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Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
Summer internship project  indiabulls
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  • 1. 2012FACTORS AFFECTING INVESTMENT DECISIONS AND COMPETITIVE ADVANTAGES OF INDIABULLS SHIKHA SINHA INDIABULLS SECURITIES IBS HYDERABAD 5/26/2012
  • 2. A REPORT ONFACTORS AFFECTING INVESTMENT DECISIONS AND COMPETITIVE ANALYSIS OF INDIABULLS SUBMITTED BY: SHIKHA SINHA 11BSPHH010767 A report submitted in the partial fulfillment of MBA Program of IBS Hyderabad Submitted to:FACULTY GUIDE COMPANY GUIDEDR. P SHASHIKALA MR. ATISH GUPTAIBS HYDERABAD V.P., INDIABULLSDate of submission:2|Page
  • 3. AUTHORIZATIONI, Dr. P Shashikala, hereby authorize the submission of the projectwork titled, “ Factors affecting investment decision and competitiveadvantage of Indiabulls”, undertaken by Ms. Shikha Sinha(Enrollment no. 11BSPHH010767) as partial fulfillment of MBAProgram of IBS Hyderabad. This project work was executed undermy guidance and no part of this project has been submitted for anydegree or recognition before.Sincerely,Dr. P Shashikala(Faculty Guide, IBS Hyderabad)Dated:3|Page
  • 4. ACKNOWLEDGEMENTI hereby take this opportunity to thank INDIABULLSSECURITIES, for providing me a corporate exposure through thecourse of my summer internship.I would like to express my sincere gratitude towards my companyguide Mr. Atish Gupta, for providing me great insights about stockmarkets, real estate, home loans and various other ventures, forguiding me all throughout and for being a great support.I would also like to thank Dr. P Shashikala, my faculty guide forinstructing me and giving me her valuable advice on my project.I am also like to thank Mr. Ashish Yadav, Mr. Ankit Gupta, Mr.Jadish Yadav, Mr. Naveen and all members of Indiabulls family whowere a great co-operation and help all throughout.I would like to extend my gratitude to IBS Hyderabad, for providingme such a platform.Last but not the least all my friends and family for their support andco-operation.Thanking You,Shikha Sinha,11BSPHH0107674|Page
  • 5. EXECUTIVE SUMMARYThe increasing trend towards globalization and industrialization hasincreased the trend of competition in the financial market, intensifiedby the coming of Non Banking Financial Company (NBFC), likeIndiabulls Securities, and so has the need for the marketing offinancial instruments has intensified.NBFCs are financial institutions are ones which provide bankingservices without meeting the legal definition of a bank, i.e. one whichdoes not hold a license. They are not allowed to take deposits frompublic. Nonetheless all the operations of these institutions are coveredunder banking regulations.This project is completely focused to identify some of the demanddrivers, rather factors that make people invest in such institutions andin this regard what are the various differentiating factors that provideIndiabulls a competitive edge over other players in the market.There has been an emphasis on the various businesses and ofIndiabulls that make it standout in this league, rather than being a “metoo” product. In words of Al Ries and Jack Trout, “differentiate ordie”.5|Page
  • 6. TABLE OF CONTENTSSL CONTENTS PAGENO. NO. 01 Authorization 3 02 Acknowledgement 4 03 Executive summary 504-a Introduction- Background and Literature review 9 b Objective of project 10 c Methodology 11-12 d Scope and Limitations of study 1305-a Financial industry overview 14-15 b Introduction to brokerage industry 16-18 c Porter‟s 5 factor model of industry 19-21 d Demand drivers of the industry 22 e Supply drivers of the economy 23 f Domestic economic conditions 24-25 g Global economic conditions 26 h Critical success factors of the industry 27 i Measures taken by Indian government 28 j PESTEL analysis of industry 29-30 k Fiscal and monetary policies (legal issues) 31-3206-a Company overview-History 33-34 b Business life cycle 35-37 c Indiabulls group of companies 38 d Company financials 39-40 e Mission and vision 41 f Strategies and focus 41 g Marketing mix of Indiabulls 42-46 h SWOT of Indiabulls 47-48 i BCG of Indiabulls 49-50 j Porter‟s 5 factor model of Indiabulls 51-54 k Indiabulls in News 55 l Recent CSR done by Indiabulls 56-57 m Customer relationship 58 n Affect of market dynamics 5907-a Factors affecting investment decisions 60-626|Page
  • 7. b Factor Analysis and interpretation 63-6808-a Comparison of Indiabulls brokerage services 69-71 b Different charges in the industry 72-81 c SWOT analysis of different firms 82 d Competition in real estate industry 83 e Competition in home loans 84 f Competitive advantage 85 09 Conclusion and recommendation 86 10 Outcome and contribution 87 11 Learning from SIP 88 12 References 89 13 Appendix (Questionnaire) 90-91 LIST OF FIGURES AND TABLESSl. Pg.NO. CONTENT NO.01 Research Methodology 1102 Methodology 1203 Products of financial market 1404 Classification of financial market 1505 Brokerage terminals in various areas 1706 Percentage of branches in each region 1807 Percentage of sub brokers in various regions 1908 Analysis of Porter‟s 5 factor model of the industry 2409 Indian economy‟s growth factors 2610 Stable and robust growth in face of global 27 challenges11 Critical success factors of the industry 2812 Various measures taken by Indian Government 2913 PESTEL analysis 3014 PESTEL analysis of the industry 3315 Indiabulls at glance 3516 Business life cycle 377|Page
  • 8. 17 Journey of Indiabulls 3818 Indiabulls group of companies 3919 Indiabulls a leading finance company 4020 Asset growth of Indiabulls 4121 Products of Indiabulls 4222 Places of Indiabulls 4423 Promotion of Indiabulls 4524 SWOT of Indiabulls 47-4825 BCG of Indiabulls 4926 Competition in the industry 51-5227 Suppliers of Indiabulls Power 5328 Indiabulls in news 5529 KMO and Bartlett‟s test 6330 Variables used in the test 6431 Communalities 6532 Total variance explained 6633 Rotated component matrix 6734 Condensed/final factors 6835 Different brokerage charges in the industry 6936 Comparison of various rates 7037 Price comparison chart 7138 SWOT of Sharekhan 72-7339 SWOT of India Infoline 74-7540 SWOT of ICICI Direct 76-7741 SWOT of Motilal Oswal 78-7942 SWOT of Angel Broking Firm 80-8143 Competition in real estate 8244 Competition in home loans 8345 Housing Finance Companies competition 838|Page
  • 9. BACKGROUND AND LITERATURE REVIEW The Securities Brokerage Industry is cyclical and comprised of twodistinct types of businesses. Brokerages, also known as financialservices companies, strive to meet the investing needs of their clients,and exchanges facilitate securities trading. Net profits correlate to theperformance of the broader equity market. In this market with less differentiated products and many players,there exists an oligopoly (saying in book terms), characterized bytough competition, entry and exit barriers and many more. 1. Al Ries and Jack Trout, in his work said “differentiate or die”, too many less differentiated products creates a kind of information overload, and in this clutter of too much information, products which are not properly differentiated or advertised just end up becoming a me too product. To avoid it every marketer needs to position his/ her products in a way that makes a specific image in the minds of consumers. 2. Jack Miller, in his work published on June 03, 2010, talked about how investors make investment decisions. He broke the process of decision making in pulling the buy or sell trigger. According to him investors made the investment decisions in the ways like simple screening, then lateral recommendation, followed by piggy bank investing. 3. According to U.S. Securities and Exchange Commissions’, one of the articles: investors first evaluate their current financial roadmap, and then they evaluate their comfort zone in taking on risk. Consider an appropriate mix of investments, create and maintain an emergency fund, consider dollar averaging, consider rebalancing portfolio occasionally, and in the process also try to avoid the circumstances that can lead to fraud.9|Page
  • 10. OBJECTIVE OF THE PROJECTAn increasing trend has been observed in demand for the services ofNon Banking Financial Institutions nowadays. This project is aimedto find out factors affecting investment decisions in these firms. Therehas also been emphasis to find out the plus points of Indiabulls or thedifferentiating factors that give Indiabulls a competitive edge. Inshort: To find out the factors affecting investment decisions in a NBFC. To find out various competitive advantages that makes Indiabulls of the largest stock broking companies.10 | P a g e
  • 11. METHODOLOGYThis is a two dimensional project focusing on two aspects, as alreadymentioned (objectives). For my project work I have focused on bothprimary and secondary data as well.Basically any research work proceeds as: Fig: 1 For this project my challenge was to find out the factors and the competitive advantages. For which I conducted a descriptive research.11 | P a g e
  • 12. I have collected primary data through questionnaire and survey. For secondary data, company records, some reviews in economic times, data on moneycontrol site, some online research works have been referred. I have taken 11 factors in my survey so my population size is of 66. I have targeted only investors, who were customers, general investors and company employees. A factor analysis has been run on the data to find the most influential factor. For rest my own analytical skill is used. Fig: 212 | P a g e
  • 13. SCOPE OF THE PROJECTThis project has been a great insight for me as I came to know aboutstock market, demat accounts, buying and selling of dematerializedsecurities, who are brokers, how to make investment and how to trackportfolio of investments.The project is aimed to cover maximum factors affecting the demanddrivers and competitiveness.Nowadays even the government is taking up steps to find such factorsto give a boost to the Indian financial system. LIMITATIONS OF STUDY The population size is limited to Hyderabad area. There may be interviewer bias or judgmental bias. There may be redundancy of data or area surveyed. Due to time and resource constraints some important segment of population might have been missed out.13 | P a g e
  • 14. INDUSTRY OVERVIEW The Financial MarketThe financial industry or financial services industry includes a widerange of companies and institutions involved with moneymanagement, lending, investing, insuring and securities insurance andtrading services. The following institutions are a part of the industry: Banks Credit card issuers Investment companies Investment bankers Securities traders Financial planners Security exchanges Products of the financial market: Fig: 314 | P a g e
  • 15. The major crises that have shaped the modern financial industryare: The Great Depression(1929) Black Monday(1987) Asian Financial Crisis(1990) Stock Market Downturn(2002) Sub-prime Crisis(2007) The Classification of financial market in India Fig: 415 | P a g e
  • 16. THE BROKERAGE INDUSTRYThe brokerage industry is currently characterized by a large numberof companies (private or unorganized). In effect it is a fragmentedindustry with a large number of participants. The industry thus has„monopolistic competition‟, i.e. a large number of firms selling aslightly differentiated product.Indian stock broking industry is the oldest trading industry that hasbeen around even before the establishment of BSE in 1875. Despitepassing through a number of changes in post liberalization period, theindustry has found its way towards sustainable growth. With thepurpose of gaining deeper understanding about the role of Indianstock broking industry, in the country‟s economy, here are some datagleaned from analysis of secondary research.On the basis of recent research: On the basis of geographical concentration, Western region has maximum of 52%, around 24% are located in the North, 13% in South, and 10% in the East. 3% of firms started broking operations before 1950, 65% between 1950-1995, and 32% post 1995. On the basis of terminals 40% are located in Mumbai, 12% in Delhi, 8% in Ahmadabad, 7% in Kolkata, 4% in Chennai, and 29% in other cities. From the study it was found that 36% of firms trade in cash, 27% in derivatives, and 20% in cash, derivatives and commodities. In the cash market, 34% trade in NSE, 14% in BSE, 45% in both. Whereas in debt market, 31% trade in NSE, 26% trades in BSE, and 43% in both. Majority branches are located in North, i.e. 40%, 31% in West, 24% in South, and 5% in East.16 | P a g e
  • 17. In terms of sub-brokers, around 55% are located in South, 29% in West, 11% in North, and 4% in East. Trading, IPOs and Mutual Funds are the top three products offered by 90% of firms offering trading, 67% IPOs, and 53% offering Mutual Fund transaction. In terms of various areas of growth, 84% of firms have shown their interest in expanding their institutional clients, 66% firms intend to increase FIIs, and 34% are interested in setting up Joint Ventures in India and abroad. In terms of IT penetration 62% firms provide their website, and 90% have email facility. Brokerage terminals in various regions:Almost 52% of the terminals in the sample are based in the Westernregion of India, followed by 25% in the North, 13% in the South and10% in the East. Mumbai has got the maximum representation fromthe West, Chennai from the South, New Delhi from the North andKolkata from the East.Mumbai also has got the maximum representation in having thehighest number of terminals. 40% terminals are located in Mumbaiwhile 12% are from Delhi, 8% from Ahmadabad, 7% from Kolkata,4% from Chennai and 29% are from other cities in India. Fig: 517 | P a g e
  • 18. Branches and sub-brokers in various regions:The maximum concentration of branches is in the North, with asmany as 40% of all branches located there, followed by the Westernregion, with 31% branches. Around 24% branches are located in theSouth and East constitutes for 5% of the total branches of the totalsample.In case of sub-brokers, almost 55% of them are based in the South.West and North follow, with 30% and 11% sub-brokers respectively,whereas East has around 4% of total sub-brokers.Fig: 6 Fig: 7Analysis of brokerage industry based on Michael Porter’s 5 factor model18 | P a g e
  • 19. Competition in the industry Potential of new entrants Power of suppliers Power of customers Threat of subsitutes Fig: 8 CompetitionThe industry is now in a fairly high growth phase. However thebrokerage industry is very cyclical and is impacted by activity levelsin the markets. During the downturns such as 2008-2009 periods, thesmaller players were squeezed out of the business. As a result there isa contrast consolidation happening in the industry. Potential of new entrantsA new entrant in addition to the above also needs a reasonable levelof capital to fund the working requirements of the business (finance tocustomers, deposits with exchanges, etc).19 | P a g e
  • 20. The scale requirements are increasing constantly and as a result a newentrant will require higher levels of investments in the future to enterthe business. As pointed out, it is likely to see many entrants in theindustry. On the contrary, it is likely that the smaller players will exitby selling out or closing. Power of the supplierNot much relevant in most segments except investment banking,where employees control client relationships and hence have to behighly compensated. Power of the buyers/customersThis is important in the institutional brokerage business whichinvolves high volume and low brokerage charges. The extent of buyerpower is very low to non-existent in all kinds of retail segments. Threat of substitutesThe products offered by all firms in this industry are more or lessdifferentiated. Investing rather saving in the bank rather thaninvesting in a brokerage firm can be one option; else this is notapplicable for this industry.In a summary the industry has a moderate to low level of competitiveadvantage. There is low level of customer lock-in and customer willmove his or her business if the brokerage rates are not competitivewith rest of the industry. The only competitive advantage forcompanies in this sector comes from size and scale which enablesthem to leverage their size to reduce average costs and thus make aprofit on low brokerage margins.In addition to high fixed costs, the industry has very low margin cost.As a result the cost of adding an additional customer is low and per20 | P a g e
  • 21. transaction costs are limited. Due to this reason, we are seeing aconstant pressure on the brokerage rates has intensified thecompetition in the industry and is resulting in consolidation with thetop players.The basic brokerage business is now sometimes a loss leader toenable the brokerage firm to acquire customers and sell other productssuch as wealth management services, or third party mutual funds.This segment will provide adequate returns in the future for acompany with scale.21 | P a g e
  • 22. DEMAND AND SUPPLY DRIVERS OF THE INDUSTRY Demands for financial products are driven by risk-reward assessment, which considers: Potential yield The expectation of financial incentives or return on investment is a great demand driver which tempts people to invest or engage into transactions of the financial markets. Risk Rating Higher risks assumes higher profits and vice versa. Risk ratings are a vital point when making a decision to park ones resources into this industry. Liquidity To maintain strong and flexible liquidity position people tend to invest in financial markets, in order to meet their contingencies. Availability of information The more disclosure, the more is information symmetry, and so will be visibility and access to returns and so will be the expectation from this market increase along with investment. Access to alternatives More the disclosure in the market more will be the competition with more profits, so more will be the choices and access to alternatives to park ones resources.22 | P a g e
  • 23. The major supply drivers are: Money supply The supply of money has a big role to play in this industry, the more the supply of money in this industry; more will be the availability of financial services and products. Interest rates Interest rate determines the terms of trade, fluctuations in interest rates can entirely fluctuate this industry. Higher interest rate= will give higher returns, with great supply no doubt but borrowing or ascertaining the real market value may become difficult. Inflation Value of a currency appreciates and depreciates with the rates of inflation. Inflation thus serves as a great supply driver in this market. As in high inflation with higher supply of money there will be higher supply and vice versa. Economic conditions Rates of inflation, the upsurge or downturn in the domestic and global economy is another supply driver which is beyond the control of any business firm. Government Regulations The attitude of the government towards the trade policies and various other financial firms and industry matters a lot. Various restrictions or duties or taxes may restrict the supply and may hinder the growth of this industry. And will flourish with the ease of trade.23 | P a g e
  • 24. GLOBAL AND DOMESTIC ECONOMIC ENVIRONMENT OF The financial industryAccording to global 2000 (annual report by Forbes), seven of thetop 10 companies belonged to the financial industry. These includedthe Citygroup, Bank of America, HSBC Holdings, and JPMorganChase. Their combined revenue in 2007 was worth $647 billion,down from 2006 high of $785 billion.According to Fortune 500 rankings, in 2006 financial servicesgenerated $257 billion in profits, a third of total Fortune 500 profits.In 2008, however, they lost a staggering $213 billion, a total swing of$470 billion. Big players on the list, such as Citygroup and Bank ofAmerica, may only be alive today just because of government money.The financial industry is an industry in itself as well as an ancillarythat supports other industries. Trade and commerce across the worldwould come to standstill if there was no means to fund, pay andprotect the transactions. The Brokerage industry Domestic Economic EnvironmentIn 1991, Manmohan Singh, as Finance Minister in Narasimha Rao‟sgovernment, embarked on a programme of liberalization prompted byan acute balance-of-payment crisis.24 | P a g e
  • 25. Fig: 9 (Indian economy growth factors) Indian Brokerage Industry-Pre 2000 Post liberalization period. Business restricted to friends and relatives. Settlement T+15 days. Low trade volumes- No derivatives trading allowed. Lack of investment in technology- No front or back office software. Indian Brokerage Industry 2000-2008 Venture capital funding for brokerage businesses. Investment in technology- Front end and back end. National presence. Integrated risk management system. Significant increase in trade volumes- Derivatives trades play a major role. Margin funding for the retail clients. Indian Brokerage Industry 2009 onwards Paradigm shift from transaction oriented to research/ portfolio based advisory. Focus on franchisee based business model. Dematerialized accounts access for international trade. Access to international stock exchange. Trading on hand held platform (mobile phones etc) allowed.25 | P a g e
  • 26. Current Global Economic Environment The global economy is slowly recovering from a deep recession, with significant risks remaining. Countries are looking for ways to achieve sustainable economic growth and job creation. Competitiveness has become more important than ever -Globalization will continue and strong international competitors are emerging. -Companies are re-examining everything in terms of how and where they operate. India has achieved a long-term competitive transformation, but the next stage of development will be more challenging. Stable and robust growth in face of global challenges Fig: 1026 | P a g e
  • 27. Critical Success Factors of the Industry Fig: 11Seeing the overall brokerage as a single unit, the key success factorsor the winning strategy of Indian Brokerage Industry is a mixture of: People Process TechnologyThere are the three ingredients that together create value for bothinternational and domestic customers.By people it indicates to the service providers or the employees of thevarious firms of this industry, who day in and day out interact withthe customers and provide them services and satisfy them.Transparency of the process followed and disclosure method is yetanother success factor. The settlement of transactions is generallydone in a process of T+2 days. And the government support even stillplays a very vital role in forming the rules and norms of suchprocesses.Technology enables to stay competitive and on edge with thecompetitors; facilitating the ease of processes and speed and tomaintain and be up to date. This serves as a great success of thebrokerage industry.All these factors together help create value to the customer.27 | P a g e
  • 28. VARIOUS MEASURES TAKEN BY INDIAN GOVERNMT TO IMPROVE THE SITUTATION OF INDIAN STOCK MARKET MEASURES OBJECTIVESAllow foreign institutional investors to Liberalization of stock market to attract foreign investment ininvest in equity and debt markets. order to boost economic growth.Expanding the product range offered by Bring Indian market at par with the international standards andthe stock exchanges. diversify product portfolio.Allowing Indian companies to issues Facilitate market integration and give freedom to theADRS and GDRS. companies.Allowing Indian companies to invest Access to more funds for investment.abroad.Divestment of government ownership Facilitate growth through privatizationStrengthening of institutional framework To ensure transparency.in primary and secondary markets Investor protection.Demutualization Provide a standard framework for operations. Deregulation. Reduces the conflict of interest.BSE and NSE to set up and maintain To capture all information relating to trading. Investorcorporate bond reporting platforms protectionMaking PAN compulsory Strengthening KYC (Know Your Client) Fig: 12 28 | P a g e
  • 29. PESTEL ANALYSIS OF BROKERAGE INDUSTRYPESTEL analysis stands for "Political, Economic, Social,Technological, Environmental and Legal analysis" and describes aframework of macro-environmental factors used in the environmentalscanning component of strategic management. It is a part of theexternal analysis when conducting a strategic analysis or doingmarket research, and gives an overview of the different macroenvironmental factors that the company has to take into consideration.It is a useful strategic tool for understanding market growth ordecline, business position, potential and direction for operations. Fig: 13 Political factors are how and to what degree a government intervenes in the economy. Specifically, political factors include areas such as tax policy, labour law, environmental law, trade restrictions, tariffs, and political stability. Economic factors include economic growth, interest rates, exchange rates and the inflation rate. These factors have major impacts on how businesses operate and make decisions. For example, interest rates affect a firms cost of capital and therefore to what extent a business grows and expands. Social factors include the cultural aspects and include health consciousness, population growth rate, age distribution, career29 | P a g e
  • 30. attitudes and emphasis on safety. Trends in social factors affect the demand for a companys products and how that company operates. Technological factors include technological aspects such as R&D activity, automation, technology incentives and the rate of technological change. They can determine barriers to entry, minimum efficient production level and influence outsourcing decisions. Furthermore, technological shifts can affect costs, quality and lead to innovation. Environmental factors include ecological and environmental aspects such as weather, climate, and climate change, which may especially affect industries such as tourism, farming, and insurance. Legal factors include discrimination law, consumer law, antitrust law, employment law, and health and safety law. These factors can affect how a company operates, its costs, and the demand for its products. Fig: 1430 | P a g e
  • 31. LEGAL ISSUES WITH A BROKERAGE FIRM Securities Exchange Act of 1934 (Exchange Act)In contrast to the Securities Act, the Exchange Act primarily regulatestransactions of securities in the secondary market - that is, sales thattake place after a security is initially offered by a company (theissuer). These transactions often take place between parties other thanthe issuer, such as trades that retail investors execute throughbrokerage firms. The Exchange Act operates somewhat differentlyfrom the Securities Act. To protect investors, Congress crafted amandatory disclosure process that is designed to force companies tomake public information that investors would find pertinent to makinginvestment decision. In addition, the Exchange Act provides fordirect regulation of the markets on which securities are sold (thesecurities (stock) exchanges) and the participants in those markets(industry associations, brokers, and issuers). Monetary and Fiscal PoliciesIn the securities industry there exist regulators who have established aset of rules and regulations that administer the entire industry.Financial markets, depositors, clearing houses, and vendors worktogether to regulate the investment in the industry.The 3 major US government agencies that govern the securitiesindustry and frame monetary and fiscal policy, they are: the FederalReserve System, the Securities Exchange Commission (SEC), and theOffice of Comptroller of the Currency. Federal Reserve SystemThe Federal Reserve System is a government institution created toadminister nation‟s credit and monetary policies and to oversee thebanking industry as well as certain aspects of the broker activity, suchas credit.The Fed is responsible for establishing and enforcing monetarypolicy and for regulating the amount of credit outstanding. The fed31 | P a g e
  • 32. does this by establishing the bank discount rates and the rules forcredit. The market‟s response to the Fed‟s determination to controlinflation by raising and lowering the discount rate affects long terminterest rates, which have a significant impact on the securities‟market. Securities Exchange CommissionThe Securities Exchange Commission (SEC) is the primary regulatoryagency that oversees the securities industry. The SEC is anindependent bipartisan, quasi-judicial agency of the government. Thelaws administered by SEC deal with securities and finance and seek toprovide protection for investors in their securities‟ transactions. Office of the Comptroller of the CurrencyThe Office of the Comptroller of the Currency‟s (OCC) principalfunction is supervising the national banking system. The OCC mustapprove the establishment of new national banks, bank mergersinvolving national banks, and the liquidations of national banks.32 | P a g e
  • 33. COMPANY OVERVIEW Fig: 15History of IndiabullsIn middle of 1999, when e-commerce was just about starting in India,Sameer Gehlaut and his close IIT Delhi friend Rajiv Rattan gottogether and bought a defunct securities company with a NSEmembership and started offering brokerage services. A Few monthslater, their friend Saurabh Mittal also joined them. By December1999, the company embarked on its journey to build one of the firstonline platforms in India for offering internet brokerage services. InJanuary 2000, the 3 founders incorporated Indiabulls FinancialServices and made it as the flagship company.In mid 2000, Indiabulls Financial Services received venture capitalfunding from Mr. L.N. Mittal & Mr. Harish Fabani. In late 2000,Indiabulls Securities, a subsidiary of Indiabulls Financial Servicesstarted offering online brokerage services and simultaneously openedphysical offices across India. By 2003, Indiabulls securities had33 | P a g e
  • 34. established a strong pan India presence and client base through itsoffices and on the internet.In September 2004, Indiabulls Financial Services went public with anIPO at Rs 19 a share. In late 2004, Indiabulls Financial Servicesstarted its financing business with consumer loans. In March 2005,Indiabulls Properties Private Ltd, a subsidiary of Indiabulls FinancialServices, participated in government auction of Jupiter Mills, adefunct 11 acre textile mill owned by NTC in Lower Parel, Mumbai.Indiabulls Properties private Ltd won the mill in auction and thatpurchase started Indiabulls real estate business. A few months later,Indiabulls Real Estate company Pvt. ltd bought Elphinstone mill inLower Parel, another textile mill auctioned by NTC.With real estate business gaining size, Indiabulls Financial Servicesdemerged the real estate business under Indiabulls Real Estate andeach shareholder of Indiabulls Financial Services received additionalshare of Indiabulls Real Estate through the demerger. Subsequently,Indiabulls Financial Services also demerged Indiabulls Securities andeach shareholder of Indiabulls Financial Services also received ashare of Indiabulls Securities.In year 2007, Indiabulls Real Estate incorporated a 100% subsidiary,Indiabulls Power, to build power plants and started work on buildingNasik & Amravati thermal power plants. Indiabulls Power wentpublic in September 2009.Today, Indiabulls Group has a net worth of Rs 16,796 Crores & has astrong presence in important sectors like financial services, power &real estate through independently listed companies and IndiabullsGroup continues its journey of building businesses with strong cashflows.34 | P a g e
  • 35. BUSINESS LIFE CYCLE OF INDIABULLS Fig: 16The business life cycle is a model that enables businessmen toidentify the level of performance at which their business is operatingand to determine exactly what needs to be done to move to the nextlevel.The various levels of a business life cycle are: Start up Rapid Growth Maturity Decline Re-birth/ deathThe startup of IndiabullsIndiabulls was in start up phase in the year 1999. Sameer Gehlaut,Rajiv Rattan and bought a defunct securities company with NSE35 | P a g e
  • 36. membership and started brokerage services. Saurabh Mittal joined thefounders.-The founders were usually involved in running the business.-The primary emphasis was on generating and selling offlinebrokerage services.-There was less staff with modest pay in the industry, which providedpersonalized services.The rapid growth stageIndiabulls success geared up quite early, within one year of itsinception in 2000.-Indiabulls Financial Services received venture capital funding fromMr. L. N. Mittal and Mr. Harish Fabani and started online brokerageservices.-It opened many physical offices all across the country thereon andmade pan India presence.- Went public in 2004 (IPO was Rs. 19 per share) and also startedproviding customer loan in the same year.-Became a private ltd. in the year 2005. Participated in governmentauction and bought Jupiter mills to start its „real estate business‟, andso on.-In 2007, started „Power Indiabulls‟.Indiabulls by this time had a huge customer base, with wide numberof physical offices. Its sales and demand increased and it made itspresence greatly visible in the financial and other markets.36 | P a g e
  • 37. Maturity stageIndiabulls is still in the process of reaching the maturity stage. Itsfinancial services and signature account services are in their boomphase and are expected to reach there the earliest. With its currentpace of developments, expanded and loyal customer base, constantresearch and development, and other initiatives Indiabulls is sure toreach the maturity stage as a market leader very soon. And so willincrease its profitability and side by side will its competition in themarket.Decline/Re-birthWith an upsurge in demand for financial services. NBFC‟s likeIndiabulls have a great opportunity to develop and expand in themarket with its current potentials and probably will never reach thisstage unless it gives up to its competitors in the maturity stage. JOURNEY OF INDIABULLS Fig: 1737 | P a g e
  • 38. INDIABULLS GROUP OF COMPANIES Fig: 1838 | P a g e
  • 39. COMPANY FINANCIALS Total group net worth: Rs.16,844 Crs Total group PAT for FY 10-11: Rs 944 Crs Total group capital expenditure: Rs 6,200 CRs (US $ 1.4 bn) capex in financial year 10-11. Planned capex of 29000 (us $ 6.5 bn) in the FY 2014-2015. Focus on execution and on the ground results translating into profits. For its ongoing projects Indiabulls groups customers 385 MTs of steel, 550 MTs of cement, and 1700 CUM of RMC on daily basis. Creating value for shareholders: Dividend payout of 232 Crs in FY 10-11. INDIABULLS IS A LEADING FINANCE COMPANY Fig: 1939 | P a g e
  • 40. ASSET GROWTH Fig: 20 Assets have grown at a quarterly average of Rs. 2000 Crs, over last 9 quarters with a decrease in non-performing assets. Long duration mortgage loans have lead to steady asset growth and increase in Net Asset Income. Company continues to grow its branch networks and now has 170 branches across the country. Company has well trained „in house direct sales team‟, over 1300 people to promptly attend to prospective customers.40 | P a g e
  • 41. MISSION AND VISION MISSION:Rapidly increase the number of client relationships by providing abroad array of products offering to emerge as a clear market leader. VISION:To be the largest and most profitable financial services organizationin Indian market and become one stop shop for all non bankingfinancial products and services for the retail customers. STRATEGIES AND FOCUS CONSOLIDATIONAim to be among the top 3 players in existing products within next 3years. NO NEW PRODUCTSFocus on gaining size and scale in existing core products. NO CAPITAL MARKET FUND RAISINGAll businesses are well funded to achieve growth and size. Avoidingexcessive debt from the capital market. GOALFY 2013/2014, target of US $ 1.4 bn in cash generation from 3companies (real estate, finance and power).41 | P a g e
  • 42. MARKETING MIX OF INDIABULLSBeing a service industry Indiabulls will have 7P‟s rather than 4, theyare:PRODUCTSFig: 21 a) Power India bulls (PIB)PIB is the advanced online trading platform from Indiabulls SecuritiesLimited. PIB provides the best in the class internet trading featuresand delivers a seamless and rich online trading experience for itsusers. PIB comes with a whole host of online features for the internettrading users ranging from real-time stock prices, to live tradingreports, charting, News Room. PIB provides an integrated onlinetrading platform for the internet trading community to invest inequity, F&O, Online IPOs and base their decision on soundfundamental research and technical analysis. It also provides variouskinds of trading reports, each developed to cater to internet tradingusers‟ distinct needs. b) Indiabulls Signature account Indiabulls Signature account caters to remain on top of yourinvestments. It provides you the platform to trade in Equity andDerivatives. With an unmatched service and nationwide presence, theIndiabulls Signature account comes bundled with a variety ofexclusive features. c) Depository ServicesIndiabulls is a depository participant with the National SecuritiesDepository Limited and Central Depository Services (India) Limitedfor trading and settlement of dematerialized shares. Indiabullsperforms clearing services for all securities transactions through its42 | P a g e
  • 43. accounts. We offer depository services to create a seamlesstransaction platform – execute trades through Indiabulls Securitiesand settle these transactions through the Indiabulls DepositoryServices. Indiabulls Depository Services is part of our value addedservices for our clients that create multiple interfaces with the clientand provide for a solution that takes care of all your needs. d) Currency DerivativesIndiabulls offers trading in the Currency Derivatives Segment in NSE.Currency Derivatives are similar in nature to Stock Futures & Optioncontracts. Currency Derivatives Contracts (USD-INR, EUR-INR,GBP-INR and JPY-INR) at exchange rate as the underlying areavailable for trading with a monthly expiry. At any given time,Currency Derivatives Contracts are available for trading for the next12 months expiry for futures whereas 3 months expiry and 1 quarterlyexpiry for options.The Mark-to-Market for Currency Derivatives is settled on a dailybasis in a manner similar to Equity Futures & Options.The market for Currency Derivatives is open from 9 A.M to 5 P.M(Monday to Friday).PRICEIndiabulls has various models at different price ranges targeted at aparticular market segment. It caters to both the service and enterprisesegment of customers.Indiabulls charges Rs. 1350 for opening a demat account (900 accountopening charges + 450 DP charges + 750 for software (optional)). Itcharges brokerage of: 0.3% to 0.2% (delivery) and 0.2% (intraday).The brokerage ranges from 1paise to 20paise or 3paise to 30paise.Indiabulls provides home loans @ 10.75 (fluctuating) to salariedpeople and 12% (fluctuating) to non-salaried professionals.43 | P a g e
  • 44. The price of real estate fluctuates from location to location, andaccording to the size of the flat, residential or commercial plots.PLACEIndiabulls has its offices at all major cities, namely Delhi, Mumbai,Bangalore, Ahmadabad, Chennai, Kolkata, Hyderabad, Nasik andmany other Indian cities.Fig: 2244 | P a g e
  • 45. PROMOTIONIndiabulls does its promotion through news papers, magazines,through websites and television ads. Fig: 23PEOPLEThis includes the employees of the organization. The employees ofIndiabulls have expertise in the field and are well versed in all thetricks of the trade. The employees are given importance in theorganization because a satisfied employee creates a satisfiedcustomer. They provide excellent and time to time services.45 | P a g e
  • 46. PROCESSA hierarchical process is followed for execution of all services. Firstthe sales lead is generated by the employees and sales calling is doneon that database. The employees then approach interested customers,negotiation of sales is done, and the customers are explained thenorms and sale is closed. Continuous services and assistance isprovided to existing customers, they are made aware of newbeneficial offers from time to time.PHYSICAL EVIDENCEDifferent branches of Indiabulls have a very professional and formalatmosphere. The work environment is very good. This may be one ofthe reasons why the employees like to spend time in office andgenerate high productivity.46 | P a g e
  • 47. SWOT ANALYSIS OF INDIABULLSThis is a strategic planning method to evaluate the Strength,Weaknesses (limitations), Opportunities and Threats involved in aproject or business venture. It involves specifying the objectives ofthe business venture or project and identifying internal and externalfactors that are favorable or unfavorable to achieve it. This techniqueis credited to Albert Humphrey of Stanford University. • Online trading platform. • Diverse branches and networks provide a great oppourtunity to cater tapped and untapped market as well. Strength • Provides competitive brokerage and DP charges. • Equity analysis reports to support its clients. • Both online and offline trading facility. • Real time online transfer of funds and exposure facility with HDFC, Citybank, ICICI, etc • It should have its own mutual funds asit provides advises on mutual funds. • Position to answer the questions of the clients in their fields. Weaknesses • It does not provide indices on major world markets, ADR prices of Indian scripts. • Lacks banking arm47 | P a g e
  • 48. • Financial services like mutual funds and insurance. • It is registered with Luxemberg Stock Exchange so can target other stock exchanges also. • ATM facility should be provided for Oppourtunities easy withdrawals. • Tie-ups with third party companies for selling products. • High client base will help for cross sales of its products. • Companies like Sharekhan, ICICI Direct, Kotak Securities, and private brokers are major threats. • Banks with demat facilities are jockeying for position. Threats • Local brokers capable of charging lower brokerage. • Changes in SEBI guidelines and other tax implications. • Government regulations Fig: 2448 | P a g e
  • 49. BCG MATRIX OF INDIABULLSCompanies that are large enough to be organized as strategic businessunits face the challenge of allocating resources among these units. Inthe early 1970‟s Boston Consultancy Group developed a model tomanage the portfolio of these business units (or major product lines).The BCG growth share matrix displays different business units on agraph of market growth rate vs. market share relative to competitors. BCG MATRIX OF INDIABULLS Fig: 2549 | P a g e
  • 50. Question MarksIndiabulls Retail and Indiabulls SecuritiesIndiabulls Retail (Now known as „Store One‟ ) can be classified asquestion mark as it is new to the market and need to compete withestablished retailers like Future Group and K Raheja Group to gainmarket share. Indiabulls Securities also comes in this category due topertinent competitors like Sharekhan, Karvy Stock Broking andothers. Though broking industry is expanding by 12-15% annually,Indiabulls Securities is not able to cope with this high pace. StarsIndiabulls Real Estate and Indiabulls Financial ServicesIndiabulls Real Estate can be considered to be in the Star category. Itis considered star as it has a high market growth rate and enjoys ahigh market share as well. Real Estate sector in India is growing at34% annually(www.sethassociates.com/Real_estate_sector_in_india.php) whilegrowth of Indiabulls Real Estate has surged to 97%. Its profit rose toRs. 201.32 Crores in 2010-2011 from 6.75 Crores in the precedingyear. (www.indiabulls.com/ibgroup/media.htm). Financial servicessector in India grew at 8 % last year but had a steady growth rate of15% for the last few years. For FY 2011, net profits of IndiabullsFinancial more than doubled to Rs. 743 Crores. Cash CowsNone of the companies of Indiabulls comes in this category. DogsNone of the companies of Indiabulls comes in this category50 | P a g e
  • 51. PORTER’s 5 FACTOR MODEL OF INDIABULLSNamed after Michel E. Porter, this model identifies and analyses 5competitive forces that shape every industry and determinesindustry‟s weaknesses and strength. They are: Competition in the industry Indiabulls faces competition from various firms like:51 | P a g e
  • 52. Fig: 2652 | P a g e
  • 53. Potential of new entrants The market for Non Banking Financial Companies or rather broking houses are flourishing. This new trend poses for new threats also; this may be either the entry of local players who can provide lower rates or a very big player who can enter into a price war. Threat of new entry is high when: Capital requirements to start the business are less Few economies of scale are in place Customers can easily switch (low switching cost) Your key technology is not hard to acquire or isn‟t protected well Your product is not differentiated Power of suppliers Indiabulls Group has very high profile corporate suppliers, who for obvious reasons have great bargaining power and offers from competitors also. The operations largely depend on these supplies. Some of suppliers of Indiabulls Group (PIB) are: Fig: 2753 | P a g e
  • 54. Bargaining Power of supplier means how strong is the position of aseller. Suppliers are more powerful when: Suppliers are concentrated and well organized Few substitutes available to suppliers Their product is most effective or unique Switching cost, from one suppliers to another, is high You are not an important customer to SupplierPower of customersCustomer is the king of the market. They have a lot of options whileplanning to purchase products. Products offered by Indiabulls areunsought in nature and are industry dependent. The threats which lieshere are: Too many goods chasing too few consumers. Buyer purchases in bulk quantities and are mostly corporate clients. Product is not much differentiated. Buyer‟s cost of switching to a competitors‟ product is low. Shopping cost is low. Credible Threat of integration.Threat of substitutesIndiabulls poses great threat of substitutes like people of low riskappetite would like to invest in bank rather than in share market, realestate, commodities, etc. Its products can very well be substituted bysubstitutes offered by competitors.54 | P a g e
  • 55. INDIABULLS IN NEWS Fig: 2855 | P a g e
  • 56. RECENT CORPORATE SOCIAL RESPONSIBILITY BY INDIABULLSTHE NOA PROGRAMIndiabulls CSR Initiative - Drug Access Program for cancerpatients in partnership with NovartisAs a part of its deep commitment to social causes, Indiabulls hastaken up this noble project named „Novartis Oncology Access‟, inpartnership with Novartis (drug manufacturing company) and MaxFoundation (NGO). Indiabulls as financial partner is helping themaccess actual income of the patient and their families, and based onthe accessed income; recommend the drug donation slabs as perapproved guidelines.Novartis are the developers & makers of Glivec- a medication for thetreatment of Ph+ chronic myeloid leukemia (CML) in chronic phase,accelerated phase and blast crisis for both pediatric and adultpatients. This drug is also indicated for adult patients with specificconditions.NOA program:The NOA program is a drug access program for to help patients whohave been prescribed Glivec and Tasigna but cannot afford to pay forthe entire treatment cost. This program is run by Novartis along withits partner Physicians- enrolls patient under this program afterdiagnosis, The MAX Foundation- independent NGO – Assistpatient throughout the program in completing formalities &procurement of medicines, Indiabulls Financial Services -independent body for financial evaluation of patient, collection &safekeeping the submitted documents with confidentiality and outlets– Independent pharmacist, dispenses drugs to patients & manage druginventory.56 | P a g e
  • 57. Indiabulls Financial Services:As a NOA partner Indiabulls are performing task of the local creditevaluation agency which works as an independent and unbiased bodyfor the financial analysis and assessment of the patient and familymembers‟ earning capacity to afford medical expenses on criticaldisease. The analysis bases on income levels assessment by way offinancial evaluation, field verification, living standard, personaldiscussion with patient/ care taker & guidelines as per standardoperating procedure (SOP) which is prepared by Novartis based onthe WHO guidelines for drug donation programs using Business forSocial Responsibility‟s (BSR) cost of living index, a well-establishedinternational guide often used as eligibility criteria for determiningaccess to drug assistance programs. Based on the family compositeIncome a suitable donation decision is given.ACCORDING TO 12th ANNUAL REPORT OF MARCH 2011-12 DIRECTOR’S REPORT IN ECONOMIC TIMES- Indiabulls Foundation plans to set up a hospital for the poor, fortreatment of life threatening diseases. The foundation also aims towork at a district level on transformation projects specifically in theareas of education and healthcare infrastructure.- The Company will actively support Indiabulls Foundation. In FY2010-11, the Company has contributed Rs. 8.8 Cr to IndiabullsFoundation.- Other CSR Initiatives: the Company has partnered with Novartis tolaunch a "Drug Access Programme" for Cancer Patients. Indiabullslends its expertise by assessing the financial status of the patients toapprove access to Free Drugs under the programme.57 | P a g e
  • 58. CUSTOMER RELATIONSHIPWith a great team of highly motivated staff, Indiabulls maintains agreat customer. Customer retention being of great importance in suchmarket where margin is usually low and profit mainly comes due toscale of operations.The dedicated workforce is always at the service of the customer atthe very first call. There are always schemes, discounts andexemptions to existing customers.Also if there is any new product or scheme old customer is alwayscalled before sales call is made to the new ones. There is guidance ateach step.Not only customer retention important but clients new to the marketare also given great importance. Relationship managers are alwaysthere to take care of all such affairs. Continuous follow ups call aremade time to time to remind customers for any kind of dates orinvestments is to be made.58 | P a g e
  • 59. MARKET DYNAMICSThe pricing signals that are created as a result of changing supply anddemand level in a given market. Market dynamics describe thedynamic, or changing, price signals that result from the continualchanges in both supply and demand of any particular product or groupof products. Market dynamics is a fundamental concept in supply,demand and pricing economic models.There is great shift in the Indian consumption pattern that is beingobserved like: 69% of the population is less than 35 years of age and has spurred consumption demand. 54% of the population is in the working group. High savings and investment rate (over 35% of GDP). India‟s manufacturing growth is amongst the fastest in the world. India‟s manufacturing base is the fourth largest globally. The growth potential of the services sector in India is enormous at $200 billion offering employment to 40 million people. The confidence of a robust growth in the services sector is the highest in India among the 4 BRIC countries including Brazil, Russia, China and India service sector. Among 60% of firms there expect a rise in activity whileThe above factors along with many other factors are some of thosemarket dynamics which greatly affect this market.59 | P a g e
  • 60. FACTORS AFFECTING INVESTMENT DECISIONSThere are a numerous reasons that affect investment decisions hereare some of them: Risk ToleranceRisk refers to the volatility of portfolio‟s value. The amount of riskthe investor is willing to take on is an extremely important factor.While some people do become more risk averse as they get older; aconservative investor remains risk averse over his life-cycle. Anaggressive investor generally dares to take risk throughout his life. Ifan investor is risk averse and he takes too much risk, he usually panicwhen confronted with unexpected losses and abandon theirinvestment plans mid-stream and suffers huge losses. Return NeedsThis refers to whether the investor needs to emphasize growth orincome. Younger investors who are accumulating savings will wantreturns that tend to emphasize growth and higher total returns, whichprimarily are provided by equity shares. Retirees who depend on theirinvestment portfolio for part of their annual income will wantconsistent annual payouts, such as those from bonds and dividend-paying stocks. Of course, many individuals may want a blending ofthe two Þ some current income, but also some growth. Investment Time HorizonThe time horizon starts when the investment portfolio is implementedand ends when the investor will need to take the money out. Thelength of time you will be investing is important because it candirectly affect your ability to reduce risk. Longer time horizons allowyou to take on greater risks with a greater total return potentialbecause some of that risk can be reduced by investing across differentmarket environments. If the time horizon is short, the investorhas greater liquidity needs some attractive opportunities of earninghigher return has to be sacrificed and the result is reduced in return.60 | P a g e
  • 61. Tax ExposureInvestors in higher tax brackets prefer such investments where thereturn is tax exempt, others will have no such preference. Management Outlooklf the management is progressive and has an aggressively marketingand growth outlook, it will encourage innovation and favor capitalproposals which ensure better productivity on quality or both. In someindustries where the product being manufactured is a simplestandardized one, innovation is difficult and management would beextremely cost conscious. In contrast, in industries such as chemicalsand electronics, a firm cannot survive, if it follows a policy of make-do with its existing equipment. The management has to beprogressive and innovation must be encouraged in such cases. Competitor’s StrategyCompetitors strategy regarding capital investment exerts significantinfluence on the investment decision of a company. If competitorscontinue to install more equipment and succeed in turning out betterproducts, the existence of the company not following suit would beseriously threatened. This reaction to a rivals policy regarding capitalinvestment often forces decision on a company. Opportunity created by technological changeTechnological changes create new equipment which may represent amajor change in process, so that there emerges the need for re-evaluation of existing capital equipment in a company. Some changesmay justify new investments. Sometimes the old equipment which hasto be replaced by new equipment as a result of technical innovationmay be downgraded to some other applications, A proper evaluationof this aspect is necessary, but is often not given due consideration. Inthis connection, we may note that the cost of new equipment is amajor factor in investment decisions.61 | P a g e
  • 62. Market ForecastBoth short and long run market forecasts are influential factors incapital investment decisions. In order to participate in long-runforecast for market potential critical decisions on capital investmenthave to be taken. Fiscal IncentivesTax concessions either on new investment incomes or investmentallowance allowed on new investment decisions, the method forallowing depreciation deduction allowance also influence newinvestment decisions. Cash Flow BudgetsThe analysis of cash-flow budget which shows the flow of funds intoand out of the company may affect capital investment decision in twoways. First, the analysis may indicate that a company may acquirenecessary cash to purchase the equipment not immediately but aftersay, one year, or it may show that the purchase of capital assets nowmay generate the demand for major capital additions after two yearsand such expenditure might clash with anticipated other expenditureswhich cannot be postponed. Secondly, the cash flow budget shows thetiming of cash flows for alternative investments and thus helpsmanagement in selecting the desired investment project. Non-economic FactorsNew equipment may make the workshop a pleasant place and permitmore socializing on the job. The effect would be reduced absenteeismand increased productivity. It may be difficult to evaluate the benefitsin monetary terms and as such we call this as non-economic factor.Let us take one more example. Suppose the installation of a newmachine ensures greater safety in operation. It is difficult to measurethe resulting monetary saving through avoidance of an unknownnumber of injuries. Even then, these factors give tangible results anddo influence investment decisions.62 | P a g e
  • 63. FACTOR ANALYSIS BASED ON FACTORS AFFECTING INVESTMENT DECISIONSFactor analysis is a data reduction/summarization technique.Generally in market research there are many factors/variables whichare correlated which needs to be reduced to manageable levels.Generally factor analysis is used where multi co-linearity exists. Forfactor analysis to run the null is that the correlation matrix is anidentity matrix.KMO and Bartlett’s testKaiser-Mayer-Olkin (KMO) test is to test the appropriateness of thefactor analysis, if the value is between „0.5 to 1‟, the test is consideredto be significant.Bartlett’s TestUsing Bartlett‟s test of sphericity we test the null hypothesis, if thesignificant value is <0.5, then the null hypothesis is rejected, i.e. thereis multi co-linearity, so we can proceed with factor analysis. Fig: 29The factor analysis stands to be appropriate as KMO is 0.891 i.e.more than 0.5.63 | P a g e
  • 64. For Bartlett‟s test:Null hypothesis: the variable is only correlated to itself, (i.e. r=1) andun-correlated to others (i.e. r=0).Alternate hypothesis: all the variables are correlated to each other.Calculated value: 758.225Analysis: the null hypothesis is rejected as the significance level isless than 0.5. Hence, the variables are correlated.Variables used in the project are: No. Variables(sign used) V1 Income V2 Market Situation V3 Company V4 Risk Appetite V5 Management Outlook V6 Market forecast V7 Financial Incentives V8 Cash-flow Budgets V9 Non-economic Factors V10 Age Factor V11 Other Factors Fig: 3064 | P a g e
  • 65. Communalities: Fig: 31 Extraction Method: Principal Component AnalysisPrincipal Component Analysis works on the assumption that all thevariance is common, therefore before extraction all communalities are1. After extraction table shows shared variance of each variable in allthe factors.65 | P a g e
  • 66. Total variance explained Fig: 32Extraction Method: Principal Component Analysis.Factor Component: The initial number of factors is the same as thenumber of variables used in the factor analysis. However, not all 11factors will be retained. In this project only 1st 2 factors will beretained.Initial Eigen Values: Eigen value is the variance explained by eachfactor. Because the analysis is conducted based on a correlationmatrix, the variables are standardized, which means that each variablehas a variance of 1, and the total variance is equal to the number ofvariables used in the analysis, in this case its 11.Total: This column contains the Eigen values. The first factor willalways account for the most variance (and hence it has the highestEigen value), and the next factor will account for as much of the leftover variance as it can, and so on. Hence, each successive factor willaccount for less and less variance.% of Variance: This column contains the percent of total varianceaccounted for by each factor.66 | P a g e
  • 67. Cumulative %: This column contains the cumulative percentage ofvariance accounted for by the current and all preceding factors.Component MatrixIn this approach, factors only with Eigen value more than 1 areretained. Factors with variance less than 1 are no better than a singlevariable, because due to standardization, each variable has a varianceof 1. If numbers of variables are less than 20 this approach will resultin a conservative number of factors. Here, the number of variables is11 so to select the number of factors, Eigen value method is the bestmethod.Rotated Component Matrix Fig: 33Extraction Method: Principal Component Analysis.Rotation Method: Varimax with Kaiser Normalization.Rotation is converged in 3 iterations.67 | P a g e
  • 68. As a result of the Factor Analysis the 11 variables are condensed to2 factors. From the Component Matrix we can identify all variableswhich come under a particular factor. Here‟s a depiction of it: Factor What it explains Income Personal/Internal Factors Risk appetite Financial incentives Non-economic factors Age factor Others Market Situation External Factors Market forecast Management outlook Company Cash flow budgets Fig: 34Thus there are some internal and external factors that affect a person‟sinvestment decisions.68 | P a g e
  • 69. COMPARISON OF INDIABULLS BROKERAGE SERVICES COMPARISON OF DELIVERY AND INTRADAY*MMC – Minimum Monthly Charges. Fig: 3569 | P a g e
  • 70. COMPARISON OF VARIOUS RATES FIRMS HDFC SHAREK MOTILAL ICICI KOTAK INDIABULLSFACTOR HAN OSWALBROKERAG 5p to 50p 5p to 25p 5p to50p, 3p to 25p 4p to 40p 2p to 20p or E 1p-10p ( min) 1p to 10p (min)MINIMUM Rs 10000, Rs 10000 Rs 50000 Rs 0 Rs 10000 Rs 0AMOUNT Rs 0 (for big corporate clients)MINIMUM Rs 799 Nil Rs 200 Rs 555 Rs 550 Rs 1350OPENINGCHARGESPRODUCTS -Equity, features Trade ETF, IPO, IPO, K-25 and IPO, Mutual and options, Tigers, mutual Mutual T-25. Funds, Real ETF, IPO, IPO, MF funds, and Funds, Brokerage, Estate, Home mutual funds. online, NRI and IPO, loans, Commodity, -Do it yourself contract note offerings. Commod Mutual and Derivatives. systematic on paper, ities Funds, investment and ODIN Commodit planning, and Software. ies. -NRI offerings, loans, FD. -J2 ME windows, Brokerage Call and Brokerag Brokerage Brokerage, Online SERVICES blackberry, services, trade. e-e and and and Offline android, iphone. trade on banking banking Trading available - Call and trade, mobile, services. services. on all phones, No online and online, call extra charges on offline services and trade, calls from clients. for different time dedicated zones. dealer desk at every city.QUALITY OF Good Good Good Good Good GoodSALESPERSON PROCESS T+2 days T+2 days T+2 days T+2 days T+2 days T+2 days Fig: 36 70 | P a g e
  • 71. PRICE COMPARISON CHART Fig: 37In the above price band, Indiabulls is facing somewhat strongcompetition from Sharekhan, as it is more or less near to whatIndiabulls is charging. At the same time Kotak Securities also poses athreat because of the improved technology used by them and constantresearch and development. Where ICICI Direct is a little belowKotak. Motilal Oswal and HDFC both are commodity side of thegraph with relatively higher prices charged for their product. Thuswith its current pricing Indiabulls enjoys price leadership as far asbrokerage is concerned.71 | P a g e
  • 72. SWOT ANALYSIS OF COMPETITOR FIRMS SWOT OF SHAREKHAN • Market share leadership. • High Research and Development. • Strong management team, financial position and Strength competitive pricing. • Reputation management, Unique products diverse products and offers for the customers. • Strong brand recall and strong reach to masses. • Diseconomies of scale. • Not much differentiated products. • More employee turnover. Weaknesses • Less small investors.72 | P a g e
  • 73. • Financial markets (raise money through debt, etc) • Innovation, OnlineProduct and services expansion. Oppourtunities • Penetration in developing cities. • Increase in awareness of people about stock market • Competition. • Cheaper technology. • Economic slowdown. • External changes (government, Threats politics, taxes, etc). • Exchange rate fluctuations. Fig: 3873 | P a g e
  • 74. SWOT OF INDIA INFOLINE • Brand image. • Brand experiance. • Innovative products. Strength • High targets for the financial advisors and sales department. • Many competitors, less differentiated products. • The reach in semi-urban Weaknesses areas and rural markets is still very less.74 | P a g e
  • 75. • Growing Financial Services industrys share of wallet for disposable income. • Regulatory reforms would aid greater participation by all class of investors. Oppourtunities • Leveraging technology to enable best practices and processes. • Increased appetite (need) of Indian corporate for growth • Execution risk. • Slowdown in global liquidity flows. • Increased intensity of competition from local and global players. Threats • Unfavorable economic conditions. Fig: 3975 | P a g e
  • 76. SWOT ANALYSIS OF ICICI DIRECT • Banking arm. • Upgraded product design and development facilities to develop new products. • Ongoing activities to support up gradation of operational performance. Strength • Team of talented and committed professionals available to improve companies performance. • Not innovative. • Not diversified • high employee turnoverless. Weaknesses • small investors76 | P a g e
  • 77. • Innovation. • Increse in penetration in the market. Oppourtunities • Constant pressure to be cost competitive to meet customer expectations. Threats Fig: 4077 | P a g e
  • 78. SWOT OF MOTILAL OSWAL • Large and diverse distribution network. • Strong research and sales team.. • Brand recognition. Strength • Experienced top management. • Strong financial results. • Charges are high compare to other companies in industry. Weaknesses78 | P a g e
  • 79. • Growing Financial Services industrys share of wallet for disposable income. • Regulatory reforms would aid greater participation by all class of investors. Oppourtunities • Leveraging technology to enable best practices and processes. • Increased appetite (need) of Indian corporate for growth capital. • Execution risk. • Slowdown in global liquidity flows. Threats • Increased intensity of competition from local and global players. • Unfavorable economic conditions. Fig: 4179 | P a g e
  • 80. SWOT OF ANGEL BROKING • Service • Distribution network • Products Strength • Customer Satisfaction. • Branding. Weaknesses • Competition from Banks.80 | P a g e
  • 81. • Ever increasing market. • Improving technology. • Unfulfilled needs of customers.. Oppourtunities • Education level. • New competitorsTechnology based business. Threats Fig: 4281 | P a g e
  • 82. COMPETITION IN REAL ESTATEReal Estate prices in Hyderabad have touched new heights, eventhough some political issues act as a dampener once in a while .Arising trend has been observed in the demand for luxuriant residentialand IT spaces. The demand for Real Estate development sites andprojects have increased, as have the Hyderabad Realtors, includingthe Real Estate agents of the city. Indiabulls real estate business iscurrently active in various cities: Hyderabad, Mumbai, Bangalore,Gurgoan, Kolkata, Jodhpur, Ahmadabad, Nasik, and many othercities. Competition in the industryThe booming Real Estate Sector has given rise to a number ofcompanies which give stiff competition to Indiabulls Real Estate. Inthe Premium Housing category, Indiabulls Real Estate mainly facescompetition from players such as DLF and Ansal Properties andInfrastructure Limited. In the Affordable Housing segment, it facescompetition from players such as Sobha Developers. Fig: 4382 | P a g e
  • 83. COMPETITION IN HOMELOANSIn earlier days, Nationalized and Public Sector Banks were the soleproviders of Home Loans but the entry of the Public Sector Banksmarked a change in the interest rates, which came down considerably.The decrease in Interest Rates in turn, enhanced the borrowing powerof customers.Some competitors in the market who also provide also provide homeloans are: Fig: 44Some Housing Finance Companies which provide home loans and fallin Indiabulls‟ competitor league are: Fig:4583 | P a g e
  • 84. COMPETITIVE ADVANTAGE OF INDIABULLS BROKERAGE SERVICES Lowest brokerage charge in the industry (currently). Best software in the industry. Listed company and aggressive in brand promotion. Mobile trading tie ups with Blackberry and other phones, where one can trade with ease. Both online and offline facilities are provided. Competitive commissions and service support at fair price (value for money). Relationship manager facility to assist customers as and when they need assistance and guidance. Full access to Indiabulls Equity Analysis, follows a fact based approach to rating stocks. Easy access to customers of the snap shots of their account statement and portfolio statements and to digital contract notes.84 | P a g e
  • 85. CONCLUSIONIndiabulls, the young bull on the run, within some years of itsinception has established itself as a business super brand. Thecompany which began as a simple brokerage firm has now spread itswings in real estate, home loans, power, etc.The arch of the bull, Indiabulls Financial Services Limited (IBFSL)which is the flagship company of the group, offers consumer finance,including secured and unsecured personal loans; commercial vehicleand tractor financing; loan against property and housing loans; retailIPO financing; loans against shares; and commercial credit to smalland medium scale industries.Breaking free, Indiabulls Securities Limited, (ISL) before itsdemerger in 2008, was a subsidiary of IBFSL. ISL provides securitiesbrokerage services including equities, futures, commodities, andoptions; depositary services; research services; insurance, initialpublic offering (IPO), and mutual fund distribution. RECOMMENDATIONSWhile working in the real time and while making this project manythings came into scene, they are: Sales call made to new customers should be made promptly as immediate calling and customer move to competitors easily. Services of Indiabulls are available on all phones except on i- phones, which is in trend now. Indiabulls has tie-ups with all banks except SBI. This can be a reason why customers move away. Indiabulls should go for aggressive advertising, as most of its products and the brand itself is not much advertised.85 | P a g e
  • 86. OUTCOME AND CONTRIBUTIONA factor analysis was conducted to find out the factors affecting theinvestment decisions. A total of 11 factors were considered, on apopulation of 110, out of only two dominant factors came out. Whichthe help of which it can be explained that there are some external andpersonal/internal factors that affect a persons‟ investment decision.Another part of the project was a competitive analysis to find outcompetitive advantage that Indiabulls has over its competitors.My task at Indiabulls was to bring sales leads and to do sales callingto them to convert them into sales. Another task assigned to me wasto call the existing customers and explain them about what Indiabullscould offer them at that point of time.My project‟s data collection on different kind of rates prevailing inthe market of different competitors is of great importance and time totime help for the company. Also the factors affecting investmentdecisions can be help in future when deciding on the various demanddrivers.86 | P a g e
  • 87. LEARNINGS FROM SIPThrough the course of my summer internship programme, I got aglimpse of the brokerage industry‟s new upcoming giant firmIndiabulls. My task during SIP was to go to various corporate officesand explain some target population about various investment optionsoffered by Indiabulls and its advantages; and generate sales leads onits basis. Then make sales call, clarify the customer‟s doubt and createsales.During this process I learnt about the stock market, various kinds ofsecurities, commodities, metals, spices, etc that are traded. I also cameto know about different kind of loan potions and gained knowledgeabout real estate sector also.I learnt how to keep a track of the very fluctuating stock prices andhow to invest in them. I also learnt how to talk to customers whendoing a sales calling or when really approaching them. And in theprocess of explaining them and clearing their doubts, many of minewere cleared too.This SIP has been a great insight to me and it would always help mewhen I work for a firm in future or invest myself.87 | P a g e
  • 88. REFERENCESSites: www.indiabulls.com www.secgov/investor/pubs/financialnavigating.html www.tradestreaming.com/2010/06/04/investment decisions economicstimes.indiatimes.com>opinion en.wikipedia.org/wiki/marketing_research www.quickmba.com/strategy/matrix/bcg www.smallbusiness.wa.gav.au/business-life-cycle www.valueline.com/stock/industry en.wikipedia.org/wiki/porters-five-factorBooks: Kotler Philip et al, 2009. Marketing Management. A South Asian Perspective. New Delhi: Dorling Kindersley (India) Pvt Ltd. Pearson Education Al Ries and Jack trout, 1972. Principles of Marketing Management.88 | P a g e
  • 89. APPENDIX Questionnaire for factors affecting investment decision 1. Do you invest? Yes: No: 2. If yes, what is your investment portfolio? Or How much do you invest? 3. Where do you put your money? Stocks: Commodities: Currencies: Derivatives: Others (specify): 4. More than one of the above? ----------------------------------------------------------------------------- ----------------------------------------------------------------------------- ---------------------------------------------------- 5. Why do you invest?89 | P a g e
  • 90. 6. What are the factors that affect your investment decisions? Income: Market situation: Company: Risk appetite: Management outlook: Market forecast: Fiscal incentives: Cash flow budgets: Non-economic factors: Age factor: Others (specify): 7. Do you invest in more than one of the above? ----------------------------------------------------------------------------- ----------------------------------------------------------------------------- ---------------------------------------------------- 8. Name: 9. Salaried/ Non-salaried 10. Occupation: 11. Any suggestions/ Comments:90 | P a g e

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