Summer Internship Report On COMPARATIVE ANALYSIS OF INDIA INFOLINE LTD WITH 5 LEADING STOCKBROKING HOUSES IN INDIA ( KOTAK SECURITIES, KARVY, INDIABULLS, HDFC SECURITIES, ICICI DIRECT.) By RAHI GOMBERENROLLMENT NUMBER- A0102109008 MBA- ENTREPRENEURSHIP MBA Class of 2011 Under the Supervision ofProf. Anubha srivastav In Partial Fulfillment of Award of Master of Business Administration AMITY BUSINESS SCHOOL AMITY UNIVERSITY UTTAR PRADESH SECTOR 125, NOIDA-201303 , UTTAR PRADESH, INDIA
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the bank of Bengal in 1836. This list was a further broadened in 1839 when the Calcutta
newspaper printed the quotations of banks like union bank and Agra bank. It also quoted the
prices of business ventures like the Bengal bonded warehouse, the Docking Company and the
storm tug company.
Between 1840 and 1850, only half a dozen brokers existed for the limited business. But during
the share mania of 1860-65, the number of brokers increased considerably. By 1860, the number
of brokers was about 60 and during the exciting period of the American Civil war, their number
increased to about 200 to 250. The end of American Civil war brought disillusionment and many
failures and the brokers decreased in number and prosperity. It was in those troublesome times
between 1868 and 1875 that brokers organized an informal association and finally as recited in
the Indenture constituting the “Articles of Association of the Exchange”. On or about 9 th day of
July,1875, a few native brokers doing brokerage business in shares and stocks resolved upon
forming in Bombay an association for protecting the character, status and interest of native share
and stock brokers and providing a hall or building for the use of the members of such
association.
As a meeting held in the broker’ Hall on the 5 th day of February, 1887, it was resolved to execute
a formal deal of association and to constitute the first managing committee and to appoint the
first trustees. Accordingly, the Articles of Association of the Exchange and the Stock Exchange
was formally established in Bombay on 3rd day of December, 1887. The Association is now
known as “The Stock Exchange”.
The entrance fee for new member was Re.1 and there were 318 members on the list, when the
exchange was constituted. The numbers of members increased to 333 in 1896, 362 in 1916and478 in 1920 and the entrance fee was raised to Rs.5 in 1877, Rs.1000 in 1896, Rs.2500 in 1916
and Rs. 48,000 in 1920. At present there are 23 recognized stock exchanges with about 6000
stock brokers. Organization structure of stock exchange varies.
Recognition and Management, Finance Committee of The Chamber of Tax Consultants
(CTC), Law Review, Reforms and Rationalization Committee and Infotainment and Media
Committee of Indian Merchants’ Chamber (IMC) and Insurance Committee and Legal
Affairs Committee of Bombay Chamber of Commerce and Industry (BCCI).
Mr. Vikamsey is a director of Miloni Consultants Private Limited, HLB Technologies(Mumbai) Private Limited and Chairman of HLB India.
Mr Sat Pal Khattar
Non Executive Director
India Infoline Ltd.
Mr Sat Pal Khattar, - Board member since April 2001 - Presidential Council of Minority
Rights member, Chairman of the Board of Trustee of Singapore Business Federation, is also
a life trustee of SINDA, a non profit body, helping the under-privileged Indians in Singapore.
He joined the India Infoline board in April 2001. Mr Khattar is a Director of public and
private companies in Singapore, India and Hong Kong; Chairman of Guocoland Limited
listed in Singapore and its parent Guoco Group Ltd listed in Hong Kong, a leading property
company of Singapore, China and Malaysia. A Board member of India Infoline Ltd, GatewayDistriparks Ltd — both listed — and a number of other companies he is also the Chairman of
the Khattar Holding Group of Companies with investments in Singapore, India, UK and
across the world.
Mr Kranti Sinha
Independent Director
India Infoline Ltd.
Mr. Kranti Sinha — Board member since January 2005 — completed his masters from the
Agra University . 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, Larsen &
Toubro Limited, LICHFL Care Homes Limited, Gremach Infrastructure Equipments and
Projects Limited and Cinemax (India) Limited.
Mr Arun K. Purvar
Independent Director
India Infoline Ltd.
Mr. A.K. Purvar – Board member since March 2008 – completed his Masters degree in
commerce from Allahabad University in 1966 and a diploma in Business Administration in
1967. Mr. Purwar joined the State Bank of India as a probationary officer in 1968, where he
held several important and critical positions in retail, corporate and international banking,
covering almost the entire range of commercial banking operations in his illustrious career.
He also played a key role in co-coordinating the work for the Bank's entry into the field of insurance. After retiring from the Bank at end May 2006, Mr. Purwar is now working as
Member of Board of Governors of IIM-Lucknow, joined IIM–Indore as a visiting professor,
joined as a Hon.-Professor in NMIMS and he is also a member of Advisory Board for
Institute of Indian Economic Studies (IIES), Waseda University, Tokyo, Japan. He has now
taken over as Chairman of IndiaVenture Advisors Pvt. Ltd., as well as IL & FS Renewable
Energy Limited. He is also working as Independent Director in leading companies in
Telecom, Steel, Textiles, Autoparts, Engineering and Consultancy.
HISTROY OF INDIAINFOLINE
The IndiaInfoline Group was originally incorporated on October 18, 1995 as Probity
Research and Services Private Limited at Mumbai under the Companies Act, 1956 with
Registration No. 11 93797. The IndiaInfoline Group commenced its operations as an
independent provider of information, analysis and research covering Indian businesses,
financial markets and economy, to institutional customers. We became a public limited
company on April 28, 2000 and the name of the Company was changed to Probity Research
and Services Limited. The name of the Company was changed to India Infoline.com Limited
on May 23, 2000 and later to India Infoline Limited on March 23, 2001. In 1999, The
IndiaInfoline Group identified the potential of the Internet to cater to a mass retail segment
and transformed our business model from providing information services to institutional
customers to retail customers. Hence we launched our Internet portal, www.indiainfoline.com
in May 1999 and started providing news and market information, independent research,
interviews with business leaders and other specialized features.
In May 2000, the name of our Company was changed to India Infoline.com Limited to reflect
the transformation of our business. Over a period of time, we have emerged as one of the
leading business and financial information services provider in India.
In the year 2000, The India Infoline Group leveraged it’s position as a provider of financial
information and analysis by diversifying into transactional services, primarily for online
trading in shares and securities and online as well as offline distribution of personal financial products, like mutual funds and RBI Bonds. These activities were carried on by our wholly
owned subsidiaries.
The India Infoline Group’s broking services was launched under the brand name of
5paisa.com through our subsidiary, India Infoline Securities Private Limited and
www.5paisa.com, the e-broking portal, was launched for online trading in July 2000. It
combined competitive brokerage rates and research, supported by Internet technology besides
investment advice from an experienced team of research analysts, we also offer real time
stock quotes, market news and price charts with multiple tools for technical analysis.
Acquisition of Agri Marketing Services Limited ("Agri")
In March 2000, The IndiaInfoline Group acquired 100% of the equity shares of Agri
Marketing Services Limited, from their owners in exchange for the issuance of 508,482 of
our equity shares. Agri was a direct selling agent of personal financial products including
mutual funds, fixed deposits, corporate bonds and post-office instruments. At the time of our
acquisition, Agri operated 32 branches in South and West India serving more than 30,000
customers with a staff of, approximately 180 employees. After the acquisition, we changed
the company name to India Infoline.com Distribution Company Limited.
The India Infoline group, comprising the holding company, India Infoline Ltd (NSE:
INDIAINFO, BSE: 532636) and it’s subsidiaries, is one of the leading players in the Indian
financial services space. India Infoline offers the entire gamut of financial services covering
investment products ranging from Equities and derivatives, Commodities, Portfolio
Management Services, Mutual Funds, Life Insurance, Fixed deposits, Loans, Investment
Banking, GoI bonds and other small savings instruments. It owns and manages the website,
www.indiinfoline.com, which is one of India’s leading online destinations for personal
finance, stock markets, economy and business.
A forerunner in the field of equity research, India Info line’s research is acknowledged by
none other than Forbes as ‘Best of the Web’ and ‘…a must read for investors in Asia’. IndiaInfoline’s research is available not just over the internet but also on international wire
services like Bloomberg (Code: IILL), Thomson First Call and Internet Securities where it is
amongst the most read Indian brokers.
A network of 753 business locations spread over 346 cities across India, facilitates the
smooth acquisition and servicing of a large customer base. All these offices are connected
with the corporate office in Mumbai with cutting edge networking technology.
The group caters to a customer base of over 500,000 over a variety of mediums viz. online,
over the phone and at our branches. The Group is strengthening its institutional broking and
investment banking services and has built a team of experienced research analysts, sales and
to increase the efficiency of the operations as well as the systems and processes for use of
corporate resources in such a way so as to maximize the value to the stakeholders. The Group
aims at achieving not only the highest possible standards of legal and regulatory compliances,
but also of effective management.
Company Structure
India Infoline Limited is listed on both the leading stock exchanges in India, viz. the
Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE) and is also amember of both the exchanges. It is engaged in the businesses of Equities broking,
Wealth Advisory Services and Portfolio Management Services. It offers broking services
in the Cash and Derivatives segments of the NSE as well as the Cash segment of theBSE. It is registered with NSDL as well as CDSL as a depository participant, providing
a one-stop solution for clients trading in the equities market. It has recently launched itsInvestment banking and Institutional Broking business.
A SEBI authorized Portfolio Manager; it offers Portfolio Management Services to
clients. These services are offered to clients as different schemes, which are based ondiffering investment strategies made to reflect the varied risk-return preferences of
clients.
India Infoline Media and Research Services Limited.
The content services represent a strong support that drives the broking, commodities, mutual
fund and portfolio management services businesses. Revenue generation is through the sale of
content to financial and media houses, Indian as well as global.
It undertakes equities research which is acknowledged by none other than Forbes as 'Best of theWeb' and '…a must read for investors in Asia'. India Infoline's research is available not just over
the internet but also on international wire services like Bloomberg (Code: IILL), Thomson FirstCall and Internet Securities where India Infoline is amongst the most read Indian brokers.
India Infoline Commodities Limited.
India Infoline Commodities Pvt Limited is engaged in the business of commodities broking. Our
experience in securities broking empowered us with the requisite skills and technologies to allow
us offer commodities broking as a contra-cyclical alternative to equities broking. We enjoymemberships with the MCX and NCDEX, two leading Indian commodities exchanges, and
recently acquired membership of DGCX. We have a multi-channel delivery model, making it
among the select few to offer online as well as offline trading facilities.
India Infoline Marketing & Services
India Infoline Marketing and Services Limited is the holding company of India Infoline
Insurance Services Limited and India Infoline Insurance Brokers Limited.
(a) India Infoline Insurance Services Limited is a registered Corporate Agent with the Insurance
Regulatory and Development Authority (IRDA). It is the largest Corporate Agent for ICICIPrudential Life Insurance Co Limited, which is India's largest private Life Insurance Company.
India Infoline was the first corporate agent to get licensed by IRDA in early 2001.
(b) India Infoline Insurance Brokers Limited is a newly formed subsidiary which will carry out
the business of Insurance broking. We have applied to IRDA for the insurance broking licence
and the clearance for the same is awaited. Post the grant of license, we propose to alsocommence the general insurance distribution business.
India Infoline Investment Services Limited
Consolidated shareholdings of all the subsidiary companies engaged in loans and financing
activities under one subsidiary. Recently, Orient Global, a Singapore-based investmentinstitution invested USD 76.7 million for a 22.5% stake in India Infoline Investment Services.
This will help focused expansion and capital raising in the said subsidiaries for various lending
businesses like loans against securities, SME financing, distribution of retail loan products,consumer finance business and housing finance business. India Infoline Investment Services
Private Limited consists of the following step-down subsidiaries.
(a) India Infoline Distribution Company Limited (distribution of retail loan products)
(b) Moneyline Credit Limited (consumer finance)
(c) India Infoline Housing Finance Limited (housing finance)
IIFL (Asia) Pte Limited
IIFL (Asia) Pte Limited is wholly owned subsidiary which has been incorporated in Singapore to pursue financial sector activities in other Asian markets. Further to obtaining the necessary
regulatory approvals, the company has been initially capitalized at 1 million Singapore dollars.
MILESTONES ACHIEVED
1995
Incorporated as an equity research and consulting firm with a client base that included leadingFIIs, banks, consulting firms and corporates.
1999
Restructured the business model to embrace the internet; launched archives.indiainfoline.commobilized capital from reputed private equity investors.
2000
Commenced the distribution of personal financial products, launched online equity trading;
entered life insurance distribution as a corporate agent. Acknowledged by Forbes as ‘Best of the
Launched a proprietary trading platform; inducted an institutional equities team; formed a
Singapore subsidiary; raised over USD 300 mn in the group; launched consumer finance
business under the ‘Moneyline’ brand.
2008Launched wealth management services under the ‘IIFL Wealth’ brand; set up India Infoline
Private Equity fund; received the Insurance broking license from IRDA; received the venturecapital license; received in principle approval to sponsor a mutual fund; received ‘Best broker-
India’ award from Finance Asia; ‘Most Improved
‘Brokerage- India’ award from Asiamoney.
2009
Received registration for a housing finance company from the National Housing Bank; received‘Fastest growing Equity Broking House - Large firms’ in India by Dun & Bradstreet.
2010Received in-principle approval for Securities Trading and Clearing memberships from SGX.
MARKET SHARES OF COMPANY
Retail broking :
IndiaInfoline has around 3 lakhs customers. It has a tie-up with Bank of Baroda for e-broking.
Institutional broking :
IndiaInfoline has roped in Bharat Parajia, director of sales at CLSA in Singapore, H Nemkumar,
CLSA's country head for India, Aniruddha Dange, CLSA's head of research in India, and
Vasudev Jagannath, CLSA's head of sales in India. While Parajia will join as head of
institutional sales at India Infoline, Dange will be head of research and Nemkumar head of
investment banking.
Each one of them is bringing in more than 10 years of experience with a top institutional
brokerage in Asia. The CLSA foursome will also pick up stakes in India Infoline through the
preferential allotment route. Their collective stake would add up to around 15%. Parajia already
holds a 2.88% stake in India Infoline. He will subscribe to 25 lakhs equity warrants at Rs 440
each. Nemkumar will pick up another 25 lakhs, while Jagannath and Aniruddha Dange will
subscribe to 20 lakhs warrants each. The preferential allotment includes the four men buying 90
The Company has aggressively improved its presence over the past few years. Currently, the
company has presence in as many as 2,300 locations through branches and sub-brokers. Awide network has helped it in rapidly improving its share of the trading volumes, which
improved to 3.8% in FY10 from 1.7% four years ago at the national stock Exchange (NSE).Compared to FY09, the company’s share in volumes was flat. But that’s because the share
of futures and options (F&O ) has gone up in NSE volumes, while IIFL
focuses more on cash segment.
This is because the margins in cash segment are more than F&O segment. So while thecompany’s share actually went up in cash segment, its share remained stagnant in total
volumes on year-on-year basis. In brokerage industry, the fight is for the volumes. This is
where IIFL stands at advantage, as it is one of the top players both in retail as well
institutional side of business. In the lending business, the company is focusing on loansagainst property, which comprised more than 40% of loan book in FY10. Since this is
secured lending, it helps the company in maintaining high asset quality. Net non-performing
assets (NPA) formed less than 1% of net advances. At such NPA levels, the company’s assetquality is comparable with that of best non-banking financial companies (NBFC) in India.
The thrust on lending business is evident from the fact that loan portfolio grew by 70% in
FY10.
Apart from it, the company is focusing on investment banking activities too. This is evidentfrom the fact that it earned revenue of Rs 39 crore from such activities in FY10 compared to just Rs 2.3 crore a year ago. It managed the initial public offerings (IPO) & qualified
institutional placement (QIP) of names, such as Gammon India, Cox & Kings India, Cipla,
Adani Power and Everest Kanto among others.Due to its presence in wide range of financial services, it has one of the most diversified
business models in its industry. It must be recalled that brokerage and other financial
services firm had a tough time in FY09, when the equity markets plummeted. Eventhen,IIFL’s profit fell by only 9% in FY09.
Most of the people have their d-mat account with IIFL but kotak securities and India bulls givestuff competition to IIFL. These brands have good name in the market.
32% of the total sample size have their d-mat account with IIFL because of their better services
About 28% of the total population says that they do not pay any account opening chargewhich means account opening charge of their respective companies are NIL.
IIFL is the one example of such companies
Only 10% of the population says that the account opening charge of their company is 900
and above. ICICI direct is one of the company whose account opening charges are
Here also you can see that the long term investors have to give brokerage according to what the
company wants. So, here also the biasness is created in the mind of the customers. So, IIFL got agreat opportunity to attract the customers by giving the brokerage plans according to what the
Brokerage rate should be reduced. Kotak securities, Indiabulls, are charging as .05% for
Intraday and 0 .30% for Delivery where as India Infoline is charging 0.05% for Intradayand 0 .50% for Delivery. Though it is negotiable but for high margin money customer not
for less margin money customer.
IIFL has hidden charges. Absolute transparency should be maintained
Reducing the advance brokerage of Rs.750 adjustable in 3months or increase the
adjustment period as most of the traders who plan for long term investment are unwilling
to pay it.
Make new schemes for the AMC or annual maintenance charge as it is higher as
compared to its competitors.
Withdraw the exit charge that is to be paid by account holders at the time of closing of
account.
Organize seminars in various MBA colleges as students of finance are mostly interested
and trade in capital market. In that way new customers can be created at the same time
the brand name can be spread further.
Give lucrative introductory offers of free account opening or no annual maintenance
charge for the 1st year as is done by most of the trading houses.
Advertising on various social networking sites like twitter or face book.
Make tie ups with more banks of nationalized levels.
Making use of trainees to know the current satisfaction level of customers or
dissatisfaction faced by them, if any. Customer retention in today’s market is more
important than new customer creation. So all grievances should be dealt with.
More than one internet connection should be arranged so that in case of disfunctioning of
one, no interruption should be caused in trading.
Need to open more branches as the company has a low distribution network.