CHAPTER 3

COMPANY PROFILE












INDUSTRY PROFILE


HISTORY OF STOCK EXCHANGE

The only stock exchanges operating in the 19
th
century were those of Bombay set up
in 1875 and Ahmedabad set up in 1894. These were organized as voluntary non profit-making
association of brokers to regulate and protect their interests. Before the control on securities
trading became central subject under the constitution in 1950, it was a state subject and the
Bombay securities contracts (control) Act of 1925 used to regulate trading in securities. Under
this act, the Bombay stock exchange was recognized in 1927 and Ahmedbad in 1937.

During the war boom, a number of stock exchanges were organized in Bombay,
Ahmedbad and other centers, but they were not recognized. Soon after it became a central
subject, central legislation was proposed and a committee headed by A.D. Gorwala went into
the bill for securities regulation. On the basis of the committees recommendations and public
discussion, the securities contracts (regulation) Act became law in 1956.

DEFINITION OF STOCK EXCHANGE

Stock exchange means any body or individuals whether incorporated or not, constituted
for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in
securities.

It is an association of member brokers for the purpose of self-regulation and protecting
the interests of its members.

It can operate only if it is recognized by the Government under the securities contracts
(regulation) Act, 1956. The recognition is granted under section 3 of the Act by the central
government, Ministry of Finance.

BYLAWS
Besides the above act, the securities contracts (regulation) rules were also made in
1975 to regulative certain matters of trading on the stock exchanges. There are also bylaws of
the exchanges, which are concerned with the following subjects.

Opening / closing of the stock exchanges, timing of trading, regulation of blank transfers,
regulation of Badla or carryover business, control of the settlement and other activities of the
stock exchange, fixating of margin, fixation of market prices or making up prices, regulation of
taravani business (jobbing), etc., regulation of brokers trading, brokerage chargers, trading rules
on the exchange, arbitrage and settlement of disputes, settlement and clearing of the trading
etc.

REGULATION OF STOCK EXCHANGES

The securities contracts (regulation) act is the basis for operations of the stock
exchanges in India. No exchange can operate legally without the government permission or
recognition. Stock exchanges are given monopoly in certain areas under section 19 of the
above Act to ensure that the control and regulation are facilitated. Recognition can be granted to
a stock exchange provided certain conditions are satisfied and the necessary information is
supplied to the government. Recognition can also be withdrawn, if necessary. Where there are
no stock exchanges, the government licenses some of the brokers to perform the functions of a
stock exchange in its absence.

SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI).

SEBI was set up as an autonomous regulatory authority by the government of India in 1988 to
protect the interests of investors in securities and to promote the development of, and to
regulate the securities market and for matter connected therewith or incidental thereto. It is
empowered by two acts namely the SEBI Act, 1992 and the securities contract (regulation) Act,
1956 to perform the function of protecting investors rights and regulating the capital markets.

BOMBAY STOCK EXCHANGE


This stock exchange, Mumbai, popularly known as BSE was established in 1875
as The Native share and stock brokers association, as a voluntary non-profit making
association. It has an evolved over the years into its present status as the premiere stock
exchange in the country. It may be noted that the stock exchanges the oldest one in Asia, even
older than the Tokyo stock exchange, which was founded in 1878.

The exchange, while providing an efficient and transparent market for trading in
securities, upholds the interests of the investors and ensures redressed of their grievances,
whether against the companies or its own member brokers. It also strives to educate and
enlighten the investors by making available necessary informative inputs and conducting
investor education programs.

A governing board comprising of 9 elected directors, 2 SEBI nominees, 7 public
representatives and an executive director is the apex body, which decides is the apex body,
which decides the policies and regulates the affairs of the exchange.

The Exchange director as the chief executive offices is responsible for the daily today
administration of the exchange.

BSE INDICES :

In order to enable the market participants, analysts etc., to track the various ups and
downs in the Indian stock market, the Exchange has introduced in 1986 an equity stock index
called BSE-SENSEX that subsequently became the barometer of the moments of the share
prices in the Indian stock market. It is a Market capitalization weighted index of 30 component
stocks representing a sample of large, well-established and leading companies. The base year
of sensex 1978-79. The Sensex is widely reported in both domestic and international markets
through print as well as electronic media.
Sensex is calculated using a market capitalization weighted method. As per this
methodology the level of the index reflects the total market value of all 30-component stocks
from different industries related to particular base period. The total market value of a company is
determined by multiplying the price of its stock by the nu7mber of shared outstanding.
Statisticians call index of a set of combined variables (such as price and number of shares) a
composite Index. An indexed number is used to represent the results of this calcution in order to
make the value easier to go work with and track over a time. It is much easier to graph a chart
based on Indexed values than on based on actual valued world over majority of the well-known
Indices are constructed using Market capitalization weighted method.

In practice, the daily calculation of SENSEX is done by dividing the aggregate market
value of the 30 companies in the index by a number called the Index Divisor. The divisor is the
only link to the original base period value of the SENSEX. The Devisor keeps the Index
comparable over a period value of time and if the references point for the entire Index
maintenance adjustments. SENSEX is widely used to describe the mood in the Indian stock
markets. Base year average is changed as per the formula new base year average = old base
year average*(new market value / old market value).



NATIONAL STOCK EXCHANGE

The NSE was incorporated in Nov, 1992 with an equity capital of Rs.25 crs. The
international securities consultancy (ISC) of Hong Kong has helped in setting up NSE. ISC has
prepared the detailed business plans and initialization of hardware and software systems. The
promotions for NSE were financial institutions, insurances, companies, banks and SEBI capital
market ltd, Infrastructure leasing and financial services ltd and stock holding corporations ltd.
It has been set up to strengthen the move towards professionalisation of the capital
market as well as provide nation wide securities trading facilities to investors.
NSE is not an exchange in the traditional sense where brokers own and manage the
exchange. A two tier administrative set up involving a company board and a governing aboard
of the exchange is envisaged.

NSE is a national market for shares PSU bonds, debentures and government securities
since infrastructure and trading facilities are provided.

NSE-NIFTY:

The NSE on Apr22, 1996 launched a new equity Index. The NSE-50. The new Index
which replaces the existing NSE-100 Index is expected to serve as an appropriate Index for the
new segment of future and option.

NIFTY mean National Index for fifty stocks. The NSE-50 comprises fifty companies that
represent 20 board industry groups with an aggregate market capitalization of around Rs 1,
70,000 crs. All companies included in the Index have a market capitalization in excess of Rs.
500 crs each and should have trade for 85% of trading days at an impact cost of less than 1.5%.

The base period for the index is the close of price on Nov 3 1995, which makes one
year of completion of operation of NSEs capital market segment. The base value of the index
has been set at 1000.


NSE-MIDCAP INDEX

The NSE madcap index or the junior nifty comprises 50 stocks that represent 21st board
industry groups and will provide proper representation of the midcap segment of the Indian
capital market. All stocks in the Index should have market capitalization of grate than Rs.200 crs
and should have traded 85% of the trading days at an impact cost of less than 2.5%.

The base period for the index is Nov 4 1996, which signifies 2 years for completion of
operations of the capital market segment of the operations. The base value of the Index has
been set at 1000.

Average daily turn over of the present scenario 258212 (Laces) and number of average
daily trades 2160(Laces).

At present there are 24 stock exchanges recognized under the securities contract
(regulation Act, 1956. They are

Ahmedbad Stock Exchange
Bangalore Stock Exchange
Bhubaneswar Stock Exchange
Calcutta Stock Exchange
Cochin Stock Exchange
Coimbatore Stock Exchange
Delhi Stock Exchange
Guwahati Stock Exchange
Hyderabad Stock Exchange
Indore Stock Exchange
Jaipur Stock Exchange
Kanpur Stock Exchange
Ludhiana Sock Exchange
Madras Stock Exchange
Magadh Stock Exchange
Mangalore Stock Exchange
Pune Stock Exchange
Uttar Pradesh Exchange Assoc ltd
Saurashtra Sock Exchange
Vadodhara Stock Exchange
NSE
OTCEI
Inter connected Stock Exchange

Company Profile
Member - National Stock Exchange (NSE) and The Bombay Stock Exchange (BSE).
Karvy Stock Broking Limited, one of the cornerstones of the Karvy edifice, flows freely towards
attaining diverse goals of the customer through varied services. Creating a plethora of
opportunities for the customer by opening up investment vistas backed by research-based
advisory services. Here, growth knows no limits and success recognizes no boundaries. Helping
the customer create waves in his portfolio and empowering the investor completely is the
ultimate goal.



Stock Broking Services

It is an undisputed fact that the stock market is unpredictable and yet enjoys a high success rate
as a wealth management and wealth accumulation option. The difference between
unpredictability and a safety anchor in the market is provided by in-depth knowledge of market
functioning and changing trends, planning with foresight and choosing one's options with care.
This is what we provide in our Stock Broking services.
We offer services that are beyond just a medium for buying and selling stocks and shares.
Instead we provide services which are multi dimensional and multi-focused in their scope. There
are several advantages in utilizing our Stock Broking services, which are the reasons why it is
one of the best in the country.
We offer trading on a vast platform National Stock Exchange and Bombay Stock Exchange.
More importantly, we make trading safe to the maximum possible extent, by accounting for
several risk factors and planning accordingly. We are assisted in this task by our in-depth
research, constant feedback and sound advisory facilities. Our highly skilled research team,
comprising of technical analysts as well as fundamental specialists, secure result-oriented
information on market trends, market analysis and market predictions. This crucial information is
given as a constant feedback to our customers, through daily reports delivered thrice daily ; The
Pre-session Report, where market scenario for the day is predicted, The Mid-session Report,
timed to arrive during lunch break , where the market forecast for the rest of the day is given and
The Post-session Report, the final report for the day, where the market and the report itself is
reviewed. To add to this repository of information, we publish a monthly magazine "Karvy The
Finapolis", which analyzes the latest stock market trends and takes a close look at the various
investment options, and products available in the market, while a weekly report, called "Karvy
Bazaar Baatein", keeps you more informed on the immediate trends in the stock market. In
addition, our specific industry reports give comprehensive information on various industries.
Besides this, we also offer special portfolio analysis packages that provide daily technical advice
on scrips for successful portfolio management and provide customized advisory services to help
you make the right financial moves that are specifically suited to your portfolio.
Our Stock Broking services are widely networked across India, with the number of our trading
terminals providing retail stock broking facilities. Our services have increasingly offered
customer oriented convenience, which we provide to a spectrum of investors, high-networth or
otherwise, with equal dedication and competence.
But true to our spirit, this success is not our final destination, but just a platform to launch further
enhanced quality services to provide you the latest in convenient, customer-friendly stock
management.
Over the years we have ensured that the trust of our customers is our biggest returns. Factors
such as our success in the Electronic custody business has helped build on our tradition of trust
even more. Consequentially our retail client base expanded very fast.
To empower the investor further we have made serious efforts to ensure that our research calls
are disseminated systematically to all our stock broking clients through various delivery channels
like email, chat, SMS, phone calls etc.
Depository Participants

The onset of the technology revolution in financial services Industry saw the emergence of
Karvy as an electronic custodian registered with National Securities Depository Ltd (NSDL)
and Central Securities Depository Ltd (CSDL) in 1998. Karvy set standards enabling further
comfort to the investor by promoting paperless trading across the country and emerged as the top
3 Depository Participants in the country in terms of customer serviced.
Offering a wide trading platform with a dual membership at both NSDL and CDSL, we are a
powerful medium for trading and settlement of dematerialized shares. We have established live
DPMs, Internet access to accounts and an easier transaction process in order to offer more
convenience to individual and corporate investors. A team of professional and the latest
technological expertise allocated exclusively to our demat division including technological
enhancements like SPEED-e, make our response time quick and our delivery impeccable. A
wide national network makes our efficiencies accessible to all.

Distribution of Financial Products

The paradigm shift from pure selling to knowledge based selling drives the business today. With
our wide portfolio offerings, we occupy all segments in the retail financial services industry.
A 1600 team of highly qualified and dedicated professionals drawn from the best of academic
and professional backgrounds are committed to maintaining high levels of client service
delivery. This has propelled us to a position among the top distributors for equity and debt issues
with an estimated market share of 15% in terms of applications mobilized, besides being
established as the leading procurer in all public issues.
To further tap the immense growth potential in the capital markets we enhanced the scope of our
retail brand, Karvy - the Finapolis , thereby providing planning and advisory services to the
mass affluent. Here we understand the customer needs and lifestyle in the context of present
earnings and provide adequate advisory services that will necessarily help in creating wealth.
Judicious planning that is customized to meet the future needs of the customer deliver a service
that is exemplary. The market-savvy and the ignorant investors, both find this service very
satisfactory. The edge that we have over competition is our portfolio of offerings and our
professional expertise. The investment planning for each customer is done with an unbiased
attitude so that the service is truly customized.
Our monthly magazine, Finapolis, provides up-dated market information on market trends,
investment options, opinions etc. Thus empowering the investor to base every financial move on
rational thought and prudent analysis and embark on the path to wealth creation.
Advisory Services

Under our retail brand "Karvy the Finapolis", we deliver advisory services to a cross-section of
customers. The service is backed by a team of dedicated and expert professionals with varied
experience and background in handling investment portfolios. They are continually engaged in
designing the right investment portfolio for each customer according to individual needs and
budget considerations with a comprehensive support system that focuses on trading customers'
portfolios and providing valuable inputs, monitoring and managing the portfolio through varied
technological initiatives. This is made possible by the expertise we have gained in the business
over the years. Another venture towards being investor-friendly is the circulation of a monthly
magazine called "Karvy - the Finapolis". Covering the latest of market news, trends, investment
schemes and research-based opinions from experts in various financial fields.

Private Client Group

This specialized division was set up to cater to the high net worth individuals and institutional
clients keeping in mind that they require a different kind of financial planning and management
that will augment not just existing finances but their life-style as well. Here we follow a hard-
nosed business approach with the soft touch of dedicated customer care and personalized
attention.
For this purpose we offer a comprehensive and personalized service that encompasses planning
and protection of finances, planning of business needs and retirement needs and a host of other
services, all provided on a one-to-one basis.
Our research reports have been widely appreciated by this segment. The delivery and support
modules have been fine tuned by giving our clients access to online portfolio information,
constant updates on their portfolios as well as value-added advise on portfolio churning, sector
switches etc. The investment recommendations given by our research team in the cash market
has enjoyed a high success rate.



ACHIEVEMENTS

Largest mobiliser of funds as per PRIME DATABASE.
First ISO-9002 Certified Registrar in India.
A Category I-Merchant banker.
A Category-I-Registrar to public Issues.
Ranked as The Most Admired Registrar by MARG.
Handled the largest-ever public issue-IDBI
Handled over 500 public issues as registrars.
Handling the reliance Account which for nearly 10 million account holders.
First Depository Participant from Andhra Pradesh.

Major issues managed as arrangers

Kerala state electricity board.
Power Finance Corporation.
A.P. Water resources Development Corporation.
A.P Roads Development corporation.
A.P state electricity board.
Haldia Petrochemicals ltd.



Major issues managed as co-managers

IDBI Equity
Morgan Stanley Mutual Fund.
Bank of Baroda
Bank of Punjab Ltd
Corporation Bank
IndusInd Bank Ltd
Jammu and Kashmir bank Ltd
Housing and Urban Development corporation (HUDCO) Ltd
Madras refineries Ltd
Tamil Nadu Newsprint & Paper Ltd
BPL Ltd
Birla 3M Ltd
Essar Steels Ltd
Hindustan Petroleum corporation Ltd
Infosys technologies Ltd
Jindal Vijaynagar Steels Ltd
Nagarjuna Fertilizers & Chemicals Ltd
Rajshree Polyfil Ltd

Karvy securities Ltd.
Karvy has secured over rs.500 crore in the following debt issues.
Andhra Pradesh road development corporation Ltd
ICICI Bonds (private placement)
ICICI Bonds-96
ICICI Bonds-97-I
ICICI Bonds-97-II
ICICI safety Bonds March 98
IDBI Bonds 96
IDBI Flexi Bonds I
IDBI Flexi Bonds II
IDBI Flexi Bonds III
Kerala state electricity Board
Krishna Bhagya Jala Nigam Ltd
Power Finance Corporation Ltd
Andhra Pradesh Water Resources Development Corporation
Andhra Pradesh state Electricity Board

KARVY CAPABILITIES

Technology infrastructure
It has desktops and 200 plus enterprise class servers having licensed software
across technology platforms. It has wide area network connecting branches all over
India. It has 24 * 7 back up and Redundancy support for critical business data.

PHYSICAL INFRASTRUCTURE
It has 40 branches and 65 investor centers connected with communication facilities
like Email, Fax, Videoconferencing, WAN and LAN.

MAN POWER
It has work force of over 2000 highly trained people. It has experience of processing
over 120 million transactions. The Domain experience in the areas of Data
processing operations, Technology, Management and Financials and legal
processing. It has specialist expertise in quality control and cast management.

QUALITY PROCESS
It is an ISO 9002 certified operations by DNV Norway. It performs regular internal
and external audits for quality standards.
TRAINING
It has full-fledged learning center to train 150 people simultaneously. It has
simulated environment and on the Job training facilities.

BUSINESS CONTINUITY
It is a two-decade-old company of repute in the industry. It has a disaster recovery
center at separate location. It has investment in infrastructure.

VALUES
INTEGRITY
TRANSPARENCY
PASSION FOR QUALITY
HARD WORK AND TEAM PLAY
LEARNING AND INNOVATION
EMPATHY AND HUMILITY
SENSE OF OWNERSHIP.

KARVY ACHIEVEMENTS

Indias # 1 public issue registrars with 655-market share.
# 2 in India in mutual fund registraring and investor servicing.
Amongst the top 5 mobilizers of funds in India.
Among the top 3 depository Participants.
Among the top 5 retail brokers in the country.
ISO 9002 certified operations by DNV.
Among the top 10 medical transcriptionists.
Adjudged as one of the top 50 IT users in India by MIS Asia.