Mark

1. 2012
FACTORS AFFECTING INVESTMENT DECISIONS AND
COMPETITIVE ADVANTAGES OF INDIABULLS
SHIKHA SINHA
INDIABULLS SECURITIES
IBS HYDERABAD
5/26/2012

2. 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:
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3. 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:
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4. 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
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5. 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”.
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6. TABLE OF CONTENTS
SL CONTENTS PAGE
NO. NO.
01 Authorization 3
02 Acknowledgement 4
03 Executive summary 5
04-a Introduction- Background and Literature review 9
b Objective of project 10
c Methodology 11-12
d Scope and Limitations of study 13
05-a Financial industry overview 14-15
b Introduction to brokerage industry 16-18
c Porter‟s 5 factor model of industry 19-21
d Demand drivers of the industry 22
e Supply drivers of the economy 23
f Domestic economic conditions 24-25
g Global economic conditions 26
h 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) 31-32
06-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 59
07-a Factors affecting investment decisions 60-62
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7. b Factor Analysis and interpretation 63-68
08-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 83
e Competition in home loans 84
f Competitive advantage 85
09 Conclusion and recommendation 86
10 Outcome and contribution 87
11 Learning from SIP 88
12 References 89
13 Appendix (Questionnaire) 90-91
LIST OF FIGURES AND TABLES
Sl. Pg.
NO. CONTENT NO.
01 Research Methodology 11
02 Methodology 12
03 Products of financial market 14
04 Classification of financial market 15
05 Brokerage terminals in various areas 17
06 Percentage of branches in each region 18
07 Percentage of sub brokers in various regions 19
08 Analysis of Porter‟s 5 factor model of the industry 24
09 Indian economy‟s growth factors 26
10 Stable and robust growth in face of global 27
challenges
11 Critical success factors of the industry 28
12 Various measures taken by Indian Government 29
13 PESTEL analysis 30
14 PESTEL analysis of the industry 33
15 Indiabulls at glance 35
16 Business life cycle 37
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8. 17 Journey of Indiabulls 38
18 Indiabulls group of companies 39
19 Indiabulls a leading finance company 40
20 Asset growth of Indiabulls 41
21 Products of Indiabulls 42
22 Places of Indiabulls 44
23 Promotion of Indiabulls 45
24 SWOT of Indiabulls 47-48
25 BCG of Indiabulls 49
26 Competition in the industry 51-52
27 Suppliers of Indiabulls Power 53
28 Indiabulls in news 55
29 KMO and Bartlett‟s test 63
30 Variables used in the test 64
31 Communalities 65
32 Total variance explained 66
33 Rotated component matrix 67
34 Condensed/final factors 68
35 Different brokerage charges in the industry 69
36 Comparison of various rates 70
37 Price comparison chart 71
38 SWOT of Sharekhan 72-73
39 SWOT of India Infoline 74-75
40 SWOT of ICICI Direct 76-77
41 SWOT of Motilal Oswal 78-79
42 SWOT of Angel Broking Firm 80-81
43 Competition in real estate 82
44 Competition in home loans 83
45 Housing Finance Companies competition 83
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9. BACKGROUND AND LITERATURE REVIEW
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.
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10. OBJECTIVE OF THE PROJECT
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.
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11. METHODOLOGY
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.
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12. I have collected primary data through questionnaire and
survey.
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
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13. SCOPE OF THE PROJECT
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.
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14. 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 the financial market:
Fig: 3
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15. The major crises that have shaped the modern financial industry
are:
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
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16. 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.
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.
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17. 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.
Fig: 5
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18. 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.
Fig: 6 Fig: 7
Analysis of brokerage industry based on Michael Porter’s 5 factor
model
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19. Competition in the industry
Potential of new entrants
Power of suppliers
Power of customers
Threat of subsitutes
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).
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20. 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
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21. 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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22. 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.
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23. 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
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.
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24. GLOBAL AND DOMESTIC ECONOMIC ENVIRONMENT OF
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.
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25. Fig: 9 (Indian economy growth factors)
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.
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26. Current Global Economic Environment
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
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27. Critical Success Factors of the Industry
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.
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28. VARIOUS MEASURES TAKEN BY INDIAN GOVERNMT TO
IMPROVE THE SITUTATION OF INDIAN STOCK MARKET
MEASURES OBJECTIVES
Allow foreign institutional investors to Liberalization of stock market to attract foreign investment in
invest in equity and debt markets. order to boost economic growth.
Expanding the product range offered by Bring Indian market at par with the international standards and
the stock exchanges. diversify product portfolio.
Allowing Indian companies to issues Facilitate market integration and give freedom to the
ADRS and GDRS. companies.
Allowing Indian companies to invest Access to more funds for investment.
abroad.
Divestment of government ownership Facilitate growth through privatization
Strengthening of institutional framework To ensure transparency.
in primary and secondary markets Investor protection.
Demutualization Provide a standard framework for operations.
Deregulation.
Reduces the conflict of interest.
BSE and NSE to set up and maintain To capture all information relating to trading. Investor
corporate bond reporting platforms protection
Making PAN compulsory Strengthening KYC (Know Your Client)
Fig: 12
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29. 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
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30. attitudes and emphasis on safety. Trends in social factors affect
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
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31. LEGAL ISSUES WITH A BROKERAGE FIRM
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
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32. does this by establishing the bank discount rates and the rules for
credit. The market‟s response to the Fed‟s determination to control
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.
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33. COMPANY OVERVIEW
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
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34. 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.
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35. BUSINESS LIFE CYCLE OF INDIABULLS
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
35 | P a g e

36. membership and started brokerage services. Saurabh Mittal joined the
founders.
-The founders were usually involved in running the business.
-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.
36 | P a g e

37. Maturity stage
Indiabulls is still in the process of reaching the maturity stage. Its
financial services and signature account services are in their boom
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
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38. INDIABULLS GROUP OF COMPANIES
Fig: 18
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39. COMPANY FINANCIALS
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
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40. ASSET GROWTH
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.
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41. 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 2013/2014, target of US $ 1.4 bn in cash generation from 3
companies (real estate, finance and power).
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42. MARKETING MIX OF INDIABULLS
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
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43. 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.
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.
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44. The price of real estate fluctuates from location to location, and
according to the size of the flat, residential or commercial plots.
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
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45. PROMOTION
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.
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46. 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.
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.
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47. SWOT ANALYSIS OF INDIABULLS
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.
• Online trading platform.
• Diverse branches and networks provide a great
oppourtunity to cater tapped and untapped
market as well.
Strength • 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
• It should have its own mutual
funds asit provides advises on
mutual funds.
• Position to answer the questions
of the clients in their fields.
Weaknesses • It does not provide indices on
major world markets, ADR
prices of Indian scripts.
• Lacks banking arm
47 | P a g e

48. • 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
Oppourtunities easy withdrawals.
• Tie-ups with third party companies for
selling products.
• High client base will help for cross sales
of its products.
• Companies like Sharekhan, ICICI
Direct, Kotak Securities, and private
brokers are major threats.
• Banks with demat facilities are
jockeying for position.
Threats • Local brokers capable of charging
lower brokerage.
• Changes in SEBI guidelines and other
tax implications.
• Government regulations
Fig: 24
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49. 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
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50. 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
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51. PORTER’s 5 FACTOR MODEL OF INDIABULLS
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:
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52. Fig: 26
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53. 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
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54. 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.
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55. INDIABULLS IN NEWS
Fig: 28
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56. RECENT CORPORATE SOCIAL RESPONSIBILITY
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.
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57. Indiabulls Financial Services:
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 12th 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 FY
2010-11, 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.
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58. CUSTOMER RELATIONSHIP
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.
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59. MARKET DYNAMICS
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.
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60. FACTORS AFFECTING INVESTMENT DECISIONS
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.
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61. Tax Exposure
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.
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62. Market Forecast
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.
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63. FACTOR ANALYSIS BASED ON FACTORS AFFECTING
INVESTMENT DECISIONS
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.
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64. For Bartlett‟s test:
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. Variables
(sign used)
V1 Income
V2 Market Situation
V3 Company
V4 Risk Appetite
V5 Management Outlook
V6 Market forecast
V7 Financial Incentives
V8 Cash-flow Budgets
V9 Non-economic Factors
V10 Age Factor
V11 Other Factors
Fig: 30
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65. Communalities:
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.
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66. Total variance explained
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.
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67. Cumulative %: This column contains the cumulative percentage of
variance accounted for by the current and all preceding factors.
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.
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68. 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:
Factor What it explains
Income
Personal/Internal Factors Risk appetite
Financial incentives
Non-economic factors
Age factor
Others
Market Situation
External Factors 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.
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69. COMPARISON OF INDIABULLS BROKERAGE SERVICES
COMPARISON OF DELIVERY AND INTRADAY
*MMC – Minimum Monthly Charges.
Fig: 35
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70. COMPARISON OF VARIOUS RATES
FIRMS
HDFC SHAREK MOTILAL ICICI KOTAK INDIABULLS
FACTOR HAN OSWAL
BROKERAG 5p to 50p 5p to 25p 5p to50p, 3p to 25p 4p to 40p 2p to 20p or
E 1p-10p ( min) 1p to 10p (min)
MINIMUM Rs 10000, Rs 10000 Rs 50000 Rs 0 Rs 10000 Rs 0
AMOUNT Rs 0
(for big
corporate
clients)
MINIMUM Rs 799 Nil Rs 200 Rs 555 Rs 550 Rs 1350
OPENING
CHARGES
PRODUCTS -Equity, features Trade ETF, IPO, IPO, K-25 and IPO, Mutual
and options, Tigers, mutual Mutual T-25. Funds, Real
ETF, IPO, IPO, MF funds, and Funds, Brokerage, Estate, Home
mutual funds. online, NRI and IPO, loans, Commodity,
-Do it yourself contract note offerings. Commod Mutual and Derivatives.
systematic on paper, ities Funds,
investment and ODIN Commodit
planning, and Software. ies.
-NRI offerings,
loans, FD.
-J2 ME windows, Brokerage Call and Brokerag Brokerage Brokerage, Online
SERVICES blackberry, services, trade. e-e and and and Offline
android, iphone. trade on banking banking Trading available
- Call and trade, mobile, services. services. on all phones, No
online and online, call extra charges on
offline services and trade, calls from clients.
for different time dedicated
zones. dealer desk
at every city.
QUALITY OF Good Good Good Good Good Good
SALESPERSO
N
PROCESS T+2 days T+2 days T+2 days T+2 days T+2 days T+2 days
Fig: 36
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71. PRICE COMPARISON CHART
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.
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72. SWOT ANALYSIS OF COMPETITOR FIRMS
SWOT OF SHAREKHAN
• Market share leadership.
• High Research and
Development.
• Strong management team,
financial position and
Strength competitive pricing.
• Reputation management,
Unique products diverse
products and offers for the
customers.
• Strong brand recall and
strong reach to masses.
• Diseconomies of scale.
• Not much differentiated products.
• More employee turnover.
Weaknesses • Less small investors.
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73. • Financial markets (raise money
through debt, etc)
• Innovation, OnlineProduct and
services expansion.
Oppourtunities • Penetration in developing
cities.
• Increase in awareness of people
about stock market
• Competition.
• Cheaper technology.
• Economic slowdown.
• External changes (government,
Threats politics, taxes, etc).
• Exchange rate fluctuations.
Fig: 38
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74. SWOT OF INDIA INFOLINE
• Brand image.
• Brand experiance.
• Innovative products.
Strength
• High targets for the
financial advisors and sales
department.
• Many competitors, less
differentiated products.
• The reach in semi-urban
Weaknesses areas and rural markets is
still very less.
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75. • Growing Financial
Services industry's share
of wallet for disposable
income.
• Regulatory reforms would
aid greater participation by
all class of investors.
Oppourtunities • Leveraging technology to
enable best practices and
processes.
• Increased appetite (need)
of Indian corporate for
growth
• Execution risk.
• Slowdown in global
liquidity flows.
• Increased intensity of
competition from local and
global players.
Threats • Unfavorable economic
conditions.
Fig: 39
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76. SWOT ANALYSIS OF ICICI DIRECT
• Banking arm.
• Upgraded product design
and development facilities
to develop new products.
• Ongoing activities to
support up gradation of
operational performance.
Strength • Team of talented and
committed professionals
available to improve
companies performance.
• Not innovative.
• Not diversified
• high employee turnoverless.
Weaknesses • small investors
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77. • Innovation.
• Increse in penetration in
the market.
Oppourtunities
• Constant pressure to be cost
competitive to meet
customer expectations.
Threats
Fig: 40
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78. SWOT OF MOTILAL OSWAL
• Large and diverse
distribution network.
• Strong research and sales
team..
• Brand recognition.
Strength • Experienced top
management.
• Strong financial results.
• Charges are high compare to
other companies in industry.
Weaknesses
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79. • Growing Financial
Services industry's share
of wallet for disposable
income.
• Regulatory reforms would
aid greater participation by
all class of investors.
Oppourtunities • Leveraging technology to
enable best practices and
processes.
• Increased appetite (need)
of Indian corporate for
growth capital.
• Execution risk.
• Slowdown in global
liquidity flows.
Threats • Increased intensity of
competition from local and
global players.
• Unfavorable economic
conditions.
Fig: 41
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80. SWOT OF ANGEL BROKING
• Service
• Distribution network
• Products
Strength
• Customer Satisfaction.
• Branding.
Weaknesses • Competition from Banks.
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81. • Ever increasing market.
• Improving technology.
• Unfulfilled needs of
customers..
Oppourtunities
• Education level.
• New competitorsTechnology
based business.
Threats
Fig: 42
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82. 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
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83. 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
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84. 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.
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85. CONCLUSION
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.
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86. OUTCOME AND CONTRIBUTION
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.
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87. LEARNINGS FROM SIP
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.
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88. REFERENCES
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.
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89. APPENDIX
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?
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5. Why do you invest?
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90. 6. What are the factors that affect your investment decisions?
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?
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8. Name:
9. Salaried/ Non-salaried
10. Occupation:
11. Any suggestions/ Comments:
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