Indian Stock Market

A REPORT ON AN OVERVIEW OF INDIAN STOCK MARKET BY ARUNA LAKHINA INDIABULLS SECURITIES LIMITED
A REPORT ON AN OVERVIEW OF INDIAN STOCK MARKET SUBMITTED TO: Prof. RACHNA SHARMA SUBMITTED BY: ARUNA LAKHINA 07BS0801 A Report submitted in partial fulfillment of the requirements of MBA Program
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ACKNOWLEDGEMENT
Apart from the efforts of me, the success of this project depends largely on the encouragement and guidelines of many others. I take this opportunity to express my gratitude to the people who have been instrumental in the successful completion of this project. I would like to show my greatest appreciation to Mr. Lalit Sharma (AVP- the Industry guide). I cant thank him enough for his tremendous support and help. Without his encouragement and guidance, this project would not have materialized. The guidance and support received from Prof. Rachna Sharma (Faculty Guide), Mr. Mukesh kr. Singh (Relationship Manager) and Mr. Ashish Sharma (Back-office in charge) who contributed to this project was vital for the success of the project. I am grateful for their constant support and help.
TABLE OF CONTENTS
Acknowledgement..............3 List of illustrations....6 Abstract.....7 Introduction8 Chapter 1 Outlook on Indian Stock market 1.1 Introduction.. ..9 1.2 National stock exchange.10 1.3 Bombay stock exchange.12 Chapter 2 Overview of Indiabulls 2.1 Introduction15 2.2 Growth of Indiabulls......16 2.3 Indiabulls subsidiaries.18 2.4 Organizational structure of Indiabulls19 2.5 Products and services of Indiabulls23 Chapter 3 Overview of Indiabulls Securities 3.1 Introduction..25 3.2 Business Model & Operations of Indiabulls Securities Ltd..25 3.3 Basic Requirement for doing Trading.26 3.4 Trading products of Indiabulls securities27 Chapter 4 Financial Analysis 4.1 Income29 4.2 Financial Highlights.32 4.3 Interpretation..37 Chapter 5 Understanding Capital market 5.1 Project framework.38 5.2 Indian Capital markets Chronology39 5.3 Capital market Participants..39 5.4 Types of Investors..40 5.5 Cash market40
Chapter 6 Derivatives 6.1 Definition.41 6.2 Understanding Derivatives...42 6.3 Difference between commodity derivatives and financial derivatives..43 6.4 Futures and forwards.44 6.5 Options..45 6.6 Option contracts46 Chapter 7 Competitors 7.1 Major competitors of Indiabulls securities limited..47 7.2 India Infoline Limited .47 7.3 Sharekhan securities..49 7.4 Motilal Oswal.49 7.5 Kotak securities.50 7.6 ICICI Securities ..52 7.7 Religare Securities52 Chapter 8 Competitive Analysis 8.1 Indian retail brokerage market.54 8.2 Major growth drivers for brokerage revenue and trading volume.55 8.3 Parameter assessment for doing comparative analysis.55 8.4 Brokerage charges.57 8.5 Analyzing the blogs from website traderji.com.58 8.6 Competitive strengths of Indiabulls securities..60 Chapter 9 SWOT Analysis 9.1 Strengths..68 9.2 Weaknesses70 9.3 Opportunities70 9.4 Threats..71 Findings & Suggestions...74 Appendix.76 References.78 Glossary..79
LIST OF ILLUSTRATIONS
LIST OF FIGURES Figure 2.1 Diversified business group of Indiabulls..18 Figure 2.2 Department-based organizational structure of Indiabulls.20 Figure 2.3 Regional hierarchies of Indiabulls21 Figure 2.4 Key Positions22 Figure 3.4 Trading Products of Indiabulls securities.27 Figure 5.1 Project Framework..38 Figure 8.1 Interdependent segments of brokerage market.54 Figure 8.3 Parameter assessment of doing comparative analysis56 LIST OF CHARTS AND GRAPHS 4.1(bar-chart) Brokerage income of Indiabulls securities.31 4.2(bar-chart) Basic EPS33 4.3 (bar-chart) Net Worth (in million)33 4.4 (bar-chart) Market capitalization (Rs. In million). 34 4.5 (bar-chart) Net Profit (Rs. in million)..34 4.6 (bar-chart) Revenues (in million)35 4.7 (pie-chart) Revenue breakup..35 4.8 (bar-chart) Increase in the number of employees36 8.1(bar-chart) Intraday brokerage charges..57 8.2(bar-chart) Delivery brokerage charges..58 8.3(pie-chart) Poll results of blogs.59
ABSTRACT
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Indian securities markets have undergone many changes during the last decade. Exponential growth in trading volumes is pushing existing trading systems and processes to capacity and increasing settlement risk. With Indian market moving to a T+3 rolling settlement cycles in line with global markets, SEBI is continuing its efforts to increase the efficiency and transparency in Indian markets. Indeed, it has been SEBIs endeavor to make the Indian markets, one of the most competitive and efficient markets of the world. Income, Savings mobilization and promotion of investment are functions of the stock and capital markets that are a part of the organized financial system in India. This Project titled An Overview of Indian stock market is an attempt to understand the stock market and role played by Indian retail Brokerage Firms in stock market. The objective of brokerage firms is to help the investor to minimize the risk involved in investment and maximize the return. Some of the main characteristics of the brokerage industry include growth in e-broking; growing derivatives market, decline in brokerage fees etc. An endeavor has also been made to understand the role played by Indiabulls Securities compared to its competitors in Indian retail brokerage market. The role played by Indian retail brokerage industry is of immense significance, taking into account the health of the capital markets and the intensity of competition among the brokerage companies.
INTRODUCTION
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Indian Stock Markets are one of the oldest in Asia. Its history dates back to nearly 200 years ago. The earliest records of security dealings in India are meagre and obscure. The East India Company was the dominant institution in those days and business in its loan securities used to be transacted towards the close of the eighteenth century With over 20 million shareholders, India has the third largest investor base in the world after the USA and Japan. Over 9,000 companies are listed on the stock exchanges, which are serviced by approximately 7,500 stockbrokers. The Indian capital market is significant in terms of the degree of development, volume of trading and its tremendous growth potential. Indias BSE has the second most number of companies listed in the world after the NYSE.- India is world's 10th largest equity market.- In August 2007, total m-cap of the Indian stock exchanges was over $1090 billion. The purpose of the Project titled An Overview of Indian stock market is to understand the stock market and role played by Indian retail Brokerage Firms in stock market. The project aims at obtaining an understanding of the operations undertaken by various securities companies, the services rendered by them, and different brokerage charges charged by them, the strengths and weaknesses of various securities companies as compared with India bulls Securities Ltd., the role played by Capital and Derivatives markets in the Indian economic scenario. An endeavor is made to understand the back office operations, placing of orders for buying and selling of securities, techniques of equity analysis, formalities and requirements of Demat Account opening and handling of clients queries regarding their holdings, transaction, bill details etc. The project involves a thorough study and analysis of the history of Indiabulls, the growth of Indiabulls, the diversified business group of Indiabulls, Indiabulls subsidiaries, the organizational structure of Indiabulls, regional hierarchies of Indiabulls, products and services of Indiabulls, business model & operations of Indiabulls Securities Ltd, trading products of Indiabulls Securities, merits and limitations of trading software used by Indiabulls securities, financial analysis of Indiabulls securities, competitive analysis and SWOT Analysis of Indiabulls Securities. Some of the limitations involved in the project include unavailability of current data for comparative analysis of Indiabulls securities Ltd., clients refusal to give appointment in fieldwork relating to new account opening, inability to handle clients unexpected queries.
Chapter 1
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OUTLOOK ON INDIAN STOCK MARKET

1.1 Introduction
Indian Stock Markets is one of the oldest in Asia. Its history dates back to nearly 200 years ago. The earliest records of security dealings in India are meager and obscure. The East India Company was the dominant institution in those days and business in its loan securities used to be transacted towards the close of the eighteenth century. By 1830s, business on corporate stocks and shares in Bank and Cotton presses took place in Bombay. Though the trading list was broader in 1839, there were only half a dozen brokers recognized by banks and merchants during 1840 and 1850. The 1850's witnessed a rapid development of commercial enterprise and brokerage business attracted many men into the field and by 1860 the number of brokers increased into 60. In 1860-61 the American Civil War broke out and cotton supply from United States to Europe was stopped; thus, the 'Share Mania' in India began. The number of brokers increased to about 250. At the end of the American Civil War, the brokers who thrived out of Civil War in 1874 found a place in a street (now appropriately called as Dalal Street) where they would conveniently assemble and transact business. In 1887, they formally established in Bombay, the "Native Share and Stock Brokers' Association, which is alternatively known as The Stock Exchange". In 1895, the Stock Exchange acquired a premise in the same street and it was inaugurated in 1899. Thus, the Stock Exchange at Bombay was consolidated. The Indian stock market has been assigned an important place in financing the Indian corporate sector. The principal functions of the stock markets are Enabling mobilizing resources for investment directly from the investors Providing liquidity for the investors and monitoring Disciplining company management.
The two major stock exchanges in India are National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).
1.2 National Stock Exchange

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. NSE has played a catalytic role in reforming the Indian securities market in terms of microstructure, market practices and trading volumes. The market today uses state-of-art information technology to provide an efficient and transparent trading, clearing and settlement mechanism, and has witnessed several innovations in products & services viz. demutualization of stock exchange governance, screen based trading, compression of settlement cycles, dematerialization and electronic transfer of securities, market of debt and derivative instruments and intensive use of information technology. Trading at NSE can be classified under two broad categories:
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Wholesale debt market Capital market
Wholesale debt market operations are similar to money market operations institutions and corporate bodies enter into high value transactions in financial instruments such as government securities, treasury bills, public sector unit bonds, commercial papers, certificate of deposits, etc. Capital market: A market where debt or equity securities are traded. There are two kinds of players in NSE: Trading members Participants
Recognized members of NSE are called trading members who trade on behalf of themselves and their clients. Participants include trading members and large players like banks who take direct settlement responsibility. Trading at NSE takes place through a fully automated screen-based trading mechanism that adopts the principle of an order-driven market. Trading members can stay at their offices and execute the trading, since they are linked through a communication network. The prices at which the buyer and seller are willing to transact will appear on the screen. When the prices match the transaction will be completed and a confirmation slip will be printed at the office of the trading member. NSE has several advantages over the traditional trading exchanges. They are as follows:
NSE brings an integrated stock market trading network across the nation.
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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 malpractices 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.
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. NSE came to be owned and managed by India Index Services and Products Ltd. (IISL), which is a joint venture between NSE and CRISIL. IISL is India's first specialized company focused upon the index as a core product. IISL has a consulting and licensing agreement with Standard & Poor's (S&P), who are world leaders in index services. CNX stands for CRISIL NSE Indices. CNX ensures common branding of indices, to reflect the identities of both the promoters, i.e. NSE and CRISIL. Thus, 'C' stands for CRISIL, 'N' stands for NSE and X stands for Exchange or Index. The S&P prefix belongs to the US-based Standard & Poor's Financial Information Services.
1.3 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. The Exchange's pivotal and pre-eminent role in the development of the Indian
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capital market is widely recognized and its index, SENSEX, is tracked-*9 worldwide.
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 widely reported in both domestic and international markets through print as well as electronic media 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. Due to its wide acceptance amongst the Indian investors; SENSEX is regarded to be the pulse of the Indian stock market. As the oldest index in the country, it provides the time series data over a fairly long period of time. Small wonder, the SENSEX has over the years become one of the most prominent brands in the country. 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
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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. In order to fulfill the need of the market participants for still broader, segmentspecific and sector-specific indices, the Exchange has continuously been increasing the range of its indices. The launch of BSE-200 Index in 1994 was followed by the launch of BSE-500 Index and 5 sectoral indices in 1999. In 2001, BSE launched the BSE-PSU Index, DOLLEX-30 and the country's first free-float based index - the BSE TECK Index. The Exchange shifted all its indices to a freefloat methodology (except BSE PSU index) in a phased manner. 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.
Chapter 2
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OVERVIEW OF INDIABULLS
2.1 Introduction
Indiabulls is Indias 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 the 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. Chairman and CEO of Indiabulls is Sameer Gehlaut and Rajiv Rattan is the Co-founder and group CFO. Indiabulls has over 680 branches all over India with around 17450 employees. The customers of Indiabulls are more than 6,00,000 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
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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 3,330 million (30th September 2007). Indiabulls and its group companies have attracted more than USD 800 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.
2.2 Growth of Indiabulls

Year 2000-01:
One of Indias 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. 16
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 worlds 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.
Year 2006-07: In this year, Indiabulls 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.
Diversified Business Group of Indiabulls
Securities & Derivatives Broking
Secured Financing
Mortgage & Housing Finance
Financial Products Distribution
Consumer Financing 17
Fig 2.1: Diversified Business Groups of Indiabulls

Source: www.indiabulls.com
2.3 Indiabulls Subsidiaries

Indiabulls securities limited: business comprising of Securities & Derivatives broking. Indiabulls Credit services limited: business comprising 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: dealing with commodity brokerage business Indiabulls Realities limited: development of Real estate and mining. Indiabulls housing loans: mortgage of properties and housing loan business.
2.4 Organizational Structure of Indiabulls

The organizational structure of Indiabulls is functional, which consists 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 businesses consist of following departments:
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Administration Operations & Service quality Technology Finance Corporate affairs Human resources Marketing Corporate communications Legal
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Department based Organizational Structure: Director-Online Director-Offline
Administration
Operations & Service
Technology
Finance
Corporate Affairs
Human Resources
Corporate Communi cation
Legal
Customer Service
Recruitment
Marketing
Training
Sr. Vice President
Regional Manager
Branch Manager
Relationship Manager
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Figure 2.2 Department based organizational Structure of Indiabulls

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Regional Hierarchies of Indiabulls
Senior Vice President
Regional Manager
Branch Manager Senior Sales Manager
Support System
Sales Function
Back Office Executive
Local Compliance Officer
RM/SRM
ARM
Dealer
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Figure 2.3 Regional hierarchies of Indiabulls

Key Positions
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Chairman
CFO & President
Securities
Consumer Finance
Real Estate
Executive Director
Chief Executive Officer
Executive Director
Figure 2.4 Key Positions

2.5 Products and Services of Indiabulls

Indiabulls offers the following products in the financial markets:
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Stocks Options and Futures Depository Services Commodities Insurance Products Mutual Funds Bonds and Debt Products
Services provided by Indiabulls include:
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. Their fundamentals, competent management and expertise in financing the transporters are pretty sound. The companys unique market position enables it to excel in client contentment, quick service and growthled profitability.
Mortgage Loans:
Indiabulls Housing Finance Ltd., which is a flagship of Indiabulls, has started lending of Mortgage Loans to prospective customers. This company enables the home-seekers to access finance to buy their homes. They provide different types of loans like plot loans, Loans against residential, commercial and rental property, thereby enabling the borrowers to leverage the property owned to fund any genuine needs, be it Business expansion, Child's education, Child's marriage or for Holiday abroad.
Consumer Finance:
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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.
Chapter 3
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OVERVIEW OF INDIABULLS SECURITIES LTD

3.1 Introduction
Indiabulls Securities Ltd is engaged in the business of Internet based trading and is registered with SEBI as a stockbroker, trading and clearing member of NSE, member of BSE and as a depositary participant with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). ISL is also a member of the National Securities Clearing Corporation Limited. Indiabulls securities Ltd (ISL) is the only broker to be assigned highest broker quality grading (BQ1) from CRISIL.
History
Indiabulls Securities Limited (ISL) was incorporated as GPF Securities Private Limited on June 9, 1995. The name of the company was changed to Orbis Securities Private Limited on December 15, 1995 to change the profile of the company and subsequently due to the conversion of the company into a public limited company; the name was further changed to Orbis Securities Limited on January 5, 2004. The name of the company was again changed to Indiabulls Securities Limited on February 16, 2004 so as to capitalize on the brand image of the term Indiabulls in the company name. ISL is a corporate member of capital market & derivative segment of The National Stock Exchange of India Ltd.
3.2 Business Model & Operations of Indiabulls Securities Ltd

The three distinct internal business segments are: Online business
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Offline business Other Sales
Online business: serving clients primarily through an Internet based

relationship targeted towards clients who value anytime, anywhere access and can be serviced at low incremental costs. The Online sales force sells all products and services and follows the relationship manager model.
Offline business: serving clients primarily through an office based relationship

targeted towards clients who value physical interaction and are typically larger accounts. The Offline Sales force sells all products and services and follows the relationship manager model. The Institutional business-serving clients such as mutual funds and pension funds are considered part of the offline business due to largely similar client servicing and channel needs as required for high net worth clients. Indiabulls Securities Limited has established relationships with some large institutional players in India and is qualified broker for Equities, F&O and Debt markets for 145 such institutional clients.
Other Sales: includes insurance, research services and other offerings
3.3 Basic Requirement for doing Trading

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.
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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). There are only two depositories in India The National Securities Depository Ltd (NSDL) and the Central Depository Services Ltd (CDSL).
3.4 Trading Products of Indiabulls Securities

Indiabulls Securities Trading Products
Cash Account
Intraday Account
Margin Trading
Fig showing 3.1 Trading Products of Indiabulls securities
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Source: www.indiabulls.com 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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Chapter 4
FINANCIAL SECURITIES
4.1 Income:
components:
ANALYSIS
OF
INDIABULLS
Indiabulls Securities Ltd income unit has the following
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
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64.34% of business in FY 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
Brokerage Income
Brokerage Income comprises revenues earned from Equities, F&O and Wholesale debt markets on all stock exchanges. The income from brokerage services is driven primarily by the number of active clients. The rapid growth in total clients is driven primarily by increased geographical presence. Equities constitute the largest portion of brokerage business. F&O brokerage is becoming an increasingly important component of its revenues as Futures & Options trading gains more acceptance. Wholesale Debt market is focused on institutional clients.
Income from transaction and service charges and interest income

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
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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 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.
Brokerage Income of Indiabulls securities (in crores)
450 400 350 300 250 200 150 100 50 0
2004
2005
2006
2007
Bar Chart 4.1 Brokerage Income of Indiabulls Securities (in crores)

Source: www.nseindia.com
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4.2 Financial Highlights

Annual Unaudited Results (Rs. in Millions) % Change Sales TurnoverPeriod Ended Mar2007 (12 Months)Period Ended Mar2005 (12 Months) Other Income Total Income Total Expenditure Operating Profit Interest Gross Profit Depreciation Tax ReportedPAT
1,2409.50
1670.40
+ 642.91
34.60 1,2444.10 4956.89 7487.20 679.70 6807.50 176.90 2196.60 4434.00
13.70 1684.10 628.50 1055.59 133.80 921.80 21.70 333.00 567.10
+ 152.55 + 638.92 + 688.69 + 609.29 + 408.00 + 638.50 + 715.21 + 559.64 + 681.87
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Key indicators: Earnings per share (Rs.) Net Worth Market Capitalization
22.84 18456 76536
15.61 16811 40970
5.10 5404 16309
Bar chart 4.2 Basic EPS
2 5 2 0 1 5 1 0 5 0
20 05 20 06 20 07 Source: Annual Returns Indiabulls Financial Securities Limited
Bar chart 4.3 Net Worth (in million)
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200 00 100 80 100 60 100 40 100 20 100 00 80 00 60 00 40 00 20 00 0 20 05 20 06 20 07
Source: Annual Returns Indiabulls Financial Securities Limited
Bar chart 4.4 Market Capitalization (in million)

800 00 700 00 600 00 500 00 400 00 300 00 200 00 100 00 0 20 05 20 06 20 07
Bar chart 4.5 Net Profit (Rs. in million)
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40 50 40 00 30 50 30 00 20 50 20 00 10 50 10 00 50 0 0 04 5 -0 05 -06 06 7 -0
Bar chart 4.6 Revenues (Rs. in million)
Pie chart 4.7 Revenue break-up

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FY 2007
fee based incom 95 e, . capital m arket, 32 .5
other incom 03 e, . financing business, 57 .8
FY 2006
fee based other income, 0.5 income, 1.2 financing business, 47.2
capital market, 51.1
Bar chart 4.8 Increase in the number of employees
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100 80 100 60 100 40 100 20 100 00 80 00 60 00 40 00 20 00 0
20 04
20 05
20 06
20 07
Source: www.etinvest.com
4.3 Interpretation:
Ratios Profitability Period Period Period Ratios % Ended Ended Ended Mar2007 Mar2006 Mar2005 (12 (12 (12 Months) Months) Months) Operating Profit 62.90 68.94 65.40 Margin Gross Profit 54.65 59.91 54.97 Margin Net Profit 35.64 38.90 33.26 Margin Turnover Ratios Inventory 0.00 2,9431.15 2,9431.15 Turnover Ratio Debtor Turnover 12.01 7.45 142.49 Ratio Fixed Asset 8.57 8.81 4.32 TurnoverRatio Solvency Ratio Period Ended Mar2004 (12 Months) 53.33 44.54 26.87 Period Ended Mar2003 (12 Months) 42.51 34.50 19.80
29.10 0.53 4.99
29.10 0.52 2.21
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Current Ratio 4.09 DebtEquity 0.76 Ratio Interest 7.57 Covering Ratio Performance Ratio % Return On 24.00 Investment Return On 24.00 Networth Dividend Yield 1.51 Debt Equity 76.00 Ratio
3.97 0.51 7.26
7.07 1.35 6.09
4.93 2.97 6.06
2.39 0.59 3.71
21.00 18.00 0.91 51.00
10.00 12.00 0.00 135.00
17.00 34.00 0.00 297.00
23.00 17.00 0.00 59.00
Chapter 5
UNDERSTANDING CAPITAL MARKET

5.1 Project Framework
An Outlook on Indian Stock Market
Capital Market
Derivative Segment
Intraday
Delivery
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Futures
Options
Figure 5.1 Project Framework

The Indian capital markets have witnessed a transformation over the last decade. India now finds its place amongst some of the most sophisticated and largest markets of the world. With over 20 million shareholders, India has the third largest investor base in the world after the USA and Japan. The Indian capital market is significant in terms of the degree of development, volume of trading and its tremendous growth potential. Over the past few years, the capital markets have also witnessed substantial reforms in regulation and supervision. Reforms, particularly the establishment and empowerment of SEBI, market-determined prices and allocation of resources, screen-based nation-wide trading, dematerialization and electronic transfer of securities, rolling settlement and derivatives trading have greatly improved both the regulatory framework and efficiency of trading and settlement.
5.2 Indian Capital markets - Chronology

1994- Equity Trading commences on NSE 1995- All Trading goes Electronic 1996- Depository comes in to existence 1999- FIIs Participation- Globalization 2000- over 80% trades in Demat form 2001- Major Stocks move to Rolling Settlement 2003- T+2 settlements in all stocks 2003 - Demutualization of Exchanges
5.3 Capital Market Participants

Banks Exchanges Clearing Corporations 41
Brokers Custodians Depositories Investors Merchant Bankers
5.4 Types of Investors

Institutional Investors- MFs / FI / FIIs / Banks Retail Investors Arbitrageurs / Speculators Hedgers Day traders/Jobbers
5.5 Cash Market

The Spot Market or Cash Market is a commodities or securities market in which goods are sold for cash and delivered immediately. Contracts bought and sold on these markets are immediately effective. Spot markets can operate wherever the infrastructure exists to conduct the transaction. The Spot market for most securities exists primarily on the internet. The trading in this cash market can be further divided into Intraday and Delivery.
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Chapter 6
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.
6.1 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.
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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.
6.2 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.
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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 soyabean (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 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 soyabean decreases and vice-a-versa. If the selling price of soyabean 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 soyabean 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.
6.3
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. 45
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 soyabean 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 soyabean. The standard contract on soyabean has a size of 100 quintals. So the farmer will be left with 50 quintals of soyabean 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. 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.
6.4 Futures and Forwards
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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.
6.5 Options
Option contracts give the holder the option to buy or sell the underlying at a prespecified 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.
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. LONG => BUY 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. SHORT => SELL
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There are around 152 companies that 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).
6.6 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. Right to BUY / OWN CALL OPTION Or Right to SELL / WRITE PUT OPTION
You buy a call option when you are bullish or have an upward target. You buy a put option when you are bearish or have a downward target.
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Chapter 7
THE COMPETITORS
7.1 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. IndiaInfoline Motilal Oswal Securities Sharekhan Religare Securities
7.2 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
49
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. 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 - 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. 50
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.
7.3 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. The company offers its services through a combination of online and offline channels. The online model comprises a portal, chat facilities, and 'speed trade' terminals. And the offline model uses a combination of an IVR infrastructure and a team of customer agents to receive orders over the telephone.
7.4 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 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
51
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.
FEATURES
Integrity: A company honoring commitment with highest ethical and business practices. Team-Work: political Attaining goals collectively and collaboratively. environment. Meritocracy: Performance gets differentiated, recognized and rewarded in a Passion & Attitude: High energy and self motivated with a Do It attitude. Excellence in Execution: Time bound results within the framework of the companys value system.
7.5 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 corporates. 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.
52
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

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 kotaksecurities.com provides its customers using which they can view live market rates of scrips on both the NSE and BSE.
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Research Reports: Kotak Securities provide different reports to investors which include
o Intraday calls o Daily Technical View o Daily Morning Brief o Weekly Technical Report o Sectoral Reports o Stock Ideas o Derivative Reports SMS Alerts: Kotak Securities also provides SMS alerts to customers providing useful tips about stocks & shares.
7.6 ICICI SECURITIES

ICICI Securities, a subsidiary of ICICI Bank, was set up in February 1993 to provide investment-banking services to investors in India. As on date, ICICI Bank holds 99.9% of the share capital of ICICI Securities. ICICI Securities Limited is Indias leading full service investment bank with a dominant position in all segments of its operations Corporate Finance Fixed Income and Equities.
Features of ICICI securities:

ICICI provides multiple channels in banking like
o Internet Banking o Mobile Banking
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o ATM banking o Phone Banking ICICI Securities is amongst the largest arranger of funds in Debt and Equity segments and also amongst the leading advisors in Mergers and Acquisitions.
7.7 RELIGARE SECURITIES

Religare believes in providing independent research for clients to make investment decisions, with strict emphasis on self-regulation, avoiding possible conflict of interest in objectivity. Backed by a strong pool of highly skilled research analysts, it offers varied research products and services. Religares Research Products

Fundamental research Technical research Daily reports Intraday trading tech calls Intraday Derivative call Directional F&O calls Structured products Index Arbitrage
Arbitraging between Index (NIFTY) Futures and its constituents (Underlying Stock Futures).
Volatility Trading
Arbitrage between volatilities i.e. between implied volatility of options and forecasted volatility of underlying stock futures.
55
A highly process driven, diligent approach backed by powerful Research & Analytics and one of the best in class dealing rooms ensures a superlative experience. Further, Religare also has one of the largest retail networks, with its presence in more than 1300 locations across more than 400 towns & cities.
Chapter 8
COMPETITIVE SECURITIES
ANALYSIS
FOR
INDIABULLS
8.1 Indian Retail Brokerage Market

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. Indian Retail Brokerage Market
Interdepende nt Segments
Primary Market
Secondary Market
Figure 8.1 Interdependent Segments of Brokerage Market 56
Objective: The main objective is to Analyze retail brokerage industry taking into account the health of the capital markets, Derivative Markets and the intensity of competition among the brokerage companies. Doing Competitive Analysis for Indiabulls
8.2 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
8.3
Parameter
Assessment
for
Doing
Competitive
analysis
A differentiating aspect is a comparative assessment of the top retail brokerages on various value indicators, comprising of Product Pricing 57
Service Unique Value proposition.
Competitive analysis
Product
Price
Service
Value Proposition
Figure 8.3 Parameter assessment for doing competitive analysis

Source: www.traderji.com
Customers need to analyze the Brokerage Firms Based on these 5 Parameters. Brokerage & Miscellaneous charges Quote Software Execution Platform Demat Account, and Back office Support.
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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 dont evaluate quote software. Some Investors dont 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 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 that quote software provides it all. Execution Platform: Its 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 problems because of lack of good back office support. Relationship Managers trading without their clients knowledge, funds not being transferred, trades not being executed, slow execution etc are a few examples.
8.4 Brokerage Charges

Intraday Brokerage charges of the Competitors of Indiabulls Securities Ltd
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Graph 8.1 Intraday Brokerage Charges

Delivery Brokerage charges of the Competitors of Indiabulls Securities Ltd
Graph 8.2 Delivery Brokerage Charges

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8.5 Analyzing the Blogs from Web Site Traderji.com (online community for Indian Investors & Traders)
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 viewpoints 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) View Poll Results
Vote Now
Poll Results of Blogs: Total Number of Voters =457
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Which Online Broker You Prefer? Poll Results of Blog(Voters 457)
Any other Mention, (58), 13%
India-Infoline(5paisa), (68), 15%
Kotak, (34), 7%
Sharekhan, (83), 18%
Indiabulls, (75), 16% ICICI direct, (109), 24% HDFC, (14), 3%
Motilal Oswal, (16), 4%
India-Infoline(5paisa) HDFC
Sharekhan Indiabulls
Motilal Oswal Kotak
ICICI direct Any other Mention
Pie chart 8.4 showing Poll results

Source: www.traderji.com
8.6 Competitive Strengths 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
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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 Indiabulls securities provide 8 times margin for Intra-day and 4 times Indiabulls is suitable for both Day trading & Long term investment Indiabulls has software called Power Indiabulls. It is a Java based
% for delivery. margin for delivery.
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 dont have their own bank. And In ICICI direct, you have a direct debit/credit facility with the bank
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given.
Most customers feel that it is difficult to understand the ledger
reports of Indiabulls securities; so proper customer guidance should be Lack of Banking arm Rural market is yet to be tapped. More importance should be given to promotions & advertisements.
Value Proposition of Indiabulls Securities ISL provides 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 brings intensive research reports on how the stock market is faring, when is the right time to invest, when to execute the order and more. Depending on what kind of investor you are, they bring you fundamental or basic research and technical research.
Merits & De-merits of Competitors
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ICICI securities: It provides products & services in fixed income, equity & corporate finance. Merits of ICICI Securities ICICI Direct is considered best for long-term investment. (Indiabulls is suitable for both Day trading & Long term investment) A direct debit/credit facility with the bank. All facilities available under one umbrella. BTST (Buy today & sell tomorrow) is available; this facility is available only in ICICI Direct. Can apply for IPO online (we cant do this in Indiabulls). Can apply for mutual funds online and can also sell them online. Internet banking demo that gives customers an opportunity to learn.
De-Merits of ICICI Securities Brokerage charges are high - intraday 0.3% and 0.75% delivery compared to other brokerage firms (is considered as highest in the market). Day trading is a nightmare in ICICI because of Web based terminal, which is very slow. Orders placed at or around 10.00 hrs may be queued for a while. hassle for Cash So trading though. intra-day Margin trading could be annoying now & then. It's not much of a (Indiabulls offers you a trading terminal 'powerIndiabulls', which is javabased software. It is fast in terms of speed and execution). ICICI Direct brokerages are not negotiable (Where as Indiabulls Brokerage Charges are negotiable) While opening Demat account, three accounts are opened, the saving bank account, trading account and Demat account and you have to
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maintain minimum of Rs5000 in case if it is not a salaried account. (That Rs5000 sleeps without earning any money) Other banks account cannot be linked with the ICICI trading account. They charge an annual maintenance charges are Rs540.
Value Proposition of ICICI Securities E-Instructions: You can transfer securities 24 hours a day, 7 days a week through Internet & Interactive Voice Response (IVR) at a lower cost. Now with "Speak to transfer", you can also transfer or pledge instructions through our customer care officer. Mobile Request: Access your Demat account by sending SMS to enquire about Holdings, Transactions, Bill & ISIN details. The equities research team tracks over 15 key sectors of the Indian economy and publishes in-depth research reports every year. The equities team at ICICI Securities comprises of research desk, sales desk and the trading desks.
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
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No BTST (buy today sell tomorrow), in ShareKhan you cant sell a You have to open a bank account with the banks mentioned in Streaming quotes requires JVM (Java Virtual Machine); this may be Annual charges are Rs330. Their trading terminals are certainly not for "investors", only for
share today that you bought yesterday. ShareKhan site. big headache for customers.
active traders. That is because, you have to trade a certain volume every month, otherwise you end up paying a fine Comparing ShareKhan & ICICI Direct Sharekhan Live Streaming quotes but streaming quotes require JVM No BTST facility (Buy today sell tomorrow) Annual Maintenance charge Rs 330 You have to open a bank account with the banks mentioned in ShareKhan site Can apply IPO online Not necessary Can apply IPO online While opening a Demat account you need to maintain a minimum of Rs 5000 Can Trade in BSE & NSE No Monthly Charges Can apply mutual funds online ICICI Securities No live streaming quotes BTST facility is available Annual Maintenance charge Rs 540 Other banks account cannot be linked with ICICI trading account
Can trade in BSE & NSE No Monthly Charges Cannot apply
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IndiaInfoline
Merits of India Infoline (5 Paisa.com) Securities Low brokerage charges, intraday 0.10% and 0.50% for delivery and Minimum brokerage per share will be 1 paisa for trading 5 paisa provides 6 times margin for Intraday & 8 times margin for All customers will get Digital Contract Notes. Physical contract notes
it is negotiable. transactions and 5 paisa for delivery based transactions. Delivery. could be provided on request that would entail a nominal charge. De- Merits of India Infoline (5 Paisa.com) Securities Registration Fees (one time) Rs.500/ and is non-refundable. Software License Fee Rs.799/- per month or 7999/- per annum and There is lot of Hidden costs. Annual Service Charges Rs.250. Customers who just want to have a depository relationship will be
is non-refundable.
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 Trader terminal is good, but the interface is too complicated compressed in one screen.
Kotak Securities
Merits of Kotak securities 68
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. 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 of Kotak securities 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.domainb.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 scrips 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 & 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.
Chapter 9
SWOT ANALYSIS OF INDIABULLS SECURITIES

9.1 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
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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. The features allow them to seamlessly integrate across delivery channels, online or offline through branches or telephone. Pan India distribution network: - They have 680 branches across India. These branches help in customer acquisition as well as customer service. Their distribution network is well spread to capture the target audience and cater to the needs of their potential customers. Relationship manager facility: - This is one of the unique services that Indiabulls offers its customers. 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 has it seen a fast growth rate in the number of branches but also it has grown in the number of clients and the employee strength. 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. In all the cities that they have expanded into, they have been able to leverage upon brand awareness and have established a customer base.
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Strong sales and marketing teams that deliver market leading product innovation: - Their relationship manager channel offers a single point contact to all their retail customers. 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 relations 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.
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 allows them to recruit good and efficient employees, compensate them attractively and provides 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.
9.2 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 that 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 72
client relationships. Any events that harm these relationships including the loss of their relationship managers may lead to the loss of client.
9.3 OPPORTUNITIES
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 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 returns. The evolution in Indias demographic setup with a median age of 24 years and higher consumption expenditure is expected to have a virtuous cycle effect by improving the economic growth and per capita income which would result in higher savings and investments. Rapid 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. These people are willing to use advanced communication tools, such as computers and telephones, and want to take charge of their personal investment decisions. The use of technology is influencing more people to invest in the stock market. 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 that started in 1991. India is the worlds 12th largest economy 73
in dollar terms and the 4th largest in PPP terms. The projected growth rate of real GDP is greater than 9% per annum with higher growth in many sectors such as financial services. Indian financial sector presents a huge retail finance opportunity. As a result of falling interest rates, bank deposits, other traditional investment opportunities are losing their attraction. Thus, Indian investors are getting attracted towards alternate investments such as the equity markets and are looking for newer financial products. Diversified business model: -The Company and its 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 the retail and institutional investors thus providing all these services in a single platform. Thus Indiabulls is not dependent on any single of its subsidiary for survival and failure of any one subsidiary will not have an adverse effect on the company as a whole.
9.4 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. With the change in government, there is no assurance that these liberalization polices will continue in the future. Any 74
political instability could delay the economic reforms and could have adverse effect on the market. 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. Unless and until the market stabilizes the investors will be very hesitant to invest in the market. Stock market falls will have a cascading effect on the investors and economy of the country. Competition: - Indiabulls faces significant competition from companies seeking to attract clients financial assets, including traditional and online brokerage firms, mutual fund companies, etc, which are having a wide presence and strong brand name. As the company enters new markets theyre bound to face additional competition from those who have longer operating history have grater retail and brand presence than Indiabulls. If the company is unable to manage its business it might impede their competitive position and their profitability. 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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Chapter 10 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. Hence Indiabulls should concentrate more on advertising through print and electronic media. Tapping Rural Market: The Indian rural investors market is 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
76
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 that 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 that will encourage them to invest more in the company. 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.
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APPENDIX
Profit & Loss Accounts (Rs.in Millions) % Period % Period % Period % Ended Ended Ended Mar2006 Mar2005 Mar2004 (12 (12 (12 Mnts.) Mnts.) Mnts.) +99.94 6102.89 +99.54 1675.73 +99.70 719.15 +100.00 +0.06 27.93 +0.46 5.07 +0.30 0.03 +0.00 6130.81 1680.80 719.18 0.00 0.00 0.00 0.00 579.80 +34.50 0.00 0.00 0.00 0.00 335.65 +46.67 383.53 +53.33 63.24 +8.79 320.29 +44.54
Sales Other Income Total Income Raw Material Cost Excise Other Expenses Operating Profit Interest Name Gross Profit
Period Ended Mar2007 (12 Mnts.) 1,2409.47 7.68 1,2417.15
Period % Ended Mar2003 (12 Mnts.) 257.76 +96.65 8.93 +3.35 266.69 0.00 0.00 0.00 0.00 148.19 +55.57 118.50 +44.43 29.56 +11.08 88.94 +33.35
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 4604.46 +37.08 1895.37 +30.92
7812.69 +62.92 4235.45 +69.08 1101.00 +65.50 1030.87 +8.30 579.35 +9.45 179.90 +10.70 6781.82 +54.62 3656.09 +59.63 921.10 +54.80
78
Depreciation Profit Bef. Tax Tax Net Profit Other NonRecurring Income Reported Profit Equity Dividend
177.96 +1.43
82.01 +1.34
30.74 +1.83 890.36 +52.97 332.99 +19.81 557.37 +33.16 2.70 +0.16 560.07 +33.32 0.00 0.00
11.63
+1.62
9.57
+3.59
6603.86 +53.18 3574.09 +58.30 2181.43 +17.57 1200.03 +19.57 4422.44 +35.62 2374.06 +38.72 11.50 +0.09 0.26 +0.00
308.66 +42.92 115.43 +16.05 193.22 +26.87 0.31 +0.04
79.37 +29.76 28.33 +10.62 51.04 +19.14 0.21 +0.08
4433.93 +35.71 2374.32 +38.73 554.13 +4.46 290.58 +4.74
193.53 +26.91 0.00 0.00
51.25 +19.22 0.00 0.00
Data Source - Asian CERC IT Ltd.
Balance Sheet (Rs.in Millions) Period Ended Mar2007 (12 Mnts.) 3,979.05 Period Ended Mar2006 (12 Mnts.) 487.65 Period Period Period Ended Ended Ended Mar2005 Mar2004 Mar2003 (12 (12 (12 Mnts.) Mnts.) Mnts.) 266.48 4,217.67 4,484.15 3,821.82 2,244.83 163.13 401.07 564.20 830.29 845.74 157.13 145.71 302.84 167.33 10.26 480.43
Liabilities
Share Capital Reserves & Surplus Net Worth (1) Secured Loans (2) Unsecured Loans (3) Total Liabilities (1+2+3)
14,629.89 12,793.94 18,608.94 13,281.59 3,357.92 10,760.58 29.68 6,696.95
32,727.44 20,008.23 10,550.80 2,240.23 Period Ended Mar2007 (12 Mnts.) 1,758.14 309.69 Period Ended Mar2006 (12 Mnts.) 825.95 133.51
Assets
Period Period Period Ended Ended Ended Mar2005 Mar2004 Mar2003 (12 (12 (12 Mnts.) Mnts.) Mnts.) 448.95 61.00 183.29 39.27 144.72 28.15
Fixed Assets Gross Block (-) Acc. Depreciation
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Net Block (A) Capital Work in Prgs. (B) Investments (C) Current Assets, Loans & Advs. Inventories Sundry Debtors Cash And Bank< Loans And Advances Current Liab. & Provs. Current Liabilities Provisions (ii) Net Curr. Assets (i - ii) (D) Misc. Expenses (E) Total Assets (A+B+C+D+E)
1,448.46 92.06 5,845.76 0.00 1,033.47 8,054.47
692.44 32.10 2,674.18 0.06 819.05 8,910.28
387.95 16.53 7.19 0.00 3,325.82 8,472.33
144.02 0.00 191.82 11.53 872.60 398.17
116.57 0.00 185.32 0.00 492.70 75.73 56.52 624.95 237.24 23.85 261.09 363.86 0.00 665.75
11.76 1,347.15
24,448.11 12,478.53
(i) 33,536.05 22,207.92 11,809.91 2,629.46 6,214.88 1,980.01 8,194.88 0.00 3,893.48 1,704.93 5,598.41 0.00 1,212.35 458.42 1,670.76 0.00 396.45 136.79 533.24 0.00
25,341.17 16,609.51 10,139.14 2,096.21 32,727.44 20,008.23 10,550.80 2,432.05
Data Source - Asian CERC IT Ltd.
REFERENCES
Book called 'Technical Analysis from A to Z' by Steven B Achelis Annual Report-06-07 of Indiabulls Securities Limited Websites: www.indiabulls.com www.valueresearchonline.com www.traderjee.com www.moneycontrol.com www.stockbasics.com www.nseindia.com www.livemint.com www.equitymaster.com www.indiainfoline.com www.5paisa.com www.domain-b.com www.kotaksecurities.com
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www.sharekhan.com www.religare.com www.icicidirect.com www.motilaloswal.com
GLOSSARY
Key Terms
1. Intraday refers to buying or selling stocks today with an obligation to sell or buy the stock on the same day. It means completing the trading cycle in the same day. Here the stocks do not come to the Demat account. 2. Delivery refers to buying stocks today with a plan of selling it in future. In India there is a concept of T+2 settlements which means a stock bought on trade day is credited to your Demat account (or delivered) after 2 days. 3. Square off- making the position nil. Say selling off the stocks. (or buying back in case of short selling) 4. Short selling- selling without having the possession of the stocks (possible in intraday trade). Selling the stocks initially and buying them back later. It is a concept used in the falling markets. 5. Demat Account- the account wherein the shares are delivered. Every Demat account is linked to a trading account and a savings bank account. 81
Demat account are provided by CDSL (central depository services limited) and NSDL (national securities depository limited). Indiabulls is a depository participant that links the depository to the beneficial owner of the account (client). 6. Trading pool/margin account- the place where the stock is received after the trade, it is the brokers account called the broker pool account. 7. T+2= Transaction + 2 days Futures Terminology 8. Spot Price: the price at which an asset trades in the spot market. 9. Futures Price: the price at which the futures contract trades in the futures market 10. Contract Cycle: The period over which the contract trades. The index futures contracts on the NSE have a one-month, two-month and threemonth expiry cycles that 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. 11. Expiry Date-the date specified in the futures contract. It is the last Thursday of the month 12. 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. NSE prescribes it for stocks. Each stock had a different lot size. 13. 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. 14. Cost of Carry the storage cost plus the interest that is paid to finance the asset less the income earned on the asset. 15. 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.
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16. Marking to Market the adjustment made at the end of each trading day to the investors margin account to reflect the investors gain or loss depending upon the futures closing price. It is the difference between todays 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. 17. 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. Options Terminology 18. Stock options options on individual stocks. A contract gives the buyer the right to buy or sell shares at the specified price 19. 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 20. Writer of an option the one who by receiving premium, is obliged to sell/buy the asset if the buyer exercises on him 21. Call Option gives the buyer the right but not the obligation to buy an asset by a certain date for a certain price 22. Put Option gives the buyer the right but not the obligation to sell an asset by a certain date for a certain price 23. Spot Price the price at which an asset trades in the spot market. 24. Strike Price the target price or the expected price. 25. Contract Cycle the period over which the contract trades. There are three-month contracts just like the futures. 26. Expiry Date the date specified in the option contract. It is the last Thursday of the month, just as in futures. 27. Contract Size the amount of asset that has to be delivered under one contract.
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28. In-The-Money Option (ITM) an option that would lead to a positive cash flow to the holder if it were exercised immediately. 29. 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). 30. A put option is ITM if the index is below the Strike price (Spot Price < Strike Price). 31. At-The-Money (ATM) an option that would lead to zero cash flows to the holder if it were exercised immediately. 32. Out-Of-The-Money Option (OTM) an option that would lead to a negative cash flow to the holder if it were exercised immediately. 33. A call option on the index is said to be OTM if the current index stands at a level that is less than the strike price (Spot Price < Strike Price).
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A REPORT ON AN OVERVIEW OF INDIAN STOCK MARKET BY ARUNA LAKHINA INDIABULLS SECURITIES LIMITED

OUTLOOK ON INDIAN STOCK MARKET

1.2 National Stock Exchange

Wholesale debt market Capital market

1.3 Bombay Stock Exchange

2.2 Growth of Indiabulls

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

Indiabulls won bids for landmark properties in Mumbai.

Diversified Business Group of Indiabulls

Securities & Derivatives Broking

Mortgage & Housing Finance

Financial Products Distribution

Fig 2.1: Diversified Business Groups of Indiabulls

2.3 Indiabulls Subsidiaries

2.4 Organizational Structure of Indiabulls

Department based Organizational Structure: Director-Online Director-Offline

Operations & Service

Corporate Communi cation

Sr. Vice President

Figure 2.2 Department based organizational Structure of Indiabulls

Regional Hierarchies of Indiabulls

Senior Vice President

Branch Manager Senior Sales Manager

Back Office Executive

Local Compliance Officer

Figure 2.3 Regional hierarchies of Indiabulls

CFO & President

Chief Executive Officer

Figure 2.4 Key Positions

2.5 Products and Services of Indiabulls

Services provided by Indiabulls include:

Commercial Vehicle Loans:

OVERVIEW OF INDIABULLS SECURITIES LTD

3.2 Business Model & Operations of Indiabulls Securities Ltd

Offline business Other Sales

Online business: serving clients primarily through an Internet based

Offline business: serving clients primarily through an office based relationship

Other Sales: includes insurance, research services and other offerings

3.3 Basic Requirement for doing Trading

3.4 Trading Products of Indiabulls Securities

Fig showing 3.1 Trading Products of Indiabulls securities

Indiabulls Securities Ltd income unit has the following

Income from Online business: The contribution of revenue from Online

Income from transaction and service charges and interest income

Brokerage Income of Indiabulls securities (in crores)

450 400 350 300 250 200 150 100 50 0

Bar Chart 4.1 Brokerage Income of Indiabulls Securities (in crores)

4.2 Financial Highlights

34.60 1,2444.10 4956.89 7487.20 679.70 6807.50 176.90 2196.60 4434.00

13.70 1684.10 628.50 1055.59 133.80 921.80 21.70 333.00 567.10

+ 152.55 + 638.92 + 688.69 + 609.29 + 408.00 + 638.50 + 715.21 + 559.64 + 681.87

22.84 18456 76536

15.61 16811 40970

5.10 5404 16309

Bar chart 4.2 Basic EPS

20 05 20 06 20 07 Source: Annual Returns Indiabulls Financial Securities Limited

Bar chart 4.3 Net Worth (in million)

200 00 100 80 100 60 100 40 100 20 100 00 80 00 60 00 40 00 20 00 0 20 05 20 06 20 07

Source: Annual Returns Indiabulls Financial Securities Limited

Bar chart 4.4 Market Capitalization (in million)

Source: Annual Returns Indiabulls Financial Securities Limited

Bar chart 4.5 Net Profit (Rs. in million)

Source: Annual Returns Indiabulls Financial Securities Limited