1. 1
Table of Contents
TOPIC ................................................................................................................................................2
COMPANY OVERVIEW .................................................................................................................3
INDIABULLS HISTORY
..............................................................................................................
3
INDIABULLS IS A LEADING FINANCE COMPANY
..............................................................
4
MISSION AND VISION
................................................................................................................
5
STRATEGIES AND FOCUS
.........................................................................................................
5
INDUSTRY OVERVIEW..................................................................................................................6
THE FINANCIAL MARKET
........................................................................................................
6
THE BROKERAGE INDUSTRY
..................................................................................................
7
DEMAND AND SUPPLY DRIVERS OF THE INDUSTRY ......................................................11
CRITICAL SUCCESS FACTORS OF BROKERAGE INDUSTRY
..........................................
12
MARKETING MIX OF INDIABULLS ........................................................................................14
PRODUCTS
...................................................................................................................................
14
PLACE
..........................................................................................................................................
15
PRICE
...........................................................................................................................................
16
PROMOTION
...............................................................................................................................
16
PEOPLE
........................................................................................................................................
17
PHYSICAL EVIDENCE
..............................................................................................................
17
PROCESS
.....................................................................................................................................
18
REFERENCES ................................................................................................................................19
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Topic
Review the current Marketing Plan of your
Consulting (or Non consulting if you are not working
for one) Organization and suggest changes in its
Marketing Mix, to improve it’s overall performance,
particularly financial.
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3. 3
Company Overview
INDIABULLS HISTORY
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.
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By 2003, Indiabulls securities had established a strong pan India presence and
client base through its offices and on the internet.
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.
INDIABULLS IS A LEADING FINANCE COMPANY
Asset Composition:
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Asset Growth:
MISSION AND VISION
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 2014/2015, target of US $ 1.6 bn in cash generation from 3 companies
(real estate, finance and power).
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Industry Overview
THE FINANCIAL MARKET
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 Financial Markets:
The major crises that have shaped the modern financial
industry are:
➢
➢
The Great Depression(1929)
Black Monday(1987)
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➢
➢
➢
Asian Financial Crisis(1990)
Stock Market Downturn(2002)
Sub-prime Crisis(2007)
The Classification of financial market in India:
THE BROKERAGE INDUSTRY
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.
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➢
➢
➢
➢
➢
➢
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.
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.
Branches and sub-brokers in various regions:
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.
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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).
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.
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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 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.
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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:
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 :
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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.
CRITICAL SUCCESS FACTORS OF BROKERAGE INDUSTRY
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.
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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.
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Marketing Mix of Indiabulls
Being a service industry Indiabulls will have 7P’s rather than just 4, they are:
PRODUCTS
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 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.
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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).
Suggestion:
You have to open a bank account with bank mentioned in Indiabulls site for
Credit/Debit facility as they don't have their own bank. Whereas, in ICICI
direct, you have a direct debit/credit facility with the bank. With the opening of
a banking arm, Indiabulls can provide better services and user experience to
its customers.
PLACE
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Indiabulls has its offices at all major cities, namely Delhi, Mumbai, Bangalore,
Ahmadabad, Chennai, Kolkata, Hyderabad, Nasik and many other Indian cities.
Suggestion:
Indiabulls should start tapping rural markets.
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.
Suggestion:
Indiabulls should try to bring down brokerage prices but bringing more
automation in its back-end work. It will attract customers from firms like Karvy
and Kotak Securities.
PROMOTION
Indiabulls does its promotion through news papers, magazines, through
websites and television ads.
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Suggestion:
More importance should be given to promotions & advertisements, specially in
rural markets.
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.
Suggestion:
Their business is dependent on the team of relationship managers who directly
manage their relationships. Any events that harm these relationships including
the loss of their relationship managers may lead to the loss of client. They
should improve their approach to retain high performing talents.
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.
Suggestion:
Bringing greenery and natural ambiance in their working environment, can
help reducing stress levels of both employees and customers and hence
enhance the productivity.
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PROCESS
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.
Suggestion:
The process can be made more friendly to customers by making their request
status available via mobile and web applications.
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References
Sites:
http://www.indiabulls.com
http://www.secgov/investor/pubs/financialnavigating.html
http://en.wikipedia.org/wiki/marketing_research
http://www.quickmba.com/strategy/matrix/bcg
http://www.smallbusiness.wa.gav.au/business-life-cycle
http://www.valueline.com/stock/industry
http://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
Nature Thoughts & Symmetry