invest smart project report nirmal dhruva
TRANSCRIPT
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1. Introduction
1.1 Executive Summary
With the advent of technology, the needs, taste and preferences of the
customers are changing. Companies often ends up in doing lot more in getting new
customers but often forget to do the precise little to find out what they should do to
keep the customer in their hands. It is a well-known truth that loss of one's customer
is the gain of the competitor. A satisfied customer eventually multiplies the number of
customers. It's more cost effective doing business with existing customers than
looking for new ones.
Despite this fact companies do face customer attrition. Over a period of time,
some of their customers get in-active. However, no organization can afford to loose
its customers. An attentive organization always tries to identify reasons of customer
in-activism. The current study is also an attempt to examine the in-activism of equity
customers of IL&FS Investsmart Limited, with an aim to help the company to find out
the crucial issues to improve upon and also figure out the future potential customers
among those old customers.
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IL&FS Investsmart Limited is a premier financial services organization. It
focuses on stock broking, portfolio management, mutual fund, insurance and housing
loan advisory services.
The study has been completed in six phases starting with initial orientation and
ending with recommendations. Primary data was collected through telephonic survey
For the purpose of analysis qualitative data were converted into quantitative data. Six
factors were identified to figure out potential customers. Each customer was rated on
all the six factors and a composite score was calculated for each of them. Finally all
customers were divided into three categories high, medium and low potential based
on their respective composite scores.
From the total database of 300 customers, 82 customers were interviewed and
among them, 19 were identified as high potential, 31 as medium and 32 as low
potential customers. The main reasons for in-activism were identified as better
services offered by other players, shifting to online trading, change in customers and
companys location. However, satisfaction level of companys services was very
good. Many customers were interested in companys research reports and mutual
funds advisory services as well. Overall this study has helped the company to
regain/retain relationship with its old and in-active customers.
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1.2 Theoretical Background of the Study
Modern marketing revolves around the Customer. It is an old and by-now
universally accepted concept that the Customer is the King. Customers are treated
as the eyeballs of all major companies in the world. The little-guy-the-customer is the
person who has unique interests, needs, attitude preferences, issues and
opportunities, and most importantly the authority to spend the money on the offerings
of the company. Therefore the traditional approach of making one-time sales is being
replaced with making long term commitment to the customer that focuses on keeping
and improving the current customers, rather than acquiring new customers.
This concept assumes that the consumer prefers to have an ongoing
relationship with one organization rather than switching organizations. Building on
this assumption and also on the fact that retention is cheaper than acquiring new
customers, the marketers of today offers prime importance in the strategy of
acquiring-satisfying-maintaining customers. Marketing companies often ends up in
doing lot more in getting new customers but often forget to do the precise little to find
out what they should do to keep the customer in their hands. It is a well-known truth
that loss of one's customer is the gain of the competitor.
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An organization might lose its customers over a period of time for a number of
reasons; sometimes this can't be prevented, however, in many occasions it will be
able to take some corrective actions to retain/regain its customers. Therefore
customer retention is very important for success of any business whether it is
manufacturing or trading or service. Satisfying the existing customer eventually
multiply the number of customers as researches suggests, one satisfied customer
creates four new customers whereas one unsatisfied customer spreads bad message
to ten customers. An unsatisfied customer makes more harm to the business than the
benefits a satisfied customer brings. Hence all companies try to keep their existing
customers satisfaction at top priority.
It's more cost effective doing business with existing customers than looking for
new ones. An old customer does not require understanding about the product or
service which organization offers which is necessary for a new customer. For a
marketer it is easy to understand needs of existing customers then new customers.
The cost of retaining one existing customer is much lower than creating a new
customer, so it is always preferable to retain old customers than trying to make new
customers. It becomes easy to get new customers if existing customers are satisfied
in all aspects. If an organization keeps adding new customers and does not care
about its old customers, cannot survive in the long run. Companies that realize this
fact at an early stage survive and grow in their business.
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With the advent of technology, the needs, taste and preferences of the
customers are changing. Banking industry, for instance, has seen lot of changes and
now ATM card has become basic need for most of the customers unlike 6-7 years
back when people did not even think about depositing and withdrawing money
through ATM card. As customers move from one life cycle stage from another, needs
evolve, buying pattern fluctuates and product choices shift. A smart and live
relationship company should recognize such change of needs and wants, and should
gear itself up to suit the advantage. Failure to do so might result in drifting of the
customer.
Many organizations have attempted to automate many routine interactions with
their customers, because face-to-face customer service is the most labor-intensive,
expensive, and risky way to do business with consumers. This is why banks
encourage customers to use ATMs, many gas stations have self-service pumps with
built-in credit-card readers, and many supermarkets have self-checkout stands.
Despite all these efforts, it is still argued that many organizations are not good
at service and that large organizations in particular are still frustrating to deal with
their customers. For example, automation can go awry if not executed correctly, as
shown by widespread dissatisfaction with voice mail systems. Therefore human
interaction is still important. A machine cannot read customers face and understand
his mind; it is only human being who can understand what is going on in customers
mind and customize the product or service accordingly. In absence of that, it leads to
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customers dissatisfaction and eventually customers switching. The reason being
that such organization could not accustom with the changing needs of its customers
and at the same time other players see opportunity with those customers and attract
them by satisfying their needs. Hence customer satisfaction, customer loyalty and
customer retention are believed to be three important pillars on which any
organization is built on. Simply delivering variety of products does not guarantee a
satisfied customer.
However, no organization can afford to loose its customers. An attentive
organization always tries to identify reasons if any of its customers are getting
inactive. There could be several reasons to that. They did not get desired quality of
goods or service or they got better service with other company or their taste and
choice has changed and so on and so forth. Reasons could be different depends on
the nature of business. However, it is very important for an organization to find out
those reasons if any of its customers are getting inactive. Reuniting business
relationship with a lapsed or inactive customer will improve the profitability quicker
than targeting a new one, which will inevitably involve extra spending on advertising
and promotion.
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1.3 Statement of the Problem
For a stock broking company like Investsmart equity investors are very
important because they are their bread and butter. In the competitive market, all
players try to attract the customers towards them and customer switching becomes
one of the important issue for them. In such a scenario it is essential for the company
to figure out the reasons for switching.
Investsmart has been encountering this issue for quite some time. The
company has realized that some of its customers are not availing its services for
some time. The study is an examination of the in-activism of such equity customers of
the company with an aim to help the company to find out the crucial issues to improve
upon and also figure out the future potential customers among those old customers.
1.4 Importance of the Study
The importance of examining in activism lies in the fact that in the absence
of it, company may completely loose its old customers which could be brought back
had they tried to figure out their problems and resolve them. On one hand company
looses old customers and on the other hand they do not refer to other people and
new customers do not attract to the organization. Reemphasizing on the importance
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of customer retention, a loyal customer appreciate referring new people about the
product or service of the organization.
The study has helped the company in the following ways:
To understand the problem of its inactive customers, to find out reasons for
their in-activism, so as to find out ways to make them active.
To improve customer relationship. When an inactive customer is contacted
after long time, he feels very good that company is still caring about him even
though he is not giving any business to them.
To figure out potential customers among those old inactive customers.
To improve its product or service to its existing active customers because the
study may reveal some new areas to improve upon.
To find out customers expectations from the company.
To improve its image and goodwill in the market.
To increase its business.
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1.5 The Topic
In-activism of equity customers an examination. For the purpose of study,
in-activism was defined as an event when a customer was not availing companys
services from certain period of time. The period was defined as six months or more.
Equity customers are those customers who invest in equity shares either through
Initial Public Offerings (IPOs) or through secondary market and have trading account
with the company. Examination of the in-activism of equity customers is a process of
finding out reasons for their in-activism, their past experience with the services of the
company, their present and future expectations from the company. There might be
many reasons for in-activism such as: not having interest in equity investments, prior
bad experience with equity trading, dissatisfaction from the companys services,
better services offered by another company, convenience and so on.
1.6 Objectives of the Study
The objective of the study is to find out the reasons for in activism of equity
customers of IL&FS Investsmart Limited, suggest the company what initiative it
should take to make them active and figure out the future potential customers among
those old customers.
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2. Design of the Study
2.1 Methodology
2.1.1 Various Phases
PHASE I: An initial orientation for understanding the organizational culture and its
products.
PHASE II: Learning the process by actual working experience
PHASE III: Preparation of the plan
PHASE IV: Data collection
PHASE V: Facts finding and data analysis
PHASE VI: Recommendations to the organization.
PHASE I: An initial orientation for understanding the organizational culture and its
products.
Phase I started with initial training about the products and services Company
offers and its work culture that was essential for researcher before directly interacting
with the customers.
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PHASE II: Learning the process by actual working experience
Phase II included actual working experience with the senior executives and
relationship officers that helped the researcher to understand how company delivers
its services to the customers.
PHASE III: Preparation of the plan
Having understood the process, the third phase started with preparation of
plan how to approach the in-active customers, interact with them and try to
understand their problems and expectations from the company. The company had
provided the database of about 300 old customers. These customers had opened
their stock trading account with the company from October 2000 to March 2004. The
study was concentrated on the in-active customers. For the purpose of the study,
inactive customers were defined as those customers who were not availing
companys services for last six months or more.
It is important to follow a planned strategy. First, the customer should be
contacted by either of the following methods:
To contact directly through face to face meeting or telephone or e-mail.
To invite them to avail any new offer, the company is offering.
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To invite them for any seminar or customer meet if company is conducting
or sponsoring.
To send them greetings or gift on their birthday or marriage anniversary.
Each method has its own advantages and disadvantages. All possible
methods were explored with their pros and cons. With respect to nature of business
and kind of customers, the most suitable method identified was to contact them
directly. Most of the customers were not comfortable with face to face meeting hence
telephonic conversation was given preference over face to face meeting or e-mail
to get fast response depending on the convenience of the customer. However,
customers preference was always given top priority.
PHASE IV: Data collection
Fourth Phase was the most important phase comprising data collection. It has
given great opportunity to the researcher to understand what customers expect from
the company.
Telephonic interview had an unstructured talk covering all the vital areas
required. A typical telephonic conversation used to start with greeting the customer,
introducing the researcher, the purpose for calling and asking him/her to have a word.
If the customer was not comfortable talking that time then he was approached later.
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Once the customer agrees, he/she was asked about status of the trading account
with the company. The conversation was concentrated to find out how far he is using
the services of the company or if he has stopped using then what are the reasons for
discontinuation, whether he is interested in re-availing the services, how satisfied he
was with companys services, currently how actives he is in stock trading, what is his
occupation and what are his expectation from the company.
PHASE V: Facts finding and data analysis
The fifth phase was actually more rigorous work summarizing the data, sorting
the points, sequencing the conversation, converting the qualitative data into
quantitative data and analyzing. Essentially fourth and fifth phases were not mutually
exclusive; they were both happening simultaneously because the telephonic
conversation cannot be remembered for long time until and unless it is written down
and reshuffled.
After collection of the qualitative data from the customers, it was converted into
the quantitative data and finally the customers were divided into three categories such
as: High, medium and low potential customers based on their Composite Score
(hereinafter defined). Six factors (as explained below) were taken to arrive at
Composite Score.
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A. Deciding Factors for Potential Customer
There are many factors which can decide the potential of the customer such as
his interest level, occupation, age, income level, knowledge level, risk taking capacity,
activeness, size of current portfolio, previous experience with the company and stock
trading, future expectations and so on. However, there are few factors which mostly
contribute to potential and capture the other factors into them.
To find out the potential, finally six factors were considered which contribute to
the overall potential. Each factor was given equal weightage and each customer was
rated on the scale of 1 to 5 on all factors based on the data collected. One being
lowest and 5 being highest rating. The six factors were as follows:
1. Interest level of the customer
2. Activeness of the customer
3. Satisfaction level from the companys services
4. Occupation of the customer
5. Current Portfolio
6. Expectations from the company in future
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1. Interest level of the customer: Interest level of the customer includes how
much the customer was interested in availing companys services. It is very
important as interest level of the customer is indicative of his/her future
potential for the company. Customers were rated on the following scale:
1 2 3 4 5Highly
uninterested
Somewhat
UninterestedInterested
Somewhat
Interested
Highly
Interested
2. Activeness of the customer: Activeness was defined as how actively the
customer was involved in the stock trading and related business possibly with
another stock broking firm. This factor was included to find out the customers
who are actively involved in equity related trading but by any reason shifted to
another firm. Customers were rated on the following scale:
1 2 3 4 5Not at all
active
Somewhat
inactiveActive
Somewhat
Active
Very Much
Active
3. Satisfaction level from the companys services: This factor measures
satisfaction level of those customers. In other words, how satisfied the
customer was from the services provided by the company in past. This could
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help to find out reason for discontinuing the services. If the customer was
satisfied from the companys services then there might be other reasons for
discontinuing its services or if he was not satisfied earlier then this was the first
reason for discontinuing the services. Customers were rated on the following
scale:
1 2 3 4 5Highly
Dissatisfied
Somewhat
Dissatisfied
SatisfiedSomewhat
Satisfied
Highly
Satisfied
4. Occupation of the customer: Occupation plays a major role in deciding the
potential. Thus occupation of the customer was taken as an important
parameter. Customers were rated on the following scale:
1 2 3 4 5
UnemployedRetired/
Housewife
Government
Job
Self employed/
Private Job
Industrialist/
Manager/Speculator
5. Current Portfolio: Current portfolio means size of the portfolio the customer
has. If he has large portfolio already invested, that means he is an active trader
but availing the services from other company so the company can target such
customer by providing value added services and set him back to the company.
The size of the portfolio also indicates the risk taking ability of the customer. If
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he has invested only Rs 1 lakh or Rs 2 lakhs in equities, he is a moderate risk
taker and probably long term investor. On the other hand if he has equity
portfolio of more than Rs 7 lakhs, he would be an active trader and high risk
taker. Some customers even has Rs 30-40 lakhs equity portfolio as well. The
size of the portfolio also correlated with occupation. Customers were rated on
the following scale:
1 2 3 4 5Below Rs. 1
Lakh
Rs 1 Lakh to
Rs 3 Lakhs
Rs. 3 Lakhs
to Rs 5 Lakhs
Rs 5 Lakhs to
Rs 7 Lakhs
Above Rs 7
Lakhs
6. Expectations from the company in future: This factor was included to find
out customers expectations from the company in future. For example one
customer might have very high expectations and other might have no
expectations. Customers were rated on the following scale:
1 2 3 4 5No
Expectations
Low
Expectations
Some
Expectations
High
Expectations
Very High
Expectations
B. Composite Score
Composite score for each customer was calculated. Each customer was given a
composite score out of 5. Following formula was used to calculate Composite score:
n
CS = Ri/ n
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i = 1
Where CS = Composite Score of a customer
Ri = Rating of the factor i
n = Number of factors (six)
Finally customers were divided into the following three categories based on their
respective composite scores:
High Potential = CS equal to 4 and up to 5
Medium Potential = CS equal to 3 and below 4
Low Potential = CS below 3
PHASE VI: Recommendations to the organization.
The last and the final phase comprised of recommendations to the company.
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2.2Statistical Tools and Techniques
The tools used for the analysis were SPSS (Statistical Package for Social
Science) and Microsoft Excel. The following techniques were used for the analysis:
Frequencies
Charts and Graphs
Bar Chart and Pie Chart.
Cross tab and chi square test
A cross tabulation displays the number of cases in each category defined
by two or more grouping variables. Cross tabulations are useful for
summarizing categorical variables -- variables with a limited number of
distinct categories.
The chi-square measures test the hypothesis that the row and column
variables in a cross tabulation are independent. A low significance value
(typically below 0.05) indicates that there may be some relationship
between the two variables. While the chi-square measures may indicate
that there is a relationship between two variables, they do not indicate the
strength or direction of the relationship.
Correlation
The correlation explains relationship between the two variables. Pearson
correlation coefficients assume the data are normally distributed. The
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Pearson correlation coefficient is a measure of linear association between
two variables. The values of the correlation coefficient range from -1 to 1.
The sign of the correlation coefficient indicates the direction of the
relationship (positive or negative). The absolute value of the correlation
coefficient indicates the strength, with larger absolute values indicating
stronger relationships.
The significance level is the probability of obtaining results as extreme as
the one observed. If the significance level is very small (less than 0.05)
then the correlation is significant and the two variables are linearly related.
If the significance level is relatively large (for example, 0.50) then the
correlation is not significant and the two variables are not linearly related.
Other suitable statistical techniques
2.3 Limitations
The study had been conducted with the customers of the Hyderabad branch of
the company and findings may not be as applicable to the other branches of the
company through out India as it applies to the Hyderabad branch.
The data collection was done through telephonic survey so mood of the
customer at that time played a major role and some times the answers may not reveal
the real facts which become one of the limitations of the study.
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2.4 Problems faced during the study
Following difficulties were faced during execution of the study:
Meeting the customers for face to face interview was challenging task
especially with old and in-active customers. Many customers did not entertain
face to face meeting or they did not have time. So telephonic survey was
suitable in that context.
Approaching the customers through telephone also had limitations. Many
customers could not be contacted due to the following reasons:
Change of their location in the City.
Have gone abroad.
Change in the phone number or old number not working.
Sometimes other person talks on behalf of the customer and did not co-
operate the researcher.
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2.5 Analysis of the Data
From the total database of 300 customers, data was collected from 82 customers.
They were asked many qualitative questions as explained in methodology. After
collection of the qualitative data from the customers, they were converted into the
quantitative data with respect to all six factors.
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1 Factor wise Analysis:
1. Interest levelChart - 1
Interest
Highly Interested
Somew hat Interes ted
Interested
Somew hat uninteres te
Highly uninteres ted
Percent
40
30
20
10
0
11
35
2018
16
We can see from the above bar chart that more than 65 percent of customers are
interested in re-availing companys services. 35 percent customers are fairly
interested and 11 percent are highly interested. Only 16 percent customers are not at
all interested. It indicates that most of the inactive customers were interested in re-
availing companys services. Those customers fallen either in medium or high
potential.
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2. Activeness
Chart - 2
Activeness
Highly Active
Somew hat Ac tive
Active
Somew hat Inactive
Highly Inactive
Percent
40
30
20
10
0
9
27
29
20
16
We can identify from the above chart that around 65 percent of the interviewed
customers were actively doing the stock trading with some or the other company. It
clearly indicates that majority of the people were still doing stock trading but they had
shifted to other service provider. Among those 65 percent, 9 percent customers (7
customers) were highly active and doing very good business. This result has given
clear indication and immense scope for the company to target those active
customers. Only 35 percent customers were not active traders.
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3. Satisfaction
Chart - 3
We can observe from the above chart that maximum numbers of customers were
satisfied from the past services of Investsmart. Almost 90 percent of the customers
were satisfied and only 10 percent customers were dissatisfied. It clearly indicates
that customer dissatisfaction was not major reason for discontinuation of services with
most of the customers.
Satisfaction
Satisfaction
Highly Satisfied
Somewhat Satisfied
Satisfied
Somewhat Dissatisfied
Highly Dissatisfied
P e r
ce
nt
50
40
30
20
10
0
11
46
33
46
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4. Occupation
Chart - 4
Occupation
Industrialist/Specul
Pvt. Service/Self em
Govt. Service
Retired/Housewife
P
ercent
50
40
30
20
10
0
24
41
28
6
It can be observed from the above chart that no customer was in the un- employment
category and only 6 percent of the customers were retired or housewife. About 69
percent of the customers was either doing government or private service or self
employed in their business. Interesting to note that 24 percent customer has been
given rating of 5 i.e. they were either working at managerial position or they were
industrialist or speculators. This indicates that there was a large potential for the
company to make those customers active.
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5. Current Portfolio
Chart - 5
Current Portfolio
9%
15%
22%
32%
23%
Above Rs 7 Lakhs
Rs 5 Lakhs to 7 Lakh
Rs 3 Lakhs to 5 Lak
Rs 1 Lakh to 3 Lakhs
Below Rs. 1 Lakh
It can be observed from the above pie chart that almost one third of the customers
had a portfolio between Rs 1 lakh to Rs 3 lakhs but also 26 percent customers had
portfolio of more than Rs 5 lakhs. Among them 9 percent (8 customer) customers had
equity portfolio more than Rs 7 lakhs. Some of them even had more than Rs 30 lakhs
of portfolio. 22 percent customers had portfolio between Rs 3 lakhs to Rs 5 lakhs The
result was a positive signal for the company as it can target such customers by
providing value added services and make them active customer again.
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6. Expectations
Chart - 6
Expectations
Very High Expectati
High Expectations
Some Expectations
Low Expectations
No Expectations
Perce
nt
50
40
30
20
10
0
9
39
23
17
12
We can observe from the above chart that the customers have lot of expectations
from the company. About 50 percent customers have high or very high expectations.
Only 12 percent customers do not have any expectations from the company. The
balance 40 percent have some or the other expectations. Most of the customers
expect regular updates or periodic consultation from the company. Few customers
expect proactive service like information about any good buy or sell beforehand.
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2. Composite Score
As explained in the methodology, customers were divided as high, medium and low
potential customers based on their respective composite scores.
Chart - 7
Composite Score
31 / 38%
32 / 39%
19 / 23%Medium
Low
High
There were 19 customers who were categorized as high potentialcustomers. These
customers were highly interested in re-availing companys services and had high
expectations from the company. The result has evolved many new areas where the
company can target those customers such as mutual funds, derivatives and portfolio
management. With the change in time and the mode of trading, many customers
were expecting online trading platform.
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There were 31 customers who were categorized as medium potential customers.
These customers were interested in re-availing companys services but not had very
high expectations. Equity investment was not their main business. The analysis has
shown that if company concentrates on those customers by providing value added
services, they can become highly active customers in future. It is the time when
customers expect continuous updates and prompt service otherwise they have
number of alternatives.
There were 32 customers who were categorized as low potentialcustomers. These
customers were very less interested or not at all interested in re availing companys
services. There were many reasons for that such as:
They have incurred losses in equity trading.
They opened their trading account just to dematerialize their physical shares to
sell them off and were not interested in equity investments.
They were availing services from other broker and were very happy with that
and not interested to re-shift.
They felt inconvenient to re-avail service because of the change in companys
location.
They were not interested in equity or mutual fund investments.
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3. Correlation between Interest Level and Expectations
Null Hypothesis: H0 There is no relationship between Interest level and Expectations.
Alternative Hypothesis: H1 There is a relationship between Interest level and Expectations.
Table 1
Corre la t ions
.8 90**
.000
82
Pearson Corre la t ion
Sig. (2-tai led)
N
Interest
Expectat ions
Co rrelat ion is s igni ficant at the 0 .01 level
2 - ta ile d .
**.
From the above table it can be observed that there is very high correlation between
the Interest Level and Expectations. The Pearson Correlation coefficient 0.89 signifies
that customers who are interested in re-availing companys services also have good
amount of expectations and customers who are not interested, do not have
expectations from the company. The significance level .0005 is very small and
explains that the correlation is significant and the two interest level and expectations
are linearly related.
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4. Cross Tabulation and Chi-Square Test between Current Portfolio and
Interest Level
Null Hypothesis: H0 There is no association between Current Portfolio and Interest level.
Alternative Hypothesis:H1 There is an association between Current Portfolio and Interest
level.
Table 2
Current Portfolio * Interest Crosstabulation
7 5 3 4 19
9% 6% 4% 5% 23%
2 8 9 6 1 26
2% 10% 11% 7% 1% 32%
2 1 4 10 1 18
2% 1% 5% 12% 1% 22%
2 1 8 1 12
2% 1% 10% 1% 15%
1 6 7
1% 7% 9%
13 15 16 29 9 82
16% 18% 20% 35% 11% 100%
Count
% of
Total
Count
% of
Total
Count
% of
Total
Count
% of
Total
Count
% of
Total
Count
% of
Total
Current Portfolio
Below Rs. 1
Lakh
Rs 1 Lakh to
Rs 3 Lakhs
Rs. 3 Lakhs to
Rs 5 Lakhs
Rs 5 Lakhs to
Rs 7 Lakhs
Above Rs 7
Lakhs
Total
Highlyuninterested
Somewhatuninterested
InterestedSomewhatInterested
HighlyInterested
Interest
Total
The above cross tabulation is done to figure out what kinds of customers (with
respect to their portfolio) are interested in re-availing companys services. From the
above cross tab, it can be observed that 56% (7) of highly uninterested customers
(13) had less than Rs 1 lakh of portfolio. Similarly, more than 75% (6) of the
customers who has more than Rs 7 lakhs of portfolio (7) are highly interested. Most of
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the customers are uninterested among those who have Portfolio below Rs 3 lakhs
and most of the customers are interested among those who has portfolio worth Rs 3
lakhs or more. This indicates that high portfolio customers are more interested in re-
availing companys services comparative to low portfolio customers.
Table 3
Chi-Square Tests
69.063 16 .000Pearson Chi-Square
Value df
Asymp. Sig.
(2-sided)
Table 4
Symmetric Measures
.676 .000Contingency CoefficientNominal by Nominal
Value Approx. Sig.
Chi-square test output table shows significance level of .0005 so the null hypothesis
is rejected. Therefore there is a significant association between Current Portfolio and
Interest Level. Chi-square test is carried out at a 95 per cent confidence level.
The contingency coefficient gives the measure of strength of the output. If the value is
close to 0, there is no strong association between the two variables. However, if the
value ranges between 0.5 and 1, there exists an association. From the above table, it
can be seen that the contingency coefficient value is .676 that is greater than 0.5
hence the variables are strongly associated.
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5. Cross Tabulation and Chi-Square Test between Occupation and
Activeness
Null Hypothesis: H0 There is no association between Occupation and Activeness.
Alternative Hypothesis: H1 There is an association between Occupation and Activeness.
Table 5
Occupation * Activeness Crosstabulation
4 1 5
5% 1% 6%
6 7 6 4 23
7% 9% 7% 5% 28%
3 7 14 7 3 34
4% 9% 17% 9% 4% 41%
1 4 11 4 20
1% 5% 13% 5% 24%
13 16 24 22 7 82
16% 20% 29% 27% 9% 100%
StatisticsCount
% of Total
Count
% of Total
Count
% of Total
Count
% of Total
Count
% of Total
Occupation
Retired/
Housewife
Govt. Service
Pvt. Service/
Self employed
Industrialist/
Speculator
Total
Highly
Inactive
Somewhat
InactiveActive Somewhat
Active
Highly
Active
ActivenessTotal
From the above cross tab, it can be observed that all housewives or retired people
are inactive. Majority of in-active customers belongs to first two categories of
occupation. Out of total 82 customers, 36% of the customers are somewhat (27%) or
highly active (9%). Among them all Highly Active customers (7) and more than 80%
(7+11=18) of Somewhat Active customers (22) belong to only last two categories of
occupation. It all indicates that as soon as the occupation level increases people tend
to become active stock traders.
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Table 6
Chi-Square Tests
40.077 12 .0001Pearson Chi-Square
Value df Asymp. Sig.
(2-sided)
Table 7
Symmetric Measures
.573 .000Contingency CoefficientNominal by NominalValue Approx. Sig.
Chi-Square test revealed the significant association between the Occupation and
Activeness. From the Chi-square test output table, significance level of .0001 has
been achieved so the null hypothesis is rejected. Chi-square test is carried out at a 95
per cent confidence level. It can also be seen that the contingency coefficient value
is .572 that is greater than 0.5 hence the variables are strongly associated.
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3. Facts and Findings
3.1 Reasons for Customers In-activism
Online trading, more convenient mode of trading: Customers who have
good knowledge about the stock market and dont have much time prefer to
opt online trading. One of the major reasons for customer switching was online
trading being offered by other brokers. Many customers have shifted to other
brokers because of this reason.
Better service offered by other stock broking company: Some customers
have switched because they were offered better service from other stock
broking company such as much faster response, early settlement, and more
stocks specific advisory services.
No continuous updates from Investsmart: Some customers told that there
were no regular updates from Investsmart and no body regularly approached
them from Investsmart for availing services.
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Change in customers location: Many customers have moved away from
their old location and probably availing companys services from their new
location was not convenient for them.
Change in companys location: Many customers have shifted to other
company because Investsmart has shifted its office to Raj Bhavan Road,
Somajiguda from its previous location Secunderabad and continuing services
from the new office was not convenient for them.
No interest in stock trading: Some customers not had good experience with
stock trading and they did not want to do stock trading any more.
3.2 Other Findings
Most of the customers came to know about Investsmart through their friends.
Most of the customers have brand loyalty towards Investsmart.
The customers, who were availing services, were satisfied and company
maintains good relationship with them.
Response rate of the queries from Investsmart is fast.
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3.3 Expectations
Continuous Market Updates: Investment in stocks is such type of investment
in which one cannot sit idle. If someone invest and keep idle. He may loose his
principle money as well. It requires periodic reassessment of the invested
stocks. Many customers are expecting stock and sector specific advisory
services, regular updates about new IPOs and current happening in the stock
market.
Research Reports: Investsmart provides many research reports to its
customers in each asset class: Equity, Mutual Funds, Fixed Income Products
and Derivatives. Its researchers and financial analysts evaluate market trends
and prepare unbiased and objective reports to make value added
recommendations to the clients - so that they in turn can make better, well-
informed decisions. Many customers are not aware about those reports;
however most of the customers were interested in those research reports.
Mutual Fund Advisory Services: For a new and long-term equity investor,
mutual funds are also good investment opportunity through which they can
diversify their risk by indirectly investing in the stock market under the
professional management of their money by the fund manager. Many
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customers were interested in mutual fund investments and expecting good
advisory services.
Educating about Derivatives: Derivative are another emerging financial
instruments which are highly complex to understand. People who have good
knowledge in derivatives make lot of money. But still, large proportion of
people does not understand it clearly, though they want to trade in derivatives.
Thus it is necessary to educate customers about derivatives to increase its
awareness. Many customers have shown their interest towards it.
Some Interesting Quotes from the customers
I am happy that somebody has called me from Investsmart after so long. You
are good in servicing, very diligent but I want little proactiveness. Sometimes
customer has to wait a long to talk to right person.
I wanted to invest some money in mutual funds but the concerned person did
not help properly otherwise your services are ok. Surprisingly whenever I
receive any courier from Investsmart, I did not find any local address of
Investsmart, so please do mention your local address.
I would appreciate if somebody from Investsmart would continuously provide
me market updates and periodic advice about stocks.
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4. Recommendations
1. Feedback Mechanism: A good customer feedback system is an essential
ingredient of customer care. Not all companies give due importance to the
feedback from the customers. The company should emphasize on developing
a feedback mechanism wherein customer can give their feedback and
suggestions to improve the services.
2. Continuous Updates: As expected by customers continuous stock market
updates and proactive stock and sector specific advisory services should be
offered to customers. It also helps in maintaining Customer Relationship with
existing customers. New employees could be hired to fulfill this requirement
whose responsibility is to continuously update the customers by interacting
with them and help them resolve their queries.
3. Special focus on high potential customers: High potential customers
figured out from the results of the analysis must be given greater attention.
Going forward these customers can give very good business to the company if
they handled properly. Special focus is required for those customers.
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4. Cross selling: Company offers advisory services for variety of products like
Mutual Funds, Insurance, Portfolio Management, IPOs etc. The result of the
study can be used in building a strategy to promote or to cross sell more
products to the equity customers at the time of contact and thereby continuing
relationship with them.
5. Research Reports: Investsmarts research reports are highly accepted in the
industry. Research reports provide lot of information to customers and add
value to companys services. Company should regularly send research reports
to its old customers whoever has expressed their interest. Company must
concentrate on this issue.
6. Free home service: Customers who have shifted to other companies because
of the long distance to the new office should be tackled efficiently. Free home
service should be provided to those customers whenever they require. It will
definitely help the company to tap large market in the medium to long run.
7. Recruitment of Relationship Officers/executives: To provided value added
and proactive services to the customers, at least two-three new officers or
executives should be appointed.
8. Invitation to Customers/Investors Meet: Investsmart often organizes
Customers/Investors meets to interact with customer, to provide them a
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platform to talk with Industry experts and to update them about companys
performance and future plans. This is one of the effective tools to maintain
relationship with customers. The in-active customers should also be given a
privilege to attend those meets.
9. Online Trading Service: Many customers have shifted to other brokers
because of online trading being offered by them; therefore the company should
sincerely think on this issue and start online trading service for the customers.
Since there is no human interaction in online trading, therefore web site should
be made user friendly and flexible. Company should tie-up with at least two-
three prominent national level banks to facilitate the financial transactions.
However, it should be offered at competitive price to attract more customers as
there are already established players in the market.
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5. Bibliography
References:
K Madhavi Latha Analytical CRM, Marketing Mastermind, January, 2004.
G. dhananjayan Services marketing Integrating People, technology and
Strategy, Marketing Mastermind, February, 2005.
Prof. S. Anand & Dr.V.Murugaiah Marketing of Financial Services: Strategic
Issues, SCMS Journal of Indian Management, Volume 1, Number 3, July
Sept. 2004.
Web-sites:
http://www.businesseurope.com
http://www.indiainfoline.com
http://www.investsmartindia.com
http://www.moneycontrol.com
http://www.nseindia.com
http://sify.com/finance/equity/fullstory
http://www.thehindubusinessline.com
http://www.ulearntoday.com/magazine/physics
http://www.businesseurope.com/http://www.indiainfoline.com/http://www.investsmartindia.com/http://www.moneycontrol.com/http://www.nseindia.com/http://sify.com/finance/equity/fullstoryhttp://www.thehindubusinessline.com/http://www.ulearntoday.com/magazine/physicshttp://www.businesseurope.com/http://www.indiainfoline.com/http://www.investsmartindia.com/http://www.moneycontrol.com/http://www.nseindia.com/http://sify.com/finance/equity/fullstoryhttp://www.thehindubusinessline.com/http://www.ulearntoday.com/magazine/physics -
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6. Appendix
6. 1 Profile Stock Broking Industry
6.1.1 History of Stock Trading in India
The stock trading history in India is obscured in the mists of time. Historical
records, as and where they exist, rarely speak about business and speculative activity
except in passing. However, the origin of stock broking in the country may go back to
a time, when shares, debentures and bonds representing titles to property were first
issued on the condition of transfer from one person to another and the earliest record
of dealings in securities in India is the East India Company's loan securities, way back
in the 18th century.
The first stock exchange in India, Bombay Stock Exchange was established in
1875 as 'The Native Share and Stockbrokers Association' and has evolved over the
years into its present status as the premier stock exchange in the country. It may be
noted that BSE is the oldest stock exchange in Asia, even older than the Tokyo Stock
Exchange, which was founded in 1878. The country's second stock exchange was
established in Ahmedabad in 1894, followed by the Calcutta Stock Exchange (CSE).
India's other major stock exchange National Stock Exchange (NSE), promoted by
leading financial institutions and was established in April 1993. Over the years,
several stock exchanges have been established in the major cities of India. Today,
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most of the global stock exchanges have become highly efficient, computerized
organizations. Computerized networks also made it possible to connect to each other
and have fostered the growth of an open, global securities market.
6.1.2 Automation of the Stock Exchanges in India
Technology has changed the landscape of the stock markets. The look of the
stock Exchanges has undergone enormous changes in the recent years. Prior to their
automation all Stock Exchanges in India had an outcry system of trading. The
G.S.Patel Committee report 1996 recommended the stock exchanges to go in for
computerization of their trading operations if they desired to offer the facility of carry
forward deals. The Bombay Stock Exchange was the first to automate its trading with
the Bombay Online Trading (BOLT) System on March 14, 1995.
In recent years Investments in stocks have become one of highest returns
giving investments and large amount of investors are attracted towards stock trading.
As investors are getting educated about the market complexity they want even faster
trading system. Sometimes, it takes substantial time to complete a trading transaction
and customer does not get right price as stock prices change every second. Investor
has to be dependent on stock broker for the execution of their transaction. The best
alternative solution to it, is online trading wherein the customer can trade from
anywhere in the world sitting on a desktop.
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Main Objectives for the introduction of Online Trading:
Facilitate easier transaction processing;
Facilitate easy Surveillance so that there is less scope for speculation;
Provide the investor with best possible facilities and services;
Bring in transparency in the operations of the Exchanges;
Simplify Trading procedures and make them fully automated.
6.1.3 Recent Developments in Stock Broking Industry
Indian Stock broking industry is one the emerging and developing industry in
the financial services sector. It has seen many ups and down over a period of time.
Significantly it has experienced lot of speculative activities in the Harsad Mehta and
Ketan Pareek time when stock market touched new heights and attracted lots of
investors to the market. But such attraction to the stock market was not real. It was
only because of the increase in the stock prices due to speculation. The real growth
started from the year 2003 when market consistently seen a growth momentum by
touching all time high. During these period large disinvestments of the Navratna
PSUs has also motivated the small investors to enter into the market. In all that
process the ultimate gainers are stock broking companies whose revenue is all
depends on the market volumes. Trading Volumes have significantly increased in the
last years. Following statistics indicates the growing trading volumes and market
capitalization of securities at National Stock Exchange:
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Table - 8
Daily Trading Volumes on National Stock Exchange
Date
No. of
companies
traded
No of trades
Traded
quantity
(lakhs)
Traded
Value
(Rs.crore)
1-Apr-05 822 2,017,647 2,976.66 4,498.46
1-Apr-04 749 1,499,082 2,271.66 4,781.23
1-Apr-03 667 996,622 1,319.80 2,369.57
1-Apr-02 749 753,120 1028.34 2,025.50
2-Apr-01 820 451,258 708.00 1,395.78
3-Apr-00 1,066 385,779 815.00 3,089.891-Apr-99 1,119 275,097 653.00 2,389.76
1-Apr-98 1,129 189,346 571.00 1,763.00
1-Apr-97 1,233 129,811 546.00 1,219.21
1-Apr-96 954 39,905 206.00 411.22
3-Apr-95 477 5,383 21.00 25.25 (Source: nseindia.com)
It is evident from the above statistics that trading volume in last 10 years on the
National Stock Exchange has increased by more than 140 times. In April 1995, only
21 lakhs shares were traded in a day whereas the number has increased to 2,977
lakhs in April, 2005. The traded value has sharply increased in last four years. It has
increased by more than 300% in the same period from 1,396 crore to 4,498 crore. It
can also be observed from the Graph-8 that market capitalization in 2004-05 has
increased by more than 4 times and reached to Rs 1585 Thousand Crore which was
only Rs 363 Thousand Crore in 1994-95. It has seen tremendous growth after 2002-
03. The effect of growing volume and market capitalization can be seen in increasing
business and market share of stock broking companies (Table - 9). Number of
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companies traded on the exchange has declined till 2003 but after that it has again
started increasing because of the rally of Initial Public Offers coming in the market.
Graph - 8
Market Capitalization of securities in Cash Market Segment
Market Capitalisation in Cash Market Segment
2003-
2004
2002-
2003
2001-
2002
2000-
2001
1999-
2000
1998-
1999
1997-
1998
1996-
1997
1995-
1996
1994-
1995
Market Capitalisation Rs. crore)
(Source: nseindia.com)
6.1.4 Changing Phase of Stock Broking Industry
The stock-broking business has undergone a sea change over the last decade.
There are three main factors behind the changes in the stock-broking business.
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a) First, the shift from floor-based to screen-based trading in 1994. This brought
transparency into trade execution and raised the confidence of investors. The
result has been lower transaction charges and increased convenience. This
has helped both the investors and the brokers.
b) The second change was dematerialization. Before this, buying or selling
shares was a difficult matter. Even when an investor bought shares, he was
not sure whether they would be transferred in his name. But now these
concerns are no longer there.
c) The introduction of futures and options was the third major factor that has
changed the face of the stock-broking business as it is a new avenue for
revenue.
6.1.5 Changing role of Stock Brokers
Traditionally, a broker's main role was just to buy and sell shares. However,
with the changes in the corporate and regulatory systems, his role has changed from
just execution of trades to advice along with execution. In this case, a broker has to
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understand the need of the client, his risk assessment, period of holding and returns
expectation. He has also to provide research-based advice.
6.1.6 Players in the Stock Broking Industry
There are two types of stock broking services provided by the companies
namely offline and online. In offline trading IL&FS Investsmart, Karvy, Anand Rathi
securities are major players in offline and ICICIDirect, Kotak Securities, Sharkhan are
top players in online trading. However, many brokers provide both offline and online
to customers. Following are the prominent players in Indian Stock Broking Industry:
Indiabulls
IL&FS Investsmart Limited
Motilal Oswal Securities
Kotak Securities
Sharkhan.com
5Paisa.com
ICICIDirect.com
HDFC Securities
Karvy Stock Broking Company
Way to Wealth
Anand Rathi Securities
JM Morgan Stanlay Securities
DSP Merrill Lynch
CLSA Securities
The top retail domestic brokerage firms include Kotak Securities, Indiabulls,
ICICI direct, IL&FS Investsmart and Sharekhan. The competition in the intra-day
trading and arbitrage business is primarily between these entities. Most of the
traditional brokers and sub brokers are increasingly opting to keep their personal
memberships in suspension or closing them down. They are choosing to become
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franchisees of these players as not all brokers have adequate funds to manage the
risk involved in the business.
Indian stock broking industry has attracted prominent foreign players as well.
JM Morgan Stanley Securities, DSP Merrill Lynch and CLSA Securities are among
the top foreign brokers with a sizeable institutional business. Most of the foreign
brokerages continue to dominate the delivery based institutional business of around
20-25% of the average daily turnover of around Rs 4,500 crore.
The retail broking business has seen a tremendous growth in the last few
years because of booming stock market and increased stock activity. But then
consolidation in the stock broking industry also seems to have taken place which is
reflected in the increasing market share of brokers. The market share of top 10 and
50 NSE brokers increased from 12% and 36% respectively in 2002 to 17% and 44%
respectively in 2004. As of June 2004, the top ten brokers accounts for 19% of the
total turnover in the cash market, according to data collated from the National Stock
Exchange (NSE). The share of the top 5 brokers has surged to 13% from 7% three
years ago.
Table - 9
Market Share of Top Brokers
(in percentage)
YearNumber of Brokers
5 10 25 50 100
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June 04 13 19 33 48 642003-04 12 17 30 44 612002-03 10 16 29 42 592001-02 7 12 24 36 53
2000-01 8 13 23 34 49(Source: Economic Times July 20, 2004)
The statistics point to increasing consolidation in the stock broking industry as
part of which domestic brokers are expanding their business by aggressively
increasing the number of franchisees. The rapid increase in derivatives trading and
subsequently in arbitrage activity has made stock broking a very capital intensive
business.
6.1.7 Changing international scenario in the stock broking
industry, and its likely effects on the Indian stock broking
industry
Over the last several decades, the decline in the trade barriers resulting from
the GATT agreements, the emergence of large trading blocks such as the European
Union (EU), NAFTA, ASEAN, etc. and substantial reduction in transportation costs
have significantly altered the international competitive environment. The securities
markets worldwide have gone through a dramatic structural change, reflecting the
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above trend. Now, economies are not only affected by domestic changes but also the
changes taking place all over the world either directly or indirectly. Changes in the
major markets around the world, either causes changes in other securities markets
directly or gives a cue to the other markets of the changes to come in the near future.
Indian markets are slowly coming in line with the international markets, due to
the efforts of SEBI and individual exchanges. The starting of rolling settlement,
Internet trading, increasing circuit filters, huge increase in volumes are all signs of the
Indian market coming in line with the more developed markets such as those of the
US, UK, Japan, Germany, and many of the Asian giants. So it is important that
Indian brokers also keep in tune with and take signals from the international markets
because thats the only way they can brace themselves for the future. Following
recent and more important changes may give an indication of the times to come in the
Indian market:
1. Mergers between brokers
With stock exchanges, banks and firms at it, i.e. merging to form bigger and
better corporations the stock broking industry cannot be far behind. For instance,
number of small stock broking firms in Malaysia merged with bigger firms by following
the order of Malaysian securities commission. The merged entities were called
"Universal brokers". The universal brokers must have a share capital of $250 million
and capital adequacy ratio of 1.5 times. They were able to open branches through out
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the country. These steps were designed to make Malaysia ready for foreign
competition. As the name suggests, universal brokers, are aimed at making the
Malaysian firms truly global. This change has a serious impact on the brokers of any
developing market like India where the brokerage houses are small and fragmented.
With international competition coming in, and infrastructure requirements increasing,
mergers could be the only way to survive and thrive in the future.
2. Streamlining of licensing regime
For facilitating more effective regulation, these changes are necessary in
todays world. They not only facilitate better supervision but also provide a breathing
space for intermediaries such as brokers, who are facing lots of other challenges.
Changes such as these can be seen in countries like Hong Kong.
3. Investor protection measures
Globally the equity culture is booming. With one of the major reasons being is
the investors confidence in the securities market. This confidence has been built
because of better investor protection measures being taken worldwide. Examples
include, the investor protection measures issued by SEBI and promotion of quality
disclosure measures by the Hong Kong authorities.
4. Capital adequacy ratios
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Another very important issue is the capital adequacy ratio to be maintained by
the brokers and other financial intermediaries. These measures are a way the
government can keep in check the financial viability of an intermediary. Internationally
speaking taking example of Malaysia, where the capital adequacy ratio (CAR) for
stock broking companies have been revised to replace the existing minimum liquid
fund rules. Under the new CAR, the measurement of risk is based on the total risk
exposure related to the activities of the stock broking companies. Previously, the CAR
was dependent on minimum liquid fund requirements which were computed on the
basis of changes in the level of indebtedness, regardless of the risk involved.
5. Interest on margin money
With the growth of the internet as a medium for buying and selling of shares
the brokerage rates of the brokers in the US have also come down dramatically.
When Internet trading started the brokerage was $19.95 per trade and now it is
possible for $9.95 per trade, which means a fall of 50.12%. Meanwhile the cost of
research has been spiraling, as the brokerage houses have to keep track of
everything that is happening in the financial world. So how do the brokerage houses
give facilities at such low costs? The answer lies in putting up the margin money for
their clients and earning interest income. This works in two ways; first they earn
interest incomes and secondly since they are putting up the margin money the clients
have more money with which they can buy shares and are hence increasing the
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brokerage margin. Just to give an idea of how significant this has become a part of
the US broking houses, here are some figures:
Ameritrade tops the list of margin lending brokers with 25% of its revenues
coming from margin interest. Not so far behind is TD Waterhouse with 22%
followed by E*trade and Charles Schwab with just under 20%. As Internet
broking has already arrived in India with reduced brokerage charges, given the
nod by SEBI this is also becoming a major feature in the income of Indian
brokers.
6.2 Profile IL&FS Investsmart Limited
IL&FS Investsmart Limited is a premier financial services organization. It deals
in stock broking, mutual fund, insurance, housing loan consultancy, portfolio
management. Its customers include individual and corporate who deals in equity
trading, mutual fund.
Initially the company started in the domain of infrastructure lending (e.g. one of
the largest Toll Bridge between Delhi and Noida is funded by IL&FS). Later on, it
diversified in brokerage, consultancy mutual fund, insurance, housing loan etc. Today
Company is mainly concentrating on retail financial services and consultancy. Its
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retail broking and business of distribution of financial products contribute close to
three quarters of its total income. It's strong team of Relationship Managers,
Customer Service Executives, Advisory Managers and Research Analysts, offers
efficient execution backed by in-depth research, knowledge and expertise to more
than 53,000 retail customers across the country through its network of 30 branches,
120 franchisees and 153 outlets spread across 63 cities and its content rich
transactional website www.Investsmartindia.com
Companys core objective is to add value for the investors and to give more
services to customer. Its core competencyis financial advisory.
6.2.1 Pedigree
IL&FS Investsmart leverages on its pedigree of Infrastructure Leasing &
Financial Services (IL&FS), which has the core competency of institutional and retail
financial services. IL&FS is a financial institution known for its innovative and
pioneering initiatives in the areas of Infrastructure and Corporate Finance. IL&FS has
four foreign and four Indian promoters which includes reputed names such as:
Foreign Promoters: International Finance Corporation - Washington, Credit
Commercial de France Paris (part of the HSBC group), Orix Corporation of
Japan and Indivest Private Limited, an affiliate of the Government of
Singapore.
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Indian Promoters: UTI, SBI, HDFC and Central Bank of India.
6.2.2 Companys Business
A. Retail Banking
Retail banking is the main business of the company which constituted 38% of
the companys total revenues in 2005. Though the company faced price competition
last year, it managed to hold ground. The company collected revenues from non-
metros clients, where the margins were better. It plans to add 17 more branches,
which could boost its revenues from non-metro areas. The company is also setting up
branches abroad in five countries to attract the NRI customers. Investment in IT
infrastructure and CRM is a necessary evil in this business and the company is doing
that.
B. Retail-Other Services
The company earns a significant part of its revenue (33%) from non-broking
retail services. It distributes IPOs of companies, mutual funds, insurance (through its
subsidiary) and is also active in portfolio management services. IL&FSs share has
grown by leaps and bounds from 5% levels that existed in 2002. This certainly is good
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as a sustainable business model, since traditionally the companys revenues and
profit have largely been in sync with the performance of the stock market.
C. Institutional Business
The institutional business, which constitutes 25% of income, is also more or
less linked to capital market activities by way of merchant banking, broking and
project syndication. At last count, it had over 76 institutional clients.
6.2.3 Divisions:
A. Investment Advisory and Broking Division
This division provides end-to-end Personalized Investment Management
Services, which includes Planning, Advisory, Execution and Monitoring. IAB division
has a presence across asset classes - Equities, Fixed- Income, Mutual Funds,
Derivatives and Insurance. It partners in planning its customer's complete investment
decisions towards wealth generation, retirement planning and capital built up at
different stages of their life.
B. Merchant Banking Equity Capital Market Division
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IL&FS Investsmart's Equity Capital Markets Division's product portfolio
comprises of entire gamut of merchant banking services comprising advisory services
and resources raising through either the capital markets or private
placement/syndication of equity. This includes management of IPOs, Rights Issues,
Buyback of Equity, Open Offers, and private placements of Equity.
Few Important Mandates
1. Advisor for Noida Toll Bridge Company Limited - first toll bridge BOOT project
in India
2. Co Book Running Lead Manager for Balaji Telefilms Limited
3. Book Running Lead Manager for Mid Day Multimedia Limited, Divis
Laboratories Limited, Datamatics Limited
C. Project Syndication Business
The Project Syndication Business of IL&FS Investsmart has been inherited
from IL&FS. The syndication desk has so far worked on Debt Syndication of large
Infrastructure Projects being implemented by IL&FS. The mandate includes Debt
structuring of highly complex and difficult projects. Project Syndication focuses on the
role of an Arranger of Project and Structured loans. The services under Project
Syndication include project loan syndication, structured debt syndication and debt
restructuring. The syndication business thrives on its extensive contact base and
strong relationships developed over the years with Banks and Financial Institutions.
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Under this division, the entire spectrum of services for clients are covered right from
structuring the instrument, preparation of the offer document, marketing of the
instrument to post fund mobilization formalities.
D. Institutional Debt Division
This division deals in primary and secondary debt placement and distribution.
DebtonNet, a part of the IIL Institutional Debt division is an internet enabled platform,
which has been promoted as a transparent electronic marketplace for primary debt
market products, through its website, www.debtonnetindia.com. The website
addresses all issuers, investors and intermediaries with the attendant advantages of
speed, transparency and lower costs. It also offers one of its kinds, complex and
robust investment valuation tools, in addition to value research and information on the
debt and money markets in India.
6.2.4 Products & Services
IL&FS Investsmart is one such financial service organization, catering to
requirements of individuals & institutions by providing a broad spectrum of value
added products and services for both of them.
A. Securities Broking Equities and Derivatives
1. Equity Trading
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IL&FS Investsmart offers easy and effective transaction ability that is both
personal and transparent. It is members of the National Stock Exchange (NSE) for
both Capital and WDM segment and Bombay Stock Exchange (BSE). It has a team of
experienced dealers networked across the country.
2. Derivatives Trading
IIL offers derivatives trading in equities, in the NSE Futures and Options
segment through its specialist dealers in this function. Under derivatives trading, it
recommend trading on futures, strategies and options, hedging with Nifty and other
products and opportunities of riskless arbitrage between various segments.
B. Distribution of Financial Products
1. Mutual Fund Investments
IIL's Mutual Funds team has a wealth of experience and knowledge,
monitoring and studying a large number of Mutual Funds/schemes (more than 500
schemes) available. It helps customers in selecting the right scheme to match their
financial needs, goals and risk profiles.
2. Fixed Income Products
IIL offers a comprehensive range of Fixed Deposits, Bonds and Debt
instruments. These are screened and evaluated for safety and suitability to individual
liquidity requirements before recommendation. Besides, it also has dedicated Debt
Desk to cater to Institution/Bank/Corporate.
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3. Home Loans
Its Home Loan Consultants evaluate clients needs and help them select the
best suited scheme, besides providing the highest level of convenience while keeping
in mind the value of speedy loan processing, thus enabling them to overcome biggest
challenge and translating the dreams into reality.
4. Insurance Advisory
IIL provides a complete range of insurance products and solutions through its
subsidiary companies. Its Insurance Team having the required expertise and backed
by quality research applies a professional approach to assess ones need for
insurance, advise them on product suitability and guide them on policy selection.
C. PMS (Portfolio Management Scheme for Individual Investors)
In personal financial advisory services, IL&FS Investsmart offers IIL-PMS, a
discretionary portfolio management service for retail investors. The primary focus of
IIL PMS is to provide individualized portfolio management services for clients,
personalized portfolios designed to fit a specific investor's investment parameters.
Each portfolio contains individually selected securities, which are not mingled
(pooled) with those of other investors, ensuring transparency and flexibility in
operations.
D. Depository and Custodial Services through IL&FS
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IL&FS Investsmart facilitates the entire process of "dematerializing" shares and
Custodial Accounts for the safe keeping of securities through its parent company
IL&FS.
6.2.5 Companys Research & Analysis
Research is the fundamental ingredient of all sound investment decisions. It
has a dedicated research team for each asset class: Equity, Mutual Funds and Fixed
Income Products. Its researchers and financial analysts evaluate market trends and
prepare unbiased and objective reports to make value added recommendations to the
clients - so that they in turn can make better, well-informed decisions. This valued
analysis is shared through following reports:
Smart Update - Extensively researched monthly reports detailing the market
performance of various investment options.
Mutual Fund Updates - Monthly and Quarterly analysis of the Mutual Fund
Industry
Flavour of the Week - Detailed company analysis
Pre-market review - Pre market analysis
Market Wrap - A post market analysis
Tech Ticks - A daily technical analysis report
Tech Talk - A weekly technical analysis report
Deristrat - Daily Futures market report
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Morning Coffee - Daily update on global debt/equity/forex markets
6.2.6 Online Services and Tools
IL&FS Investsmart's website www.investsmartindia.com reflects the
commitment of IL&FS Investsmart to use technology to make the process of investing
convenient and effective. The offerings on this site are unique features such as real
time news and analysis, portfolio manager, comprehensive research, corporate
profiles and data, mutual funds, IPO center, Smart Stock alerts, investment advisory
services online, information, query based tools and much more.