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PROJECT REPORT

On

ANALYSIS OF CONSUMER BEHAVIORTOWARDS SHARE TRADING AND

SALES PROMOTION OF INDIABULLSSECURITIES LTD

In the partial fulfillment of the two year full time PGDBM(Equivalent to MBA)

Project GuideFaculty Guide

Mr. Vijay Babbar MissRashmi SundryalDivisional Sales Head

NDIMIndianbulls Securities Ltd. New DelhiNew Delhi

Submitted by:

Uttam SethRoll No: 68

PGDBM (2004-06)

New Delhi Institute of Management60-61 Tughlakabad Institutional Area \

New Delhi-110062


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ACKNOWLEDGEMENTS

I would like to express my sincere thanks to Indiabulls

Securities Ltd., Delhi for giving me the opportunity to carry out the

Summer Internship Program in their organization. The whole period

spent with the organization has been of immense learning experience

about the Indian Stock Market.

Preparing a project of such a kind is not an easy task in itself and I

am sincerely thankful to all those people who help me lot, in

preparing and completing this project.

I am grateful to Indiabulls Securities Ltd. who has given me this

opportunity to carry out the project Analysis of Consumer

Behavior Towards Share Trading and Sales Promotion of

Indiabulls Securities Ltd. A study on investors perception their

behavior about equities.

I sincerely thank to Mr. Vijay Babbar (Divisional Sales Head,

Indiabulls Securities Ltd., Delhi) for providing me this valuable

learning opportunity.

I would also like to thank Ms. Rashmi Sundryal Faculty Guide,

NDIM- Delhi for her valuable guidance and insight amidst her busy

schedule.

Finally I would like to thank Mr. Vineet Chandani (Relationship

Manager) my project supervisor without his help and guidance the

completion of this project would have become difficult task.


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INDEX

OBJECTIVE

HISTORY OF STOCK EXCHANGE

COMPANY PROFILE

a) Introduction

b) Philosophy

c) History and other corporate matters overview

SHARE TRADING

ORGANIZATION CHART

PRODUCTS AND SERVICES

INDIABULLS IN NEWS 2005

RESEARCH METHODOLOGY

FINDINGS AND ANALYSIS

RECOMMENDATIONS

BIOBLIOGRAPHY


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EXECUTIVE SUMMARY

Investing in equities in a market like India is speculative and involves

risk that may be greater than other types of investment strategies.

Before investing an Investor should be careful enough about him

investment decision to avoid erosion of wealth. As seen in the recent

times the volatility of market is more detrimental to the retail

investors as it seems to be lucrative for speculative gains of short

duration of time. Hence an investor has to evaluate his options

carefully for a prudent investment, keeping long-term horizon in

mind.

The report has tried to bring out the parameters those are of

paramount importance to general public dealing in an equity trading

on day-today and delivery base trading. The working methodology

has been discussed i.e. the data collection methods, sampling

methods and the survey questionnaire methods. Thee questionnaire

prepared is designed so as to cover a wide range of customer touch

points

The report given a view about the investors perception that what

they think while making investments in shares.

A sample of 100 people was selected randomly and survey was done

as per the parameters of the questionnaire. The results of every

parameter have been included in this report and shown graphically


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(Pie Charts, bar graphs etc.) A complete structure of the research

design has been included.

Apart from above discussed points the brief history of Indiabulls

Securities Ltd, its business diversification and a brief introduction

about the concept of share trading.


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OBJECTIVE

To study investors behavior towards different attributes such as

risk, return, liquidity etc. of investment in Equities.

To study the issues and challenges that investors face while

making investment in share market.

To study the preferences and perceptions of investors regarding

various financial products from the stable of Indiabulls Securities

Ltd. so that the firm can benefit from the findings of the report in

launching any new investment product in future.

To study the consumers perception in respect of investment in

shares Trading.

To study about Risk Management with the help of equities.


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HISTORY OF STOCK EXCHANGE

The only stock exchanges operating in the 19th century were those of

Bombay set up in 1875 and Ahemadabad set up in 1894. These were

organized as voluntary non-profit making organization of brokers to

regulate and protect their interests. Before the control on securities

trading became a central subject under the constitution in 1950, it

was a state subject and the Bombay securities contract (CONTROL)

Act of 1952 used to regulate trading in securities. Under this Act, the

Bombay stock exchanges in 1927 and Ahemadabad in 1937.

During the war boom, a number of stock exchanges were organized

in Bombay, Ahemadabad and other centers, but they were not

recognized. Soon after it became a central subject, central legislation

was proposed and a committee headed by A.D. Gorwala went into

the bill for securities regulation. On the basis of committees

recommendations and public discussions the securities contracts

(regulations) Act became law in 1956.

Definition of Stock Exchange

Stock exchange means anybody or individuals whether incorporated

or not, constituted for the purpose of assisting, regulation or

controlling the business of buying, selling or dealing in securities.

It is an association of member brokers for the purpose of self

regulation and protecting the internets of its members. It can operateonly if it is recognized by the Govt. under the securities contract


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(regulation) Act, 1956 the recognition is granted under section 3 of

Act by the Central Govt. ministry of finance.

Byelaws

Beside the above act, the securities contract (regulation) rules were

also made in 1975 to regulate certain matter of trading on Stock

Exchange. These are also byelaws of the exchanges, which are

concerned with following subjects.

Opening/Closing of the Stock Exchange, timing of trading, regulation

of blank transfer, regulation of Badla or carryover business, control of

statement, and other activities of stock exchange, fixation of

margins, fixation market price or making price, regulation of intraday

(jobbing), regulation of broker trading, brokerage charges, trading

rules on exchanges, attribution and settlement of disputes,

settlement and clearing of the trading etc.

Regulation of stock exchange

The securities contract (regulation) is the basis of the stock exchange

in India. No exchange can operate legally without the Govt.

permission or recognition. Stock exchanges are given monopoly in

certain areas under section 19 of the above Act to ensure that the

control and regulation are facilitated. Recognition can be granted to a

stock exchange provided certain condition are satisfied and the

necessary information is supplied to the government. Recognition can

also be withdrawn, if necessary. Where there are no stock

exchanges, the government can license some of the brokers to


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perform the function of stock exchange in its absence.


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SECURITIES AND EXCHANGE BOARD OF

INDIA (SEBI)

SEBI was setup as an autonomous regulatory authority by the

Government of India in 1988to perform the interest of investors in

the securities and to promote the development of, and to regulate

the securities market and for matters connected therewith or

incidental thereto. It is empowered by two Acts namely the SEBI

act, 1992 and the securities contract (regulation) Act 1956 to

perform the function of protecting investors right and regulating the

capital market.

Bombay Stock Exchange

The stock exchange, Mumbai, popularly known as BSE was

established in 1875 as The Native share and stock broker

association,as a voluntary non-profit making association. It has an

evolved over the year into its present status as the premiere stock

exchange in the country. It may be noted that the stock exchanges

the oldest one in the Asia, even older than the Tokyo Stock

Exchange, which was founded in 1878.

The Exchange, while providing an effective and transparent market

for trading in securities, uphold the interest of the investors and

ensure redressed of their grievances, whether against the companies

or its own member brokers. It also strives to educate and enlighten

the investors by making available necessary informative inputs and


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conducting investor education programmes.

A governing board comprising of 9 elected directors, 2 SEBI

nominees, 7 public representatives and an executive director is the

apex body, which decides the policies and regulates the affairs of the

exchanges.

The executive director as the chief executive officer is responsible for

the day today administration of the exchange. The average daily

turnover of the exchange during the year 2000-01 (April-March) was

Rs. 3984.19 crores and average number of daily trades 5.69 lakhs.

However the average daily turn over of the exchange during the year

2001-02 has declined to Rs. 1244.10 crores and number of average

daily trades during the period to 5.17 lakhs.

The average daily turn over of the exchange during the year 2002-03

had declined and number of average daily trades during the period is

also decreased.

The Ban on all deferral products like BLESS AND ALBM in the Indian

capital markets by SEBI with effects from July 2, 2001, abolition of

account period settlements, in all scripts traded on the exchanges

with effect from Dec 31, 2001, etc., have adversely impacted the

liquidity and consequently there is a considerable decline in the daily

turn over at the exchange. The average daily turn over of the

exchange present scenario is 110363 (laces) and number of average

daily trades 1057 (laces).

BSE Indices


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In order to enable the market participants analysis etc., to track the

various ups and downs in the Indian stock market, the Exchange has

introduced in 1986 an equity stock index called BSE-SENSEX that

subsequently became the barometer of the moments of the share

prices in the Indian Stock market. It is a Market capitalization

weighted index of 30 components stocks representing a sample of

large, well-established and leading companies. The base year of

Sensex is 1978-79. The Sensex is widely reported in both domestic

and international markets through print as well as electronic media.

Sensex is calculated using a market capitalization weighted method.

As per this methodology, the level of the index reflects the total

market value of all 30-component stocks form different industries

related to particular base period. The total market value of a

company is determined by multiplying the price of its stock by the

number of shares outstanding. Statisticians call an index of a set of

combined variables (such as price and number of shares) a

composite Index. An Indexed number is used to represent the

results of this calculation is order to make the value easier to work

with the track over a time. It is much easier to graph a chart based

on Indexed values than one based on actual values world over

majority of the well-known Indices are constructed using Market

capitalization weighted method.

In practice, the daily calculation of SENSEX is done dividing the

aggregate market value of the 30 companies in the Index Divisor.

The keeps the Index comparable over a period or time and if the

reference point for the entire Index maintenance adjustments.


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SENSEX is widely used to describe the mood in the Indian Stock

Markets. Base year average is changed as per the formula new base

year average = old base year average* (new market value/old

market value).

National Stock Exchange

The NSE was incorporated in Now 1992 with an equity capital of

Rs. 25 crores. The international securities consultancy (ISE) of Hong

Kong has helped in setting up NSE. ISE has prepared the detailed

business plans and installation of hardware and software systems.

The promotions for NSE were financial institutions, insurance

companies, banks an SEBI capital market ltd., Infrastructure leasing

and financial services ltd. and stock holding corporation ltd.

It has been set up to strengthen the move towards

professionalisation of the capital market as well as provide nation

wide securities trading facilities to investors.

NSE is not an exchange in the traditional sense where brokers own

and mange the exchange. A two tier administrative set up involving

a company board and a governing abroad of the exchange is

envisaged.

NSE is a national market for share PSU bonds, debentures and

government securities since infrastructure and trading facilities are

provided.


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NSE-NIFTY

The NSE on April 22, 1996 launched a new equity Index. The NSE-

50. The new index, which replaces the existing NSE-100 index, is

expected to serve as an appropriate Index for the new segment of

futures and options.Niftymeans National Index for Fifty Stocks.The

NSE-50 comprises 50 companies that represent 20 board Industry

groups with an aggregate market capitalization of around Rs.

1,70,000 crores. All companies included in the Index have a market

capitalization in excess of Rs. 500 crores each and should have

traded for 85% of trading days at an impact cost of less than 1.5%.

The base period for the close of prices on Nov 3, 1995, which makes

one year of completion of operation of NSEs capital market segment.

The base value of the Index has been set at 1000.


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NSE-MIDCAP INDEX

The NSE madcap Index or the Junior Nifty comprises 50 stocks that

represents 21 abroad Industry groups and will provide proper

representation of the madcap segment of the Indian capital Market.

All stocks in the index should have market capitalization of greater

than Rs. 200 crores and should have traded 85% of the trading days

at an impact cost of less 2.5 %.

The base period for the index is Nov 4, 1996, which signifies two

years for completion of operations of the capital market segment of

the operations. The base value of the Index has been set at 1000.

Average daily turn over of the present scenario 258212 (Laces) and

number of averages daily trades 2160 (Laces).

At present, there are 24 stock exchanges recognized under

the securities contact (regulation) Act, 1956.


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INTRODUCTION

Indiabulls Group is one of the country's leading business houses with business interests in

Power, Financial Services, Real Estate and Infrastructure. Indiabulls Group companies are

listed in Indian and overseas financial markets. The Net worth of the Group is Rs 18,593

Crore and the total planned capital expenditure of the Group by 2013-14 is Rs 35,000 Crore.

Indiabulls Securities (ISL) is one of India's leading capital markets companies providing

securities broking and advisory services. Indiabulls Securities also provides depository

services, equity research services and IPO distribution to its clients and offers commodities

trading through a separate company.

These services are provided both through on-line and off-line distribution channels.

Indiabulls Securities is a pioneer of on-line securities trading in India. Indiabulls Securities

in-house trading platform is one of the fastest and most efficient trading platforms in the

country. Indiabulls Securities has been assigned the highest rating BQ-1 by CRISIL.

Indiabulls Securities Ltd is India's leading capital markets company with All-India Presence

and an extensive client base. The company is engaged in the securities brokerage industry.

They provide range of services to their clients in securities brokerage, including equities,

commodities, wholesale debt, futures and options, depositary services, research services,

insurance, initial public offering (IPO), and mutual fund distribution.

They have a pan India presence with a network of 123 branches spread across 70 cities. The

company's primary business activity is to carry on business of stock and share broker on

National Stock Exchange of India Ltd and Bombay Stock Exchange Ltd, and other related

ancillary services.

They are a depositary participant with the National Securities Depository Ltd (NSDL) and

Central Depository Services (India) Ltd (CDSL) for settlement of dematerialized shares.

They perform clearing services for all securities and commodities transactions. The

company is the first and only brokerage house in India to be assigned the highest rating BQ-

1 by CRISIL. They possesses state of the art trading platform, best broking practices and is

the pioneer in trading product innovations.


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Power Indiabulls, in-house trading platform, is one of the fastest and most efficient trading

platforms in the country. Their subsidiaries include Indiabulls Commodities Limited,

Devata Tradelink Ltd, Indiabulls Distribution Services Ltd and Indiabulls Brokerage Ltd.

Indiabulls Securities Ltd was incorporated on June 9, 1995 as a private limited company

with the name GPF Securities Pvt Ltd. The name of the company was changed to Orbis

Securities Pvt Ltd 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 Ltd on January 5, 2004. The name of the company

was again changed to Indiabulls Securities Ltd on February 16, 2004 so as to capitalize on

the brand image of the term 'Indiabulls' in the company name.

During the year 2007-08, pursuant to a court approved composite scheme of arrangement

inter-alia between the company, Indiabulls Financial Services Ltd and Indiabulls Credit

Services Ltd and their respective shareholders and creditors, the securities broking and

advisory business of Indiabulls Financial Services Ltd comprising of business providing

advisory business with respect to risk management, equity analysis and securities data

management, securities brokerage including equities, wholesale debt, futures and options,

depository services, research services, mutual fund and IPO distribution its clients which

Indiabulls Financial Services Ltd carries on by itself and through their subsidiaries including

the company, a registered member of the BSE and NSE and Indiabulls Commodities Pvt Ltd

which is a member of National Commodities Derivatives Exchange of India and Multi

Commodity Exchange and operates the business of an intermediary for trading in securities

and derivatives was transferred by the way of de-merger and vested with the company.

The de-merger of Indiabulls Securities Ltd was effective form December 24, 2007. As per

the scheme, every shareholder of Indiabulls Financial Services Ltd as on January 8, 2007,received a share of Indiabulls Securities Ltd. In January 9, 2008, the company incorporated

Devata Tradelink Ltd as a subsidiary company. The equity shares of the company were

listed on National Stock Exchange of India Ltd and Bombay Stock Exchange Ltd with

effect from April 2, 2008 and GDRs were listed on Luxembourg Stock Exchange with effect

from July 16, 2008.

During the year 2008-09, the company formed wholly owned subsidiary company namely

Indiabulls Brokerage Ltd. During the year 2009-10, the company formed a wholly owned

subsidiary company, namely, Indiabulls Distribution Services Ltd. They opened 58,224 new

equity trading accounts during the year. Also, they added 8,612 new trading accounts for

commodities during the year.


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In December 2009, they created a full fledged division for institutional sales. The company

is focused on building a long term stable business with emphasis on retail brokerage that

does not rely on highly-leveraged trading clients. Their position will be further strengthened

by the set-up of their Institutional Equity business and their future foray into Portfolio

Management, Wealth Management and Investment Banking.

Other main listed companies:

Indiabulls Housing Finance Ltd. (IBHFL)is Indias 3rd largest Housing Finance

Company (HFC). The company is registered as a Housing Finance Company (HFC) and is

regulated by the National Housing Bank (NHB). IBHFL is a leading provider of home

loans, loan against properties and commercial vehicle loans.

The company has a loan asset book of over Rs. 34,400 Cr and has, since inception,

disbursed over Rs. 71,000 Cr to over 5.5 lakh customers.

With a net worth of over Rs. 5,300 Cr, IHFL is one of the best capitalized companies

amongst its peer with a CRAR of 18.47% as at March 31st, 2013. Further, the company is

one of the least levered amongst its peer set with a net debt-to-equity ratio of only 4.67. Thecompany enjoys a credit rating of AA+.

IBHFL has 200 well appointed and customer accessible walk-in branches spread across the

country. Companys national and International reach is further enhanced from tie-ups

with Yes Bank and Doha Bank

Indiabulls Real Estate (IBREL) is among India's top Real Estate companies with

development projects spread across residential complexes, integrated townships,

commercial office complexes, hotels, malls, Special Economic Zones (SEZs) and

infrastructure development. Indiabulls Real Estate partnered with Farallon Capital

Management LLC of USA to bring the first FDI into real estate in the country.

The company has a networth of Rs 7,403 Crore and has purchased prime land, mostly in the

metros and other Tier 1 cities worth Rs 4,000 Crore in government auctions alone.

Indiabulls Real Estate is currently developing 71.55 million sqft into premium quality, high-

end commercial, residential and retail spaces. The company has been assigned 'A+' rating.


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Indiabulls Power (IBPOW) is currently developing Thermal Power Projects with an

aggregate capacity of 5400 MW. The first unit is expected to go on stream in May 2012.

The net worth of Indiabulls Power is Rs 5,507 Crore. The company has a total capital

expenditure of Rs 27,500 Crore. The company has been assigned 'BBB' rating.

Products

Indiabulls Securities Limited (ISL) is the pioneer in Retail Broking Industry having a pan

India presence and providing services to a customer base exceeding half a million. ISL is in

the business of providing securities broking and advisory services and is a corporate

member of capital market, wholesale debt market and derivative segment of NSE and of the

capital market and derivative segment of BSE. ISL is the first and only brokerage house to

be assigned the highest rating BQ-1 by CRISIL.

The company through various types of brokerage accounts provides product and services

related to purchase and sale of securities listed in NSE and BSE. It also provides depository

services, equity research services, mutual fund, IPO distribution to its clients. The company

provides these services through on-line and off-line distribution channel.

1) Power Indiabulls

Power Indiabulls (PIB)is the advanced online trading platform from Indiabulls Securities

Limited. PIB provides the best in the class internet trading features and delivers a seamless

and rich online trading experience for its users. PIB comes with a whole host of online

features for the internet trading users ranging from real-time stock prices, to live trading

reports, charting, News Room. PIB provides an integrated online trading platform for the

internet trading community to invest in equity, F&O, Online IPOs and base their decision on

sound fundamental research and technical analysis. It also provides various kinds of trading

reports,each developed to cater to internet trading users distinct needs.

With whole host of advanced online trading features, PIB aims to fulfill the needs of

every genre of investors & help them gain profits in every possible way.


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Why PIB?

PIB is the internet based stock trading application, which provides you an unparalleled edge

to trade in Indian stock markets. Here are some of the compelling reasons, why you should

subscribe for Power Indiabulls (PIB)

Integrated market watch for Equities and Derivatives

Live Streaming Quotes

Fast Order Entry

Tic by Tic Live Intraday Charts

Technical Analysis

Live Market News

Customizable Alerts

Extensive Reports

Real Time Market Statistics

World Market Summary

Introducing Intraday Futures

2) Indiabulls Signature Account

With Indiabulls Signature account you will always remain on top of your investments. It

provides you the platform to trade in Equity and Derivatives. With an unmatched service

and nationwide presence, the Indiabulls Signature account comes bundled with a variety of

exclusive features.

Ease of trading With Indiabulls Signature account you have the flexibility to

place your orders either by logging on the website, calling at the branch or walking

in the branch.

Dedicated Service Branch and Relationship Manager: You can get in touch with

your Relationship Manager and Service Branch for all your trading related

requirements.

Power Indiabulls (PIB): You can trade smarter and faster using the Power

Indiabulls application. Access the broad spectrum of sophisticated trading tools andget an edge in the stock markets.


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Online Payment Gateways: Use our online payment gateways facility and get

instant credit in your Trading Account. We currently provide online gateway

payment facility with five major banksHDFC, ICICI, AXIS, CITI and IDBI.

IPOs Indiabulls provides you the flexibility to apply in ongoing IPOs through

either online or offline channels. For applying online, you do not need to fill tedious

forms and write cheques. You can apply conveniently in IPOs from the comfort of

your home / office through our Website/PIB. For applying offline, you can contact

your Relationship Manager/ Service Branch.

Portfolio Tracker: You can track your investments online through our portfolio

tracker functionality. You can conveniently track the daily movement, notional /

booked profits and losses in your portfolio.

Equity Analysis Report

A qualified and dedicated team of equity analysts at

Indiabulls publishes various research reports. You can view these reports to gain

insight into the companies of your interest.

News Room: The News Room provides real-time news from stock-markets,

corporate sector, economy and other segments that have a bearing on the market

sentiment.

Market Statistics: This functionality facilitates tracking the market trend by

providing you real time data on top gainers, top losers, volume toppers and most

volatile stocks.

Mobile Power Indiabulls (MPIB): MPIB is a mobile-phone based application,

developed exclusively for Indiabulls customers. Using MPIB, you can view the live

market rates of your favorite stocks and futures contracts on your mobile device.

Thus with MPIB, you can always remain connected with the market, even on the

move.

Electronic Contract Notes on Email: This facility enables you to get digitallysigned Electronic Contract Notes on email within 24 hours of executing trades in

your Trading Account.

Introducing Intraday Futures: Intraday Futures Product enables you to take

intraday positions in various future contracts at lower margins. These positions have

to be necessarily squared-off at the day end.

Comprehensive Reports: Track your financials and portfolio efficiently through

various reports like Ledger Statements, Account Summary, Net Portfolio Report,

Daily Transaction Report, Daily Transaction report etc.


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HISTORY AND OTHER CORPORATE MATTERS

OVERVIEW

Indiabulls Financial Services Limited was incorporated on January10, 2000 as M/s

Orbits InfoTech Private Limited at New Delhi under the Companies Act, 1956 with

Registration No. 55 103183. The name of the Company was changed to M/s. 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 Company was

changed to M/s. Indiabulls Financial Services Limited. Company was promoted by three

engineers from IIT Delhi, and has attracted more than Rs.700 million as investments from

venture capital, private equity and institutional investors such as LNM India Internet

Ventures Ltd., Transatlantic Corporation Ltd., Farallon Capital Partners, L.P., R R Capital

Partners L.P., and Infinity Technology Trustee Pvt. Ltd. and has developed significantrelationships with large commercial banks such as Citibank, HDFC Bank, Union Bank,

ICICI Bank, ABN Ambro Bank, Standard Chartered Bank, Lord Krishna Bank and IL&FS.

Company and there subsidiaries have facilities from the above mentioned banks and financial

institutions aggregating to Rs. 1760 million.

Companies headquarters are co-located in Mumbai and Delhi, allowing it to access the two

most important regions for Indian financial markets, the Western region including Mumbai,

rest of Maharashtra and Gujarat; and the Northern region, including the National

Capital Territory of Delhi, nearby cities, parts of Haryana, Uttar Pradesh and Punjab; and

access the highly skilled and educated workforce in these cities.

The Marketing and Sales efforts are headquartered out of Mumbai; with a regional

headquarter in Delhi; and its back office, risk management, internal finances etc. are

headquartered out of Delhi, allowing our Company to scale these processes efficiently for the

nationwide network.


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Main Objects Of The Company:

The main objects to be pursued by the Company on its incorporation are:

1. To hold investments in various step-down subsidiaries for investing, acquiring,

holding, purchasing or procuring equity shares, debentures, bonds, mortgages, obligations,

securities of any kind issued or guaranteed by our Company.

2. To provide financial consultancy services; to provide investment advisory services on the

internet or otherwise; provide financial consultancy in the area of personal and corporate

finance; publish books and CD ROMs and any other information related to the above.

3. To conduct the business of sale, purchases, distribution and transfer of shares, debts,

instruments and hybrid financial instruments and to perform all related, incidental, ancillary

and allied services.

4. To conduct depository participant services; to conduct de materialization and

re-materialization of shares; set up depository participant centers at various regions in

India and to perform all related, incidental, ancillary and allied services.

5. To receive funds, deposits and investments from the public, Government agencies,

financial institutions and Corporate bodies; grant advances and loans; conduct advisory

services related to banking activities, project financing, funding of mergers and acquisition

activities; fund management and activities related to money market operations.

6. To carry on the business of portfolio management services, investment advisory services;

custodial services; asset management services; leasing and hire purchase; mutual fund

services and to act as brokers of real estate and financial instruments.

7. To carry on the business of financing; provide lease and hire purchase services; to

provide consultancy in the area of lease and hire purchase financing.

8. To operate mutual funds; receive funds from investors; equity or debt instrument

research activity instrument in debt and/or equity instruments.


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Key Business Strategies

Their focus on the client has allowed Company and its subsidiaries to offer a range of

services that have changed the investing landscape and created a new model of financial

services that melds people and technology to provide an integrated human assisted

technology interface service for investors who range from self-directed full-time active

investor to those who prefer to deal with through a marketing associate in smaller towns and

cities. Their key strategies include:

Defend and maintain their differentiation as the firm that delivers ethical and useful

services

Build and expand investing insight through product offerings such as Equity

Analysis which is objective,

Uncomplicated and not driven by commission

Give clients new levels of choice tailored to their desire for help, tools for investing their

assets, their willingness to pay for additional services and the level of business they can do

with the company.

Provide clients with tools, relationship managers and choices that support their desired

investment outcomes. Indiabulls has developed a client specific approach as a core element

of its business strategy and are constantly focusing on acquiring new clients and expanding

their customer base.

They believe that the strong secular growth of the Indian financial Markets, due to increased

household penetration of financial assets; increasing liquidity and market capitalization of

Indian Markets, led by the listing of many public sector entities; and the increasing affluence

of Indian households and savers provides an impetus to the growth perspective.

They believe that this diversification and growth strategy will continue to produce

results and allow Company and its subsidiaries to grow business at a rapid pace irrespective

of market conditions.

In addition, management believes that the growth of the Indian financial markets, due

to increased household penetration of financial assets; increasing liquidity and market

capitalization of Indian markets, led by the listing of many public sector entities; and the

increasing affluence of Indian households and savers, favors our long term growth outlook.


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The core pillars of our business strategy are discussed below: Increase the

Number of Client Relationships

They are focused on increasing the number of client relationships through a wide network of

offices throughout India and having more number of relationship managers to service these

relationships. They plan to grow their business by growing the number of client

relationships. During a downturn of the markets they believe that increased number of client

relationships will add stability to their earnings.

Offer Diversified Financial Products & Services

Capture

Greater Share of Wallet

Company and its subsidiaries offer to their clients a wide range of financial services and

products allowing the clients to leverage their relationship with Indiabulls and get

products suiting their varied needs. This strategy allows them to gain share of walletof

the clients consumption of financial services. They offer to the client a comprehensive

product offering and are able to increase their revenues per client by selling different

products to the same client. Indiabulls offer equity, debt & derivatives brokerage, IPO

distribution, mutual funds and insurance products. Their strategy is to increase the

number of client relationships and then leverage those client relationships into offering in a

whole suite of financial products.


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Multiple Channels Enhance Customer Experience and

Opportunities to interact with us

These multiple channels provide flexibility to the clients and allow them to utilize their

existing business Relationship with them through any channel from any part of India.

Companys strategy is to provide the most convenient, efficient and value added channel to

the client at the lowest possible cost, and allow the clients with choice and varied access

points. Indiabulls believe that their multiple channel strategy has been particularly

effective in the affluent segment where many sophisticated clients like to have a close-by

office they can access and yet have the flexibility of Internet account management,

transactions and electronic funds transfer and settlement.

Relationship Manager driven sales model, provide high quality service and

exploit cross-sell opportunities

Companys clients benefit from the personal attention and advice of the trained and

motivated relationship managers. All its relationship managers are qualified and educated

professionals, who have been extensively trained in-house to provide the products and

services to the clients. These relationship managers are encouraged to develop long-term

relationships with the clients and can access a variety of resources within the Company,

such as insurance specialists, research services and others to add value to their clients.

Most of the clients have dedicated relationship managers irrespective of the channel they use.

Low cost and highly scalable business

Indiabulls has utilized the technologies available and have constantly invested in products

and innovations to provide an enhanced experience to its customers. The benefits of such

infrastructure include integrated customer trading account with depositary services; electronic

gateway for instant funds transfer to and from the bank to the brokerage account; and

comprehensive client systems that track all activity in various segments.

They believe that technology and systems are one of the key competitive edges in terms of

lowering their operating costs; managing the business; reducing risk and providing an

enhanced experience to the clients with superior service standards.


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Brokerage Offering

Companysretail equity business primarily covers secondary market equity broking. It caters

to the needs of individual Indian and Non- resident Indian (NRI) investors. They offer broker

assisted trade execution and automated online investing and trading facilities to their

customers. Automated online investing and trading includes automated order placement and

execution of market and limit equity orders; and advanced trading platforms for active

traders. All investors have full access to real - time quotes, personalized portfolio tracking,

charting and quote applications, real-time market commentary, real-time quotes and news.

Online Automated Channel

Automated Online Business contributes more than 34.6% of its overall revenues. They

control more than 20% market share in the online business. Clients are able to obtain

financial information and execute trades on an automated basis through their online channel

using product offerings like Power Indiabulls and Indiabulls Market Trader.

This channel is designed to provide added convenience for clients and minimize its costs of

responding to and processing routine client transactions. Online channels include theIndiabulls Group Professional Network that provides access via their web-site

www.indiabulls.comto information and trading service on the Internet.

Additionally, Power Indiabulls online trading system is designed for the high volume trader

and provides enhanced trade information and order execution integrated software-based

trading.platforms. While most client transactions are completed through the online channel,

they continue to stress the importance of blending the power of the Internet with personal

service to create a full- service client interface. They offer an online portal where the clients

can execute securitiespurchase and sales transactions through the Internet.

This covers the Equity, Debt & Derivatives segment in the Indian securities market. With an

objective of assisting our customers in taking investment decisions, the portal also provides

financial information on various companies listed. For executing a transaction clients can

directly log on to our website without requiring any assistance from offline

intermediaries
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Third Party Financial Products Offering

They distribute third party products and services through our comprehensive retail

distribution network. The products offered include third party insurance, mutual funds andinitial and secondary public offerings.

ACCOUNTS AND FEATURES

Through various types of brokerage accounts, they offer purchase and sale of securities,

which includes Equity, Derivatives and Commodities listed on NSE, BSE and NCDEX.

Additionally, they provide their clients access to a variety of insurance products like life, term

and annuity products through third-party insurance companies like Birla Sunlife Insurance

Company.

Indiabulls Group Signature Client is designed to serve self-directed individual investors

who want to manage their own portfolios. For these clients, they offer this account, which is

a stock trading account that allows clients to combine investments and cash in one-

account and trade securities. Clients are also eligible to subscribe to Indiabulls Equity

Analysis, a fee based research offering.

Other features of Indiabulls Group Signature Account include priority handling of their

service calls at the Centralized Customer Service Centre and through dedicated relationship

managers.

Indiabulls Group Signature account features include online integrated net transfers via

integrated payment gateways with banks such as HDFC Bank. Power Indiabulls - For active

traders, They offer Power Indiabulls accounts that include access to special features and

services such as advanced trading tool dedicated team of relationship managers.

Indiabulls offers a full range of financial services and products ranging from Equities to

Insurance to enhance your wealth and hence achieve your financial goals.

Indiabulls Professional Network offers real-time prices, detailed data and news, intelligent

analytics, and electronic trading capabilities, right at your finger-tips. This powerful

technology is complemented by our knowledgeable and customer focused Relationship

Managers.


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Indiabulls' Relationship Managers are available to you to help with your financial planning

and investment needs. To provide the highest possible quality of service, Indiabulls provides

full access to all products and services through multi-channels.

Equities and Derivatives

Our Retail Equity Business caters to the needs of individual Indian and Non-Resident

Indian (NRI) investors. Indiabulls offers broker assisted trade execution, automated online

investing and access to all IPO's.

Through various types of brokerage accounts, Indiabulls offers the purchase and sale of

securities which includes Equity, Derivatives and Commodities Instruments listed on

National Stock Exchange of India Ltd (NSEIL), The Stock Exchange, Mumbai (BSE) and

NCDEX.

THE FACILITIES PROVIDED BY INDIABULLS

Indiabulls Signature Account

A multitude of ways to access your account either through priority access to Relationship

Manager over phone or online access to your Account & Research Tools.

Indiabulls Signature Account Features

Priority Service Enjoy priority telephone access that gives you direct access to your

Relationship Manager.

Premium Research Benefit from full access to Indiabulls Equity A n a l y s i s

our objective, fact-based approach to rating stocks.

Online Accounting Stay on the top of your investments with a snapshot of your Account

Statements. Get access to Portfolio statement and access to digital contract notes.
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Benefits

ControlStay on top of your investments with convenient access to your account online or

by phone.

ConfidenceSupport your investing decisions with premium in- depth research -Indiabulls

Equity Analysis.

ValueEnjoy competitive commissions and get the service and support you need at a fair

price.

Power IndiabullsIndiabulls is dedicated to empower Active Traders through personal service and advanced

trading technology.

Active Trader - Get More At Indiabulls

Regardless of how the market is performing or which way the economic winds are blowing,

you, as a trader, are researching, charting, crafting a strategy, buying and selling. You are

getting in, getting out and moving on to the next trade.

Choose from a comprehensive offering of accounts, platforms and products. Customize our

technology and services to support the way you work.

Features of Power Indiabulls

Live Streaming Quotes

Fast Order Entry

Tic by Tic Live Charts

Technical Analysis Live News

and Alerts Extensive Reports

for Real-time Accounting
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Benefits

Comprehensive Financial Services As an Active trader, you'll have the tools,

resources and support you need to execute your trading strategy, plus your choice of a wide

range of investment products and services.

Dedicated Support and ServicesEnjoy priority access to Relationship Managers who

are dedicated to supporting your trading and investing needs.

Non-Resident Indian (NRI) Investor Services

With an extensive range of investment products, you will discover an unwavering

commitment to helping you invest in India.

Facilities

Indiabulls NRI Trading Account - Provides access to comprehensive trading tools for

independent NRI investors

Indiabulls Depository Services - Integrated services for seamless delivery

HDFC Bank Account - NRE/NRO Accounts with built in tax management solutions andfacility to source all regulatory approvals.

Indiabulls Equity Analysis - Premium Research on 200 companies updated daily.

Benefits

Indian Investments Brings You More Choices

Investing in India, one of the world's fastest emerging financial markets, means a

wider choice of investment opportunities and industries. At Indiabulls, you can take fulladvantage of the emerging Indian market.

See what indiabulls offer

Indiabulls provide you with a Seamlessly integrated trading, depository and bank account

enabling you to trade from anywhere in the world.

Investing in India, one of the world's fastest emerging financial markets, means a

wider choice of investment opportunities and industries. At Indiabulls, you can take full

advantage of the emerging Indian market. Indiabulls provide you with a Seamlessly

integrated trading, depository and bank account enabling you to trade from anywhere in the

world.
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INTRODUCTION AND CONCEPT OF SHARE TRADING

Trading in shares is old phenomena its regulation had been started when securities contract

act had been formed in 1956. Transfer of resources from those with idle resources to

others who have a productive need for them is most efficiently achieved through the

securities market. It provides a channel for reallocation of savings to investments.

SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI) is a regulatory

governing body of security market. The SEBI Act 1992 was enacted to empower SEBI

with statutory powers for:

(a) Protecting the interests of investors in securities.

(b) Promoting the development of the securities market

(c) Regulating the securities market

Its regulatory jurisdiction extends over corporate in the issuance of capital and transfer of

securities. It has powers to register and regulate all the market all market intermediaries

and also to penalize them in case of violations of the provisions of the ACT, rules and

regulations made there under. SEBI has a full autonomy and authority to regulate and

develop an orderly securities market.

The share market can be segmented in two parts

PrimaryMarket

Secondary Market.


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Primary Market

It provides opportunity to issuers of securities government as well as corporate to raise

resources to meet their requirements of investments. In this market companies issue

fresh security sin exchange of funds through public issues or private placements. The

market design for primary market is provided in the provision of Companies Act, 1956

which deals with issues, listing and allotment of securities. The investors have to

apply the shares by filling the application form issue by the company along with the

application money. According to Disclosure and Investor Protection guidelines of SEBI,

1992 company has to disclose all the necessary information regarding pricing of issues,

listing requirements, disclosure norms lock-in-period for promoters contribution,

contents of offer documents pre and post issue obligations etc.

Company can issue shares at face value, at premium or at discount. Another method of

pricing which is now days common is issuing the securities through online system of the

stock exchange has to comply with the section 55 to 68a of the companies Act, 1956

and SEBI guidelines 2000. The company is required to enter in to an agreement

with the stock exchanges which have the requisite system for online offer of

securities. The advantages for this new system are:-

(a) The investors part with money only after allotment.

(b) It eliminates refunds except in case of direct applications.

(c) It reduces the time taken for issue process.


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Secondary Market

Secondary market is the place for sale and purchase of existing securities. It enables an

investor to adjust his holdings of securities in response to changes in his assessment about

risk and return. It enables him to sell securities for cash to meet his liquidity needs. It

essentially comprises of the stock exchanges which provide platform for trading of securities

and a host of intermediaries who assist in trading of securities and clearing and settlement of

trades. The securities are traded, cleared and settled as per prescribed regulatory framework

under the supervision of the exchanges and oversight of SEBI.

Trading Mechanism

Earlier trading on stock exchanges in India used to take place through open outcry

without use of information technology for immediate matching or recording of trades. This

was time consuming and inefficient. This imposed limits on trading volumes and efficiency.

In order to provide efficiency, liquidity and transparency National Stock Exchange

introduced a nation wide on line fully automated screen based trading system where a

member can punch in to the computer quantities of securities and the prices at which he likes

to transact and the transaction is executed as soon as it finds a matching sale or buy

order from a counter party. Screen based trading electronically matches orders on a

price/time priority and hence cuts down on time, cost and risk of error, as well as on fraud

resulting in improved operational efficiency. It enables market participants, irrespective of

their geographical locations to trade with one another and it provides equal access to

everybody.

NSE has main computer which is connected through Very Small Aperture Terminal (VSAT)

installed at its office. The main computer runs on a default tolerant STRATUS mainframe

computer at the exchange. Brokers have terminals installed at their premises which are

connected through VSATs. An investor informs a broker to place an order on his behalf.


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THE INDIABULLS PHILOSOPHY YOU COME FIRST

We have created a unique organization that is designed for you the

Smart Investor . We passionately believe in the Smart Investor

who wants to make his own educated investment choices and

demands world class access to a full range of services and products

ranging from Equities to Insurance, combined with the highest level

of integrity, service and professionalism.

Indiabulls is India's leading retail financial services company with 135

locations spread across 95 cities. While its size and strong balance

sheet allow them to provide you with varied products and services at

very attractive prices, over 750 Client Relationship Managers are

dedicated to serving your unique needs.

Indiabulls is lead by a highly regarded management team that has

invested cores of rupees into a world class Infrastructure that

provides there clients with real-time service & 24/7 access to all

information and products. Their flagship Indiabulls Professional

Network TM offers real-time prices, detailed data and news,

intelligent analytics, and electronic trading capabilities, right at yourfinger-tips. This powerful technology is complemented by there

knowledgeable and customer focused Relationship Managers.


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We are Creating a World of Smart Investor

Indiabulls offers a full range of financial services and products

ranging from Equities to Insurance to enhance your wealth and

hence, achieve your financial goals.

Indiabulls' Client Relationship Managers are available to you to help

with your financial planning and investment needs. To provide the

highest possible quality of service, Indiabulls provides full access to

all our products and services through multi-channels


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THE INDIABULLS PHILOSOPHY

YOU COME FIRST

We have created a unique organization that is designed for you the

Smart Investor . We passionately believe in the Smart Investor

who wants to make his own educated investment choices and

demands world class access to a full range of services and products

ranging from Equities to Insurance, combined with the highest level

of integrity, service and professionalism.

Indiabulls is a full service investment firm offering clients access to a

tremendous range of financial services from 135 locations across 95

cities. We have a strong team of over 750 Client Relationship

Managers focussed on serving your unique needs. Our world class

infrastructure, built with tens of crores of investment, provides our

clients with real-time service, multi-channel & 24/7 access to all

information and products. As we've expanded and developed to serve

the needs of all kinds of investors, we've been guided by one

underlying philosophy: You come first.

We are proud to introduce to you Indiabulls Professional

NetworkTM that offers real-time prices, equity analysis, detailed data

and news, intelligent analytics, and electronic trading capabilities,

right at your finger-tips. This powerful technology is complemented

by our knowledgeable and customer focussed Relationship Managers

who are available to help with your financial planning and investment

needs.


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We invite you to learn more about Indiabulls by calling 1 600 11

1130 (toll free) or visit our 135 Indiabulls Offices Nationwide or

explore the services we offer through theIndiabulls Market Trader.TM
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HISTORY AND OTHER CORPORATE MATTERS

OVERVIEW

Indiabulls Financial Services Limited was incorporated on January

10, 2000 as M/s Orbits InfoTech Private Limited at New Delhi under

the Companies Act, 1956 with Registration No. 55 103183. The

name of the Company was changed to M/s. 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 Company was changed to M/s.

Indiabulls Financial Services Limited. Company was promoted by

three engineers from IIT Delhi, and has attracted more than Rs.700

million as investments from venture capital, private equity and

institutional investors such as LNM India Internet Ventures Ltd.,

Transatlantic Corporation Ltd., Farallon Capital Partners, L.P., R R

Capital Partners L.P., and Infinity Technology Trustee Pvt. Ltd. and

has developed significant relationships with large commercial banks

such as Citibank, HDFC Bank, Union Bank, ICICI Bank, ABN Ambro

Bank, Standard Chartered Bank, Lord Krishna Bank and IL&FS.

Company and there subsidiaries have facilities from the above

mentioned banks and financial institutions aggregating to Rs. 1760

million. Companies headquarters are co-located in Mumbai and Delhi,

allowing it to access the two most important regions for Indian

financial markets, the Western region including Mumbai, rest of

Maharashtra and Gujarat; and the Northern region, including the


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National Capital Territory of Delhi, nearby cities, parts of Haryana,

Uttar Pradesh and Punjab; and access the highly skilled and educated

workforce in these cities. The Marketing and Sales efforts are

headquartered out of Mumbai; with a regional headquarter in Delhi;

and its back office, risk management, internal finances etc. are

headquartered out of Delhi, allowing our Company to scale these

processes efficiently for the nationwide network.

Main Objects Of The Company

The main objects to be pursued by the Company on its

incorporation are:

1. To hold investments in various step-down subsidiaries for

investing, acquiring, holding, purchasing or procuring equity

shares, debentures, bonds, mortgages, obligations, securities of

any kind issued or guaranteed by our Company.

2. To provide financial consultancy services; to provide investment

advisory services on the internet or otherwise; provide financial

consultancy in the area of personal and corporate finance; publish

books and CD ROMs and any other information related to theabove.

3. To conduct the business of sale, purchases, distribution and

transfer of shares, debts, instruments and hybrid financial

instruments and to perform all related, incidental, ancillary and

allied services.

4. To conduct depository participant services; to conduct de-


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materialization and re-materialization of shares; set up

depository participant centers at various regions in India and to

perform all related, incidental, ancillary and allied services.

5. To receive funds, deposits and investments from the public,

Government agencies, financial institutions and Corporate bodies;

grant advances and loans; conduct advisory services related to

banking activities, project financing, funding of mergers and

acquisition activities; fund management and activities related to

money market operations.

6. To carry on the business of portfolio management services,

investment advisory services; custodial services; asset

management services; leasing and hire purchase; mutual fund

services and to act as brokers of real estate and financial

instruments.

7. To carry on the business of financing; provide lease and hire

purchase services; to provide consultancy in the area of lease

and hire purchase financing.

8. To operate mutual funds; receive funds from investors; equity or

debt instrument research activity instrument in debt and/or

equity instruments.

Credit Rating

Indiabulls Securities Limited has been grantedPR1+rating for its

unsecured short term borrowing program of Rs. 200 million. Videletter dated May 5, 2004 the rating agency has increased the


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unsecured short term borrowing limit to Rs. 320 million maintaining

the PR1+ rating. ISL also enjoys A+ rating for medium to long

term unsecured borrowing program of Rs. 200 million. The Rating to

the company has been assigned by Credit Analysis Research Limited.

As for the present issue of equity shares of our Company, credit

rating is not required.

Shareholders Agreement

Shareholders Agreement was entered into by and among our

Company (formerly Orbis Infotech Private Limited), Infinity

Technology Trustee Private Limited as the trustee of Infinity Venture

India Fund, LNM India Internet Ventures Limited, Transatlantic

Corporation Limited (together theVC Investors)and the Promoters

dated November 2, 2000. The VC Investors invested an aggregate

amount of Rs. 206,000,000 in our Company for which they were

issued 55,425 equity shares at an average price of Rs. 3,716.73 per

equity share. Pursuant to a letter agreement (the Letter

Agreement) dated May 27, 2004 between the parties to the

Shareholders Agreement, each of the VC Investors have agreed not

to enforce rights that have accrued to them before the said Letter

Agreements and have agreed that the Shareholders Agreement,

together with all the rights and obligation on the parties will stand

terminated immediately upon the listing of the shares of our

Company and consequent to the listing, the rights of the

Shareholders Agreement, including the rights that have arisen prior

to such termination shall be terminated. A copy of the Shareholders


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Agreement, and a copy of the Letter Agreement terminating the

Shareholders Agreement are available for inspection as material

documents at the corporate offices of our Company.

Key Competitive Strengths

Diverse Branch Network

Since Company inception in FY 2000 Company and its subsidiaries

have grown from a single location to a nationwide network spread

over 135 offices in 95 cities. They have a pan India distribution

networks for the purpose of distribution of financial products and

services. Such a diverse and integrated network provides a

centralized platform to there clients.

Bouquet of financial products and services

Company and its subsidiaries offer various financial services and

products ranging from equity, F & O and wholesale debt, mutual

fund, insurance and IPO distribution, equity research analysis,

depository services to cater to the specific needs of the retail and

institutional investors thus providing all these services in a single

platform.

Advanced Technology team that delivers market leading

product innovation

There ongoing investment in technology is a key element in

expanding there product and service offerings, enhancing there

delivery systems, providing fast and consistent client service,


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reducing processing costs, and facilitating there ability to handle

significant increases in client activity without a corresponding rise in

risk and staff. Company and its subsidiaries have an in-house

technology team of 27 people comprising of several engineers. The

in-house technology team has been responsible for developing the

technology products for operating at a large scale with efficient back

office systems. The application of technology allows Company and its

subsidiaries to build scaleable product and service offerings. The in-

house technology team developed one of the first Internet trading

platforms in India, one of the first in-house real-time CTCL link with

NSE. Company and its subsidiaries introduced integrated accounts

with automated gateways with client bank accounts so that they can

transfer funds to and from their bank account to their brokerage

account with the Company. This has enhanced customer ability to

access their funds for market related activities. The in-house

technology team has good expertise to create mission critical

applications and in the maintenance and upkeep of high transaction

processing of there web-site.

Strong Sales and Marketing Teams with continuous

reinvestment and training

Companys relationship manager channel (through a team of 1050

Relationship Managers as on April 30, 2004) offers a single point

contact to retail customers whereby their high net worth clients have

separate relationship managers catering to them. These managers

offer personalized services to the customers helping build strong and

continuing relationships with them. Also, our marketing associate


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channel helps Company and its subsidiaries in client acquisitions at

minimal costs with client loyalty. The marketing associates channel

also helps Company and its subsidiaries in increasing their

penetration in smaller town and cities.

Strong cross Selling Opportunities

With 135 branches spread over 95 cities all over India and variety of

financial products and offerings coupled with online, relationship

manager & marketing associate channels, Company and its

subsidiaries have strong cross product selling opportunities thus

providing a multi-channel delivery systems to there diverse client

base of 71,000 clients as on July 10, 2005.

Strong Team of Experienced Promoters

Indiabulls has a strong team of promoters who are engineers from

Indian Institute of Technology and have several yearsexperience in

financial services industry. They believe that their strong technical

experience will help them in achieving our key business strategies.

Leading Product innovation and marketing strategies

Management is innovative and nimble and has historically introduced

many new and innovative products to the market place that have

played a significant role in their growth. Companys relationship

manager model has introduced private banking experience to the

clients. The relationship managers are trained and incentives to work

with their client base and enhance ability to cross sell and leverage

the large client base. Indiabulls have launched marketing associate


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model, which replaces the traditional sub-broker model with an

authorized person that client can appoint independently and provide

them with the benefit of their trading, clearing and servicing

strengths. Its equity analysis product provides clients with unbiased

research. Company plans to continuously innovate and introduce

market leading products and services to add to its competitive

advantage.

Well capitalized player, with strong banking relationships and

credit ratings

Indiabulls consolidated net worth is Rs. 1023.19 million making us a

well capitalized companies. The Company and ISL have received

sanctioned facilities of Rs. 1760 million from 9 leading commercial

banks and financial institutions. The details of the banking

relationships as of July 24, 2004 are as follows:

Ability to combine People & Technology in unique ways

They provide multiple distribution channels by combining people and

technology. Clients can visit one of the 70 offices in 55 cities or

access via telephone, call centre or online channel. Web enabled tools

such as technical analysis, information, news, interactive web based

programs and tools and back office solutions for clients and

marketing associates; Power Indiabulls an order entry, routing and

management technology through technology platform, for actively-

trading investors.

Strong market presence and increased market share leads to


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virtuous cycle of growth and profitability

Theyre growing client base and market share have increased their

market presence, brand recognition enhanced their profitability and

increased the available credit facilities from the banks further

strengthening its strong balance sheet. Companys brand and

profitability allows them to recruit good and efficient employees,

compensate them attractively and provides the flexibility toes for

investments in the business and technology systems. These

attributes in turn have a positive effect on the growth of its client

base thereby increasing its market share, leading to higher profits

and credit facilities and thus forming a virtuous circle.

Key Business Strategies

Their focus on the client has allowed Company and its subsidiaries to

offer a range of services that have changed the investing landscape

and created a new model of financial services that melds people and

technology to provide an integrated human assisted technology

interface service for investors who range from self-directed full-time

active investor to those who prefer to deal with through a marketing

associate in smaller towns and cities. Their key strategies include:

Defend and maintain their differentiation as the firm that delivers

ethical and useful services

Build and expand investing insight through product offerings

such as Equity Analysis which is objective,


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Uncomplicated and not driven by commission

Give clients new levels of choice tailored to their desire for help,

tools for investing their assets, their willingness to pay for

additional services and the level of business they can do with the

company.

Provide clients with tools, relationship managers and choices that

support their desired investment outcomes. Indiabulls has

developed a client specific approach as a core element of its

business strategy and are constantly focusing on acquiring new

clients and expanding their customer base. They believe that the

strong secular growth of the Indian financial Markets, due to

increased household penetration of financial assets; increasing

liquidity and market capitalization of Indian Markets, led by the

listing of many public sector entities; and the increasing affluence

of Indian households and savers provides an impetus to the

growth perspective.

They believe that this diversification and growth strategy will

continue to produce results and allow Company and its subsidiaries to

grow business at a rapid pace irrespective of market conditions. In

addition, management believes that the growth of the Indian

financial markets, due to increased household penetration of financial

assets; increasing liquidity and market capitalization of Indian

markets, led by the listing of many public sector entities; and the

increasing affluence of Indian households and savers, favors our long

term growth outlook.


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The table below encapsulates the financial metrics on an annual

basis, and compares that with the Market trading volume.

(NSE Yearly Trading Volume is taken as representative of Market

activity).

The core pillars of our business strategy are discussed below:

Increase the number of Client Relationships

They are focused on increasing the number of client relationships

through a wide network of offices throughout India and having more

number of relationship managers to service these relationships. They

plan to grow their business by growing the number of client

relationships. During a downturn of the markets they believe that

increased number of client relationships will add stability to their

earnings.

Offer Diversified Financial Products & Services Capture

Greater Share of Wallet

Company and its subsidiaries offer to their clients a wide range of

financial services and products allowing the clients to leverage their

relationship with Indiabulls and get products suiting their varied

needs. This strategy allows them to gain share of wallet of the

clients consumption of financial services. They offer to the client a

comprehensive product offering and are able to increase their

revenues per client by selling different products to the same client.

Indiabulls offer equity, debt & derivatives brokerage, IPO distribution,

mutual funds and insurance products. Their strategy is to increase


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the number of client relationships and then leverage those client

relationships into offering in a whole suite of financial products.

Multiple Channels Enhance Customer Experience and

Opportunities to interact with us

Companys clients can access their products and services through

135 offices spread across 95 cities; through operator assisted call

Centers; or through their website www.indiabulls.com; or through

their respective relationship managers or through marketing

Associates. These multiple channels provide flexibility to the clients

and allow them to utilize their existing business Relationship with

them through any channel from any part of India. Companys

strategy is to provide the most convenient, efficient and value added

channel to the client at the lowest possible cost, and allow the clients

with choice and varied access points. Indiabulls believe that their

multiple channel strategy has been particularly effective in the

affluent segment where many sophisticated clients like to have a

close-by office they can access and yet have the flexibility of Internet

account management, transactions and electronic funds transfer and

settlement.

Relationship Manager driven sales model, provide high quality

service and exploit cross-sell opportunities

Companysclients benefit from the personal attention and advice of

the trained and motivated relationship managers. All its relationship

managers are qualified and educated professionals, who have been

extensively trained in-house to provide the products and services to
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the clients. These relationship managers are encouraged to develop

long-term relationships with the clients and can access a variety of

resources within the Company, such as insurance specialists,

research services and others to add value to their clients. Most of the

clients have dedicated relationship managers irrespective of the

channel they use.

Low cost and highly scalable business

Indiabulls has utilized the technologies available and have constantly

invested in products and innovations to provide an enhanced

experience to its customers. The benefits of such infrastructure

include integrated customer trading account with depositary services;

electronic gateway for instant funds transfer to and from the bank to

the brokerage account; and comprehensive client systems that track

all activity in various segments. They believe that technology and

systems are one of the key competitive edges in terms of lowering

their operating costs; managing the business; reducing risk and

providing an enhanced experience to the clients with superior service

standards.


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Brokerage Offering

Companysretail equity business primarily covers secondary market

equity broking. It caters to the needs of individual Indian and Non-

resident Indian (NRI) investors. They offer broker assisted trade

execution and automated online investing and trading facilities to

their customers. Automated online investing and trading includes

automated order placement and execution of market and limit equity

orders; and advanced trading platforms for active traders. All

investors have full access to real - time quotes, personalized portfolio

tracking, charting and quote applications, real-time market

commentary, real-time quotes and news.

Online Automated Channel

Automated Online Business contributes more than 34.6% of its

overall revenues. They control more than 20% market share in the

online business. Clients are able to obtain financial information and

execute trades on an automated basis through their online channel

using product offerings like Power Indiabulls and Indiabulls Market

Trader. This channel is designed to provide added convenience for

clients and minimize its costs of responding to and processing routine

client transactions. Online channels include the Indiabulls Group

Professional Network that provides access via their web-site

www.indiabulls.com to information and trading service on the

Internet. Additionally, Power Indiabulls online trading system is

designed for the high volume trader and provides enhanced trade

information and order execution integrated software-based trading
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platforms. While most client transactions are completed through the

online channel, they continue to stress the importance of blending

the power of the Internet with personal service to create a full-

service client interface. They offer an online portal where the clients

can execute securities purchase and sales transactions through the

Internet.

This covers the Equity, Debt & Derivatives segment in the Indian

securities market. With an objective of assisting our customers in

taking investment decisions, the portal also provides financial

information on various companies listed. For executing a transaction

clients can directly log on to our website without requiring any

assistance from offline intermediaries

Third Party Financial Products Offering

They distribute third party products and services through our

comprehensive retail distribution network. The products offered

include third party insurance, mutual funds and initial and secondary

public offerings. They have a pan India retail distribution network,

comprising 1050 relationship managers and 135 branches spread

over 95 cities.


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INTRODUCTION AND CONCEPT OF SHARE

TRADING

Trading in shares is old phenomena its regulation had been started

when securities contract act had been formed in 1956. Transfer of

resources from those with idle resources to others who have a

productive need for them is most efficiently achieved through the

securities market. It provides a channel for reallocation of savings to

investments.

SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI) is a

regulatory governing body of security market. The SEBI Act 1992

was enacted to empower SEBI with statutory powers for:

(a)Protecting the interests of investors in securities.

(b) Promoting the development of the securities market

(c) Regulating the securities market

Its regulatory jurisdiction extends over corporate in the issuance of

capital and transfer of securities. It has powers to register and

regulate all the market all market intermediaries and also to penalize

them in case of violations of the provisions of the ACT, rules and

regulations made there under. SEBI has a full autonomy and

authority to regulate and develop an orderly securities market.

The share market can be segmented in two parts one is Primary

Market another is Secondary Market.


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Primary Market

It provides opportunity to issuers of securities government as well as

corporate to raise resources to meet their requirements of

investments. In this market companies issue fresh security sin

exchange of funds through public issues or private placements. The

market design for primary market is provided in the provision of

Companies Act, 1956 which deals with issues, listing and allotment of

securities. The investors have to apply the shares by filling the

application form issue by the company along with the application

money. According to Disclosure and Investor Protection guidelines of

SEBI, 1992 company has to disclose all the necessary information

regarding pricing of issues, listing requirements, disclosure norms

lock-in-period for promoters contribution, contents of offer

documents pre and post issue obligations etc.

Company can issue shares at face value, at premium or at discount.

Another method of pricing which is now days common is issuing the

securities through online system of the stock exchange has to comply

with the section 55 to 68a of the companies Act, 1956 and SEBI

guidelines 2000. The company is required to enter in to an

agreement with the stock exchanges which have the requisite system

for online offer of securities. The advantages for this new system

are:-

(a)The investors part with money only after allotment.

(b) It eliminates refunds except in case of direct applications.


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(c) It reduces the time taken for issue process

Secondary Market

Secondary market is the place for sale and purchase of existing

securities. It enables an investor to adjust his holdings of securities in

response to changes in his assessment about risk and return. It

enables him to sell securities for cash to meet his liquidity needs. It

essentially comprises of the stock exchanges which provide platform

for trading of securities and a host of intermediaries who assist in

trading of securities and clearing and settlement of trades. The

securities are traded, cleared and settled as per prescribed regulatory

framework under the supervision of the exchanges and oversight of

SEBI.

Trading Mechanism

Earlier trading on stock exchanges in India used to take place

through open outcry without use of information technology for

immediate matching or recording of trades. This was time consuming

and inefficient. This imposed limits on trading volumes and efficiency.

In order to provide e

final indiabulls

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