Summer internship project indiabulls

FACTORS AFFECTING INVESTMENT DECISIONS AND COMPETITIVE ADVANTAGES OF INDIABULLS

A REPORT ON

FACTORS AFFECTING INVESTMENT DECISIONS AND COMPETITIVE ANALYSIS OF INDIABULLS

SUBMITTED BY:

SHIKHA SINHA

11BSPHH010767

A report submitted in the partial fulfillment of

MBA Program of IBS Hyderabad

Submitted to:

FACULTY GUIDE COMPANY GUIDE

DR. P SHASHIKALA MR. ATISH GUPTA

IBS HYDERABAD V.P., INDIABULLS

Date of submission:

2 | P a g e

AUTHORIZATION

I, Dr. P Shashikala, hereby authorize the submission of the project work titled, “ Factors affecting investment decision and competitive advantage of Indiabulls”, undertaken by Ms. Shikha Sinha (Enrollment no. 11BSPHH010767) as partial fulfillment of MBA Program of IBS Hyderabad. This project work was executed under my guidance and no part of this project has been submitted for any degree or recognition before.

Sincerely,

Dr. P Shashikala

(Faculty Guide, IBS Hyderabad)

Dated:

3 | P a g e

ACKNOWLEDGEMENT

I hereby take this opportunity to thank INDIABULLS SECURITIES, for providing me a corporate exposure through the course of my summer internship.

I would like to express my sincere gratitude towards my company guide Mr. Atish Gupta, for providing me great insights about stock markets, real estate, home loans and various other ventures, for guiding me all throughout and for being a great support.

I would also like to thank Dr. P Shashikala, my faculty guide for instructing me and giving me her valuable advice on my project.

I am also like to thank Mr. Ashish Yadav, Mr. Ankit Gupta, Mr. Jadish Yadav, Mr. Naveen and all members of Indiabulls family who were a great co-operation and help all throughout.

I would like to extend my gratitude to IBS Hyderabad, for providing me such a platform.

Last but not the least all my friends and family for their support and co-operation.

Thanking You,

Shikha Sinha,

11BSPHH010767

4 | P a g e

EXECUTIVE SUMMARY

The increasing trend towards globalization and industrialization has increased the trend of competition in the financial market, intensified by the coming of Non Banking Financial Company (NBFC), like Indiabulls Securities, and so has the need for the marketing of financial instruments has intensified.

NBFCs are financial institutions are ones which provide banking services without meeting the legal definition of a bank, i.e. one which does not hold a license. They are not allowed to take deposits from public. Nonetheless all the operations of these institutions are covered under banking regulations.

This project is completely focused to identify some of the demand drivers, rather factors that make people invest in such institutions and in this regard what are the various differentiating factors that provide Indiabulls a competitive edge over other players in the market.

There has been an emphasis on the various businesses and of Indiabulls that make it standout in this league, rather than being a “me too” product. In words of Al Ries and Jack Trout, “differentiate or die”.

5 | P a g e

TABLE OF CONTENTS

SL NO.

CONTENTS PAGE NO.

01 Authorization 302 Acknowledgement 403 Executive summary 5

04-a Introduction- Background and Literature review 9b Objective of project 10c Methodology 11-12d Scope and Limitations of study 13

05-a Financial industry overview 14-15b Introduction to brokerage industry 16-18c Porter’s 5 factor model of industry 19-21d Demand drivers of the industry 22e Supply drivers of the economy 23f Domestic economic conditions 24-25g Global economic conditions 26h Critical success factors of the industry 27

i Measures taken by Indian government 28 j PESTEL analysis of industry 29-30 k Fiscal and monetary policies (legal issues) 31-3206-a Company overview-History 33-34 b Business life cycle 35-37 c Indiabulls group of companies 38

d Company financials 39-40 e Mission and vision 41

f Strategies and focus 41 g Marketing mix of Indiabulls 42-46 h SWOT of Indiabulls 47-48 i BCG of Indiabulls 49-50 j Porter’s 5 factor model of Indiabulls 51-54 k Indiabulls in News 55 l Recent CSR done by Indiabulls 56-57 m Customer relationship 58 n Affect of market dynamics 5907-a Factors affecting investment decisions 60-62

6 | P a g e

b Factor Analysis and interpretation 63-6808-a Comparison of Indiabulls brokerage services 69-71

b Different charges in the industry 72-81 c SWOT analysis of different firms 82

d Competition in real estate industry 83e Competition in home loans 84

f Competitive advantage 8509 Conclusion and recommendation 8610 Outcome and contribution 8711 Learning from SIP 8812 References 8913 Appendix (Questionnaire) 90-91

LIST OF FIGURES AND TABLES

Sl. NO. CONTENT

Pg.NO.

01 Research Methodology 1102 Methodology 1203 Products of financial market 1404 Classification of financial market 1505 Brokerage terminals in various areas 1706 Percentage of branches in each region 1807 Percentage of sub brokers in various regions 1908 Analysis of Porter’s 5 factor model of the industry 2409 Indian economy’s growth factors 2610 Stable and robust growth in face of global

challenges27

11 Critical success factors of the industry 2812 Various measures taken by Indian Government 2913 PESTEL analysis 3014 PESTEL analysis of the industry 3315 Indiabulls at glance 3516 Business life cycle 37

7 | P a g e

17 Journey of Indiabulls 3818 Indiabulls group of companies 3919 Indiabulls a leading finance company 4020 Asset growth of Indiabulls 4121 Products of Indiabulls 4222 Places of Indiabulls 4423 Promotion of Indiabulls 4524 SWOT of Indiabulls 47-4825 BCG of Indiabulls 4926 Competition in the industry 51-5227 Suppliers of Indiabulls Power 5328 Indiabulls in news 5529 KMO and Bartlett’s test 6330 Variables used in the test 6431 Communalities 6532 Total variance explained 6633 Rotated component matrix 6734 Condensed/final factors 6835 Different brokerage charges in the industry 6936 Comparison of various rates 7037 Price comparison chart 7138 SWOT of Sharekhan 72-7339 SWOT of India Infoline 74-7540 SWOT of ICICI Direct 76-7741 SWOT of Motilal Oswal 78-7942 SWOT of Angel Broking Firm 80-8143 Competition in real estate 8244 Competition in home loans 8345 Housing Finance Companies competition 83

BACKGROUND AND LITERATURE REVIEW

8 | P a g e

The Securities Brokerage Industry is cyclical and comprised of two distinct types of businesses. Brokerages, also known as financial services companies, strive to meet the investing needs of their clients, and exchanges facilitate securities trading. Net profits correlate to the performance of the broader equity market.

In this market with less differentiated products and many players, there exists an oligopoly (saying in book terms), characterized by tough competition, entry and exit barriers and many more.

1. Al Ries and Jack Trout, in his work said “differentiate or die”, too many less differentiated products creates a kind of information overload, and in this clutter of too much information, products which are not properly differentiated or advertised just end up becoming a me too product. To avoid it every marketer needs to position his/ her products in a way that makes a specific image in the minds of consumers.

2. Jack Miller, in his work published on June 03, 2010, talked about how investors make investment decisions. He broke the process of decision making in pulling the buy or sell trigger. According to him investors made the investment decisions in the ways like simple screening, then lateral recommendation, followed by piggy bank investing.

3. According to U.S. Securities and Exchange Commissions’, one of the articles: investors first evaluate their current financial roadmap, and then they evaluate their comfort zone in taking on risk. Consider an appropriate mix of investments, create and maintain an emergency fund, consider dollar averaging, consider rebalancing portfolio occasionally, and in the process also try to avoid the circumstances that can lead to fraud.

OBJECTIVE OF THE PROJECT

9 | P a g e

An increasing trend has been observed in demand for the services of Non Banking Financial Institutions nowadays. This project is aimed to find out factors affecting investment decisions in these firms. There has also been emphasis to find out the plus points of Indiabulls or the differentiating factors that give Indiabulls a competitive edge. In short:

To find out the factors affecting investment decisions in a NBFC.

To find out various competitive advantages that makes Indiabulls of the largest stock broking companies.

METHODOLOGY

10 | P a g e

This is a two dimensional project focusing on two aspects, as already mentioned (objectives). For my project work I have focused on both primary and secondary data as well.

Basically any research work proceeds as:

Fig: 1

For this project my challenge was to find out the factors and the competitive advantages. For which I conducted a descriptive research.

I have collected primary data through questionnaire and survey.

11 | P a g e

For secondary data, company records, some reviews in economic times, data on moneycontrol site, some online research works have been referred.

I have taken 11 factors in my survey so my population size is of 66. I have targeted only investors, who were customers, general investors and company employees.

A factor analysis has been run on the data to find the most influential factor.

For rest my own analytical skill is used.

Fig: 2

SCOPE OF THE PROJECT

12 | P a g e

This project has been a great insight for me as I came to know about stock market, demat accounts, buying and selling of dematerialized securities, who are brokers, how to make investment and how to track portfolio of investments.

The project is aimed to cover maximum factors affecting the demand drivers and competitiveness.

Nowadays even the government is taking up steps to find such factors to give a boost to the Indian financial system.

LIMITATIONS OF STUDY

The population size is limited to Hyderabad area. There may be interviewer bias or judgmental bias. There may be redundancy of data or area surveyed. Due to time and resource constraints some important segment of

population might have been missed out.

INDUSTRY OVERVIEW

The Financial Market

13 | P a g e

The financial industry or financial services industry includes a wide range of companies and institutions involved with money management, lending, investing, insuring and securities insurance and trading services. The following institutions are a part of the industry:

Banks Credit card issuers Investment companies Investment bankers Securities traders Financial planners Security exchanges

Products of the financial market:

Fig: 3

The major crises that have shaped the modern financial industry are:

14 | P a g e

The Great Depression(1929) Black Monday(1987) Asian Financial Crisis(1990) Stock Market Downturn(2002) Sub-prime Crisis(2007)

The Classification of financial market in India

Fig: 4

THE BROKERAGE INDUSTRY

15 | P a g e

The brokerage industry is currently characterized by a large number of companies (private or unorganized). In effect it is a fragmented industry with a large number of participants. The industry thus has ‘monopolistic competition’, i.e. a large number of firms selling a slightly differentiated product.

Indian stock broking industry is the oldest trading industry that has been around even before the establishment of BSE in 1875. Despite passing through a number of changes in post liberalization period, the industry has found its way towards sustainable growth. With the purpose of gaining deeper understanding about the role of Indian stock broking industry, in the country’s economy, here are some data gleaned from analysis of secondary research.

On the basis of recent research:

On the basis of geographical concentration, Western region has maximum of 52%, around 24% are located in the North, 13% in South, and 10% in the East.

3% of firms started broking operations before 1950, 65% between 1950-1995, and 32% post 1995.

On the basis of terminals 40% are located in Mumbai, 12% in Delhi, 8% in Ahmadabad, 7% in Kolkata, 4% in Chennai, and 29% in other cities.

From the study it was found that 36% of firms trade in cash, 27% in derivatives, and 20% in cash, derivatives and commodities.

In the cash market, 34% trade in NSE, 14% in BSE, 45% in both. Whereas in debt market, 31% trade in NSE, 26% trades in BSE, and 43% in both.

Majority branches are located in North, i.e. 40%, 31% in West, 24% in South, and 5% in East.

In terms of sub-brokers, around 55% are located in South, 29% in West, 11% in North, and 4% in East.

16 | P a g e

Trading, IPOs and Mutual Funds are the top three products offered by 90% of firms offering trading, 67% IPOs, and 53% offering Mutual Fund transaction.

In terms of various areas of growth, 84% of firms have shown their interest in expanding their institutional clients, 66% firms intend to increase FIIs, and 34% are interested in setting up Joint Ventures in India and abroad.

In terms of IT penetration 62% firms provide their website, and 90% have email facility.

Brokerage terminals in various regions:

Almost 52% of the terminals in the sample are based in the Western region of India, followed by 25% in the North, 13% in the South and 10% in the East. Mumbai has got the maximum representation from the West, Chennai from the South, New Delhi from the North and Kolkata from the East.

Mumbai also has got the maximum representation in having the highest number of terminals. 40% terminals are located in Mumbai while 12% are from Delhi, 8% from Ahmadabad, 7% from Kolkata, 4% from Chennai and 29% are from other cities in India.

Fig: 5

Branches and sub-brokers in various regions:

17 | P a g e

The maximum concentration of branches is in the North, with as many as 40% of all branches located there, followed by the Western region, with 31% branches. Around 24% branches are located in the South and East constitutes for 5% of the total branches of the total sample.

In case of sub-brokers, almost 55% of them are based in the South. West and North follow, with 30% and 11% sub-brokers respectively, whereas East has around 4% of total sub-brokers.

Fig: 6 Fig: 7

Analysis of brokerage industry based on Michael Porter’s 5 factor model

18 | P a g e

Fig: 8

Competition

The industry is now in a fairly high growth phase. However the brokerage industry is very cyclical and is impacted by activity levels in the markets. During the downturns such as 2008-2009 periods, the smaller players were squeezed out of the business. As a result there is a contrast consolidation happening in the industry.

Potential of new entrants

A new entrant in addition to the above also needs a reasonable level of capital to fund the working requirements of the business (finance to customers, deposits with exchanges, etc).

19 | P a g e

Competition in the industry

Potential of new entrants

Power of suppliers

Power of customers

Threat of subsitutes

The scale requirements are increasing constantly and as a result a new entrant will require higher levels of investments in the future to enter the business. As pointed out, it is likely to see many entrants in the industry. On the contrary, it is likely that the smaller players will exit by selling out or closing.

Power of the supplier

Not much relevant in most segments except investment banking, where employees control client relationships and hence have to be highly compensated.

Power of the buyers/customers

This is important in the institutional brokerage business which involves high volume and low brokerage charges. The extent of buyer power is very low to non-existent in all kinds of retail segments.

Threat of substitutes

The products offered by all firms in this industry are more or less differentiated. Investing rather saving in the bank rather than investing in a brokerage firm can be one option; else this is not applicable for this industry.

In a summary the industry has a moderate to low level of competitive advantage. There is low level of customer lock-in and customer will move his or her business if the brokerage rates are not competitive with rest of the industry. The only competitive advantage for companies in this sector comes from size and scale which enables them to leverage their size to reduce average costs and thus make a profit on low brokerage margins.

In addition to high fixed costs, the industry has very low margin cost. As a result the cost of adding an additional customer is low and per

20 | P a g e

transaction costs are limited. Due to this reason, we are seeing a constant pressure on the brokerage rates has intensified the competition in the industry and is resulting in consolidation with the top players.

The basic brokerage business is now sometimes a loss leader to enable the brokerage firm to acquire customers and sell other products such as wealth management services, or third party mutual funds. This segment will provide adequate returns in the future for a company with scale.

21 | P a g e

DEMAND AND SUPPLY DRIVERS OF THE INDUSTRY

Demands for financial products are driven by risk-reward assessment, which considers:

Potential yield

The expectation of financial incentives or return on investment is a great demand driver which tempts people to invest or engage into transactions of the financial markets.

Risk Rating

Higher risks assumes higher profits and vice versa. Risk ratings are a vital point when making a decision to park ones resources into this industry.

Liquidity

To maintain strong and flexible liquidity position people tend to invest in financial markets, in order to meet their contingencies.

Availability of information

The more disclosure, the more is information symmetry, and so will be visibility and access to returns and so will be the expectation from this market increase along with investment.

Access to alternatives

More the disclosure in the market more will be the competition with more profits, so more will be the choices and access to alternatives to park ones resources.

The major supply drivers are:

22 | P a g e

Money supply

The supply of money has a big role to play in this industry, the more the supply of money in this industry; more will be the availability of financial services and products.

Interest rates

Interest rate determines the terms of trade, fluctuations in interest rates can entirely fluctuate this industry. Higher interest rate= will give higher returns, with great supply no doubt but borrowing or ascertaining the real market value may become difficult.

Inflation

Value of a currency appreciates and depreciates with the rates of inflation. Inflation thus serves as a great supply driver in this market. As in high inflation with higher supply of money there will be higher supply and vice versa.

Economic conditions

Rates of inflation, the upsurge or downturn in the domestic and global economy is another supply driver which is beyond the control of any business firm.

Government Regulations

The attitude of the government towards the trade policies and various other financial firms and industry matters a lot. Various restrictions or duties or taxes may restrict the supply and may hinder the growth of this industry. And will flourish with the ease of trade.

GLOBAL AND DOMESTIC ECONOMIC ENVIRONMENT OF

23 | P a g e

The financial industry

According to global 2000 (annual report by Forbes), seven of the top 10 companies belonged to the financial industry. These included the Citygroup, Bank of America, HSBC Holdings, and JPMorgan Chase. Their combined revenue in 2007 was worth $647 billion, down from 2006 high of $785 billion.

According to Fortune 500 rankings, in 2006 financial services generated $257 billion in profits, a third of total Fortune 500 profits. In 2008, however, they lost a staggering $213 billion, a total swing of $470 billion. Big players on the list, such as Citygroup and Bank of America, may only be alive today just because of government money.

The financial industry is an industry in itself as well as an ancillary that supports other industries. Trade and commerce across the world would come to standstill if there was no means to fund, pay and protect the transactions.

The Brokerage industry

Domestic Economic Environment

In 1991, Manmohan Singh, as Finance Minister in Narasimha Rao’s government, embarked on a programme of liberalization prompted by an acute balance-of-payment crisis.

Fig: 9 (Indian economy growth factors)

24 | P a g e

Indian Brokerage Industry-Pre 2000

Post liberalization period. Business restricted to friends and relatives. Settlement T+15 days. Low trade volumes- No derivatives trading allowed. Lack of investment in technology- No front or back office

software.

Indian Brokerage Industry 2000-2008

Venture capital funding for brokerage businesses. Investment in technology- Front end and back end. National presence. Integrated risk management system. Significant increase in trade volumes- Derivatives trades play a

major role. Margin funding for the retail clients.

Indian Brokerage Industry 2009 onwards

Paradigm shift from transaction oriented to research/ portfolio based advisory.

Focus on franchisee based business model. Dematerialized accounts access for international trade. Access to international stock exchange. Trading on hand held platform (mobile phones etc) allowed.

Current Global Economic Environment

25 | P a g e

The global economy is slowly recovering from a deep recession, with significant risks remaining.

Countries are looking for ways to achieve sustainable economic growth and job creation.

Competitiveness has become more important than ever-Globalization will continue and strong international competitors are emerging.-Companies are re-examining everything in terms of how and where they operate.

India has achieved a long-term competitive transformation, but the next stage of development will be more challenging.

Stable and robust growth in face of global challenges

Fig: 10

Critical Success Factors of the Industry

26 | P a g e

Fig: 11

Seeing the overall brokerage as a single unit, the key success factors or the winning strategy of Indian Brokerage Industry is a mixture of:

People Process Technology

There are the three ingredients that together create value for both international and domestic customers.

By people it indicates to the service providers or the employees of the various firms of this industry, who day in and day out interact with the customers and provide them services and satisfy them.

Transparency of the process followed and disclosure method is yet another success factor. The settlement of transactions is generally done in a process of T+2 days. And the government support even still plays a very vital role in forming the rules and norms of such processes.

Technology enables to stay competitive and on edge with the competitors; facilitating the ease of processes and speed and to maintain and be up to date. This serves as a great success of the brokerage industry.

All these factors together help create value to the customer.

27 | P a g e

VARIOUS MEASURES TAKEN BY INDIAN GOVERNMT TO IMPROVE THE SITUTATION OF INDIAN STOCK MARKET

MEASURES OBJECTIVES

Allow foreign institutional investors to invest in equity and debt markets.

Liberalization of stock market to attract foreign investment in order to boost economic growth.

Expanding the product range offered by the stock exchanges.

Bring Indian market at par with the international standards and diversify product portfolio.

Allowing Indian companies to issues ADRS and GDRS.

Allowing Indian companies to invest abroad.

Facilitate market integration and give freedom to the companies.

Access to more funds for investment.

Divestment of government ownership Facilitate growth through privatization

Strengthening of institutional framework in primary and secondary markets Demutualization

To ensure transparency. Investor protection. Provide a standard framework for operations. Deregulation. Reduces the conflict of interest.

BSE and NSE to set up and maintain corporate bond reporting platforms

To capture all information relating to trading. Investor protection

Making PAN compulsory Strengthening KYC (Know Your Client)

Fig: 12

28 | P a g e

PESTEL ANALYSIS OF BROKERAGE INDUSTRY

PESTEL analysis stands for "Political, Economic, Social, Technological, Environmental and Legal analysis" and describes a framework of macro-environmental factors used in the environmental scanning component of strategic management. It is a part of the external analysis when conducting a strategic analysis or doing market research, and gives an overview of the different macro environmental factors that the company has to take into consideration. It is a useful strategic tool for understanding market growth or decline, business position, potential and direction for operations.

Fig: 13

Political factors are how and to what degree a government intervenes in the economy. Specifically, political factors include areas such as tax policy, labour law, environmental law, trade restrictions, tariffs, and political stability.

Economic factors include economic growth, interest rates, exchange rates and the inflation rate. These factors have major impacts on how businesses operate and make decisions. For example, interest rates affect a firm's cost of capital and therefore to what extent a business grows and expands.

Social factors include the cultural aspects and include health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety. Trends in social factors affect

29 | P a g e

the demand for a company's products and how that company operates.

Technological factors include technological aspects such as R&D activity, automation, technology incentives and the rate of technological change. They can determine barriers to entry, minimum efficient production level and influence outsourcing decisions. Furthermore, technological shifts can affect costs, quality and lead to innovation.

Environmental factors include ecological and environmental aspects such as weather, climate, and climate change, which may especially affect industries such as tourism, farming, and insurance.

Legal factors include discrimination law, consumer law, antitrust law, employment law, and health and safety law. These factors can affect how a company operates, its costs, and the demand for its products.

Fig: 14

LEGAL ISSUES WITH A BROKERAGE FIRM

30 | P a g e

Securities Exchange Act of 1934 (Exchange Act)

In contrast to the Securities Act, the Exchange Act primarily regulates transactions of securities in the secondary market - that is, sales that take place after a security is initially offered by a company (the issuer).  These transactions often take place between parties other than the issuer, such as trades that retail investors execute through brokerage firms.  The Exchange Act operates somewhat differently from the Securities Act.  To protect investors, Congress crafted a mandatory disclosure process that is designed to force companies to make public information that investors would find pertinent to making investment decision.  In addition, the Exchange Act provides for direct regulation of the markets on which securities are sold (the securities (stock) exchanges) and the participants in those markets (industry associations, brokers, and issuers).

Monetary and Fiscal Policies

In the securities industry there exist regulators who have established a set of rules and regulations that administer the entire industry. Financial markets, depositors, clearing houses, and vendors work together to regulate the investment in the industry.

The 3 major US government agencies that govern the securities industry and frame monetary and fiscal policy, they are: the Federal Reserve System, the Securities Exchange Commission (SEC), and the Office of Comptroller of the Currency.

Federal Reserve System

The Federal Reserve System is a government institution created to administer nation’s credit and monetary policies and to oversee the banking industry as well as certain aspects of the broker activity, such as credit.

The Fed is responsible for establishing and enforcing monetary policy and for regulating the amount of credit outstanding. The fed does this by establishing the bank discount rates and the rules for credit. The market’s response to the Fed’s determination to control

31 | P a g e

inflation by raising and lowering the discount rate affects long term interest rates, which have a significant impact on the securities’ market.

Securities Exchange Commission

The Securities Exchange Commission (SEC) is the primary regulatory agency that oversees the securities industry. The SEC is an independent bipartisan, quasi-judicial agency of the government. The laws administered by SEC deal with securities and finance and seek to provide protection for investors in their securities’ transactions.

Office of the Comptroller of the Currency

The Office of the Comptroller of the Currency’s (OCC) principal function is supervising the national banking system. The OCC must approve the establishment of new national banks, bank mergers involving national banks, and the liquidations of national banks.

COMPANY OVERVIEW

32 | P a g e

Fig: 15

History of Indiabulls

In middle of 1999, when e-commerce was just about starting in India, Sameer Gehlaut and his close IIT Delhi friend Rajiv Rattan got together and bought a defunct securities company with a NSE membership and started offering brokerage services. A Few months later, their friend Saurabh Mittal also joined them. By December 1999, the company embarked on its journey to build one of the first online platforms in India for offering internet brokerage services. In January 2000, the 3 founders incorporated Indiabulls Financial Services and made it as the flagship company.

In mid 2000, Indiabulls Financial Services received venture capital funding from Mr. L.N. Mittal & Mr. Harish Fabani. In late 2000, Indiabulls Securities, a subsidiary of Indiabulls Financial Services started offering online brokerage services and simultaneously opened physical offices across India. By 2003, Indiabulls securities had established a strong pan India presence and client base through its offices and on the internet.

33 | P a g e

In September 2004, Indiabulls Financial Services went public with an IPO at Rs 19 a share. In late 2004, Indiabulls Financial Services started its financing business with consumer loans. In March 2005, Indiabulls Properties Private Ltd, a subsidiary of Indiabulls Financial Services, participated in government auction of Jupiter Mills, a defunct 11 acre textile mill owned by NTC in Lower Parel, Mumbai. Indiabulls Properties private Ltd won the mill in auction and that purchase started Indiabulls real estate business. A few months later, Indiabulls Real Estate company Pvt. ltd bought Elphinstone mill in Lower Parel, another textile mill auctioned by NTC.

With real estate business gaining size, Indiabulls Financial Services demerged the real estate business under Indiabulls Real Estate and each shareholder of Indiabulls Financial Services received additional share of Indiabulls Real Estate through the demerger. Subsequently, Indiabulls Financial Services also demerged Indiabulls Securities and each shareholder of Indiabulls Financial Services also received a share of Indiabulls Securities.

In year 2007, Indiabulls Real Estate incorporated a 100% subsidiary, Indiabulls Power, to build power plants and started work on building Nasik & Amravati thermal power plants. Indiabulls Power went public in September 2009.

Today, Indiabulls Group has a net worth of Rs 16,796 Crores & has a strong presence in important sectors like financial services, power & real estate through independently listed companies and Indiabulls Group continues its journey of building businesses with strong cash flows.

BUSINESS LIFE CYCLE OF INDIABULLS

34 | P a g e

Fig: 16

The business life cycle is a model that enables businessmen to identify the level of performance at which their business is operating and to determine exactly what needs to be done to move to the next level.

The various levels of a business life cycle are:

Start up Rapid Growth Maturity Decline Re-birth/ death

The startup of Indiabulls

Indiabulls was in start up phase in the year 1999. Sameer Gehlaut, Rajiv Rattan and bought a defunct securities company with NSE membership and started brokerage services. Saurabh Mittal joined the founders.

-The founders were usually involved in running the business.

35 | P a g e

-The primary emphasis was on generating and selling offline brokerage services.

-There was less staff with modest pay in the industry, which provided personalized services.

The rapid growth stage

Indiabulls success geared up quite early, within one year of its inception in 2000.

-Indiabulls Financial Services received venture capital funding from Mr. L. N. Mittal and Mr. Harish Fabani and started online brokerage services.

-It opened many physical offices all across the country thereon and made pan India presence.

- Went public in 2004 (IPO was Rs. 19 per share) and also started providing customer loan in the same year.

-Became a private ltd. in the year 2005. Participated in government auction and bought Jupiter mills to start its ‘real estate business’, and so on.

-In 2007, started ‘Power Indiabulls’.

Indiabulls by this time had a huge customer base, with wide number of physical offices. Its sales and demand increased and it made its presence greatly visible in the financial and other markets.

Maturity stage

Indiabulls is still in the process of reaching the maturity stage. Its financial services and signature account services are in their boom

36 | P a g e

phase and are expected to reach there the earliest. With its current pace of developments, expanded and loyal customer base, constant research and development, and other initiatives Indiabulls is sure to reach the maturity stage as a market leader very soon. And so will increase its profitability and side by side will its competition in the market.

Decline/Re-birth

With an upsurge in demand for financial services. NBFC’s like Indiabulls have a great opportunity to develop and expand in the market with its current potentials and probably will never reach this stage unless it gives up to its competitors in the maturity stage.

JOURNEY OF INDIABULLS

Fig: 17

INDIABULLS GROUP OF COMPANIES

37 | P a g e

Fig: 18

COMPANY FINANCIALS

38 | P a g e

Total group net worth: Rs.16,844 Crs Total group PAT for FY 10-11: Rs 944 Crs Total group capital expenditure: Rs 6,200 CRs (US $ 1.4 bn)

capex in financial year 10-11. Planned capex of 29000 (us $ 6.5 bn) in the FY 2014-2015.

Focus on execution and on the ground results translating into profits.

For its ongoing projects Indiabulls groups customers 385 MTs of steel, 550 MTs of cement, and 1700 CUM of RMC on daily basis.

Creating value for shareholders: Dividend payout of 232 Crs in FY 10-11.

INDIABULLS IS A LEADING FINANCE COMPANY

Fig: 19

ASSET GROWTH

39 | P a g e

Fig: 20

Assets have grown at a quarterly average of Rs. 2000 Crs, over last 9 quarters with a decrease in non-performing assets.

Long duration mortgage loans have lead to steady asset growth and increase in Net Asset Income.

Company continues to grow its branch networks and now has 170 branches across the country.

Company has well trained ‘in house direct sales team’, over 1300 people to promptly attend to prospective customers.

MISSION AND VISION

40 | P a g e

MISSION :

Rapidly increase the number of client relationships by providing a broad array of products offering to emerge as a clear market leader.

VISION :

To be the largest and most profitable financial services organization in Indian market and become one stop shop for all non banking financial products and services for the retail customers.

STRATEGIES AND FOCUS

CONSOLIDATION

Aim to be among the top 3 players in existing products within next 3 years.

NO NEW PRODUCTS

Focus on gaining size and scale in existing core products.

NO CAPITAL MARKET FUND RAISING

All businesses are well funded to achieve growth and size. Avoiding excessive debt from the capital market.

GOAL

FY 2013/2014, target of US $ 1.4 bn in cash generation from 3 companies (real estate, finance and power).

MARKETING MIX OF INDIABULLS

41 | P a g e

Being a service industry Indiabulls will have 7P’s rather than 4, they are:

PRODUCTS

Fig: 21

a) Power India bulls (PIB)

PIB is the advanced online trading platform from Indiabulls Securities Limited. PIB provides the best in the class internet trading features and delivers a seamless and rich online trading experience for its users. PIB comes with a whole host of online features for the internet trading users ranging from real-time stock prices, to live trading reports, charting, News Room. PIB provides an integrated online trading platform for the internet trading community to invest in equity, F&O, Online IPOs and base their decision on sound fundamental research and technical analysis. It also provides various kinds of trading reports, each developed to cater to internet trading users’ distinct needs.

b) Indiabulls Signature account

Indiabulls Signature account caters to remain on top of your investments. It provides you the platform to trade in Equity and Derivatives. With an unmatched service and nationwide presence, the Indiabulls Signature account comes bundled with a variety of exclusive features.

c) Depository Services

Indiabulls is a depository participant with the National Securities Depository Limited and Central Depository Services (India) Limited for trading and settlement of dematerialized shares. Indiabulls performs clearing services for all securities transactions through its accounts. We offer depository services to create a seamless transaction platform – execute trades through Indiabulls Securities

42 | P a g e

and settle these transactions through the Indiabulls Depository Services. Indiabulls Depository Services is part of our value added services for our clients that create multiple interfaces with the client and provide for a solution that takes care of all your needs.

d) Currency Derivatives

Indiabulls offers trading in the Currency Derivatives Segment in NSE.Currency Derivatives are similar in nature to Stock Futures & Option contracts. Currency Derivatives Contracts (USD-INR, EUR-INR, GBP-INR and JPY-INR) at exchange rate as the underlying are available for trading with a monthly expiry. At any given time, Currency Derivatives Contracts are available for trading for the next 12 months expiry for futures whereas 3 months expiry and 1 quarterly expiry for options.

The Mark-to-Market for Currency Derivatives is settled on a daily basis in a manner similar to Equity Futures & Options.The market for Currency Derivatives is open from 9 A.M to 5 P.M (Monday to Friday).

PRICE

Indiabulls has various models at different price ranges targeted at a particular market segment. It caters to both the service and enterprise segment of customers.

Indiabulls charges Rs. 1350 for opening a demat account (900 account opening charges + 450 DP charges + 750 for software (optional)). It charges brokerage of: 0.3% to 0.2% (delivery) and 0.2% (intraday). The brokerage ranges from 1paise to 20paise or 3paise to 30paise.

Indiabulls provides home loans @ 10.75 (fluctuating) to salaried people and 12% (fluctuating) to non-salaried professionals.

The price of real estate fluctuates from location to location, and according to the size of the flat, residential or commercial plots.

43 | P a g e

PLACE

Indiabulls has its offices at all major cities, namely Delhi, Mumbai, Bangalore, Ahmadabad, Chennai, Kolkata, Hyderabad, Nasik and many other Indian cities.

Fig: 22

PROMOTION

44 | P a g e

Indiabulls does its promotion through news papers, magazines, through websites and television ads.

Fig: 23

PEOPLE

This includes the employees of the organization. The employees of Indiabulls have expertise in the field and are well versed in all the tricks of the trade. The employees are given importance in the organization because a satisfied employee creates a satisfied customer. They provide excellent and time to time services.

PROCESS

45 | P a g e

A hierarchical process is followed for execution of all services. First the sales lead is generated by the employees and sales calling is done on that database. The employees then approach interested customers, negotiation of sales is done, and the customers are explained the norms and sale is closed. Continuous services and assistance is provided to existing customers, they are made aware of new beneficial offers from time to time.

PHYSICAL EVIDENCE

Different branches of Indiabulls have a very professional and formal atmosphere. The work environment is very good. This may be one of the reasons why the employees like to spend time in office and generate high productivity.

SWOT ANALYSIS OF INDIABULLS

46 | P a g e

This is a strategic planning method to evaluate the Strength, Weaknesses (limitations), Opportunities and Threats involved in a project or business venture. It involves specifying the objectives of the business venture or project and identifying internal and external factors that are favorable or unfavorable to achieve it. This technique is credited to Albert Humphrey of Stanford University.

47 | P a g e

Strength

Online trading platform.Diverse branches and networks provide a great oppourtunity to cater tapped and untapped market as well.Provides competitive brokerage and DP charges.Equity analysis reports to support its clients.Both online and offline trading facility.Real time online transfer of funds and exposure facility with HDFC, Citybank, ICICI, etc

Weaknesses

It should have its own mutual funds asit provides advises on mutual funds.Position to answer the questions of the clients in their fields.It does not provide indices on major world markets, ADR prices of Indian scripts.Lacks banking arm

Fig: 24

48 | P a g e

Oppourtuni

ties

Financial services like mutual funds and insurance.It is registered with Luxemberg Stock Exchange so can target other stock exchanges also.ATM facility should be provided for easy withdrawals.Tie-ups with third party companies for selling products.High client base will help for cross sales of its products.

Threats

Companies like Sharekhan, ICICI Direct, Kotak Securities, and private brokers are major threats.Banks with demat facilities are jockeying for position.Local brokers capable of charging lower brokerage.Changes in SEBI guidelines and other tax implications.Government regulations

BCG MATRIX OF INDIABULLS

Companies that are large enough to be organized as strategic business units face the challenge of allocating resources among these units. In the early 1970’s Boston Consultancy Group developed a model to manage the portfolio of these business units (or major product lines). The BCG growth share matrix displays different business units on a graph of market growth rate vs. market share relative to competitors.

BCG MATRIX OF INDIABULLS

Fig: 25

49 | P a g e

Question Marks

Indiabulls Retail and Indiabulls Securities

Indiabulls Retail (Now known as „Store One‟) can be classified as question mark as it is new to the market and need to compete with established retailers like Future Group and K Raheja Group to gain market share. Indiabulls Securities also comes in this category due to pertinent competitors like Sharekhan, Karvy Stock Broking and others. Though broking industry is expanding by 12-15% annually, Indiabulls Securities is not able to cope with this high pace.

Stars

Indiabulls Real Estate and Indiabulls Financial Services

Indiabulls Real Estate can be considered to be in the Star category. It is considered star as it has a high market growth rate and enjoys a high market share as well. Real Estate sector in India is growing at 34% annually (www.sethassociates.com/Real_estate_sector_in_india.php) while growth of Indiabulls Real Estate has surged to 97%. Its profit rose to Rs. 201.32 Crores in 2010-2011 from 6.75 Crores in the preceding year. (www.indiabulls.com/ibgroup/media.htm). Financial services sector in India grew at 8 % last year but had a steady growth rate of 15% for the last few years. For FY 2011, net profits of Indiabulls Financial more than doubled to Rs. 743 Crores.

Cash Cows

None of the companies of Indiabulls comes in this category.

Dogs

None of the companies of Indiabulls comes in this category

PORTER’s 5 FACTOR MODEL OF INDIABULLS

50 | P a g e

Named after Michel E. Porter, this model identifies and analyses 5 competitive forces that shape every industry and determines industry’s weaknesses and strength. They are:

Competition in the industry

Indiabulls faces competition from various firms like:

51 | P a g e

Fig: 26

52 | P a g e

Potential of new entrants

The market for Non Banking Financial Companies or rather broking houses are flourishing. This new trend poses for new threats also; this may be either the entry of local players who can provide lower rates or a very big player who can enter into a price war. Threat of new entry is high when:

Capital requirements to start the business are less

Few economies of scale are in place

Customers can easily switch (low switching cost)

Your key technology is not hard to acquire or isn’t protected well

Your product is not differentiated

Power of suppliers

Indiabulls Group has very high profile corporate suppliers, who for obvious reasons have great bargaining power and offers from competitors also. The operations largely depend on these supplies.

Some of suppliers of Indiabulls Group (PIB) are:

Fig: 27

53 | P a g e

Bargaining Power of supplier means how strong is the position of a seller. Suppliers are more powerful when:

Suppliers are concentrated and well organized

Few substitutes available to suppliers

Their product is most effective or unique

Switching cost, from one suppliers to another, is high

You are not an important customer to Supplier

Power of customers

Customer is the king of the market. They have a lot of options while planning to purchase products. Products offered by Indiabulls are unsought in nature and are industry dependent. The threats which lies here are:

Too many goods chasing too few consumers.

Buyer purchases in bulk quantities and are mostly corporate clients.

Product is not much differentiated.

Buyer’s cost of switching to a competitors’ product is low.

Shopping cost is low.

Credible Threat of integration.

Threat of substitutes

Indiabulls poses great threat of substitutes like people of low risk appetite would like to invest in bank rather than in share market, real estate, commodities, etc. Its products can very well be substituted by substitutes offered by competitors.

INDIABULLS IN NEWS

54 | P a g e

Fig: 28

RECENT CORPORATE SOCIAL RESPONSIBILITY

55 | P a g e

BY INDIABULLS

THE NOA PROGRAM

Indiabulls CSR Initiative - Drug Access Program for cancer patients in partnership with Novartis

As a part of its deep commitment to social causes, Indiabulls has taken up this noble project named ‘Novartis Oncology Access’, in partnership with Novartis (drug manufacturing company) and Max Foundation (NGO). Indiabulls as financial partner is helping them access actual income of the patient and their families, and based on the accessed income; recommend the drug donation slabs as per approved guidelines.

Novartis are the developers & makers of Glivec- a medication for the treatment of Ph+ chronic myeloid leukemia (CML) in chronic phase, accelerated phase and blast crisis for both pediatric and adult patients.  This drug is also indicated for adult patients with specific conditions.

NOA program:

The NOA program is a drug access program for to help patients who have been prescribed Glivec and Tasigna but cannot afford to pay for the entire treatment cost. This program is run by Novartis along with its partner Physicians- enrolls patient under this program after diagnosis, The MAX Foundation- independent NGO – Assist patient throughout the program in completing formalities & procurement of medicines, Indiabulls Financial Services - independent body for financial evaluation of patient, collection & safekeeping the submitted documents with confidentiality and outlets – Independent pharmacist, dispenses drugs to patients & manage drug inventory.

Indiabulls Financial Services:

56 | P a g e

As a NOA partner Indiabulls are performing task of the local credit evaluation agency which works as an independent and unbiased body for the financial analysis and assessment of the patient and family members’ earning capacity to afford medical expenses on critical disease. The analysis bases on income levels assessment by way of financial evaluation, field verification, living standard, personal discussion with patient/ care taker & guidelines as per standard operating procedure (SOP) which is prepared by Novartis based on the WHO guidelines for drug donation programs using Business for Social Responsibility’s (BSR) cost of living index, a well-established international guide often used as eligibility criteria for determining access to drug assistance programs.  Based on the family composite Income a suitable donation decision is given.

ACCORDING TO 12 th ANNUAL REPORT OF MARCH 2011-12 DIRECTOR’S REPORT IN ECONOMIC TIMES

- Indiabulls Foundation plans to set up a hospital for the poor, for treatment of life threatening diseases. The foundation also aims to work at a district level on transformation projects specifically in the areas of education and healthcare infrastructure.

- The Company will actively support Indiabulls Foundation. In FY2010-11, the Company has contributed Rs. 8.8 Cr to Indiabulls Foundation.

- Other CSR Initiatives: the Company has partnered with Novartis to launch a "Drug Access Programme" for Cancer Patients. Indiabulls lends its expertise by assessing the financial status of the patients to approve access to Free Drugs under the programme.

CUSTOMER RELATIONSHIP

57 | P a g e

With a great team of highly motivated staff, Indiabulls maintains a great customer. Customer retention being of great importance in such market where margin is usually low and profit mainly comes due to scale of operations.

The dedicated workforce is always at the service of the customer at the very first call. There are always schemes, discounts and exemptions to existing customers.

Also if there is any new product or scheme old customer is always called before sales call is made to the new ones. There is guidance at each step.

Not only customer retention important but clients new to the market are also given great importance. Relationship managers are always there to take care of all such affairs. Continuous follow ups call are made time to time to remind customers for any kind of dates or investments is to be made.

MARKET DYNAMICS

58 | P a g e

The pricing signals that are created as a result of changing supply and demand level in a given market. Market dynamics describe the dynamic, or changing, price signals that result from the continual changes in both supply and demand of any particular product or group of products. Market dynamics is a fundamental concept in supply, demand and pricing economic models.

There is great shift in the Indian consumption pattern that is being observed like:

69% of the population is less than 35 years of age and has spurred consumption demand.

54% of the population is in the working group. High savings and investment rate (over 35% of GDP). India’s manufacturing growth is amongst the fastest in the

world. India’s manufacturing base is the fourth largest globally. The growth potential of the services sector in India is enormous

at $200 billion offering employment to 40 million people. The confidence of a robust growth in the services sector is the highest in India among the 4 BRIC countries including Brazil, Russia, China and India service sector. Among 60% of firms there expect a rise in activity while

The above factors along with many other factors are some of those market dynamics which greatly affect this market.

FACTORS AFFECTING INVESTMENT DECISIONS

59 | P a g e

There are a numerous reasons that affect investment decisions here are some of them:

Risk Tolerance

Risk refers to the volatility of portfolio’s value. The amount of risk the investor is willing to take on is an extremely important factor. While some people do become more risk averse as they get older; a conservative investor remains risk averse over his life-cycle. An aggressive investor generally dares to take risk throughout his life. If an investor is risk averse and he takes too much risk, he usually panic when confronted with unexpected losses and abandon their investment plans mid-stream and suffers huge losses.

Return Needs

This refers to whether the investor needs to emphasize growth or income. Younger investors who are accumulating savings will want returns that tend to emphasize growth and higher total returns, which primarily are provided by equity shares. Retirees who depend on their investment portfolio for part of their annual income will want consistent annual payouts, such as those from bonds and dividend-paying stocks. Of course, many individuals may want a blending of the two Þ some current income, but also some growth.

Investment Time Horizon

The time horizon starts when the investment portfolio is implemented and ends when the investor will need to take the money out. The length of time you will be investing is important because it can directly affect your ability to reduce risk. Longer time horizons allow you to take on greater risks with a greater total return potential because some of that risk can be reduced by investing across different market environments. If the time horizon is short, the investor has greater liquidity needs some attractive opportunities of earning higher return has to be sacrificed and the result is reduced in return.

Tax Exposure

60 | P a g e

Investors in higher tax brackets prefer such investments where the return is tax exempt, others will have no such preference.

Management Outlook

lf the management is progressive and has an aggressively marketing and growth outlook, it will encourage innovation and favor capital proposals which ensure better productivity on quality or both. In some industries where the product being manufactured is a simple standardized one, innovation is difficult and management would be extremely cost conscious. In contrast, in industries such as chemicals and electronics, a firm cannot survive, if it follows a policy of 'make-do' with its existing equipment. The management has to be progressive and innovation must be encouraged in such cases.

Competitor’s Strategy

Competitors' strategy regarding capital investment exerts significant influence on the investment decision of a company. If competitors continue to install more equipment and succeed in turning out better products, the existence of the company not following suit would be seriously threatened. This reaction to a rival's policy regarding capital investment often forces decision on a company'.

Opportunity created by technological change

Technological changes create new equipment which may represent a major change in process, so that there emerges the need for re-evaluation of existing capital equipment in a company. Some changes may justify new investments. Sometimes the old equipment which has to be replaced by new equipment as a result of technical innovation may be downgraded to some other applications, A proper evaluation of this aspect is necessary, but is often not given due consideration. In this connection, we may note that the cost of new equipment is a major factor in investment decisions.

Market Forecast

61 | P a g e

Both short and long run market forecasts are influential factors in capital investment decisions. In order to participate in long-run forecast for market potential critical decisions on capital investment have to be taken.

Fiscal Incentives

Tax concessions either on new investment incomes or investment allowance allowed on new investment decisions, the method for allowing depreciation deduction allowance also influence new investment decisions.

Cash Flow Budgets

The analysis of cash-flow budget which shows the flow of funds into and out of the company may affect capital investment decision in two ways. 'First, the analysis may indicate that a company may acquire necessary cash to purchase the equipment not immediately but after say, one year, or it may show that the purchase of capital assets now may generate the demand for major capital additions after two years and such expenditure might clash with anticipated other expenditures which cannot be postponed. Secondly, the cash flow budget shows the timing of cash flows for alternative investments and thus helps management in selecting the desired investment project.

Non-economic Factors

New equipment may make the workshop a pleasant place and permit more socializing on the job. The effect would be reduced absenteeism and increased productivity. It may be difficult to evaluate the benefits in monetary terms and as such we call this as non-economic factor. Let us take one more example. Suppose the installation of a new machine ensures greater safety in operation. It is difficult to measure the resulting monetary saving through avoidance of an unknown number of injuries. Even then, these factors give tangible results and do influence investment decisions.

FACTOR ANALYSIS BASED ON FACTORS AFFECTING INVESTMENT DECISIONS

62 | P a g e

Factor analysis is a data reduction/summarization technique. Generally in market research there are many factors/variables which are correlated which needs to be reduced to manageable levels.

Generally factor analysis is used where multi co-linearity exists. For factor analysis to run the null is that the correlation matrix is an identity matrix.

KMO and Bartlett’s test

Kaiser-Mayer-Olkin (KMO) test is to test the appropriateness of the factor analysis, if the value is between ‘0.5 to 1’, the test is considered to be significant.

Bartlett’s Test

Using Bartlett’s test of sphericity we test the null hypothesis, if the significant value is <0.5, then the null hypothesis is rejected, i.e. there is multi co-linearity, so we can proceed with factor analysis.

Fig: 29

The factor analysis stands to be appropriate as KMO is 0.891 i.e. more than 0.5.

For Bartlett’s test:

63 | P a g e

Null hypothesis: the variable is only correlated to itself, (i.e. r=1) and un-correlated to others (i.e. r=0).

Alternate hypothesis: all the variables are correlated to each other.

Calculated value: 758.225

Analysis: the null hypothesis is rejected as the significance level is less than 0.5. Hence, the variables are correlated.

Variables used in the project are:

No.(sign used)

Variables

V1 IncomeV2 Market SituationV3 CompanyV4 Risk AppetiteV5 Management OutlookV6 Market forecastV7 Financial IncentivesV8 Cash-flow Budgets V9 Non-economic FactorsV10 Age FactorV11 Other Factors

Fig: 30

Communalities:

64 | P a g e

Fig: 31

Extraction Method: Principal Component Analysis

Principal Component Analysis works on the assumption that all the variance is common, therefore before extraction all communalities are 1. After extraction table shows shared variance of each variable in all the factors.

Total variance explained

65 | P a g e

Fig: 32

Extraction Method: Principal Component Analysis.

Factor Component: The initial number of factors is the same as the number of variables used in the factor analysis. However, not all 11 factors will be retained. In this project only 1st 2 factors will be retained.

Initial Eigen Values: Eigen value is the variance explained by each factor. Because the analysis is conducted based on a correlation matrix, the variables are standardized, which means that each variable has a variance of 1, and the total variance is equal to the number of variables used in the analysis, in this case its 11.

Total: This column contains the Eigen values. The first factor will always account for the most variance (and hence it has the highest Eigen value), and the next factor will account for as much of the left over variance as it can, and so on. Hence, each successive factor will account for less and less variance.

% of Variance: This column contains the percent of total variance accounted for by each factor.

Cumulative %: This column contains the cumulative percentage of variance accounted for by the current and all preceding factors.

66 | P a g e

Component Matrix

In this approach, factors only with Eigen value more than 1 are retained. Factors with variance less than 1 are no better than a single variable, because due to standardization, each variable has a variance of 1. If numbers of variables are less than 20 this approach will result in a conservative number of factors. Here, the number of variables is 11 so to select the number of factors, Eigen value method is the best method.

Rotated Component Matrix

Fig: 33

Extraction Method: Principal Component Analysis.

Rotation Method: Varimax with Kaiser Normalization.

Rotation is converged in 3 iterations.

As a result of the Factor Analysis the 11 variables are condensed to 2 factors. From the Component Matrix we can identify all variables which come under a particular factor. Here’s a depiction of it:

67 | P a g e

Factor What it explains

Personal/Internal Factors Income Risk appetite Financial incentives Non-economic factors Age factor Others

External Factors Market Situation Market forecast Management outlook Company Cash flow budgets

Fig: 34

Thus there are some internal and external factors that affect a person’s investment decisions.

COMPARISON OF INDIABULLS BROKERAGE SERVICES

COMPARISON OF DELIVERY AND INTRADAY

68 | P a g e

*MMC – Minimum Monthly Charges.

Fig: 35

COMPARISON OF VARIOUS RATES

FIRMS HDFC SHAREK MOTILAL ICICI KOTAK INDIABULLS

69 | P a g e

FACTOR HAN OSWAL

BROKERAGE

5p to 50p 5p to 25p 5p to50p,1p-10p ( min)

3p to 25p 4p to 40p 2p to 20p or1p to 10p (min)

MINIMUMAMOUNT

Rs 10000,Rs 0 (for big corporate clients)

Rs 10000 Rs 50000 Rs 0 Rs 10000 Rs 0

MINIMUM OPENING CHARGES

Rs 799 Nil Rs 200 Rs 555 Rs 550 Rs 1350

PRODUCTS -Equity, features and options, ETF, IPO, mutual funds.-Do it yourself systematic investment planning, and-NRI offerings, loans, FD.

Trade Tigers,IPO, MF online, contract note on paper, and ODIN Software.

ETF, IPO, mutual funds, andNRI offerings.

IPO, Mutual Funds, and Commodities

K-25 and T-25.Brokerage, IPO, Mutual Funds, Commodities.

IPO, Mutual Funds, Real Estate, Home loans, Commodity, and Derivatives.

SERVICES-J2 ME windows, blackberry, android, iphone.- Call and trade, online and offline services for different time zones.

Brokerage services, trade on mobile, online, call and trade, dedicated dealer desk at every city.

Call and trade.

Brokerage-e and banking services.

Brokerage and banking services.

Brokerage, Online and Offline Trading available on all phones, No extra charges on calls from clients.

QUALITY OF SALESPERSON

Good Good Good Good Good Good

PROCESS T+2 days T+2 days T+2 days T+2 days T+2 days T+2 days

Fig: 36

PRICE COMPARISON CHART

70 | P a g e

Fig: 37

In the above price band, Indiabulls is facing somewhat strong competition from Sharekhan, as it is more or less near to what Indiabulls is charging. At the same time Kotak Securities also poses a threat because of the improved technology used by them and constant research and development. Where ICICI Direct is a little below Kotak. Motilal Oswal and HDFC both are commodity side of the graph with relatively higher prices charged for their product. Thus with its current pricing Indiabulls enjoys price leadership as far as brokerage is concerned.

SWOT ANALYSIS OF COMPETITOR FIRMS

71 | P a g e

SWOT OF SHAREKHAN

72 | P a g e

Strength

Market share leadership.High Research and Development.Strong management team, financial position and competitive pricing.Reputation management, Unique products diverse products and offers for the customers.Strong brand recall and strong reach to masses.

Weaknesses

Diseconomies of scale.Not much differentiated products.More employee turnover.Less small investors.

Fig: 38

73 | P a g e

Oppourtunities

Financial markets (raise money through debt, etc)Innovation, OnlineProduct and services expansion. Penetration in developing cities.Increase in awareness of people about stock market

Threats

Competition.Cheaper technology. Economic slowdown.External changes (government, politics, taxes, etc). Exchange rate fluctuations.

SWOT OF INDIA INFOLINE

74 | P a g e

Strength

Brand image.Brand experiance.Innovative products.

Weaknesse

s

High targets for the financial advisors and sales department.Many competitors, less differentiated products.The reach in semi-urban areas and rural markets is still very less.

Fig: 39

75 | P a g e

Oppourtunities

Growing Financial Services industry's share of wallet for disposable income.Regulatory reforms would aid greater participation by all class of investors.Leveraging technology to enable best practices and processes.Increased appetite (need) of Indian corporate for growth

Threats

Execution risk.Slowdown in global liquidity flows.Increased intensity of competition from local and global players.Unfavorable economic conditions.

SWOT ANALYSIS OF ICICI DIRECT

76 | P a g e

Strength

Banking arm.Upgraded product design and development facilities to develop new products.Ongoing activities to support up gradation of operational performance.Team of talented and committed professionals available to improve companies performance.

Weaknesse

s

Not innovative. Not diversifiedhigh employee turnoverless. small investors

Fig: 40

77 | P a g e

Oppourtunities

Innovation.Increse in penetration in the market.

Threats

Constant pressure to be cost competitive to meet customer expectations.

SWOT OF MOTILAL OSWAL

78 | P a g e

Strength

Large and diverse distribution network.Strong research and sales team..Brand recognition. Experienced top management.Strong financial results.

Weaknesse

s

Charges are high compare to other companies in industry.

Fig: 41

79 | P a g e

Oppourtunities

Growing Financial Services industry's share of wallet for disposable income.Regulatory reforms would aid greater participation by all class of investors.Leveraging technology to enable best practices and processes.Increased appetite (need) of Indian corporate for growth capital.

Threats

Execution risk.Slowdown in global liquidity flows.Increased intensity of competition from local and global players.Unfavorable economic conditions.

SWOT OF ANGEL BROKING

80 | P a g e

Strength

ServiceDistribution networkProducts

Weaknesse

sCustomer Satisfaction.Branding. Competition from Banks.

Fig: 42

81 | P a g e

Oppourtunities

Ever increasing market.Improving technology.Unfulfilled needs of customers..Education level.

Threats

New competitorsTechnology based business.

COMPETITION IN REAL ESTATE

Real Estate prices in Hyderabad have touched new heights, even though some political issues act as a dampener once in a while .A rising trend has been observed in the demand for luxuriant residential and IT spaces. The demand for Real Estate development sites and projects have increased, as have the Hyderabad Realtors, including the Real Estate agents of the city. Indiabulls real estate business is currently active in various cities: Hyderabad, Mumbai, Bangalore, Gurgoan, Kolkata, Jodhpur, Ahmadabad, Nasik, and many other cities.

Competition in the industry

The booming Real Estate Sector has given rise to a number of companies which give stiff competition to Indiabulls Real Estate. In the Premium Housing category, Indiabulls Real Estate mainly faces competition from players such as DLF and Ansal Properties and Infrastructure Limited. In the Affordable Housing segment, it faces competition from players such as Sobha Developers.

Fig: 43

82 | P a g e

COMPETITION IN HOMELOANS

In earlier days, Nationalized and Public Sector Banks were the sole providers of Home Loans but the entry of the Public Sector Banks marked a change in the interest rates, which came down considerably. The decrease in Interest Rates in turn, enhanced the borrowing power of customers.

Some competitors in the market who also provide also provide home loans are:

Fig: 44

Some Housing Finance Companies which provide home loans and fall in Indiabulls’ competitor league are:

Fig:45

83 | P a g e

COMPETITIVE ADVANTAGE OF INDIABULLS BROKERAGE SERVICES

Lowest brokerage charge in the industry (currently). Best software in the industry. Listed company and aggressive in brand promotion. Mobile trading tie ups with Blackberry and other phones, where

one can trade with ease. Both online and offline facilities are provided. Competitive commissions and service support at fair price

(value for money). Relationship manager facility to assist customers as and when

they need assistance and guidance. Full access to Indiabulls Equity Analysis, follows a fact based

approach to rating stocks. Easy access to customers of the snap shots of their account

statement and portfolio statements and to digital contract notes.

CONCLUSION

84 | P a g e

Indiabulls, the young bull on the run, within some years of its inception has established itself as a business super brand. The company which began as a simple brokerage firm has now spread its wings in real estate, home loans, power, etc.

The arch of the bull, Indiabulls Financial Services Limited (IBFSL) which is the flagship company of the group, offers consumer finance, including secured and unsecured personal loans; commercial vehicle and tractor financing; loan against property and housing loans; retail IPO financing; loans against shares; and commercial credit to small and medium scale industries.

Breaking free, Indiabulls Securities Limited, (ISL) before its demerger in 2008, was a subsidiary of IBFSL. ISL provides securities brokerage services including equities, futures, commodities, and options; depositary services; research services; insurance, initial public offering (IPO), and mutual fund distribution.

RECOMMENDATIONS

While working in the real time and while making this project many things came into scene, they are:

Sales call made to new customers should be made promptly as immediate calling and customer move to competitors easily.

Services of Indiabulls are available on all phones except on i-phones, which is in trend now.

Indiabulls has tie-ups with all banks except SBI. This can be a reason why customers move away.

Indiabulls should go for aggressive advertising, as most of its products and the brand itself is not much advertised.

OUTCOME AND CONTRIBUTION

85 | P a g e

A factor analysis was conducted to find out the factors affecting the investment decisions. A total of 11 factors were considered, on a population of 110, out of only two dominant factors came out. Which the help of which it can be explained that there are some external and personal/internal factors that affect a persons’ investment decision.

Another part of the project was a competitive analysis to find out competitive advantage that Indiabulls has over its competitors.

My task at Indiabulls was to bring sales leads and to do sales calling to them to convert them into sales. Another task assigned to me was to call the existing customers and explain them about what Indiabulls could offer them at that point of time.

My project’s data collection on different kind of rates prevailing in the market of different competitors is of great importance and time to time help for the company. Also the factors affecting investment decisions can be help in future when deciding on the various demand drivers.

LEARNINGS FROM SIP

86 | P a g e

Through the course of my summer internship programme, I got a glimpse of the brokerage industry’s new upcoming giant firm Indiabulls. My task during SIP was to go to various corporate offices and explain some target population about various investment options offered by Indiabulls and its advantages; and generate sales leads on its basis. Then make sales call, clarify the customer’s doubt and create sales.

During this process I learnt about the stock market, various kinds of securities, commodities, metals, spices, etc that are traded. I also came to know about different kind of loan potions and gained knowledge about real estate sector also.

I learnt how to keep a track of the very fluctuating stock prices and how to invest in them. I also learnt how to talk to customers when doing a sales calling or when really approaching them. And in the process of explaining them and clearing their doubts, many of mine were cleared too.

This SIP has been a great insight to me and it would always help me when I work for a firm in future or invest myself.

REFERENCES

87 | P a g e

Sites:

www.indiabulls.com www.secgov/investor/pubs/financialnavigating.html www.tradestreaming.com/2010/06/04/investment decisions economicstimes.indiatimes.com>opinion en.wikipedia.org/wiki/marketing_research www.quickmba.com/strategy/matrix/bcg www.smallbusiness.wa.gav.au/business-life-cycle www.valueline.com/stock/industry en.wikipedia.org/wiki/porters-five-factor

Books:

Kotler Philip et al, 2009. Marketing Management. A South Asian Perspective. New Delhi: Dorling Kindersley (India) Pvt Ltd. Pearson Education

Al Ries and Jack trout, 1972. Principles of Marketing Management.

APPENDIX

88 | P a g e

Questionnaire for factors affecting investment decision

1. Do you invest?Yes: No:

2. If yes, what is your investment portfolio?

Or

How much do you invest?

3. Where do you put your money?Stocks:Commodities:Currencies:Derivatives:Others (specify):

4. More than one of the above?--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

5. Why do you invest?

6. What are the factors that affect your investment decisions?

89 | P a g e

Income:Market situation:Company:Risk appetite:Management outlook:Market forecast:Fiscal incentives:Cash flow budgets:Non-economic factors:Age factor:Others (specify):

7. Do you invest in more than one of the above?

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

8. Name:

9. Salaried/ Non-salaried

10. Occupation:

11. Any suggestions/ Comments:

90 | P a g e