urge gives birth to technology which has changed the world around us. The World of both the Automobile Industry of 21st century sets the best example by the virtue of breakthrough technologies & never tiring urge for more innovative technical advancement in all the aspects of the Industry. Our work aims at probing into the scenario of determining the risk and return relationship of the selected sectors for the study

LIMITATION OF STUDY The project is limited by the period of study The data collected is for a period of one year only The study mainly covers only the automobile sector The project is based on the information provided by the employees of the organisation and other primary organisational documents. The project is based on secondary data.

CHAPTER 2

INDUSTRY PROFILE

HISTORY

The equity brokerage industry in India is one of the oldest in the Asian region. India had an active stock market for about 150 years that played a significant role in developing risk markets and also promoting enterprise and supporting the growth of industry.

The roots of a stock market in India began in the 1860s during the American civil war that led to a sudden surge in the demand for cotton from India resulting in setting up of a number of joint stock companies that issued securities to raise finance. This trend was akin to the rapid growth of securities markets in Europe and the North America in the background of expansion of railroads, exploration of natural resources and land development.

Historical records show that as early as 1864, there were about 1,000 brokers with the stock markets functioning from three places in Mumbai, between 9 am to 7 pm at the junction of Meadows Street and Rampart Row, from day break till 9 am and from 7 pm to early hours of next morning at Bazargate.

Share prices rose sharply even at that time. A share of Colaba Land Company during the boom period of the 1860s rose from Rs 10,000 at par to Rs 120,000 and that of Backbay Shares went up from Rs 2,000 to Rs 54,000. Bombay, at that time, was a major financial centre having housed 31 banks, 20 insurance companies and 62 joint stock companies.

Reports on stock markets around that time indicate that an ordinary broker in 1864 earned about Rs 200 per day, a huge sum in those days. The boom period came to an abrupt end in 1865. In July 1865, what was then used to be called the share mania, ended with burst of the stock market bubble. Never had I witnessed in any place a run so widely distributed nor such distress followed so quickly on the heels of such prosperity thus wrote Richard Temple, who served as the Governor of Bombay at that time. An interesting aspect is that despite the collapse of the stock market, most of the brokers met their payment commitments.

In the aftermath of the crash, banks, on whose building steps share brokers used to gather to seek stock tips and share news, disallowed them to gather there, thus forcing them to find a place of their own, which later turned into the Dalal Street. A group of about 300 brokers formed the stock exchange in July 1875, which led to the formation of a trust in 1887 known as the Native Share and Stock Brokers Association.

A unique feature of the stock market development in India was that, it was entirely driven by local enterprise, unlike the banks which during the pre-independence period were owned and run by the British. Following the establishment of the first stock exchange in Mumbai, other stock exchanges came into being in major cities of India, namely Ahmedabad (1894), Calcutta (1908), Madras (1937), Uttar Pradesh and Nagpur (1940), and Hyderabad (1944). The stock markets gained from surge and boom in several industries such as jute (1870s), tea (1880s and 1890s), coal (1904 and 1908) etc., at different points of time.

RAPID GROWTH

The last decade has been exceptionally good for the stock markets in India. With the background of wide ranging reforms in regulation and market practice and the growing participation of foreign institutional investment, stock markets in India have showed phenomenal growth in the early 1990s. The stock market capitalization in mid-2007 is nearly the same size as that of the gross domestic product as compared to about 25% of the latter in the early 2000s.

Stock markets became intensely technology and process driven, giving little scope for manual intervention that has been the source of market abuse in the past. Electronic trading, digital certification, straight through processing, electronic contract notes, online broking have emerged as major trends in technology. Risk management became robust reducing the recurrence of payment defaults. Product expansion took place in a speedy manner. Indian equity markets now offer, in addition to trading in equities, opportunities in trading of derivatives in futures and options in index and stocks. ETFs are showing gradual growth. Within five years of introduction of derivatives, Indian stock markets now are ranked first in stock futures and fourth in index futures.

Indianstock markets are transaction intensive and thus rank among the top five markets in this regard .Stock exchange reforms brought in professional management separating conflicts of interest between brokers as owners of the exchanges and traders/dealers. Foreign institutions took stake in Indias two leading domestic stock exchanges. While NYSE Group led consortium took stake in the National Stock Exchange, Deutsche Borse and Singapore Stock Exchange bought equity in the Bombay Stock Exchange Ltd.

NATIONAL STOCK EXCHANGE (NSE)

The National Stock Exchange (NSE) is Indias 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.

There are two kinds of players in NSE: Trading membersRecognized members of NSE are called trading members who trade on behalf of themselves and their clients Participants Participants include trading members and large players like banks who take direct settlement responsibility.

Unless stock markets provide professionalized service, small investors and foreign investors will not be interested in capital market operations and capital market being one of the major sources of long-term finance for industrial projects, India cannot afford to damage the capital market path. In this regard NSE gains vital importance in the Indian capital market system.

BOMBAY STOCK EXCHANGE (BSE)

Bombay Stock Exchange is the oldest stock exchange in Asia with a rich heritage of over 133 years of existence. What is now popularly known as BSE was established as The Native Share & Stock Brokers Association in 1875. BSE is the first stock exchange in the country which obtained permanent recognition (in 1956) from the Government of India under the Securities Contracts Regulation Act (SCRA) 1956. BSEs pivotal and pre-eminent role in the development of the Indian capital market is widely recognized.

It migrated from the open out-cry system to an online screen-based order driven trading system in 1995. Earlier an Association of Persons (AOP), BSE is now a corporatized and demutualized entity incorporated under the provisions of the Companies Act, 1956, pursuant to the BSE (Corporatization and Demutualization) Scheme, 2005 notified by the Securities and Exchange Board of India (SEBI). With demutualization, BSE has two of worlds prominent exchanges, Deutsche Bores and Singapore Exchange, as its strategic partners.

Today, BSE is the worlds number 1 exchange in terms of the number of listed companies and the worlds 5th in handling of transactions through its electronic trading system. The companies listed on BSE command a total market capitalization of USD 1.63 Trillion as on December, 2010,makingit the 4th largest stock exchange in Asia and the8th largest in the world.BSE reaches to over 400 cities and town nation-wide and has around 5,034 listed companies; with over 7745 scrips being traded as on 31stDec, 2010.

The BSE Index, SENSEX, is Indias first and most popular stock market benchmark index. Sensex is tracked worldwide. It constitutes 30 stocks representing 12 major sectors. The SENSEX is constructed on a free-float methodology, and is sensitive to market movements and market realities. Apart from the SENSEX, BSE offers 23 indices, including 13 sectorial indices. It has entered into an index cooperation agreement with Deutsche Borse and Singapore Stock Exchange. These agreements have made SENSEX and other BSE indices available to investors across the globe. Moreover, Barclays Global Investors (BGI), at Hong Kong, the global leader in ETFs through its iShares brand, has created the exchange traded fund (ETF) called iShares.

BSE provides an efficient and transparent market for trading in equity, debt instruments and derivatives. It has always been at par with the international standards. The systems and processes are designed to safeguard market integrity and enhance transparency in operations. BSE is the first exchange in India and the second in the world to obtain an ISO 9001:2000 certifications. It is also the first exchange in the country and second in the world to receive Information Security Management System Standard BS 7799-2-2002 certification for its BSE On-line Trading System (BOLT).BSE continues to innovate. In 2006, it became the first national level stock exchange to launch its website in Gujarati and Hindi and now Marathi to reach out to a larger number of investors. It has successfully launched a reporting platform for corporate bonds in India christened the ICDM or Indian Corporate Debt Market and a unique ticker-cum-screen aptly named BSE Broadcast which enables information dissemination to the common man on the street.

LIST OF STOCK EX-CHANGES IN INDIA

There are 22 stock exchanges in India. These are shown below:1. Bombay Stock Exchange2. National Stock Exchange 3. Bangalore Stock Exchange4. Bhubaneswar Stock Exchange 5. Calcutta Stock Exchange6. Cochin Stock Exchange7. Coimbatore Stock Exchange 8. Delhi Stock Exchange 9. Guwahati Stock Exchange 10. Hyderabad Stock Exchange11. Jaipur Stock Exchange12. Ludhiana Stock Exchange13. Madhya Pradesh Stock Exchange14. Madras Stock Exchange 15. Magadha Stock Exchange16. Mangalore Stock Exchange17. Meerut Stock Exchange18. OTC Stock Exchange19. Pune Stock Exchange20.Saurasthra Stock Exchange21. Uttar Pradesh Stock Exchange22. Vadodara Stock Exchange

WORLDWIDE STOCK MARKETS

CountryMarket cap (US$ billion)% of world

1USA15,51739.5

2Japan4,07910.4

3United Kingdom3,0677.8

4France1,8284.7

5Germany1,2563.2

6Canada1,2393.2

7Hong Kong1,0012.6

8Switzerland8722.2

9Italy7882.0

10Spain6881.8

11Australia6871.8

12Russia5921.5

13South Korea5571.4

14India5061.3

15Taiwan4751.2

SECURITY & EXCHANGE BOARD OF INDIA (SEBI)

SEBI was established in 1988 and became a fully autonomous body in the year 1992 with defined responsibilities to cover both development and regulation of Stock Market.

FUNCTIONS OF SEBI :

1. Regulation of Stock exchanges and Subsidiaries:One of the key functions of the Board is to supervise and monitor the activities of the exchanges, clearing houses and the settlement system, strengthen market infrastructure and ensure that appropriate risk management systems are in place. Main functions include Inspection of Stock Exchanges, Inspection of Subsidiaries of Stock Exchanges, Restructuring of Management of Subsidiaries, Takes Strict actions against Illegal Trading in Securities.2. Registration and Regulation of the working of Intermediaries:In order to interpose between issuers and investors, regulators recognize various classes of intermediaries in the capital market. SEBI, over the period, recognized many types of capital market intermediaries in India and operations during the year is reviewed in the following sections. i. Primary Market: Intermediaries such as merchant bankers, underwriters, debenture trustees, bankers to an issue, registrars to an issue and share transfer agents and portfolio manager are the intermediaries that function in the primary markets.ii. Secondary Market: Brokers & sub-brokers will function in the secondary market. Sub-brokers are intermediaries between the broker and the investors.iii. Registration of FIIsiv. Registration of Custodian of Securities3. Registration and Regulation of Collective Investment schemes including mutual Funds4. Promotion and Regulation of Self-Regulatory organizations 5. Fraudulent and Unfair Trade practices6. Investor Education and the Training of Intermediaries.

MAJOR INITIATIVES TAKEN BY SEBI

PAN was made the sole identification number for all transactions in securities market irrespective of the amount. Format of the New Scheme Report by Mutual funds revised. Long term options on Sensex and Nifty with tenures up to 3 years Introduced and the options cycle, risk containment measures specified. BSE and NSE permitted to put in place corporate bond trading platforms to enable efficient price discovery and clearing and settlement in a gradual manner.

COMPANY PROFILEBACKGROUND AND INCEPTION OF THE COMPANY

Motilal Oswal securities limited was founded in 1987 as a small sub-broking unit, with just two people running the show Mr. MotilalOswal and Mr. RaamdevAgarwal laid the foundation for MOFSL. It is headquartered in Mumbai having one of Indias largest networks spreading over 563 cities and towns comprising 1538 business locations operated by business partners. As of 30 Sept 2011 it has 732173 registered customers.MOITAL OSWAL FINANCIAL SERVICES GROUP consists of 5 highly renowned entities which are as follow: MOIAPL (Motilal Oswal Investment Advisors Private Ltd.) MOCBPL (Motilal Oswal Commodities Broker Private Ltd.) MOPEAPL (Motilal Oswal Private Equity Advisors Private Ltd.) MOAMC (Motilal Oswal Asset Management Company) MOSL (Motilal Oswal securities Ltd)Focus on customer-first-attitude, ethical and transparent business practices, respect for professionalism, research-based value investing and implementation of cutting-edge technology has enabled us to blossom into an over 2000 member team.NATURE OF THE BUSINESS MOFSL is a broking unit and a well-diversified financial services firm offering a wide range of financial services and products. Being a subsidiary MOSL carries the same business where it particularly deals Investment Banking, Private Equity, Wealth Management, Institutional Equities, Asset Management, Broking and Distribution, Principal Strategies . Motilal Oswal Securities Advisory Group is equipped to augment and alter the investments in an effort to create healthy portfolio. Motilal Oswal Securities Ltd follows a network of franchisee/sub-brokers shop and Remises model. Their systems and policies are deeply evolved and centred on the business requirements of the sub broker. The business is carried on in two different areas .The first one is client acquisition and the second one is franchisee acquisition .There are few ways in which client acquisition takes place .They include tele-calling, cold calling, referrals from existing clients and directly targeting competitor data base, walk-ins. Franchisee acquisition means insisting the interested sub brokers to open up a franchise or sub brokerage firms of Motilal Oswal. This might be either on the premises of Motilal Oswal or a separate office where the support service is provided by Motilal Oswal. There are people who work independently in the premises of Motilal Oswal who are known as Business Associate Group (BAG). CORE PURPOSE AND VALUESVision

To provide opportunities for children and their families to move from poverty and dependence to self-reliance. At MotilalOswal Financial Services Limited our motto is `Knowledge First` and we believe that education can bring prosperity and equality in the society.MISSION

To be a well-respected and preferred global financial services organization enabling wealth creation for all our customersValuesOur core purpose is complemented by our organizational values. Living these values, we believe, helps us achieve our core purpose.Integrity: A company honoring commitment with highest ethical and business practices.Passion & Attitude: High energy and self-motivatedwith a Do it attitude and entrepreneurial spirit. . PRODUCTS AND SERVICESMOSL understands customer profile and uses a combination of the following products and services to look after their needsEquities BSE/NSE Derivatives- NSE-Cash and F&O and BSE Cash and F&O Commodities- NCDEX/MCX Portfolio Management Services Private Equity Mutual Funds Online Trading IPOs Depository Services Loan against shares Asset management Investment banking Wealth ManagementEQUITY: Motilal Oswal securities Ltd is a member of NSE and BSE, has a network of over 480 branches inIndia and abroad, rendering quality equity trading services. Motilal Oswal Securities Ltd not only has a strong offline presence but also provides but also provide automated online trading services. Motilal Oswal Securities Ltd is retail spread caters to the need of individual investors. Trading in equities is made simple, safe and interesting with smart advice from the research desk through daily SMS alerts, market pointers, periodical research, stock recommendations and customer meets organized frequently.DERIVATIVE:A Derivative is a financial contract, between two or more parties, which is derived from the future value of an underlying asset. At any point of time there will always be available near three month contract periods. Currently, settlement of all derivatives trades is in cash. There is daily as well as final settlement. As long as the position is open, the same will be mark to market at the daily settlement price, the difference will be credited or debited accordingly and the positions shall be brought forward to the next day at the daily settlement price.INTERNET TRADING: If you have access to the Internet then you can register with your to view your demat account over the internet. This is very beneficial as you can avail of a host of services at no extra cost. You will be able to view your holdings, reports, and ledger and will have free access to our research reports at any time.DEPOSITORY SERVICES: A depository can be compared to a bank. It holds securities such as shares, debentures, bonds, government securities, units etc. Of investors in electronic form. Motilal Oswal Securities Ltd is a depository participant of NSDL. Investors can open demat accounts with NSDL through MOSL. One can approach the nearest branch of Motilal Oswal Securities Ltd for opening an account. Agreement charges along with annual maintenance charge (AMC) are collected upfront while opening an account. It takes two to three days to open a demat account.PORTFOLIO MANAGEMENT SERVICES: Motilal Oswal Securities Ltd a SEBI registered portfolio manager offers discretionary portfolio management services. Motilal Oswal Securities Ltd has a team of experts who carefully take investment decisions based on the clients objectives. The portfolio management team has a successful track record of more than 10 years in the capital markets.COMMODITIES: MOCB provides commodity broking facilities through its membership of NCDEX and MCX. They trade for their clients in a wide variety of 63 commodities, including agricultural products, bullion, industrial products, oil and oil seeds and energy products. MOSL brokerage clients have access to exclusive customized trading advice and reports on highly traded commodities.RETAIL WEALTH MANAGEMENT: Retail wealth management services are offered through MOFSL, MOSL and MOCB. They seek to offer customized investment management services including planning, advisory, executive and monitoring or a range of investment products to our retail customers. Through various types of brokerage accounts, our customers can purchase and sell securities, including equities, derivatives as well as commodities traded on NSE, BSE, OTCEI, NCDEX and MCX.MUTUAL FUNDS:Mutual funds offer a platform to participate in the equity & debt market indirectly through professional management. Motilal services regarding client profiling, asset allocation plan, scheme selection, re-balancing. It offers need based advisory fully backed by solid research, it understands the needs and builds a prudent portfolio, it reviews the portfolios on a monthly basis.

AREAS OF OPERATION:Motilal Oswal Financial Services is a national player as of March 31st, 2010, network spread over 591 cities and research coverage of more than 1755 companies and towns comprising 1,397 business locations operated by our business partners. As at march 31st, 2010, they have 6,21,215 registered customers, with a network over 1500 outlets and more than 5 lakh investors in over 450 cities and towns needs of all kinds of customers. They have established Indias largest dealing room and advisory desk spread over 2600 Sq.Ft area housing over 250+ advisors at Malad, Mumbai. The reason for the growth and size has been a large sub-broker network. Over 1300 of their outlets are run by their sub-brokers.As a part of MOFSL, Motilal Oswal Securities Ltd (MOSL) located in Bangalore. Almost 10% of the revenue is invested in equity research and they hire and train the best resources to become advisors. MOSCL has the highest credit rating for 4.0billion short term debt program. Credit rating agency CRISIL has assigned the highest rating of P1+ to the companys short term debt program. Geographic reach through Branch network Franchisee network Alliances with banks dedicated HNI channel brand Purple

Registered officePalm spring center, 2nd floor, palm court complex,New link road, Malad (W), Mumbai-400 064Call: 022-30896680Email: mfservice@motilaloswal.comBangalore regional OfficeBellary Rd, Palace Orchards, Sadashivanagar,Bangalore - 560 080Tel: 09341875446/080 67133400/ 441

OWNERSHIP PATTERN:ParticularsNo. Of Shares% holdings

Promoter and Promoter Group

Indian 100,575,85169.31%

ForeignNILNIL

Public Shareholdings

Institution Mutual Funds/UTI FII

15,663,0771,428,60610.79%0.98%

Non- Institutions Body Corporate Individuals Others (NRI, Foreign Co., Directors, trusts, Clearing Members)574,6079,322,558

17,554,7700.40%6.43%

12.11%

A. CustodiansNILNIL

TOTAL145,119,469100%

COMPETITORS INFORMATION:Motilal Oswal has many competitors like Stock Holding Corporation of Karvy Consultancy, BGSE, Infrastructure Leasing & Financial Services Limited (IL&FS), Share Khan, ICICI Direct, India Bulls, Kotak Securities, Standard Chartered, Religare, India bulls etc. INFRASTRUCTURE FACILITIES MOTILAL OSWAL FINANCIAL SERVICES LTD is located at Bellary road, palace orchards, Sadashivanagar, Bangalore. Office Total Area rented by the company is2,200 square feet. With very good technology support is available. Cleanliness is given utmost importance in the company. There are air- conditioners, proper lighting and ventilation and telecommunication facilities. The company also provides travel allowances and medical allowance facilities to the employees and parking facility is also available. There is a Relationship Manager Cabin, a Conference hall, a Training room, a Dealing room, back office department, a reception hall. The softwares used are trading :1. Online trading Fast Trade software also known as My Broker 2. Offline trading- Lite Desktop provided by 3i InfoTech.ACHIEVEMENTS AND AWARDS: Best Equity Broking House award for FY011 at the Dun and Bradstreet Equity Broking Awards2011 Best Capital Markets and Related NBFC award at the CNBC TV18 India Best Banks and Financial Institution Awards 2011. Excellence in HR through Technology and Excellence in Healthcare awards at Asias Best Employer Brand Awards 2011 in Singapore. Most Innovative Fund of the Year award at the CNBC TV18-CRISIL Mutual Fund Awards 2011 Adjudged the Best Performing Equity Broker at CNBC TV18 Financial Advisors Awards 2010. Investment Banking bagged Asia Pacific Cross-Border Deal of the Year and India M&A Investment Banker award. Rated No. 1 Best Recommendations Mid & Small Caps and won awards in 3 out of 4 categories at the Star Mine India Broker Rankings 2009 from Thomson Reuters. Alliance with Axis Bank for offering Online Trading services.FUTURE GROWTH AND PROSPECTS: Grow distribution networks India Leverage research and advisory Investor awareness and education Increase distribution of mutual fund and insurance products Focus on wealth solutions and new product offering Grow investment banking business Judicious use of capital ensures high Return on Equity and low leverage Flexible cost structure to maintain profitability across market cycles Build stronger Institutional relationship through wider and quality research Increase research support Grow institutional derivative business Building Principal Strategies Group to maximize returns using risk free arbitrage strategies Grow margin funding book size.

MCKINSEYS 7S FRAMEWORKThe 7-s framework of Mckinsey is a Value Based Management (VBM) model that describes how one can holistically and effectively organize a company..The model indicates the interrelationship between the major aspects of the company and the way in which they are coordinated.McKinsey 7S framework Developed in the early 1980s by Tom Peters and Robert Waterman, two consultants working at the McKinsey & Company consulting firm, the basic premise of the model is that there are seven internal aspects of an organization that need to be aligned if it is to be successful. The 7S model can be used in a wide variety of situations where an alignment perspective is useful, for example to help you: Improve the performance of a company. Examine the likely effects of future changes within a company. Align departments and processes during a merger or acquisition. Determine how best to implement a proposed strategy.The Seven Elements The McKinsey 7S model involves seven interdependent factors which are categorized as either "hard" or "soft" elements:Hard ElementsSoft Elements

Strategy Structure SystemsShared ValuesSkillsStyleStaff

"Hard" elements are easier to define or identify and management can directly influence them: These are strategy statements; organization charts and reporting lines; and formal processes and IT systems."Soft" elements, on the other hand, can be more difficult to describe, and are less tangible and more influenced by culture. However, these soft elements are as important as the hard elements if the organization is going to be successful.

The McKinsey 7S Model

STRATEGY: FOCUS STRATEGY MOSL offers customized investment management services to its retail customers. Focus on the customer first philosophy Customer segmentation based on understanding of individual needs Wide bouquet of product offering (Direct equity, PMS, Mutual funds, Commodities).

EXPANSION STRATEGY Increase market share in retail business Increase market share in institutional brokerage Grow fee-based revenues Grow fund based revenues

STRUCTURE OF MOTILAL OSWAL:

SYSTEMS: Trade management systemMOSL use a trade management system called iBOSS Trader Workstation (IBTW). IBTW

SYSTEMS :Trade management systemMOSL use a trade management system called iBoss Trader workstation (IBTW). IBTW is a high performance trade order management system that handles exchange-traded instruments such as equities, commodities, futures and options. IBTW allows to send multiple orders to multiple exchanges and multiple segments simultaneously.

Internet Based Share Trading SystemMOSL have implemented an internet trading platform that allows to integrate their diverse trading engines into a single platform. This allows customers, dealers and relationship managers have a unique single window experience across all asset classes and product segments. This internet platform is architecturally scalable to handle a large number of customers concurrently.

Audit and inspectionMOSL actively review its existing audit and inspection procedures to enhance their effectiveness, usefulness and timeliness. Furthermore, all operational activities are subject to concurrent internal audits at frequent intervals. The Business Locations are audited on a quarterly basis by individual chartered accountancy firms appointed in their respective location.

Security and disaster recoveryMOSL has a comprehensive information security policy and conducts periodic systems and network penetration tests to review the vulnerability of infrastructure. They are now gearing towards a BS 7799 certification, of all IT processes to achieve a comprehensive control of IT.MOSL have a sophisticated and secure layer III data center. In addition, iBTW has an inbuilt security system that ensures that the sensitive data handled by iBTW is protected from unauthorized access and misuse

STYLE: Motilal Oswal securities Pvt. Ltd is a stock broking company where the nature of the business is broking and distribution. They work participative leadership style in order to form and increase high network of franchises and sub-brokers to maintain client relationship and to share views for research purpose. MOSL follows a top down style of management .The decisions are taken by the top management concerning matters related to the organization and decisions towards department related matters are taken by the department heads

STAFF: The details of staff in Motilal Oswal regional o are as follows STAFF DETAILS DETAILS OF STAFFMOSL regional office Bangalore Money spider stock broking private ltd

Employees 266

Franchisees80-

BAG5-

Direct Channel/ Retail133

IT11

Back Office33

Office boy32

SKILLS: Programs for Employees Increasing Employee Engagement Through ting 451 business process improvement ideas will be provided. Through coffee with chairman program: It is a platform to appreciate the employees efforts and encourage them to provide new ideas. Enhancing performance managementThe performance of employees is measured through Balance scorecard and KRA audit through HR Portal my zoneTraining System: For Building Employee Capability: Through M-powered 138 training programs, over 5,000 man days and CFP certificationSHARED VALUES:The company is a broking company where its operation of work depends on the stock exchange market which is volatile in nature. MOSL goes for the following values: Integrity: A company honoring commitment with highest ethical and business practices. Teamwork: Attaining goals collectively and collaboratively. Passion & Attitude: High energy and self-motivated with a Do It attitude and entrepreneurial spirit. Excellence in Execution: Time bound results within the framework of the companys value system.

SWOT ANALYSISThe strength, weakness, opportunities and threats of Motilal Oswal can be stated as follows:STRENGTHS OF MOSL: Large and diverse distribution network Strong research and sales teams Original Research Integrated Technology Platform User friendly software to its customers to facilitate online trading on their own. Brand recognition Strong private equity operations Strong investment culture Strong risk management practices Leadership in franchisee business Financial products and services such as Wealth Management, Broking & Distribution, Commodity Broking, Portfolio Management Services, Institutional Equities, Private Equity, Investment Banking Service

WEAKNESS OF MOSL: Charges are high compared to other companies in the industry. No service in rural segment. Less penetration in developing cities. Lack of advertising causes low awareness amongst investors.

OPPORTUNITIES OF MOSL: Growing Financial Services industry's share of wallet of disposable income Huge market opportunity for wealth management service providers as Indian wealth management business is transforming from mere wealth safeguarding to growing wealth. Favourable government policies which motivate public to invest money in share market. Increasing awareness about the stock exchange among the public. Leveraging technology to enable best practices and processes Growing rural market. Earning Urban Youth looking for investments.

THREATS OF MOSL: Market fluctuations. Government polices Increased intensity of competition from local and global players Unfavourable economic conditions High inflation and interest rates Entry of foreign finance firms in Indian Market.

Analysis of financial statement

Balance sheet Rs in crores Particulars Mar13Mar 12Mar 11Mar 10Mar 09

Sources of fundsEquity share capital14 .52Share application money 0. 00Reserves 553.61Net worth 568.13Secured loan 25.00Unsecured loan 125.30Total debt 150 .30Total liabilities 718. 43Application of fundsGross block 160.67Less: Accum. Depreciation 8.41Net block 152. 26 Capital Work in progress 0.00 Investments 119.69Inventories 0.00Cash and bank balance 11.22 Total current assets 11.22Loans and advances 469.89Fixed deposits 0.00Total CA, loans & advances 481.11Current liabilities 8.71 Provisions 25.92Total CL & provisions 34.63Net current assets 446.48Miscellaneous expenses 0.00Total assets 718.43Contingent liabilities 158.64Book value 39.1214.51 0.00543.93558.44 0. 00 0.00 0.00558.44

164.25 0.94163.31 0.38 98.7 0.000.160.16365.84 1.00 36756.0714.8770.94296.060.00558.459.1138.48

14.44 0.00498.13512.57 0.00 0.00 0.00512.57

16.820.0116.81120.4983.26 0.29 0.61 0.93681.00369.911.2766.6177.88292.020.00512.5827.2235.49

14.32 0.00459.17473.49 0 .00 59.32 59.32532.81

15.840.0115.8387.4858.24107.7624.56132.32296.72 0.5429.543.7454.5558.29371.250.00532.84233.0714.20.10419.16433.46 0 .00 0.00 0.00433.46

0.010.000.010.0031.3532.72200.12232.84206.681.12440.640.9837.6138.59402.050.08433.494.730.51

PFOFIT AND LOSSES ACCOUNT Rs in crores Particulars Mar13Mar 12Mar 11Mar 10Mar 09

IncomeSales turnover Net salesOther income Total incomeExpenditure Employee costOther manufacturing expsSelling & admin expsMiscellaneous expsTotal expensesOperating profitPBDITInterestPBDTDepreciation PBTExtra ordinary itemsPBT (post extra-ord items)TaxReported net profitTotal value additionEquity dividendCorporate dividend taxShares in issue (lakhs)EPS (Rs)

70.0170.018.5278.53

6.310.000.005.0011.3158.7067.2213.4553.778.3645.410.0045.416.6538.7511.3129.051.181452.362.6746.4346.4335.5281.95

6.4504.433.0213.932.5368.050.967.150.9366.220.1366.3510.0656.313.921.77-2.091,451.233.88

49.5349.5314.7164.24

2.640.762.920.236.5542.9857.691.1656.530.0156.52-0.0656.4613.8242.666.5420.233.281,444.192.95

51.0951.0913.1664.25

1.360.032.280.434.146.9960.152.8557.3057.3057.314.9142.44.117.180.631431.722.96

55.7155.7116.5372.24

1.240.042.580.053.9151.868.337.3261.01061.01061.0115.745.313.911.360.511420.203.19