A

PROJECT REPORT

ON

“PORTFOLIO MANAGEMENT”

(A CASE STUDY ON INDIA INFOLINE FINANCE LTD)

SUBMITTED TO THE UNIVERSITY OF RAJASTHAN

FOR THE DEGREE OF

BACHELOR OF BUSINESS ADMINISTRATION

2012-2013

SUPERVISED BY- SUBMITTED BY-

MS. NEHA PALIWAL ASHUTOSH SHARMA

ASSISTANT PROFFESOR BBA IV SEMESTER

MAHAVEER COLLEGE OF COMMERCE

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ACKNOWLEDGEMENT

This project has given me immense insights about the practical aspect of

Share broking industry and its working. I got to learn a lot about the online

broking and the way they handle their clients and projects. This project also

helped me to improve my report making skills and the true meaning of

Broking.

I would like to thank all my colleagues in the Office who assisted me day in

and day out and made me feel like one of them. It was truly a delightful

experience working with all of them.

I am thankful to Assistant Prof. Neha Paliwal for her valuable guidance and support.

ASHUTOSH SHARMA

2

DECLARATION

This is to certify that all the work contained in this research report titled as “PORTFOLIO MANAGEMENT (Case Study of IIFL)” is genuine work done by me as a part of project during 2012-2013. Wherever some material is taken from website or other published literature, suitable references are given and sources are acknowledged.

ASHUTOSH SHARMA

Student of BBA IV Semester

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INDEX

Chapter Topic Page no.

1 Introduction to portfolio management 5-12

2 Research Methodology 13-38

3 Company Profile 39-60

4 Data Analysis and Interpretation 61-73

5 Future Plans and Strategies 74

6 Conclusion and suggestion 75-77

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CHAPTER1

INTRODUCTION TO PORTFOLIO MANAGEMENT

What is a Portfolio ?

A portfolio refers to a collection of investment tools such as stocks, shares, mutual funds, bonds, cash and so on

depending on the investor’s income, budget and convenient time frame.

Following are the two types of Portfolio:

1. Market Portfolio

2. Zero Investment Portfolio

What is Portfolio Management?

The art of selecting the right investment policy for the individuals in terms of minimum risk and maximum return is

called as portfolio management.

Portfolio management refers to managing an individual’s investments in the form of bonds, shares, cash, mutual

funds etc so that he earns the maximum profits within the stipulated time frame.

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Portfolio management refers to managing money of an individual under the expert guidance of

portfolio managers.

In a layman’s language, the art of managing an individual’s investment is called as portfolio

management.

Need for Portfolio Management

Portfolio management presents the best investment plan to the individuals as per their income,

budget, age and ability to undertake risks.

Portfolio management minimizes the risks involved in investing and also increases the chance of

making profits.

Portfolio managers understand the client’s financial needs and suggest the best and unique investment

policy for them with minimum risks involved.

Portfolio management enables the portfolio managers to provide customized investment

solutions to clients as per their needs and requirements.

Types of Portfolio Management

Portfolio Management is further of the following types:

Active Portfolio Management: As the name suggests, in an active portfolio management

service, the portfolio managers are actively involved in buying and selling of securities to

ensure maximum profits to individuals.

Passive Portfolio Management: In a passive portfolio management, the portfolio manager

deals with a fixed portfolio designed to match the current market scenario.

Discretionary Portfolio management services: In Discretionary portfolio management

services, an individual authorizes a portfolio manager to take care of his financial needs on

his behalf. The individual issues money to the portfolio manager who in turn takes care of

all his investment needs, paper work, documentation, filing and so on. In discretionary

portfolio management, the portfolio manager has full rights to take decisions on his

client’s behalf.

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Non-Discretionary Portfolio management services: In non discretionary portfolio

management services, the portfolio manager can merely advise the client what is good and

bad for him but the client reserves full right to take his own decisions.

Who is a Portfolio Manager?

An individual who understands the client’s financial needs and designs a suitable investment plan as

per his income and risk taking abilities is called a portfolio manager. A portfolio manager is one who

invests on behalf of the client.

A portfolio manager counsels the clients and advises him the best possible investment plan which

would guarantee maximum returns to the individual.

A portfolio manager must understand the client’s financial goals and objectives and offer a tailor

made investment solution to him. No two clients can have the same financial needs.

INDIAN STOCK MARKET

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The Bombay Stock Exchange (BSE) and the National Stock Exchange of India Limited (NSE) are the

two primary exchanges in India. In addition, there are 22 Regional Stock Exchanges. However, the

BSE and NSE have established themselves as the two leading exchanges and account for about 80%

of the equity volume traded in India. The NSE and BSE are equal in size in terms of daily traded

volume. The average daily turnover at the exchanges has increased from Rs851crore in 1997-98 to

Rs1284crore in 1998-99 and further to Rs2273crore in 1999-2000. NSE has around 1500 shares listed

with the total market capitalization of around Rs9, 21,500crore.

The BSE has over 6000 stocks listed and has a market capitalization of around Rs9, 68,000crore.

Most key stocks are traded on both the exchanges and hence the investor could buy on either of the

exchanges. Both exchanges have a different settlement cycle, which allows investors to shift their

position on the bourses. The primary index of BSE in BSE Sensex comprises 30 stocks. NSE has the

S&P NSE 50 Index (Nifty), which consists of fifty stocks. The BSE Sensex is the older and most

widely followed index. Both these indices are calculated on the basis of market capitalization and

contain the heavily traded shares from key sectors.

The markets are closed on Saturdays and Sundays. Both the exchanges have switched over from the

open outcry trading system to a fully automated computerized mode of trading known as BOLT (BSE

On Line Trading) and

NEAT (National Exchange Automated Trading) system. It facilitates more efficient processing,

automatic order matching, faster execution of trades and transparency.

REGULATION OF STOCK EXCHANGES AND SUBSIDIARIES

SEBI is the regulator for the securities market in India. It was formed officially by the Government of

India in 1992 with SEBI Act 1992...

One of the key functions of the Board is to

supervise and monitor the activities of the exchanges, clearing houses and the settlement system,

strengthen market infrastructure and ensure that appropriate risk management systems are in place.

Inspection of Stock Exchanges:

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: Inspection of Subsidiaries of Stock

Restructuring of Management of Subsidiaries:

Illegal Trading in Securities

registration and regulation of the working of intermediaries

IMPORATNCE OF STOCK MARKET

The stock market is one of the most important sources for companies to raise money. This allows

businesses to go public, or raise additional capital for expansion. The liquidity that an exchange

provides affords investors the ability to quickly and easily sell securities. This is an attractive feature

of investing in stocks, compared to other less liquid investments such as real estate.

The term 'the stock market' is a concept for the mechanism that enables the trading of company stocks

(collective shares), other securities, and derivatives. Bonds are still traditionally traded in an informal,

over-the-counter market known as the bond market. Commodities are traded in commodities markets,

and derivatives are traded in a variety of markets (but, like bonds, mostly 'over-the-counter').

The size of the worldwide 'bond market' is estimated at $45 trillion. The size of the 'stock market' is

estimated as about half that. The world derivatives market has been estimated at about $300 trillion.

The major U.S. Banks alone are said to account for about $100 trillion. It must be noted though that

the derivatives market, because it is stated in terms of notional outstanding amounts, cannot be

directly compared to a stock or fixed income market, which refers to actual value.

The stocks are listed and traded on stock exchanges which are entities (a corporation or mutual

organization) specialized in the business of bringing

buyers and sellers of stocks and securities together. The stock market in the United States includes the

trading of all securities listed on the NYSE, the NASDAQ, Amex, as well as on the many regional

exchanges, the OTCBB, and Pink Sheets European examples of stock.

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ABSTRACT “Investing is simple but not easy”

India, the World's largest democracy, is opening up to the global competition with the advent of

liberalization. It has the largest middle-class population in the world having substantial purchasing

and investing power. So far in India, most of the middle class earners have been risk-averse and

therefore park most of their savings in Fixed Deposits and Other Savings Accounts, though the yield

from such investment avenues is very low. However, the recent trend has been such that more people

have been attracted towards investment in Mutual Funds and Equities. It is in this light that Portfolio

Management Companies have been gaining prominence in India. The trend is only set to go upwards

in the years to come, as the Indian middle class becomes more risk friendly.

Managing a portfolio is not an easy task and that’s the reason why we need experts for doing this task.

These experts are well experienced and definitely have more knowledge about the markets than an

individual.

In today’s world where everyone is so busy that nobody has time even for themselves so to manage

their own portfolio is next to impossible. They cannot track the markets every single day and

therefore it is really very important to have an expert.

When it comes to managing hard-earned money, it’s very important to make sure that the extra mile is

a task best left to the experts and this extra mile when covered by the right people gives the right

returns.

This report shows a comparative analysis of the Portfolio Management Services of the broking firms.

The survey includes a few companies, which have competitive portfolio management service like

Kotak Secutities, Sharekhan Securities, Motilal Oswal Securities, India Infoline, Birla Sunlife and JM

Morgan Stanely. Interviews of people belonging to this company have been taken to get a clear

picture of how these companies are providing their services and how effective they are.

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DYNAMICS OF BROKING INDUSTRY

Competitive pressures & structural changes point to near term challenges for the broking

industry

The turnover in the Indian equity markets (BSE and NSE combined) registered a strong 46% growth

in FY10-11 (36% CAGR over the last 5 year). However, the markets have witnessed a structural

change over the last few quarters with a decline in the higher yielding cash volume and a sharp rise in

the lower yielding options volume. On the back of sustained high competitive environment and the

change in trading pattern, the blended broking yields declined in FY11 leading to only a moderate

growth in broking revenues. However, expenses increased sharply with higher employee costs and

costs associated with building capacities in existing as well as new business lines. Consequently the

brokerage houses’ profitability declined in FY10-11.

Some of the larger brokerage houses have reasonably well diversified revenue streams but still remain

largely vulnerable to capital markets environment. Given the current challenging outlook for the

equity markets over the short term, ICRA expects pressures on the revenue growth over the next few

quarters and consequently the overall profitability indicators.

Notwithstanding pressures on profitability the liquidity profile of most of the ICRA rated brokerage

houses remained comfortable with strong net worth on account of adequate though declining accruals

and the fresh capital mobilized over the past few years. However, with increasing borrowings to ramp

up the capital market financing business, the risks of refinance has increased with only few investors/

lenders to this segment.

Over the medium to long term, the outcome of various impending structural changes in the industry

could have crucial bearing on brokerage houses’ profitability. Accordingly, the companies’ ability to

stabilize the earning profile, improve profitability, maintain adequate liquidity & capital and

strengthen the risk management systems would remain the key rating considerations

SUMMARY Strengths Huge market potential given the under-penetration of equities as an

investment avenue amongst Indian investor community and an increasing investor interest in new

market segments like commodities, currency futures, interest rate derivatives. Adequate capitalization

levels, at least for larger players provides cushion to absorb potential losses resulting from the short

term challenges in the operating environment. A relatively diversified revenue profile at least for the

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larger players. A more flexible cost structure arising from the increasing reliance on franchisee

model. Challenges Protecting brokerage yields and market share in the highly competitive and

fragmented equity brokerage industry; further accentuated by the rising share of the low yielding

options segment. Volatility in earnings and profitability due to linkages with vagaries of capital

market and increasing cost of regulatory compliances

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CHAPTER 2

RESEARCH METHODOLOGY

Research is the investigation of a particular topic using a variety of reliable, scholarly resources. The three major goals of research are establishing facts, analyzing information, and reaching new conclusions. The three main acts of doing research are searching for, reviewing, and evaluating information. Learning what research is not may help you fully grasp the concept. Randomly selecting books from the library is not research, nor is surfing the Internet. On the contrary, research requires organization, resourcefulness, reflection, synthesis, and above all, time. The research process is the methodical approach to finding and examining a variety of reliable, scholarly resources on a particular topic.

The research process has a beginning and an end, with many stages or steps in between. Each one of these steps is built upon the foundation of information. Brainstorming ideas, searching for resources, and analyzing ideas are all information-based activities. Just like DNA is the building blocks of life, information is the building blocks of the research process. That’s why learning how to find, evaluate, and use information is essential to successfully engaging in and completing the research process.

Objectives:

To do a comparative analysis on the most of the firms which provide Portfolio Management

Services

To know more about Portfolio Management Services.

To know about E-BROKING

Data collection method-

At this stage; researcher have to organize a field survey to collect the data. One of the important tools

for conducting market research is the availability of necessary and useful data.

Secondary data-

Secondary data, is data collected by someone other than the user. Common sources of secondary data for social science include censuses, organisational records and data collected through qualitative methodologies or qualitative research. Primary data, by contrast, are collected by the investigator conducting the research.

Secondary data analysis saves time that would otherwise be spent collecting data and, particularly in the case of quantitative data, provides larger and higher-quality databases that would be unfeasible for any individual researcher to collect on their own. In addition, analysts of social and economic change consider secondary data essential, since it is impossible to conduct a new survey that can adequately capture past change and/or developments.

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Data used in the project is secondary data and the information source is reliable and further more detailed in appendix. and further researcher has used secondary data which includes balance sheet, cash flow statement, profit and loss account, and ratio analyses

Sampling

A process used in statistical analysis in which a predetermined number of observations will be

taken from a larger population. The methodology used to sample from a larger population will

depend on the type of analysis being performed, but will include simple random sampling,

systematic sampling and observational sampling.

Data analysis and interpretation

Researcher used secondary data which includes

Balance sheet

Profit and loss account

Cash flow statement

Ratio analyses

Hypothesis:

All Portfolio Management firms provide very good services

Sample:

The sample consists 24 companies available in the broking industries currently…

Including .top ten companies of the industry which are as follow

1. Icici prudential

2. India infolineltd

3. Kotak securities

4. Share khan

5. India bulls

6. Motilal oswal

7. Bajaj caoital

8. Smc

9. Angel broking

10. Reliance capital

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Comparison of Online Share Brokers in India (Compare

Brokerage Charges and Services)

Stock Broker Fees

Broker Name Account Type Account Opening Charge

Brokerage Account AMC 1*

Demat Account

AMC

Minimum Brokerage

ICICIDirect3-in-1 Account (I-Secure

Plan)Rs 975 NIL Rs 450 Rs 25

Sharekhan Classic Account Rs 750 Rs 400 Rs 40010 paise per

share

Indiabulls

SecuritiesPower Indiabulls Rs 950 NIL Rs 450

4 paisa per

share

India Infoline

(IIFL)Standard Account Rs 750 Rs 300

Rs 0.05 per

share

Motilal Oswal Margin 10,000 NIL NIL Rs 441

HDFC

SecuritiesOnline Trading Rs 799 Rs 25

Reliance

SecuritiesR-FIXED Rs 750 Rs 0 Rs 200

5 paise per

share

IDBI

PaisabuilderPaisa Power Classic Rs 700 NIL Rs 350

Rs 25 per trade

or 2.5% of the

trade value

whichever is

lower.

Religare Excel Account Rs 500 NIL Rs 300 1p per share

Geojit Online Trading Rs 800 NIL Rs 400 1p per share or

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Rs 20/contract

whichever is

higher

Networth

DirectRs 150 NIL Rs 440

Kotak

Securities

Kotak Gateway - Fixed

BrokerageRs 750 NIL Rs 600

4p for

delivery,3p for

Intraday &

Futures

Standard

CharteredEASY TRADE Rs 500 Rs 600 Rs 25

Angel Trade Angel Diet Rs 0 Rs 347 Rs 0

HSBC Invest

Direct3 in 1 Account Rs 950 Rs 0 Rs 600 Rs 25

Comfort

Securities

Just Trade Basic Silver Plan – 599 Rs 599 Rs 599 Rs 250

Zerodha Rs 300 NIL Rs 400 NIL

SBI Securities eZ-trade Rs 500 Rs 400 Rs 350

Ventura Plan 3500 NIL NIL Rs 420

RK Global India Trades @ Rs 999 NIL NIL Rs 250

Compositedge Rs 300 NIL Rs 300

RKSV

SecuritiesThe Freedom Plan Rs 250 NIL Rs 400 Rs 0

Trade Smart

OnlineTrade @15 Rs 200 Rs 0 Rs 300 Rs 15

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RESEARCH ANALYSIS

1. ICICI DIRECT CHARGEIS COSTLIEST AMONG ALL FOR I.E RS952 AND 450 FOR

DEMAT A/C

2. TRADE SMART CHARGES LOWEST AMOUNT FOR OPENING A/C IT CHARGES RS

200 FOR OPENING AND RS 300 FOR DEMAT A/C WHICH IS 752RUPEES MORE AS

COMPARED TO ICICI DIRECT

3. KOTAK SECURITIES ,HSBC,AND STANDARD CHARTERED CHARGE HIGHEST FOR

DEMAT A/C I.E RS 600

4. RELIANCE SECURITIES CHARGE RS 200 FOR DEMAT ACCOUNT WHICH IS

LOWEST AS COMPARED TO ABOVE COMPANIES ,THERE IS A DIFFERENCE OF RS

400

5. BROKERAGE CHARGES BY ALL THE COMPANIES ARE NOMINAL AND VARIES

FROM COMPANY TO COMPANY AS PER THEIR POLICIES AND SERVICES

PROVIDED TO CUSTOMER,MORE SPECIFICALLY MINIMUM BROKEREAGE

CHARGED BY THE COMEPANIES IS RS 25 AND HIGHEST DEPENDS UPON

COMPANY TO COMPANY OR THE NUMBER OF SHARES TRADED

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(A) PORTFOLIO MANAGEMENT

A Portfolio Management refers to the science of analyzing the strengths,

weaknesses, opportunities and threats for performing wide range of

activities related to the one’s portfolio for maximizing the return at a

given risk. It helps in making selection of Debt Vs Equity, Growth Vs

Safety, and various other tradeoffs.

Major tasks involved with Portfolio Management are as follows.

Taking decisions about investment mix and policy

Matching investments to objectives

Asset allocation for individuals and institution

Balancing risk against performance

There are basically two types of portfolio management in case of mutual

and exchange-traded funds including passive and active.

Passive management involves tracking of the market index or index

investing.

Active management involves active management of a fund’s portfolio by

manager or team of managers who

take research based investment

decisions and decisions on individual

holdings.

Portfolio: In terms of mutual fund

industry, a portfolio is built by buying

additional bonds, mutual funds,

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stocks, or other investments. If a person owns more than one security, he

has an investment portfolio. The main target of the portfolio owner is to

increase value of portfolio by selecting investments that yield good

returns.

As per the modern portfolio theory, a diversified portfolio that includes

different types or classes of securities; reduces the investment risk. It is

because any one of the security may yield strong returns in any economic

climate.

Facts about Portfolio

There are many investment vehicles in a portfolio.

Building a portfolio involves making wide range of decisions

regarding buying or selling of stocks, bonds, or other financial

instruments. Also, one needs to make decision regarding the

quantity and timing of the buy and sell.

Portfolio Management is goal-driven and target oriented.

There are inherent risks involved in the managing a portfolio.

The basics and ideas of Investment Portfolio Management are also

applied to portfolio management in other industry sectors.

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Investors’ Required Return

Return

ExpectedCash flow

Growth ofInvestmentBase

Risk

Key Challenges to implement this Approach in our Markets

Lack of liquidity (both depth and breadth) in the secondary loan trading markets

Most profitability models are global and need to be customized for regional / emerging

markets

Not enough volume to sustain an active model in the current environment – tendency

is to hang onto good quality assets

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Firm value

Potential negative impact on client relationships. Need to align all product specialists

to a common goal vise clients to avoid different agendas

Teamwork is critical for success. Creates another silo in an already over matrix

environment

Severe compression in spreads which makes the ultimate ‘hold’ position uneconomical

and the portfolio manager lukewarm to the transaction

What to expect from PMS

Okay, you have fallen for the sales pitch and entrusted your money to a PMS. What can you

now expect from this service?

More handholding from your portfolio manager than you have been accustomed to

from your mutual fund. You can expect to have a personal relationship manager

through whom you can interact with the fund manager at any time of your choice.

You can also expect frequent (maybe monthly) interaction with the portfolio manager

to discuss any concerns that you might have. Expect to be consulted on any major

changes in asset allocation or in the investment strategy relating to your portfolio. All

administrative matters, including operating a bank account and dealing with

settlement and depository transactions, will be handled by the PMS.

If you are the type who likes to watch over your money like a baby, the disclosures

offered by a PMS may be just right for you. On handing over your money, you will

receive a user-ID and password from the PMS, which will grant you online access to

your portfolio details. You can use these to check back on your portfolio as often as

you like.

Keeping track of capital gains (and losses) for the taxman can be a depressing chore,

when you have furiously churned your investments through the year. Opting for PMS

will free you of this chore, as a detailed statement of the transactions on your portfolio

for tax purposes comes as a part of the package.

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What you pay

Most portfolio managers allow you to choose between a fixed and a performance-linked

management fee. If you opt for the fixed fee, you may pay between 2-2.5 percent of portfolio

value; this is usually calculated on a weighted average basis. The structure for the

performance-linked fee differs across players; usually, this includes a flat fee of 0.5-1.5 per

cent. The portfolio manager also gets to share a percentage of your profit — usually 15-20

per cent — earned over and above a threshold level, which may range between 8 per cent and

15 per cent. Apart from management fees, separate charges will be levied towards brokerage,

custodial services and towards meeting tax payments.

There are wide variations in fee structure between players and across products. For instance,

Birla Sun Life charges only a performance-linked fee for its portfolio services. Way2Wealth

has a differential fee structure for its debt and equity dominated portfolios.

When you opt for a performance-based fee, the profits are reckoned on the basis of "high

watermarking". That is, you pay the fee only on the positive returns on your portfolio. For

instance, if you invest Rs 100 in a PMS and its value appreciates to Rs 150 at the end of the

year, you pay a fee on the profit of Rs 50. Subsequently, a fee will be levied only on gains

over and above the Rs 150 mark. If the value of your portfolio slumps to Rs 70, and climbs

back to Rs 110, the Rs 40 you earn will not be reckoned as profit. You will again be charged

a fee only if the value of your portfolio recovers to over Rs 150, the previous "high

watermark."

Who should hire a portfolio manager?

Anybody with a nest egg, which meets the minimum investment requirement, can consider

using a PMS. However, a PMS may only add significant value in the following cases:

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Equity bias: Portfolio management services may be ideal for a person who seeks a

substantial investment in the stock markets. An equity portfolio also offers greater

scope for a manager to add value than does a debt portfolio. Several of the established

players in the PMS business focus on equity investments, though some also offer

hybrid products.

Large surplus to invest: The minimum portfolio size that portfolio managers accept

for a customized portfolio ranges from Rs 25 lakh to Rs 5 crore. So consider a PMS

only if you have a substantial surplus to invest in stocks. If you don't, evaluate if you

can use the services of a financial planner or an advisor, instead of a PMS.

If you are willing to handle the paperwork associated with investing, you can get a financial

planner or advisor to construct an asset allocation plan and guide you on the choice of

investments for a one-time fee of Rs 5,000-15,000.

Reasons for having a portfolio manager:

There are two important reasons

To take maximum advantage of market conditions

To protect yourself against downturns

There are four steps to the Portfolio Approach:

1. Understand Clients’ Needs and Goals.

As an Investment Advisor's first and most important job is to listen to the client - to

understand his or her needs. Take some time to understand specific investment goals-such as

saving for retirement or financing a business - and

the timeframes available to achieve them. Importantly, consider return expectations and

tolerance for risk of the client. This "discovery process" doesn't end here - as time passes, and

client’s situation changes, ensure that investment strategy devised for the client remains up to

date.

2. Create Client’s Investment Policy Statement.

With an in-depth understanding of client’s personal and financial situation, you are able to

create client’s investment policy statement. This document provides the framework for the

management of client’s financial assets going forward. It clearly sets out investment

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objectives, income needs, timeframes, asset mix guidelines, security selection criteria, and

review process. It helps keep investment goals and preferences in clear focus. It also provides

a benchmark for measuring the progress you're making towards achieving your client’s goals.

3. Build Custom-designed Portfolio.

Once you've approved the investment policy statement, you can structure client’s portfolio.

You will get the advice from Research Team, and will have a diversified portfolio that

conforms to the guidelines and direction you set in advance. This process means you will

implement specific, appropriate investment recommendations, and that will be clear and well

thought-out implementation.

4. Manage Client’s Portfolio.

The last step in the process is to monitor your progress towards your continued success.

Review client’s portfolio on a regular basis, and recommend appropriate changes to keep it

on track.

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25

Tools, Technology, Training and Knowledge Transfer

Alignment with Business Objectives

Integrated Delivery Framework

Real-time Executive

Decision Support

Collaboration and Project Management

Portfolio Management

Programs, Initiatives

Business Strategy

Investment, Resource and Prioritization

Decisions

Integrated Portfolio of Managed Projects

Consistent, Repeatable Project Delivery

EnterpriseResource Management

Projects

Portfolio Management: process

Purpose of Portfolio Management

Portfolio management primarily involves reducing risk rather than increasing

return

Consider two $10,000 investments:

Earns 10% per year for each of ten years (low risk)

Earns 9%, -11%, 10%, 8%, 12%, 46%, 8%, 20%, -12%, and 10% in the ten

years, respectively (high risk)

Low Risk vs. High Risk Investments

Factors affecting portfolio management

26

'92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02$0

$10,000

$20,000

$30,000

$10,000

$25,937$25,937$25,937

$25,937$25,937

$25,937$25,937

$25,937$25,937

$25,937

$23,642$23,642$23,642$23,642$23,642

$23,642

$23,642$23,642

$23,642$23,642

$23,642

Low Risk

High Risk

Portfolio management is a process affected by many parameters. We will take a look at the

parameters which impact the returns of the portfolio.

Investment objective:

Investment objective is the most important parameter that defines the performance of the

portfolio. However, people seldom realize the importance of setting objective of invest5ment.

One of my friends told me very humbly that he doesn’t wish to achieve more than 25%

returns every year. What humility? Just 25% returns per year. You must be joking Mr Bharti.

Now this is bad objective as no asset has given returns of 25% in long term. You can get

lucky and get even 100% returns in 6-12 months but this is sheer luck. You can identify a

fundamentally strong company which is underpriced but expecting returns of 25% or 100% is

not right.

The investors have to define the objective of his or her portfolio. Is it for income (or

dividend), for capital appreciation (growth stocks), or safety of principal (bonds etc.). The

investment objective should drive the portfolio decision and not the other way.

Asset allocation

The investor should also decide what the portfolio mix should be. Usually the mix can

include equities and bonds. The mix depends on risk profile of individual investors and time

horizon.

Asset allocation prevents you from putting all your eggs in one basket. The advantage of

asset allocation is the absence of correlation between the various assets. This prevents

investors from losing money if one of the assets goes down. We all know that market is very

fluctuating. If you invest all the money in stocks and if market crashes, you lose all the

money. If you allocate some part in equity and some in bonds, you will still be able to

preserve the capital or lose marginal amount of sum compared to the first case.

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Portfolio strategy:

You can have portfolio strategy as active or passive investors. Active strategy involves

rotating stocks and sectors based on market movements, market timing, and stock selection at

opportune time to earn superior returns. Passive strategy is to hold a diversified portfolio and

sit tight by maintaining a pre-defined portfolio mix.

Active strategy is good for investors who have time to analyze their stocks, portfolio mix, and

market and decide accordingly on reining their portfolio. A passive investor will do himself

or herself very good if he just finds out few good blue chip companies in diversified areas

and invest for long ter.

Equity selection

Fundamental analysis and technical analysis are two major ways to use for selecting stocks.

For bonds, use YTM, credit rating, term to maturity, price etc.

Most of the investors prefer technical analysis and go by volume and price chart. While this

could be an accepted form of stock selection, it doesn’t take care of fundamentals of the

company.

Fundamental analysis looks at company performance, revenue and profit growth, cash flows,

important ratios and many more ratios. This comprehensive look at a company and its stock

gives you an insight into the company’s operations and help you decide the investment

worthiness of the company.

Portfolio execution and revision

This is actually implementing the plan for following your guidelines on portfolio selection,

asset allocation etc. You also change the mix based on value and mix of the portfolio after

changed scenario.

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The portfolio execution is the most important step in portfolio management. Unless the

investors execute the plan, they cannot make use of stock market returns. As Warren Buffet

says “"You can't keep money around forever. It’s like saving sex for your old age." Take your

money out. Learn investing and Invest in the market.

Portfolio management is a very dynamic concept and hence you should revise the portfolio

from time to time to make sure you are incorporating investment horizon and risk profile at

every stage of your life.

Performance evaluation

Every quarter or year, the investors should do performance evaluation of their portfolio. They

should make appropriate changes based on the performance.

Performance evaluation is key to successful investing. The major fault with any investor is

that they keep talking about their wins and conceal their losses. That is where you hear all the

“money out of thin air” stories. It is important to look at win and loss as part of the portfolio.

This will give a better idea about your investing successes and misses. There are many tools

available on internet which can help you evaluate the performance of the portfolio. You also

can build the tracker for the performance of your portfolio by suing excel sheet.

Finally

Portfolio management has grown into a big business. This is one of the best ways for

investors to achieve good returns in the market. Many companies have come up in past few

years in the area of portfolio management services. While it is good sometimes to employ a

portfolio management company if you do not time and have enough money, we will discuss

the steps to manage portfolio for people who can invest some time in understanding the

portfolio management and apply some of the principals to manage their investment.

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A portfolio is nothing but a mix of different investment assets which are bought to diversify

risk and achieve the best return for the risk associated.

SHARE BROKING

The broking business is dependent on the capital market turnover, which is dependent on the l

evel of the equity markets and economic conditions. Over the last few years,

India’s GDP has shown an impressive growth of around 8 per cent on account of rising invest

ments by companies, leading to healthy corporate performance, which in turn lured

retail and corporate investors to the stock market. Also, the number of companies, listed on th

e bourses has increased gradually over the past few years. With an increase in the

number of listed companies and increasing investor activity, the average daily turnover has w

itnessed a significant spurt over the period.Brokerages though have found the

going increasingly tough. Brokerage income, in recent years, has been impacted by intense co

mpetition, leading to a decline in brokerage rates, and increasing preference for

option trades, which yield relatively low brokerage income compared to cash market trades. 

Investment banking 

Investment banking includes activities such as capital raising, mergers and acquisitions, priva

te equity advisory, private wealth management, etc. The fortunes of the

investment banking business are inextricably tied to overall economic growth and activity in 

capital market transactions.  

The Indian economy has grown at a strong pace over the past few years. The economic slowd

own in FY09 following the global financial crisis resulted in huge capital outflow,

withdrawal by retail participants and reduced activities in primary and secondary capital mar

kets, which impacted capital market players. With the revival in economic

growth, participation in the capital markets by foreign institutional investors (FIIs) and domes

tic investors has increased. 

30

In the words of Prof David Whitely (2000):- "An electronic market is an attempt to use

information and communication technologies to provide geographically dispersed traders

with the information necessary for the fair operation of the market". The e-market is, a

brokering service to bring together brokers and clients in specific market segment. These

markets give the client or client's intermediary, easy access to comparative data on prices, and

other attributes of the goods or services on offer. E-markets are exemplified by airline

broking systems. They are also used in the financial and commodity markets and again the

dealing is done via intermediaries- to buy stocks ands hares a member of the public uses the

services of a stockbroker. An electronic broker is an intermediary who :-

* May take an order from a client and pass it on to a stock exchange.

* May put a client with specific requirements in touch with a stock exchange who can meet

those requirements.

* May provide a service to a client, such as a comparison between stock, with respect to

particular criteria such as price, risk and return etc. thus, e-brokers provide comparison-

trading, order taking and fulfillment, and services to client. that is the reason why they are

sometimes referred to as "electronic" intermediaries. Although on line trading strictly refers

to the electronic execution of trade an eco-system of e-stock trading has three dimensions:-

* Electronic execution of the trade.

*Payment of transaction though a payment gateway, and

* Transfer of shares in electronic form. Current developments are ,essentially, converting off-

line practices to an online equivalent.

Bu examining the major developments in the sphere of Internet based share dealings in the

new global market place, as reported by Peter Temple in his book the new Online Investor,

31

we find that there have been three distinct phases in the development of e-broking. these

are :-

Phase 1:- The open outcry system with the transactions taking place manually in the ring.

Phase 2:- The electronic system, ambling brokers to place orders online4.

Phase 3:- The e-broking system, empowering clients to transact online. The machines of the

e-trading system begins with the user login onto the Electronic Communication Network

(ECN)through the Internet. the user then accesses his e-trading account with the help of a

secure client password. The user is now connected directly with exchange and any

transactions would be instaneous and irrevocable. The user also has access to real-time price

movements of various stocks, and other contextual information to assist him in his decision

making. Lee suggest in his book' Doing Business Electronically: - A Global Perspective of

E- commerce ' that " and integrated e-broking system consists of not only a transaction

enabler but also a payment gateway for funds transfer and a 'demat' account for the transfer of

stocks. Such a service enables smooth, convenient and transparent operations". It is a healthy

sign for the service industry that the number of e-trading sites and the usage of them are

mushrooming all over the globe.

Benefits and Problems of E-broking

In recent years, the use of the internet has spread amount investors in stocks and shares. The

Internet can make up-to-the-minute information available to a larger number of investors that

until recently has only been available to those working a financial institutions.

Komenar(1999) concludes:- " the use of online brokerage services automates the process of

buying and selling, and hence, allows a reduction of commission charges. Also, the

commodity being traded is intangible; the ownership of stocks and shares can be recorded

electronically. So there is no requirement for physical delivery". However, it should be noted

that the supply chain for online share dealing remains unchanged, use of the Net just speeds

up the whole process and that can be vital in some share deals. Switching over to e-broking

system results in several benefits to both client and the broker.

32

Benefits to Users

1. Lower transaction costs:- Typical brokerage-rates in India are in the ranges of 1.0 to

1.5% , whereas the rates for e-broking are as low as 0.1% . In the US, the brokerage

costs, before e-trading was introduced, were as high as 7% But it has now come down

to about 1% E-broking , in addition, not only brings down the cost of the execution of

the transaction but also speeds up the electronic transfer of securities.

2. Transparency: E-broking empowers the clients to transact directly on the stock

exchange and delayers the whole process thereby improving transparency." The user

does not need to rely on the broker's word-of-mouth' or 'transaction' slips for

confirmation of the price at which his trade was conducted, observes Dr. Lucas(1999).

3. Convenience: Online share trading is available merely at the click of button, in the comfort of

home/office, thus, making it much more convenient of the clients to trade anytime. Also ,with

limit based orders being allowed, clients can place their orders even during the non-trading

hours, which are executed at the earliest trading possibility.

4. Procedural benefits: -Unlike the earlier scenario, where the clients had to physically go to the

broker to complete the formalities of trade, under the e-trading paradigm, these procedures

are doe away with. As Chan (et al., 2001) in the book titled" E-Commerce:- Fundamentals

and Applications"(2001) concludes: - "The entire cycle-of-trade(like placing the order,

transfer of funds, transfer of securities ,etc.) is done electronically , and its speeds up the hole

process."

Benefits to Brokers

1. Easier risk management :- Peter Temple sums it up as :- " Under the online mechanism,

the system would first check the status of funds available with the client in his bank

account and only then allow the trade to take place. This process, thus, substantially

reduces the exposure of the broker to client-related credit and payment risks".

2. Greater business potential:- The new paradigm of e-broking, which allows simple,

convenient ,and transparent transaction, may encourage more participants to trade. It is

expected that the introduction of e-broking will expand the market horizon, thus resulting

in better business for brokers in the long term.

33

3. Lower staff costs: Automation of the broking processes results in reduced manpower

requirements, flexibility of time, less infrastructure cost, etc. offering significant cost-

saving to the broker. the major problem with e-stock trading is that it increases the

temptation on the part of influential speculators & stockbrokers to indulge in short-term

speculation rather than long-term investment. The history of stock markets (both NSE

and BSE) in India is replete with at least a dozen cases of scams, where stockbrokers and

bankers joined hands to squander the savings of millions of small and institutional

investors. As Dr. Lucas has rightly pointed out in this book (1997) Internet Trading and

Its Threat to Traditional Stock Brokers -"Consumer and business concerns about Internet

security are well founded. Amid an explosive upsurge in scams, fraudsters continue to

take advantage of the Internet's anonymous transaction environment -with everyone from

one-time hackers to organized crime testing the market's boundaries. “However, the

problems are further compounded by the different legislative frameworks, which are

prevalent in countries across the globe.

Security Concerns for E-broking :-

Some leading technology companies have already developed "online transaction processing"

and "straight through processing" application that allow real time transaction execution. Both

allow the user to directly interact with the central system of any market place, without any

manual intervention. As Professor David Whitely (2000) suggests:- "Straight-through

processing technology permits financial software products to directly interact with the stock

exchange system by communicating with the exchange market structures. this is achieved by

developing Application Programming Interfaces(APIs) that talk to the exchange server. "One

of the leading technology provides for online trading in India in Financial Technologies

India(visit www. ftindia.com) with a product called "FT Engine". It would suffice to say that

the cycle of e-broking has to pass through three layers :-

1. The Client Interface Layer - the front-end

34

2. The Middle Layer- risk management systems that access data from banks and depository

participants , calculate client exposure at the instant, and give GO/NO go' advice on the trade,

and

3. The End-Layer, the back-end, where the accounting modules, pay in or pay out schedules etc.

operate. It must be noted at the outset by the readers that from a technical perspective, there

are three key success factors for e-broking . They are briefly described below :-

4. Scalability and robustness of the trading system. It becomes imperative for any Net-based

application to have a proven capability for scalability and robustness of trading system that

ensures the ability to handle and process requests from multiple users at any given point in

time.

5. Bandwidth optimization :- the application software should demonstrate intelligence in

optimizing the available bandwidth by deploying advanced technologies like streaming.

6. Integration with third-party systems: - On the Net, with information feeds available from

multiple points; it is prudent to deploy application that are built on open architecture

methodology for interfacing with third party systems.

1. For any e-trading system to be successful, it should provide security, reliability and

confidentiality of data. This can be achieved through the use of 'encryption' technology

before the online trading begins. The major security requirements of e-broking are :-

* Trusted means of authentication over open networks,

* Confidentiality of the transaction,

* Means to ensure integrity of data in -transit, and(d) means to ensure non-repudiation of

payment or its receipt(visit www. odyseytec.com)

2. Various security models are adopted to ensure safe and reliable e-broking transaction. the

commonly employed security models in e-broking are :- passwords, Secure Sockets Layer

(SSL), Kerberos, Pretty Good Privacy(PGP), Public Key Infrastructure(PKI), Custom

Implementations, Linux, etc.

35

E-broking in India:-

Internet stock-trading in India began in January 2000. Hindrances to the growth of e-broking

in India can be summed up as: -

First, the low density of telephones, low Internet penetration, and low installed base of

computers are responsible for the poor availability of the Internet.

Second, very few online payment gateways are available, hindering the smooth growth of the

industry. Integrated service providers(like ICICIDirect. com), which provide combined

banking, broking and 'demat' services, have an advantage over other non-integrated service

providers, who have to scout for partners for providing gateway services.

Third, data privacy can be ensured through server side certification and here the situation

appears to be satisfactory. However, most of the sites restrict access through passwords and

identification numbers, but these are not considered adequate and foolproof.

Fourth, Institutional investors comprise over 80% of the total investors in the country. The

remaining 20% of retail investors, the focus segment of e-brokers, do not contribute

significantly to the overall stock-turnover of the country. Thus, there is a theoretical limit to

the overall penetration of e-broking,

Last but not least, the concept of trading on computers through the Internet requires a change

in the habits of people; enhancing trust in these techniques may take more time.

36

REVIEW OF LITERATURE

Portfolio Management - an emerging strategy for excellence

You earn money in bagfuls, but don't have the time or inclination to manage it if this

description fits you, do consider entrusting your money to a professional portfolio

management service (PMS). In return for a fee, portfolio managers offer to craft a basket of

stocks,

Bonds or even mutual funds that would fit your personal investment goals and risk

preferences.

Though a few portfolio managers offer standardized packages for a sum as small as Rs 5-10

lakh, it may take a minimum investment size of Rs 25-50 lakh to fetch you a customized

portfolio. Apart from cash, you can also hand over an existing portfolio of stocks, bonds or

mutual funds to a PMS that could be revamped to suit your profile.

Why not mutual funds?

But why should you opt for PMS instead of a mutual fund? Here are a few aspects on which

portfolio managers say they score over the standardized products offered by mutual funds:

Asset allocation: You may know what stocks, equity funds or bonds you would like

to own, but do you know how much of your savings you should allocate to each of

these? The decision on asset allocation will be crucial in determining investment

returns over the long term. With PMS,

an asset allocation plan is tailor-made for you, after a detailed check on your

investment goals, savings pattern and appetite for risk.

Timing: Have you ever kicked yourself for switching your entire portfolio into

equities just before they tanked? If you have, you probably need help with regard to

timing of investments. Once you hire a portfolio manager, you can expect assistance

on when you should be investing more money into equities and when you should be

37

bailing out. A portfolio manager may also switch a portion of your portfolio into cash,

if he perceives a big risk to stock prices. The focus is on preserving value.

Flexibility: You are bullish on FMCG stocks, but find that equity funds have

marginal exposures to the sector. In a PMS, you can expect the portfolio manager to

accommodate your sector preferences when he invests. But don't expect to completely

dictate what stocks or sectors your portfolio manager will buy for you, as he will be

the best judge of that.

Also, portfolio managers do not have to stick to any rigid rules on what proportion of your

money will be invested in each sector or stock. They can also use liberal doses of cash or

derivative instruments to pep up your returns. Mutual fund managers have their hands tied on

these aspects by SEBI regulations.

38

COMPANY PROFILE

INDIA INFOLINE

IIFL (India Infoline group), comprising the holding company, India Infoline Ltd

(NSE: INDIAINFO, BSE: 532636) and its subsidiaries, is one of the leading players

in the Indian financial services space. IIFL offers advice and execution platform for

the entire range of financial services covering products ranging from Equities and

derivatives, Commodities, Wealth management, Asset management, Insurance, Fixed

deposits, Loans, Investment Banking, GoI bonds and other small savings

instruments. It owns and manages the website, www.indiainfoline.com, which is one

of India’s leading online destinations for personal finance, stock markets, economy

and business. BSE Group felicitated IIFL for being one of the top performers in the

‘Equity FI’ category on Muhurat Trading day. Mr Nirmal Jain, our Chairman,

received the ‘Entrepreneur of the Year’ award at the 10thFranchise India Awards,

2012. IIFL has also received ‘Best Equity Broking House with Global Presence’ at

the D&B Equity Broking Awards 2012 as well as for 2011. IIFL Wealth was

awarded Best Wealth Management House – India’ at The Asset Triple A Investment

Awards, 2012 as well as for 2011. IIFL has also been awarded as the ‘Best Broker in

India, 2011’, by Finance Asia and the 'Best Equity Broker of the Year, 2011' by

Bloomberg UTV. A forerunner in the field of equity research,

IIFL’s research is acknowledged by none other than Forbes as ‘Best of the Web’ and

‘…a must read for investors in Asia’. IIFL research is available not just over the

Internet but also on international wire services like Bloomberg, Thomson First Call

and Internet Securities where it is amongst one of the most read Indian brokers. A

network of over 4,000 business locations spread over more than 900 cities and towns

across India facilitates the smooth acquisition and servicing of a large customer

base. All our offices are connected with the corporate office in Mumbai with cutting

edge networking technology. The group caters to a customer base of over a million

customers, over a variety of mediums viz. online, over the phone and at our

39

branches. IIFL/ India Infoline refer to India Infoline Ltd and its group companies.

This document may contain certain forward looking statements based on

management expectations. Actual results may vary significantly from these forward

looking statements. This document does not constitute an offer to buy or sell IIFL

products, services or securities The press release, results and presentation for

analysts/press for the quarter ended Dec 31, 2012, is available under the ‘Investor

Relations’ section on our website www.indiainfoline.com .

2-BUSINESSES/products

1. Equities and commodities broking

2. Portfolio and Wealth Management services

3. Distribution of Life Insurance products

4. Distribution of Mutual funds, Fixed Deposits, RBI Bonds and Small Savings among

others

5. Distribution of Mortgages and other Loan products

1. EQUITIES BROKING

Our core offering, gives us a leading market share in both retail and institutional

segments. Over a million retail customers rely on our research, as do leading FIIs

and MFs that invest billions.

INSTITUTIONAL EQUITIES

Research team built up with a blend of industry and equity research experience

Launched a daily synopsis on Indian markets titled ‘The Front Page’

Research focus on original bottom-up ideas

Research products have been received well by institutional clients

A number of new products in the pipeline

40

2. WEALTH MANAGEMENT

The key to achieving a successful Investment Portfolio is to have a carefully planned financial strategy based on a thorough understanding of the client's investment needsand risk appetite. The IIFL Private Wealth Management Team of financial experts will recommend an appropriate financial strategy to effectively meet your investment requirements.

Our Financial Advisor will analyze:

Your cash-flow requirements Your risk appetite Desired investment horizon Long-term goals

3. FINANCIAL SERVICES DISTRIBUTION

3. INSURANCE

Over the last five years, India Infoline sharpened its competitive edge in this business

segment through the following initiatives:

Client base:

Grew its 40,000 strong client base through knowledge-led analysis, translating into an

attractive opportunity to cross-sell products and generate referral business.

The largest corporate agency for the largest private sector life Insurance company

Currently partner with ICICI Prudential, No1 private sector player

Life Insurance mobilization in Q1 Rs 1.14 bn : up 24% q-q and 21% y-y

4. MUTUAL FUNDS

Distributors for all the leading AMC’s.

Leveraging pan-India presence

41

Mutual funds income has improved – increased focus on equity funds

Industry structure will change radically with t he recent SEBI ruling

5. CONSUMER FINANCE

Started distribution of own loan products under the brand name ‘Moneyline’

Commenced business in August ‘07 with current portfolio size of Rs941mn

Currently present in 10 locations, presence in 32 additional locations by March ‘08

New Initiatives: Loans against Mutual Funds/ Business Loans/ Auto Loans/ Loans against ESOPS/ Loans for Commercial Vehicles

Loans through internet are showing a huge response and our lead conversion is one of the highest in the industry

Started distribution of own loan products under the brand name ‘MONEYLINE’.

New Initiatives: Loans against Mutual Funds/ Business Loans/ Auto Loans/ Loans against ESOPS/ Loans for Commercial Vehicles

Loans through internet are showing a huge response and our lead conversion is one of the highest in the industry.

STORY OF GLORY

42

Incorporated on October 18, 1995 as Probity Research & Services by a group of

professionals

Launched Internet portal www.indiainfoline.com in May 1999 – Rated as “Best of the

Web” by Forbes

Promoted by Mr. Nirmal Jain and Mr. R. Venkataraman

Launched 5paisa.com – revolutionized brokerage rates

Largest distributor of ICICI Prudential Life Insurance

Our Rs. 900 million public issue was oversubscribed 7.22 times

Listed on NSE and BSE on May 17, 2005

Today, we are one of the fastest growing company in the financial services space

We are a Leading Financial Services Intermediary

43

HISTORY AND MILESTONES

2011

Launched IIFL Mutual Fund.

2010

Received in-principle approval for membership of the Singapore Stock Exchange Received membership of the Colombo Stock Exchange

2009

Acquired registration for Housing Finance SEBI in-principle approval for Mutual Fund Obtained Venture Capital license

2008

Launched IIFL Wealth Transitioned to insurance broking model

2007

Commenced institutional equities business under IIFL Formed Singapore subsidiary, IIFL (Asia) Pte Ltd

2006

Acquired membership of DGCX Commenced the lending business

2005

Maiden IPO and listed on NSE, BSE

2004

Acquired commodities broking license Launched Portfolio Management Service

44

2003

Launched proprietary trading platform Trader Terminal for retail customers

2000

Launched online trading through www.5paisa.com Started distribution of life insurance and mutual fund

1999

Launched www.indiainfoline.com

45

India Infoline wins award for 'Best Broking House with Global Presence'

The awards felicitated 8 of India’s leading equity broking houses. The occasion also

marked the launch of the sixth edition of Dun & Bradstreet’s premier publication, India’s

Leading Equity Broking Houses 2012.Dun & Bradstreet, the world’s leading provider of global business information, knowledge

and insight, today announced the ‘Polaris Financial Technology, BSE IPF– Dun & Bradstreet

Equity Broking Awards 2012’. The awards felicitated 8 of India’s leading equity broking

houses. The occasion also marked the launch of the sixth edition of Dun & Bradstreet’s

premier publication, India’s Leading Equity Broking Houses 2012.

Speaking at the awards, Kaushal Sampat, President & CEO – India, Dun & Bradstreet said,

“The sixth edition of India’s Leading Equity Broking Houses reveals that the aggregate total

income of the broking firms covered in the financial analysis section of the publication, de-

grew by 18% in FY12. This de-growth is primarily on account of declining trading volumes

in the cash segment. Profitability is also under pressure. Net Profit Margins have declined

from 18% in FY11 to 13% in FY12. This is the second consecutive year that the aggregate

total income and net profit margins have declined.” 

46

 

“During last year’s analysis, declining investor interest was listed as the second most

important area of concern. Today, this issue has climbed to the top of the chart as the most

worrying factor for broking houses”, he added.

India’s Leading Equity Broking Houses 2012 was released by Dr. CKG Nair, Secretary,

Financial Sector Legislative Reforms Commission. Also present at the event were Arun Jain,

Chairman & CEO, Polaris Financial Technology Ltd and Mr. Ashish Kumar Chauhan,

Interim CEO, BSE Ltd among other leading names from the Equity Broking sector.

Awards Categories Winner

Broking House with Largest Distribution Network SMC Global Securities Limited

Largest E-Broking House ICICI Securities Limited

Best Broking House with Global Presence India Infoline Limited

Best Retail Broking House Angel Broking Limited

Fastest Growing Equity Broking House (Large size firms) Kotak Securities Limited

Best Equity Broking House - Cash Segment ICICI Securities Limited

Best Equity Broking House - Derivative Segment SMC Global Securities Limited

Best Equity Broking House – Overall SMC Global Securities Limited

India’s Leading Equity Broking Houses 2012, captures the performance of major equity

broking firms and throws light on the changing landscape of the industry. The publication

profiles a total of 124 leading equity broking companies in India. Further, the publication

provides a brief over view of the Indian equity markets and includes a section on

comprehensive financial analysis of 20 equity broking houses whose audited financial results

were available for FY12. The financial analysis in the publication gauges the performance of

these broking houses related to income, expenses, profits, profitability and assets.

Key Highlights:

47

Aggregate income of the sample broking houses declined by 18.6% y-o-y to Rs 32,054.9 mn

during FY12. This was attributable to a decline in trading volumes, especially delivery

volumes in the cash segment which generate higher brokerages, despite the growth in

derivative trading volumes. Additionally, there was a decline in income from broking

services, whose share in total income decreased from 74.1% in FY11 to 69.8% in FY12.

Overall net profits of the sample broking companies eroded 38.3% to Rs 4,273.8 mn in FY12.

The companies also witnessed lower operational efficiency as their operating profit margin

and net profit margin declined by 590 bps and 430 bps to 44% and 13.3% respectively in

FY12 due to declining revenue.

Overall return on net worth (RONW) of the companies also declined from 14.3% in FY11 to

8.1% in FY12. All companies, irrespective of broking revenue size, witnessed a fall in

RONW as they recorded a decline in profit, but still experienced growth in equity in FY12.

The publication also includes primary insights which analyses key trends of over 50 broking

companies. Some of the key findings of the study include: 

30% of the companies covered in the study account for over 80% of the total terminals.

Introduction of new technologies has resulted in rapid growth of online trading in terms of

size with 12.8% growth in e-broking accounts in FY12. E-broking thus emerges as the future

of broking business.

Majority of the respondents have voted for trading in commodities as one of the fastest

growing product offerings followed by trading in currency futures and then trading in equity

derivatives market.

Given the market potential due to the under-penetration of equities as an investment avenue,

the sample companies’ primary focus in the next two years is to scale up business operations

0by way of network/channel expansion.

48

 

CORPORATE STRUCTURE

49

50

IIFL STRUCTURE AND BRANCHES

51

BRANCHES ACROSS INDIA

52

INTERNATIONAL OFFICES

IIFL - Singapore

IIFL (Asia) Pte Ltd.20 Collyer Quay#21-04/05 Tung CentreSingapore 049319

IIFL - Dubai

53

IIFL Private Wealth Management (Dubai) Ltd. DIFC, 808 Liberty House,P.O. Box 115064,Dubai, UAE – 241 294

IIFL - USA

IIFL Inc.Grace Building, 34th Floor1114 Avenue of the AmericasNew York, NY-10036Tel: +1 212 221 6800Fax: +1 212 221 6818

IIFL - UK

IIFL WEALTH (UK) LTD107 Cheap Side,London, EC2V 6DN, UK.

IIFL - Geneva

IIFL Private Wealth (Suisse) SAPlace de la Fusterie, 71204 GenevaTel: +41 22 310 99 90

IIFL - Hong Kong

IIFL Private Wealth Hong Kong Ltd.Level 9 , 907 Central Building21-27 Queens Road CentralHong Kong.

54

IIFL - Mauritius

IIFL Private Wealth (Mauritius) Ltd5th Floor, Barkly WharfLe Caudan WaterfrontPort Louis, Mauritius

55

MANAGEMENT TEAM

Nirmal Jain is the founder and Chairman of India Infoline Ltd. He is a PGDM (Post Graduate Diploma in Management) from IIM (Indian Institute of Management) Ahmedabad, a Chartered Accountant and a rank-holder Cost Accountant. His professional track record is equally outstanding. He started his career in 1989 with Hindustan Lever Limited, the Indian arm of Unilever. During his stint with Hindustan Lever, he handled a variety of responsibilities, including export and trading in agro-commodities. He contributed immensely towards the rapid and profitable growth of Hindustan Lever’s commodity export business, which was then the nation’s as well as the Company’s top priority.

He founded Probity Research and Services Pvt. Ltd. (later re-christened India Infoline) in 1995; perhaps the first independent equity research Company in India. His work set new standards for equity research in India. Mr. Jain was one of the first entrepreneurs in India to seize the internet opportunity, with the launch of www.indiainfoline.com in 1999. Under his leadership, India Infoline not only steered through the dotcom bust and one of the worst stock market downtrends but also grew from strength to strength.

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Mr. R Venkataraman, Co-Promoter and Managing Director of India Infoline Ltd, is a B.Tech (electronics and electrical communications engineering, IIT Kharagpur) and an MBA (IIM Bangalore). He joined the India Infoline Board in July 1999. He previously held senior managerial positions in ICICI Limited, including ICICI Securities Limited, their investment banking joint venture with J P Morgan of US, BZW and Taib Capital Corporation Limited. He was also the Assistant Vice President with G E Capital Services India Limited in their private equity division, possessing a varied experience of more than 19 years in the financial services sector

Mr. Nilesh Vikamsey – Board Member since February 2005 - is a practicing Chartered Accountant for 25 years and Senior Partner at M/s Khimji Kunverji & Co., Chartered

57

Accountants, a member firm of HLB International, a world-wide organisation of professional accounting firms and business advisers, ranked amongst the top 12 accounting groups in the world. Mr. Vikamsey headed the audit department till 1990 and thereafter also handled financial services, consultancy, investigations, mergers and acquisitions, valuations and due diligence, among others. He is elected member of the Central Council of Institute of Chartered Accountant of India (ICAI), the Apex decision making body of the second largest accounting body in the world, 2010–2013.

He is on the ICAI study group member for the introduction of the Accounting Standard — 30 on financial instruments — recognition and management. Convener of the Study group Formed by ASB of ICAI to formulate comments on various Exposure Drafts, Discussion Papers and other matters pertaining to IFRS originating from IASB, Representative of the Institute of Chartered Accountants of India on the Committee for Improvement in Transparency, Accountability and Governance(ITAG) of South Asian Federation of Accountants (SAFA), Member of Executive Committee & IFRS Implementation Committee of WIRC of Institute of Chartered Accountant of India (ICAI), Accounting and Auditing Committee of Bombay Chartered Accountant Society (BCAS) and also on its Core Group, member of Review, Reforms & Rationalisation Committee, IPR Committee of Bombay Chamber of Commerce and Industry (BCCI), Member of Legal Affairs Committee of Bombay Chamber of Commerce and Industry(BCCI), Corporate Members Committee of The Chamber of Tax Consultants (CTC), Regular Contributor to WIRC Annual Referencer on “Bank Branch Audit”, Study/ Sub Group formed by ICAI for Considering Developments on Fair Value Accounting (AS 30) post Sub Prime crisis, Sub Group formed by ICAI for approaching the Government and Regulatory Authorities for Convergence with IFRS.

He is also a Vice Chairman of Financial Reporting Review Board Accounting Standard Board and Member of Accounting Standard Board and various other Standing and Non Standing Committees. Mr. Vikamsey is also a Director of Miloni Consultants Private Limited, HLB Offices and Services Private Limited, Trunil Properties Private Limited, BarKat Properties Private Limited and India Infoline Investment Services Limited.

Mr. Kranti Sinha — Board member since January 2005 — completed his masters from the Agra University and started his career as a Class I Officer with Life Insurance

58

Corporation of India. He served as the Director and Chief Executive of LIC Housing Finance Limited from August 1998 to December 2002 and concurrently as the Managing Director of LICHFL Care Homes (a wholly-owned subsidiary of LIC Housing Finance Limited). He retired from the permanent cadre of the Executive Director of LIC; served as the Deputy President of the Governing Council of Insurance Institute of India and as a member of the Governing Council of National Insurance Academy, Pune apart from various other such bodies. Mr. Sinha is also on the Board of Directors of Hindustan Motors Limited and Cinemax (India) Limited.

Mr. Purwar is currently the Chairman of IndiaVenture Advisors Pvt. Ltd., investment manager to IndiaVenture Trust – Fund I, the healthcare and life sciences focussed private equity fund sponsored by the Piramal Group. He has also taken over as the Chairman of IL & FS Renewable Energy Limited in March 2008 and India Infoline Investment Services Ltd in November 2009. He is working as Independent Director in leading companies in Telecom, Steel, Textiles, Power, Auto components, Renewable Energy, Engineering Consultancy, Financial Services and Healthcare Services. He is an Advisor to Mizuho Securities in Japan and is also a member of Advisory Board for Institute of Indian Economic Studies (IIES),Waseda University, Tokyo, Japan. Mr. Purwar was the Chairman of State Bank of India, the largest bank in the country from November ‘02 to May ’06 and held several important and critical positions like Managing Director of State Bank of Patiala, Chief Executive Officer of the Tokyo branch covering almost the entire range of commercial banking operations in his illustrious career at the bank from 1968 to 2006. Mr. Purwar also worked as Chairman of Indian Bank Association during 2005 – 2006. Mr. Purwar has received the “CEO of the year” Award from the Institute for Technology & Management (2004); “Outstanding Achiever of the year” Award from Indian Banks’ Association (2004); “Finance Man of the Year” Award by the Bombay Management Association in 2006.

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Mr. Kaul earned his post graduate degree in management from the Indian Institute of Management, Bangalore and a bachelor’s degree in technology from the Indian Institute of Technology, Bombay. Sunil Kaul is a Managing Director for Carlyle’s Asia Buyout fund focused on investments in the financial services sector across Asia. He is based in Singapore. Since joining Carlyle, Mr. Kaul has worked on several notable portfolio investments of Carlyle including HDFC Ltd, India’s leading financial services group, TC Bank, a leading mid-sized bank in Taiwan and Caribbean Investment Holdings, one of the largest provider of offshore company incorporation and trust services in Asia and India Infoline Limited Mr. Kaul serves as a director on the board of TC Bank and a member of its Risk and Executive Committees. He is also a member of the Asia Pacific Infrastructure Partnership. Prior to joining Carlyle, Mr. Kaul served as the president of Citibank Japan, covering the banks corporate and retail banking operations. He concurrently served as the chairman of Cites’ credit card and consumer finance companies in Japan. He was also a member of Cites’ Global Management Committee and Global Consumer Planning Group. Mr. Kaul has over 20 years’ experience in corporate and consumer banking of which more than 10 have been in Asia. He has lived and worked in India, the United States, Japan, Netherlands and Singapore. In his earlier roles, Mr. Kaul served as the Head of Retail Banking for Citi in Asia Pacific. He has also held senior positions in Business Development for Citi's Global Transaction Services based in New York, Transaction Services Head for Citi Japan and Global Cash Business Management Head for ABN Amro, based out of Holland

.

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CHAPTER 4DATA ANALYSIS AND INTERPRETATION

FINANCIAL REVIEW

Latest quarterly results highlights

Results (consolidated) for the quarter ended September 30, 2012

Income for the quarter at `653 cr, up 12% qoq, up 59% yoy

Profit before Tax at `96 cr, up 17% qoq, up 172% yoy

Profit after Tax*at `67 cr, up 27% qoq, up 199% yoy

`RS Crores Quarter ended Dec 31, 2012

Quarter ended Sep 30, 2012

Quarter ended Dec 31, 2011

% Quarter-on-Quarter

% Year-on- Year

Income 695.7 653.2 480.4 7% 45% EBITDA 356.3 312.5 205.2 14% 74% Profit Before Tax

106.6 95.8 49.3 11% 116%

Profit After Tax*

75.1 67.2 36.4 12% 106%

Balance sheet(Rs crore)

Balance Sheet of India Infoline

------------------- in Rs. Cr. -------------------

Mar '12 Mar '11

12 mths 12 mths

Sources Of Funds

Total Share Capital 57.80 57.28

Equity Share Capital 57.80 57.28

Share Application Money 0.00 0.33

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Preference Share Capital 0.00 0.00

Reserves 1,219.48 1,031.36

Revaluation Reserves 0.00 0.00

Net worth 1,277.28 1,088.97

Secured Loans 16.80 0.56

Unsecured Loans 0.00 465.00

Total Debt 16.80 465.56

Total Liabilities 1,294.08 1,554.53

Mar '12 Mar '11

12 mths 12 mths

Application Of Funds

Gross Block 130.39 122.33

Less: Accum. Depreciation 104.28 83.25

Net Block 26.11 39.08

Capital Work in Progress 0.11 0.92

Investments 1,209.26 1,000.09

Inventories 39.54 53.22

Sundry Debtors 252.90 289.46

Cash and Bank Balance 457.82 358.06

Total Current Assets 750.26 700.74

Loans and Advances 259.54 507.02

Fixed Deposits 0.00 268.72

Total CA, Loans & Advances 1,009.80 1,476.48

Deffered Credit 0.00 0.00

Current Liabilities 947.27 961.65

Provisions 3.92 0.41

Total CL & Provisions 951.19 962.06

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Net Current Assets 58.61 514.42

Miscellaneous Expenses 0.00 0.00

Total Assets 1,294.09 1,554.51

B.

Profit & Loss account of India Infoline ------------------- in Rs. Cr.

Mar '12 Mar '11 Mar '10 Mar '09Mar '08

12 mths 12 mths 12 mths 12 mths12

mths

Income

Sales Turnover 548.55 698.95 665.99 542.27 616.11

Excise Duty 0.00 0.00 0.00 0.00 0.00

Net Sales 548.55 698.95 665.99 542.27 616.11

Other Income 90.45 100.61 32.20 29.34 27.29

Stock Adjustments

0.00 0.00 0.00 0.00 0.00

Total Income 639.00 799.56 698.19 571.61 643.40

Expenditure

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Raw Materials 0.00 0.00 0.00 0.00 0.00

Power & Fuel Cost

0.00 0.00 0.00 0.00 0.00

Employee Cost 207.07 188.53 162.62 136.91 128.79

Other Manufacturing Expenses

0.00 17.83 14.52 93.32 105.93

Selling and Admin Expenses

0.00 250.12 205.75 112.16 119.13

Miscellaneous Expenses

287.90 55.40 36.25 41.03 39.67

Preoperative Exp Capitalised

0.00 0.00 0.00 0.00 0.00

Total Expenses 494.97 511.88 419.14 383.42 393.52

Mar '12 Mar '11 Mar '10 Mar '09Mar '08

12 mths 12 mths 12 mths 12 mths12

mths

Operating Profit

53.58 187.07 246.85 158.85 222.59

PBDIT 144.03 287.68 279.05 188.19 249.88

Interest 37.86 90.34 13.88 11.15 22.82

PBDT 106.17 197.34 265.17 177.04 227.06

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Depreciation 31.44 24.08 31.86 25.56 19.44

Other Written Off 0.00 0.00 0.00 0.00 0.00

Profit Before Tax 74.73 173.26 233.31 151.48 207.62

Extra-ordinary items

-0.07 -0.76 -3.96 2.23 -0.53

PBT (Post Extra-ord Items)

74.66 172.50 229.35 153.71 207.09

Tax 11.36 50.14 77.34 47.88 78.39

Reported Net Profit

63.30 122.36 152.02 105.83 157.73

Total Value Addition

494.98 511.88 419.14 383.42 393.53

Preference Dividend

0.00 0.00 0.00 0.00 0.00

Equity Dividend 43.36 85.92 85.20 79.45 34.26

Corporate Dividend Tax

7.03 12.76 14.48 13.50 5.82

Per share data (annualised)

Shares in issue (lakhs)

2,890.24 2,864.11 2,852.15 2,834.00 571.03

Earnings Per Share (Rs)

2.19 4.27 5.33 3.73 27.62

Equity Dividend (%)

75.00 150.00 150.00 140.00 60.00

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Book Value (Rs) 44.19 38.01 38.84 36.58 173.35Financial position

From the above balance sheet  it is very much clear that the net worth

of the company increases from 1088.97 in year march 2011 to

1277.28 in year 2012 which is 189.28 more than the previous year,

company’s reserves also increases from 1031.36 to 1219.48 in 2012

which also shows the increment of 188.12 ,investments are increased

by 209 along with current assets to 50crore increment.net Current

assets are decreased by 455crore ,total assets are also decreased from

1554.51crore to 1294.09crore.it is very much clear from the above

balance sheet that the growth of the organisation is moderate but not

predictive. But still the organisation is trying its every curse to face

the cutthroat competition that makes the company the second largest

broking company after ICICI.

66

Current share price performance chart of 6 months

67

Key Financial Ratios of India Infoline

Mar '12

Mar '11

Investment Valuation Ratios

Face Value 2.00 2.00

Dividend Per Share 1.50 3.00

Operating Profit Per Share (Rs)

1.85 6.53

Net Operating Profit Per Share (Rs)

18.98 24.40

Free Reserves Per Share (Rs)

-- 33.66

Bonus in Equity Capital

31.19 31.48

Profitability Ratios

Operating Profit Margin (%)

9.76 26.76

Profit Before Interest And Tax Margin (%)

3.54 20.37

Gross Profit Margin 4.03 23.31

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(%)

Cash Profit Margin (%)

12.87 18.44

Adjusted Cash Margin (%)

12.87 18.44

Net Profit Margin (%) 10.13 15.29

Adjusted Net Profit Margin (%)

10.13 15.29

Return On Capital Employed (%)

7.58 16.97

Return On Net Worth (%)

4.95 11.23

Adjusted Return on Net Worth (%)

3.83 11.33

Return on Assets Excluding Revaluations

44.19 38.01

Return on Assets Including Revaluations

44.19 38.01

Return on Long Term Funds (%)

7.68 24.22

Liquidity And Solvency Ratios

Current Ratio 1.03 1.03

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Quick Ratio 1.00 1.47

Debt Equity Ratio 0.01 0.43

Long Term Debt Equity Ratio

-- --

Debt Coverage Ratios

Interest Cover 2.59 3.07

Total Debt to Owners Fund

0.01 0.43

Financial Charges Coverage Ratio

3.43 3.19

Financial Charges Coverage Ratio Post Tax

3.50 2.62

Management Efficiency Ratios

Inventory Turnover Ratio

13.87 --

Debtors Turnover Ratio

2.02 1.61

Investments Turnover Ratio

13.87 13.13

Fixed Assets Turnover Ratio

4.51 --

Total Assets Turnover Ratio

0.43 0.45

70

Asset Turnover Ratio 0.39 0.44

Average Raw Material Holding

-- --

Average Finished Goods Held

-- --

Number of Days In Working Capital

38.47 264.96

Profit & Loss Account Ratios

Material Cost Composition

-- --

Imported Composition of Raw Materials Consumed

-- --

Selling Distribution Cost Composition

-- 24.38

Expenses as Composition of Total Sales

0.18 --

Cash Flow Indicator Ratios

Dividend Payout Ratio Net Profit

79.62 80.64

Dividend Payout Ratio Cash Profit

53.19 67.38

Earning Retention Ratio

-2.84 20.06

71

Cash Earning Retention Ratio

37.36 33.11

Adjusted Cash Flow Times

0.21 3.16

Mar '12

Mar '11

Earnings Per Share 2.19 4.27

Book Value 44.19 38.01

RATIOS ANALYSIS1. Dividend per share was reduced to 50% which means company wants to

retain its earnings in reserves and surplus for future growth2. Company’s gross profit margin has been decreased comparing to last

year which means its sales has decreased and operating cost has increased

3. Company has decreased its dividend payout ratio from 80.64% to 79.62% therefore its cash earnings retention ratio has increased from 33.11% to 37.36%

4. Net operating profit per share has decreased from rs24.40 to 18.98 which means ,market price of share and earnings per share will also effect

5. Selling and distribution of a part of cost composition has decreased from 24.38 to 0 which indicates company had tried to cut its selling and advertising cost and has achieved it

6. Dividend payout ratio cash profit has decreased more than dividend payout ratio net profit which clearly means company has given major part of its dividends from reserves or last year’s profits than this year’s cash profit.

7. Because of decrease in profits, company’s earnings per share has decreased from rs4.27 to rs2.19

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8. Return on capital employed has reduced to half because of decreased in profits

9. To Quick ratio of company has decreased which is good indicator that company has not hold surplus funds with it and invested them to business

10.Current ratio is maintained at a level of1.03 which is not satisfactory

because ideal ratio is 2.00%

11.Company has reduced its debt to a large extent which can be seen as debt

equity ratio has decreased from 0.43 to 0.01

12.Which is not good indicator for long run ideal debt equity ratio should be

1:1

13.No of days in working capital has decreased from 264.96 days to 38.47

days which is a good indicator that number of operating cycles per year

has increased

14.Debtors turnover ratio has increased from 1.61 to 2.02 which means

company increased the proportion of credit sales in total sales.

CHAPTER 5

73

FUTURE PLANS AND STRATEGY

Wealth Management

New initiative- team identified.

Plans for aggressive growth.

Upper middle class is growing at 10-12% p.a.

Strategy will be to deliver value and target mid segment.

Leverage our brand, research capability and distribution reach.

CHAPTER 6

74

Ticket size

Ser

vice

s

Foreign banks

New Indian private banks

MarketOpportunity

Small

Narrow

Boutiques

Local brokers

Broad

Local Investment banks

The market opportunity

CONCLUSION AND SUGGESTIONS

Investing in equities is a very complex process. It involves studying, tracking and

understanding factors like the economy both domestic and global, interest rates, the political

and legal environment among others.

Clearly, this is a full time activity that is best left to experts. A fund manager does precisely

that for investors, that too at an affordable cost. Effectively, portfolio management services

offer the opportunity to the access the markets in a hassle-free and convenient manner.

Secondly, portfolio management services investment offers investors the benefits of

diversification. Any financial planner worth his salt will vouch for the importance of holding

a well-diversified portfolio.

A portfolio created by an expert offers diversification across stocks (a diversified equity fund

invests in various stocks) and asset classes (a balanced fund/monthly income plan invests in

both equities and debt instruments).

Finally, the single most important reason why one should appoint an expert is -- the

versatility they afford. Whether you wish to plan for your retirement, children's marriage or

even buy a car, a portfolio manager will expose you only to the risk you can face and the

return you expect and thus can help you achieve these objectives and more and the most

important thing is that these services are offered to clients as different schemes, which are

based on

Differing investment strategies made to reflect the varied risk-return preferences of clients

and in today’s world where

On the other hand, equities serve the broad purpose of achieving capital appreciation.

However, achieving financial goals would imply building a portfolio of equities and debt

instruments and actively managing the same. Investing is serious business and should be seen

as a means for achieving one's financial objectives.

75

According to me all the companies are good in their own respective way. Some are good at

their brokerage whereas some are good at their services; some have good companies in their

portfolio whereas some have good fund managers. All the companies are fighting

competition in different ways and all are good in their own way and they all provide the

following benefits:

Bespoke Advice- The advice designed to achieve your financial objectives.

Professional Management - The service provides professional management of equity

portfolios with the objective of delivering consistent long-term performance while

controlling risk.

Continuous Monitoring - Portfolios need to be constantly monitored and periodic

changes made to optimize the results.

Risk Control - A research team responsible for establishing our investment strategy

and providing us real time information to support it, backs our portfolio managers.

Hassle Free Operation- Our Portfolio Management Service gives you a customized

service. We take care of all the administrative aspects of your

Portfolio with a monthly reporting on the overall status of the portfolio and

performance.

Flexibility - We specialize in providing a personal investment management service to

achieve your investment objective.

Transparency - You will get regular statements and updates from us. Web-enabled

access will ensure that you are just a click away from all information relating to your

investment.

No one company can be recommended as they all are good in their own way and all are

competitive in their own way. All the companies are good at providing their services in their

own way. The companies are very competitive, if one company takes a step the other

company takes two steps and all the benefits go the customer towards the end. Therefore the

76

only benefit that someone achieves is the customers who gain from these competitive firms in

terms of service provided by them as well as in cost terms.

Strengths

Huge market potential given the under-penetration of equities as an investment avenue

amongst

Indian investor community and an increasing investor interest in new market segments like

Commodities, currency futures, interest rate derivatives.

Adequate capitalization levels, at least for larger players provides cushion to absorb potential

losses

Resulting from the short term challenges in the operating environment.

A relatively diversified revenue profile at least for the larger players.

A more flexible cost structure arising from the increasing reliance on franchisee model.

Challenges

Protecting brokerage yields and market share in the highly competitive and fragmented equity

Brokerage industry; further accentuated by the rising share of the low yielding options

segment.

Volatility in earnings and profitability due to linkages with vagaries of capital market and

increasing

Cost of regulatory compliances.

Achieving a critical scale of operations and managing costs to sustain profitability even in a

prolonged

Dull phase.

Managing the inherent refinancing risk as players scale up capital market funding book.

Continue investing in upgrading the risk management systems and monitoring policies to

mitigate

associated risks, especially during periods of extreme market volatility

Scaling up the non broking business lines to diversify revenue streams while containing risks.

Greater dominance of the foreign brokerage houses in the institutional broking segment

77

APPENDIX

WEBLIOGRAPHY:

www.indiainfoline.com

www.sharekhan.com

http://www.financialexpress.com/fe_full_story.php?content_id=147783

http://en.wikipedia.org/wiki/India

http://www.thehindubusinessline.com/iw/2006/10/08/stories/2006100800591300.htm

www.indiainfoline.com

www.economictimes.com

www.theeconomist.com

www.moneycontrol.com

www.investopidia.com

www.bse.com

www.dalalstreet.com

www.ndtvprofit.com

www.freestockcharts.in

www.topstockresearch.com

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