Comparitive study of online share trading account and market potential of il&fs online share trad

A study on ONLINE SHARE TRADING ACCOUNT

1

A

PROJECT REPORT

ON

COMPARITIVE STUDY OF ONLINE SHARE TRADING ACCOUNT &

MARKET POTENTIAL OF IL&FS ONLINE SHARE TRADING ACCOUNT

AT

IL&FS INVESTSMART LTD

BY

BHUSHAN BHATT

MBA 3RD SEMESTER

PUNE UNIVERSITY

2005-2007

VISHWAKARMA INSTITUE OF MANAGEMENT,

PUNE


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CERTIFICATE

This is to certify that the project titled COMPARATIVE STUDY OF ONLINE SHARE

TRADING ACCOUNT AND MARKET POTENTIAL OF IL&FS ONLINE SHARE

TRADING ACCOUNT

is a bonafide work carried out by Mr.Bhushan D Bhatt. He has

successfully completed the project work for the partial fulfillment of Master of Business

Administration (MBA) from Pune University (2005-2007). He has worked under our

guidance and supervision according to our satisfaction.

Prof: Smita Sovani Dr.Sharad Joshi

(Project Guide) (Director)


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ACKNOWLEDGEMENT

First off all, I would like to extend my gratitude towards Pune University for giving me

an opportunity to take up this project as preparing this project has definitely broadened

my horizons.

Next, I would like to extend my thanks to Vishwakarma Institute of Management, Pune

for providing me with the necessary ware withal to successfully complete this project.

I would also like to thank my institute director Dr. Prof. Sharad Joshi, my very helpful

project guide Prof. Smita Sovani and Prof. Yuvraj Lahoti for their continuous support and

guidance.

I would specially like to thank Mr.Khurshid Khan and Mr. Ketan Bhatia (Deputy

Manager-eBusiness) of IL&FS INVESTSMART Ltd for encouraging me and providing

me with the necessary information and material, the blend of which has made it a

knowledgeable project.I would also like to express my gratitude towards Mr. Viren

Shetty (Manager-eBusiness), Mr. Amit Kedia and Mr. Mukesh Sah of IL&FS

INVESTSMART for helping me whenever the need arised inspite of their busy schedules

Last but not the least, my sincere thanks to my family and friends without whose support

this project would not have become a reality.


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PREFACE

The history of e trading goes back to 1983, when a doctor in Michigan placed the first

online trade using E*TRADE technology. What began with a single click over 16 years

ago has now taken the world by storm. The concept was visualized by one Bill Porter, a

physicist and inventor who provided online quotes and trading services to many US firms

like Fidelity, Charles Schwab, and Quick & Reilly. This led Bill to wonder why, as an

individual investor, he had to pay a broker hundreds of dollars for stock transactions.

With incredible foresight, he saw the solution at hand: someday everyone would own

computers and invest through them with unprecedented efficiency and control. And today

his dream has become a reality.

With the global firms turning their eyes on INDIA as a country with immense potential

for growth thanks to globalization and various economic reforms, the Indian stock

markets are places receiving a lot of attention. Trading and investing in shares is gaining

momentum and with the Internet facility virtually at every part of the country, it has

become a reality for even a smallest person wanting to invest his surplus money but did

not know where to go until recently.


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CONTENTS

EXECUTIVE SUMMARY

OBJECTIVE

INTRODUCTION (ABOUT IL&FS)

PROMOTERS AND SHARE HOLDERS

PRODUCTS AND SERVICES

ONLINE SHARE TRADING

TRADING PLATFORMS

VALUE ADDS

CHANNELS USED

INTERFIRM COMPARISON

RESEARCH METHODOLOGY

MARKET POTENTIAL OF IL&FS (SURVEY ANALYSIS)

INTERPRETATION OF DATA

CONCLUSION

RECOMMENDATIONS

ANNEXURE

BIBLIOGRAPHY


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EXECUTIVE SUMMARY

IL&FS INVESTSMART is a financial multiplex that has a variety of financial products

under its stable such as mutual funds, insurance, online share trading, commodity trading

etc. Each one of them caters to different customer needs. Again, it also has many

competitors in each and every area.

Share trading is one such are, which is receiving tremendous attraction in the recent

times.

The reason behind this is tremendous growth of the Indian economy, increasing

profitability of the Indian firms as well as a spurt of foreign investment in India.

Considering this reason and the rising popularity of share trading IL&FS

INVESTSMART has come up with a unique product called as online share trading

account which enables people to buy, sell, shares, stocks of any company listed on the

BSE and NSE through the Internet.

The first part of the project concentrates on the company s profile, its sub-products or

trading platforms and compares IL&FS online share trading account with the major

competitors.

The second part of the project deals with a questionnaire, which is circulated randomly

among fifty people. Based on their answers and point of views, assumptions are made.

Taking this data into consideration, interpretations are made regarding the popularity of

e-trading, awareness of IL&FS online share trading account among people vis-à-vis its

competitors and what needs to be done by IL&FS to increase its customer base.


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OBJECTIVES:

An objective is the brainchild behind any project report. A project report will always

have a certain objective which needs to be accomplished. Following are the objectives

behind the preparation of my project at IL&FS INVESTSMART LTD

To compare IL&FS online share trading account with three big players in the

market, i.e.ICICI, KOTAK and HDFC as well as with a latest entrant which is 5

PAISA, in the city of MUMBAI.

Identify the areas where IL&FS scores above its competitors and what are its

weak links.

Know the market potential of IL&FS considering the fact that there are many

competitors in this field with some more firms expected to join the fray in the

near future. This will be done with the help of a questionnaire.

Provide suggestions to the company regarding what else it can do to stand apart in

this ever competitive field and thereby emerge as a market leader.


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INTRODUCTION:

ABOUT IL&FS Investsmart Limited

IL&FS Investsmart was set up with the objective of becoming one of the leading full

services brokerage house in the country with a strong expertise in web based technology

as well as strengths in physical distribution

IL&FS Investsmart Limited (IIL) is an initiative in the field of Financial Services started

by Infrastructure Leasing & Financial Services (IL&FS), an institution known for its

innovative and pioneering initiatives in the areas of Infrastructure, Corporate Finance and

Investment Banking. IIL was set up in October 1997 and it began its retail operations in

September 1998. IIL reflects the commitment of IL&FS to bring its financial expertise

within the reach of the discerning investor.

Today with a presence in more than 65 cities across India through more than 175 outlets,

IIL has become one of the most prominent players in the Financial Services Industry with

service offerings across all the categories.

RETAIL BUSINESS:

The Retail Business Division at IIL is involved in dealing with a range of products, which

include Equity Investments, Commodity Trading, Fixed Income products, Mutual Funds,

as well as Insurance & Home Loans Advisory services. In addition it also offers allied

services to facilitate the investment process. Custodial and Depository services are

offered through the IL&FS Depository Services

The other important business units at IIL include the Institutional Equity Broking,

Project Syndication, and Merchant Banking & Institutional Debt Broking Divisions.


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INSTITUTIONAL EQUITY BUSINESS:

Institutional Equity Business (IEB) thrives on strong relationships it has built among

domestic mutual funds, banks, financial institutions, insurance companies and private

sector funds over the past few years. IEB also has well-developed relationships among

corporates, leveraged from its institutional pedigree. Efficient execution, quality research

and high degree of compliance with stock exchange regulations and ethical business

standards back IEB's services to institutional investors through IPOs, Equities,

Derivatives and Mutual Funds. IEB is well positioned to offer support to the complete

range of investment banking services to corporates.

PROJECT SYNDICATION:

The Project Syndication division has been inherited from IL&FS. The syndication desk

has so far worked on Debt Syndication of various large Infrastructure Projects in the

country. The mandate includes Debt structuring of highly complex and difficult projects.

Project Syndication focuses on the role of an Arranger of Project and Structured loans.

While fund mobilization services are provided across various areas, infrastructure sectors

remain key focus area for syndication activity. The services under Project Syndication

include project loan syndication, structured debt syndication and debt restructuring. The

syndication business thrives on its extensive contact base and strong relationships

developed over the years with Banks and Financial Institutions.

MERCHANT BANKING:


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The Merchant Banking division offers a complete range of services, which includes

management of IPO's, rights issues; buy back offers, open offers, and private placements

of equity. Its extensive contact base and strong relationships developed with Venture

Capital Funds and Private Equity Funds for equity placements, contributes to an effective

delivery platform for its clients.

DEBT BROKING DIVISION:

The Debt division has an active presence in the secondary and primary debt placement

markets. It deals in various products including Govt. Securities, Treasury Bills, Bonds

and Debentures, State guaranteed papers and Commercial papers. It has strong

relationship with Institutional clients like Banks, Primary Dealers, Mutual Funds,

Provident Funds and Corporates. Debt-on-Net address all Fixed Income participants with

attendant advantages of Speed, Transparency and lower costs in the primary Market. It

also offers one of its kind, complex and robust investment valuation tools, in addition to

value research and information on the debt and money markets in India.


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PROMOTERS AND SHAREHOLDERS OF IL&FS INVESTSMART

LIMITED:

IIL (IL&FS Investsmart limited) was promoted by IL&FS in 1997,has come a long way

since its inception. It s a matter of great pride for IIL that some of world s biggest

organizations are becoming equity owners of the company.

The stockholding pattern as of today involves IL&FS which holds 66.01% equity stake,

while Softbank Asia Infrastructure Fund L.P. (SAIF) and E*TRADE FINANCIAL,

through its wholly owned subsidiary E*TRADE Mauritius Limited collectively holds

34% of the equity shares in IIL.

BACKGROUND OF THE PROMOTERS OF IL&FS

IL&FS: IL&FS was promoted as a joint venture between Central Bank Of India, (CBI),

Unit Trust Of India, (UTI), and Housing and Finance Development Corporation,

(HDFC). With the objective of extending its reach and resources and broad base its

shareholding, IL&FS inducted reputed domestic & foreign investors such as International

Finance Corporation, Washington, ORIX Corporation, Japan, Credit Commercials de

France (CCF), State Bank of India and the Government of Singapore as its shareholders.

Within a short span, IL&FS has grown into a multifaceted company with a networth of

over Rs.6700 million and an asset base of over Rs.39000 million.

Broadly the activities of IL&FS include:

Financial Services including Investment Banking, Asset Financing.

Commercialization of Infrastructure Projects.

Asset Management Services to wide range of funds.

Capital Markets & Merchant Banking Services.

Securities brokerage including distribution of Financial Securities & Investment.

Management planning services.


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SOFTBANK ASIA INFRASTRUCTURE FUND:

SAIF is a leading Asian private equity firm headquartered in Hong Kong. SAIF is a

strategic joint venture between Softbank Corporation and Cisco Systems that was formed

in early 2001 to make investments in information technology, media, and telecom related

companies based (or with significant operations) in the Asia Pacific region. SAIF focuses

its efforts primarily on China, India and Korea. Cisco Systems, Inc. is the sole limited

partner of the Fund and has committed $404 million in the first of a series of funds. Over

the years, Softbank has made investments in E*TRADE FINANCIAL, Yahoo!,

UTStarcom, Shanda, Sify Limited, & Intelligroup.

E*TRADE MAURITIUS LIMITED:

E*TRADE Mauritius Limited, an indirectly wholly owned subsidiary of E*TRADE

FINANCIAL Corporation, identifies strategic investment opportunities throughout the

Indian Ocean Rim.

E*TRADE FINANCIAL CORPORATION:

The E*TRADE FINANCIAL family of companies provide financial services including

brokerage, banking and lending for retail, corporate and institutional customers. With 2.7

million households and 3.5 million customer accounts worldwide, U.S.-based E*TRADE

FINANCIAL Corporation operates branded web sites in 12 countries.

MANAGEMENT TEAM OF IL&FS:

Over the years, the formidable team at IL&FS Investsmart Securities Limited, has been

responsible for the overall management of the company and has provided direction in

diverse areas of business strategy, operating management, regulatory reporting, human

resources development, product development etc. Here s an overview of the team.


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1) Mr.Hemang Raja: Managing Director and CEO

Mr. Hemang Raja, has more than 2 decades of varied experience, his core competencies

in financial services industry encompassing the functions of accounts, finance, project

related exposure, all India marketing and investment banking. He holds a Master's degree

in Business Administration from Abilene Christian University, Texas, USA, in 1982 and

Bachelor's degree in Commerce from Bombay University, in 1979. During his career, he

has been associated with companies like Candy Filters India Limited, Blue Star Limited,

20th Century Finance Corporation Limited, Yokogawa Keonics Limited, and later joining

IL&FS in 1990. He joined IL&FS Investsmart Securities Limited on 1999 and has since

been heading the organization.

2) Mr. R.C. BAWA: Managing director

Mr. R.C. Bawa has more than 3 decades of rich experience in the Indian Banking Sector

and carries strong relationships with many Indian banks. His educational qualifications

are Post Graduation in Personal Management & Industrial Relationship, M.A. (Political

Science) from Meerut University, and BA from Punjab University. After being associated

with organizations like Syndicate Bank and the National Housing Bank, joined IL&FS in

1995 and moved to IL&FS Investsmart Securities Limited in 2002. Currently, he is

responsible for sourcing as well as syndication of Project Debt. He has been instrumental

for a number of initiatives of the Group with the Banking Sector.

3) Mr. Sandeep Presswala: Chief Operating Officer, Retail Business

Mr. Sandeep Presswala has over 15 years of experience in the Capital Markets. A

Chartered Accountant, he joined IL&FS in 1997. He worked as Senior Manager

responsible for investment banking activities including corporate finance, infrastructure

product advisory and merchant banking activities from 1997 to 1999. He Joined IL&FS

Investsmart Securities Limited in 1999. Currently, as COO-Retail Business, he is

responsible for the entire retail business, including development of various branches,

achieving branch level profitability, and setting up business plans & strategy.


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4) Mr. Sachin Joshi: Chief Financial Officer

Mr. Sachin Joshi has over 16 years of financial management experience. His educational

qualifications are Graduate CWA (1991), ACA (1990), LLB (Gen) and B Com (1985).

He joined the IL & FS in 1994 as Manager - Resources. His responsibilities included

credit rating of the company, funds mobilization from banks, domestic and multilateral

institutions to take care of the working capital and other term loan requirements of the

IL&FS Group. He joined IL&FS Investsmart Securities Limited in 1999 and is currently

the Chief Financial Officer. He is responsible for the Accounts & Finance, Operations &

Risk Management, Human Resources Development, and Administration functions.

5) Mr. Deepak Chhabria: CEO-Asia Pacific

Mr. Deepak Chhabria has over 15 years of industry experience nurturing excellent

relationships with Corporates, Domestic Institutions and FII s. He is a commerce

graduate from Bombay University, 1989 and has done a course on technical analysis

from ICFAI. Started his career in financial markets in 1992 on the institutional desk at

Prabhudas Lilladher where he was instrumental in expanding the business in both

institutional and corporate clients. Later he moved on to Birla Sun Life Securities to set

up their institutional business. In 10 years time he built a profitable financial advisory

business across Equities, Mutual Funds and Derivatives. He joined IL&FS Investsmart

Securities Limited in 2004.

5) Mr. Girish Nadkarni: COO Investment Banking and Institutional Equity Business

Mr. Girish Nadkarni has over 15 years experience. He holds a Post Graduate Diploma in

Management from IIM, Ahmedabad (1990), ICWA (1991) and B Com, 1988, from

Mumbai University. During his career he was associated with organizations like ICICI

Limited, ITC Limited, TAIB Securities (India) Limited. He is member on the Panel of

Market Advisors

CNBC India and Star News. He started his career with ICICI Limited

and gained exposure to the areas of Project analysis and developed financial pricing and

tax structuring models for lease business. After this he joined ITC Ltd. and his core

function was to do Strategic Planning, Treasury Operations and restructuring. He was


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also part of the team involved in structuring merger of ITC Classic Finance with ICICI.

After completing 6 years at ITC he moved to TAIB Securities as Director. He joined

IL&FS Investsmart Securities Limited in 2004. In his current capacity, he is responsible

for Institutional Equity, International Business, and Placements with additional

responsibility of monitoring Merchant Banking activities.

6) Mr. Rajesh Kotian: COO Syndication Business

Mr. Rajesh Kotian has over 14 years of varied experience, including 11 years in the

financial services sector. He is a commerce graduate from the Bombay University and a

Chartered Accountant (1991). He started his career in the treasury division of WIMCO

Ltd. and subsequently worked for 2 years for the Bombay Oil Industries Ltd. in the

finance function. He joined IL&FS in 1994 as Assistant Manager - MIS and Budgets.

Since then, his experience in IL&FS has also encompassed Financial Accounting,

Operations, Treasury and Liability management. His last assignment was with IL&FS as

Head of Resources, in charge of the Liability profile, across domestic and international

lenders. He has moved to IL&FS Investsmart Securities Limited in May 2005 and

currently heads the Project Syndication desk, responsible for business development,

structuring and execution of debt mobilization mandates for achievement of profile

targets.

7) Mr. Kersi Tavadia: Chief Technology Officer

Mr. Kersi Tavadia has more than 2 decades of experience with some of India's large

corporate houses. A Post Graduate in Computer Science, he has been leading IT

department in various financial institutions prior to his stint at IL&FS Investsmart

Securities Limited. During his last assignment he was heading the IT team at Motilal

Oswal Securities Ltd and was instrumental in setting up of their portal

www.motilaloswal.com as well as the retail technology network for their brokerage

house. Kersi joined IL&FS Investsmart Securities Limited as Chief Technology Officer

in 2004.

8) Mr. R. Sreesankar: Head- Research

http://www.motilaloswal.com


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Mr. R Sreesankar has more than 2 decades of experience with large corporate houses. He

completed his Bachelor of Science from University of Calicut, and started his

professional career in 1986 with Canara Bank as Credit Officer. During his career he has

been associated with organizations like DSP Merrill Lynch Investment Managers Ltd as

Chief Investment Officer, SSKI Securities as Chief Executive Officer, Baring Asset

Management as Product Head, South Asia at London, United Kingdom, ABN Amro

Securities Ltd as Senior Manager-Equity Research and Canbank Mutual Fund. His last

assignment was with Polaris Software as Vice President responsible for investment

strategy of its business. Joined IL&FS Investsmart Securities Limited in 2005. In his

current capacity, he is heading Company s research desk.


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PRODUCTS AND SERVICES

IL&FS has a number of products and services under its stable. Not everybody is an

investment professional; there is always a need for someone who can guide investors

through the complex maze of investment options with unbiased and expert advice.

Someone, who can be a friend and an expert who would understand the needs of the

investor and help him achieve his financial goals.

IL&FS Investsmart is one such financial service organization, catering to requirements of

individuals & institutions by providing a broad spectrum of value added products and

services for both of them.

Here is the range of financial solutions for both individuals as well as institutions

Retail Offering Institutional Offering

Wealth Management Services

Portfolio Management Services

Securities Broking - Equities &

Derivatives

Depository & Custodial Services

Distribution of Financial

Products

Merchant Banking

Product Syndication

Institutional Equity Broking and

Sales

Institutional Debt Broking and

Sales

1) Wealth Management Services:

At IL&FS Investsmart believes in partnering the customer s investments all the way

through. This distinguishing feature is implemented through InvestSaathi, Wealth

Management Solutions. Most of us require some assistance in making selections

appropriate to our individual needs. We need sound advice from people who have the

expertise to decipher the financial jargon of investment options available today.

InvestSaathi is like the Smart Friend that you can rely on, who will help you maximize

your investments and reach your financial goals. IL&FS s relationship managers interact


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with the customers on a periodic basis to discern their changing needs in tune with the

changing environment. Accordingly, they will also help to review, re-evaluate and

restructure their existing portfolio, as and when needed.

IL&FS s experienced team s customised plans are based on the customer s investment

objectives, his risk profile, time horizon and financial needs. they assist the customers

through the process of maximizing their wealth. Research is the fundamental basis of all

sound investment decisions and superior research allows IL&FS to deliver superior

solutions. The firm s investment solutions are backed by in-depth research generated by a

top-drawer research team.

2) Portfolio Management Services:

Extending its expertise to personal financial advisory services, IL&FS also offer portfolio

management services to its investors. The primary focus of portfolio management

services is to provide individualised portfolio management through personalised

portfolios, designed to fit the customer s specific investment parameters. One can choose

his own securities, ensuring transparency and flexibility in all operations. IL&FS has a

range of portfolio management services to suit your individual needs.

3) Securities Broking- Equities and Broking:

Equity Trading

Personal, transparent, prompt and convenient, trading through IL&FS Investsmart is

simple and effective. Being member of the National Stock Exchange (NSE), Bombay

Stock Exchange (BSE) and an institutional promoted broking house, it caters to all the

trading needs of a trader, through a network of experienced dealers across the country &

its comprehensive website www.investsmartindia.com. Customers have the facility of

choosing between three different types of products, each one being unique and catering to

http://www.investsmartindia.com


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different trading needs. They are Smart trade, Smart invest and Smart start. They will be

explained later in detail.

Derivatives Trading:

IL&FS offer derivative trading in equities, in the NSE Futures and Options segment,

through specialist dealers in this division. Under derivatives trading, IL&FS recommends

trading on futures, strategies and options, hedging with Nifty and other products and

opportunities of riskless arbitrage between various segments.

3) Depository and Custodial Services:

IIL facilitates the entire process of dematerialising shares through its parent company

IL&FS. IL&FS DP provides personalised service with the highest standards of efficiency.

For your convenience you will continue to deal with Investsmart.

The company also arranges to open Custodial Accounts for the safe keeping of the

customer s securities through its parent company IL&FS. This service keeps track and

takes care of all the shares related activities of a customer, ranging from: share transfer,

issues of dividends and interest payments, to monitoring announcements of rights / bonus

issues etc.

4) Distribution Of Financial Products:

Investsmart, with its expertise in delivering complete investment solutions to its clients,

offers various different financial products into categories like Mutual Funds, Fixed

Income Products, Home Loans, Insurance etc.

Mutual Funds

IL&FS s executives help to select the right scheme from over 500 offerings, that will

match the needs, goals and risks of the customer. In addition to this, they also help to


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constantly monitor the customer s MF portfolio, making changes to adapt to the changing

needs or the market scenario, in order to make his money work for him more.

Fixed Income Products

A gamut of fixed deposits, bonds and debt instruments make up this section of

investments. The company s managers evaluate these options thoroughly, to match the

individual liquidity requirements.

Home Loans

IL&FS S facilities also extend to Home Loans Consultancy, to help one select the

scheme that is best suited to his financial profile. Prompt and convenient loan processing

procedures helps one realise his dreams later.

Insurance Advisory

IL&FS S Insurance team assesses the insurance needs of a person and then advises him

on the choices that match his requirements. IL&FS offer a range of insurance products,

including pension plans through our subsidiary companies.

5) Merchant Banking Services:

The Merchant Banking function of IL&FS Investsmart comprising of the Equity Capital

Market division, offers a complete range of services. This includes management of IPOs,

rights issues, buy back offers, open offers, and private placements of equity. Its extensive

contact base and strong relationships developed with Venture Capital Funds and Private

Equity Funds for equity placements, contributes to an effective delivery platform for its

clients.

6) The Project Syndication Services:


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The Project Syndication Business of IL&FS Investsmart has been inherited from IL&FS.

The syndication desk has so far worked on Debt Syndication of large Infrastructure

Projects being implemented by IL&FS. The mandate includes Debt structuring of highly

complex and difficult projects. Project Syndication focuses on the role of an Arranger of

Project and Structured loans. While fund mobilisation services are provided across

various areas, infrastructure sectors remain key focus area for syndication activity. The

services under Project Syndication include project loan syndication, structured debt

syndication and debt restructuring. The syndication business thrives on its extensive

contact base and strong relationships developed over the years with Banks and Financial

Institutions.

7) Institutional Broking and Sales:

Institutional Equity Business of IL&FS Investsmart (IEB), thrives on strong relationships

it has built among domestic mutual funds, banks, financial institutions, insurance

companies and private sector funds over the past few years. IEB also has well-developed

relationships among corporates, leveraged from its institutional pedigree. Efficient

execution, quality research and high degree of compliance with stock exchange

regulations and ethical business standards back IEB s services to institutional investors

through IPOs, Equities, Derivatives and Mutual Funds. IEB is well positioned to offer

support to the complete range of investment banking services to corporates.

8) Institutional Debt Broking and Sales:

The IL&FS Investsmart Institutional Debt division deals in primary and secondary debt

placement and distribution. DebtonNet, a part of the IIL Institutional Debt division is an

internet enabled platform, which has been promoted as a transparent electronic

marketplace for primary debt market products, through its website,

www.debtonnetindia.com. The website addresses all issuers, investors and intermediaries

http://www.debtonnetindia.com


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with the attendant advantages of speed, transparency and lower costs. It also offers one of

its kind, complex and robust investment valuation tools, in addition to value research and

information on the debt and money markets in India.

The Debt division has an active presence in the secondary and primary debt placement

markets. It deals in various products including Govt. Securities, Treasury Bills, Bonds

and Debentures, State guaranteed papers and Commercial papers. It has strong

relationship with Institutional clients like Banks, Primary Dealers, Mutual Funds,

Provident Funds and Corporates. Debt-on-Net address all Fixed Income participants with

attendant advantages of Speed, Transparency and lower costs in the primary Market. It

also offers one of its kind, complex and robust investment valuation tools, in addition to

value research and information on the debt and money markets in India.


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PRESENCE AND REACH:

ILFS Investsmart currently caters to over 80000 retail customers through more than 200

outlets across 80 locations encompassing almost every Indian state. Here is the view of

the company s presence across the country.


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ONLINE SHARE TRADING ACCOUNT:

1) WHAT IS ONLINE TRADING?

SEBI committee has approved the use of Internet as an order routing system (ORS) for

communicating clients orders to the exchanges through brokers. ORS enables investors

to place orders with his broker on an online basis. Once the broker s system receives the

order, it checks the authenticity of the client electronically and then routes the order to the

appropriate exchange for execution. On execution of the order, it is confirmed on real

time basis.

The orders originating from the PC s of the investors are routed through the Internet to

the trading terminals of the designated brokers with whom they are connected and further

to the exchange for trade execution. Soon after these orders are matched and result into

trades, the investors get confirmation about them on their PC s through the same Internet

route.

Online trading allows you to buy and sell shares on the stock exchanges (BSE and NSE)

through the Internet. It is truly a powerful medium to be in direct control of your

investments.

The Internet revolution has been changing the fundamentals of our society. It shapes the

way we communicate and the way we do business. It brings us closer and closer to vital

sources of information. It provides us with means to directly interact with service-

oriented computer systems tailored to our specific needs; therefore, we can serve

ourselves better by making our own decisions.

Today, investors can use revolutionary Internet Client-Server technology to buy and sell

stocks nearly anywhere, anytime This new access by the online trading customers to

low-cost transactions and cutting-edge, real-time market information that formerly

belonged only to brokers has opened up extraordinary new investment opportunities as

well as a crucial need for state-of-the-art information.

2) WHY SHOULD ONE INVEST ONLINE?

WHAT ARE THE ADVANTAGES OF INVESTING ONLINE?


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There are many reasons that convince people to invest online. Today investors can use

revolutionary internet-client-server technology to buy and sell stocks nearly anywhere,

anytime. It saves a lot of time as well as the extra hidden cost that one incurs while

dealing with a normal broker.

Online investing has reached mainstream proportions. With Internet transmission times

of less than a second to anywhere in the world, dealing over the Internet is faster. It is a

powerful medium to be in control of your investments

One can now get the latest quotes of scrips on the Internet and place an order almost

instantly. One can quickly sift through over thousands stocks to find those with the

greatest potential.

One can maximize his/her return on investment using technical indicators that can help

him/her quickly identify favorable investment opportunities.

WHY ONLY CHOOSE INVESTSMART ONLINE OR IL&FS?

1) FREDOM OF INFORMATION: The Internet can provide a new sense of control

over your financial future. The amount of investment information available online is

truly astounding. It's one of the best aspects of being a wired investor. For the first

time in history, any individual with an Internet connection can:

Know the price of any stock at any time

Review the price history of any stock in chart format

Follow market events in-depth

Receive a wealth of free commentary and analysis about stock markets and the

global economy

Conduct extensive financial research on any company

Talk with other investors around the world


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At Investsmart one can get real-time stock quotes, daily roundups of the stock market,

expert commentary, and a deep community of fellow investors.

2) CONTROL YOUR MONEY: One of the great appeals of using an Investsmart

online account is the fact that the account belongs to the customer, and is under his

direct control. When he wants to buy or sell stock, he need not call his broker

anymore; hope that he is in the office to place his order; possibly argue with the

broker about the order; and hope that the transaction is executed instantly.

3) ACCESS TO MARKET: At the most basic level, an online trading account with

Investsmart gives more agility in buying and selling stocks. This is through

sophisticated information streams, dedicated trading platforms and sophisticated

tools for accessing the markets.

4) ENSURES THE BEST PRICE FOR INVESTOR: Investsmart specializes in the

technique that offers the best price for the buy and sell orders of the investors and

traders. Also due to the high level of transparency with regard to display of

information relating to the specific stocks and company profiles, one will be able to

get the best quote for his orders.

5) OFFERS GREATER TRANSPARENCY: Online trading at Investsmart offers a

greater transparency by providing its customers with an audit trail. This involves a

complete integrated electronic chain starting from order placement, to clearing and

settlement and finally ending with a credit into your depository account. All these

stages are subject to inspection, thus bringing in transparency into the system.


27

6) ENABLES HASSLE FREE TRADING: Online trading integrates the bank account,

trading account and the demat accounts of the customer, which leads to easy and

paperless trading

7) ALLOWS INSTANT TRADE EXECUTION: An Investsmart online customer will

be able to execute the entire trading transaction, right from logging on to our site, to

the execution and settlement of your bank account, in a very short period of time.

8) PROVIDES A LEVEL PLAYING FIELD: Trading on the net, gives even the

smallest retail investor access to information that earlier was available only to the big

traders. This provides a level playing field for all investors in the securities market.

9) REDUCES SETTLEMENT RISK: This method of trading reduces the settlement

risk for the investor, as in this case all short sell orders are squared off at the

specified cut-off time and not allowed to be carried forward.

10) LIVE FINANCIAL NEWS AND ANALYSIS: As a client of Investsmart online, you

are given free access to streaming news to give you the latest financial information as

it occurs.

11) ONLINE HELP DESK: You can contact the Tele Trading Executives from the Tele

Trading team during and after market hours. Any questions you might have will be


28

addressed quickly and your trading ideas and strategies can be discussed with them.

12) INSTANT ORDER TRADE CONFIRMATIONS: Every trade is confirmed

immediately and you will receive an on-screen confirmation following every trade

with full details for your records. This avoids costly errors that would have been

discovered when it is too late.

13) INTEGRATED ACCOUNTS: Your Bank, Depository and online account are

integrated for your convenience. As an Investsmart online client you have the choice of

opening a bank account upto 5 different banks.

14) SECURITY: Investsmart Online works hard to keep your account and personal

information secure. From updated security technology to advanced fraud prevention

measures, we have the people and tools in place to provide a strong defense against

electronic scams and fraud.


29

DIFFERENT TRADING PLATFORMS UNDER INVESTSMART

ONLINE TRADING ACCOUNT:

Keeping in mind different requirements of different types of customers and their trading

patterns, IL&FS INVESTSMART has devised three different types of products-each

being unique and trying to give maximum possible help to the customer. The different

trading platforms are:

1) SMART TRADE

2) SMART INVEST

3) SMART START

1) SMART TRADE:

Smart Trade is an EXE based desktop software designed for active

traders who transact frequently to capture favorable short-term price movements. The

platform offers active traders the tools they need to make critical decisions with

confidence.

Smart Trade is designed and built from the ground up to address the needs of active

traders. Smart Trade makes the most of state-of the-art technology to deliver power,

speed and reliability. Through an easy-to-use interface, users are provided with the same

tools and advantages that the professionals enjoy.

Features of Smart trade: Fully Customizable display.

Dynamic Charts with Indicators

Real-Time market data.

Live order status

Track your orders real time

Real time position updates.

Derivative chain

Lock terminal option


30

Software requirements for Smart trade: Smart trade can work very easily with the

following configurations on your personal computer.

The operating system needs to be either windows 98/2000 or windows XP. The

other requirement is that the system also needs to be a Pentium 3 or Pentium 4.

Internet connection is also needed to run Smart trade. It can be a broad band or a

dial up connection.

The Browser type should be Microsoft internet explorer(version 6.0 or higher)

and it needs to be Java enabled.

Benefits of Smart trade are also many:

FULLY CUSTOMIZABLE DISPLAY: The save desktop option allows you to save

your created trade screen layout, so the next time you access the application the

created layout is not lost.

Dynamic Charts with Indicators: Provides you a wealth of charting capabilities and

timing indicators, which allow you to go right into the action with real-time daily

charts, and intra-day charts. Watch price movements by minutes, days, or weeks.

EOD CHARTS: SmartTrade puts up to 5 years of in-depth market history at your

command with the power to instantly back-test any trading strategy you design,

before risking one rupee of your trading capital.

REAL-TIME MARKET DATA: Get real time market data from both the NSE and

BSE similar to what your broker gets.

ADVANCED ALERT CAPABILITIES: Alert Window allows you to be free from

watching every tick. Users can be notified once a security has reached the set


31

parameters. Multiple securities can be monitored using the set parameters. These

alerts can be triggered both visually and audibly.

LIVE ORDER STATUS: Tracking all your orders is made easy through the order

status screen. Further drill down into all details pertaining to an order is available in

the order detail sub report.

TRACK YOUR ORDERS REAL TIME: Track your stock order and trades in real-

time.

REAL TIME POSITION UPDATES: All your positions are updated automatically

and instantly. No need to use the refresh button at all.

DYNAMIC BUYING POWER: Reflects your credits and debits instantly on every

trade execution. No need to refresh each statement to know your latest buying limits.

DERIVATIVE CHAIN: This feature provides you with a list of all derivative

contracts available for the selected security. To view derivative prices of a security

just right click on the symbol and click on derivative chain

LOCK TERMINAL OPTION: If your system is unattended this function locks the

trading platform for you and can be accessed again only on providing the proper login

details.

MESSAGE WINDOW DOCKING: This feature enables you to receive trading

messages, intra-day trading calls, and messages from both the exchanges flashed real

time onto your screen.

2) SMART INVEST:

SmartInvest is a browser-based system designed for customers

who transact occasionally. It is ideal for investors who believe in the Buy and Hold

approach towards investment in equities


32

SmartInvest's capability as a browser-based trading platform gives you the benefit of

real-time streaming data with the flexibility of trading on any Internet capable system.

With access to both the NSE & BSE, you are in the driver's seat when routing your

order to the best price on either of the exchanges. SmartInvest sophisticated yet easy

to use point and click order entry interface allows you to react more quickly to the

markets and make better decisions.

Software requirements of Smart invest: Smart invest needs the following

configurations on a computer:

The operating system needs to be either windows 98/2000 or windows XP. The

other requirement is that the system also needs to be a Pentium 3 or Pentium 4.


dial up connection.

The Browser type should be Microsoft Internet explorer (version 6.0 or higher)

and it needs to be Java enabled.

The software requirements are just like that of Smart trade.

There are various benefits of using Smart invest such as

INSTANT LOADING: The browser-based applet system allows you instant access to

your account with no wait time, unlike other systems that take a few minutes to load.

WORKS BEHIND A PROXY: This platform can be accessed on any Internet enabled

network. You can access it even from your place of work.

LIVE STREAMING QUOTES: Keep an eye on the stocks you care about most with

streaming, real-time quotes and customizable market data. Color-coded price changes

help you to spot trends and react to them quickly.

MULTIPLE WATCH LISTS: The new watch list option allows you to create upto 10

watch lists. Each watch list can be personalized by inserting securities which you

would like view as a group.


33

NSE& BSE ACCESS: Flexibility of trading on both the NSE & BSE via a single

screen

SINGLE ORDER FORM FOR CASH AND FNO: Single order form offers you the

convenience of transacting in various segments of the market without having to

switch between multiple windows.

POINT AND CLICK ORDER ENTRY: Makes order entry quick and simple with a

click on the security the same gets inserted into the order form on your trade screen.

HOT KEY FUNCTIONS: Using a single keystroke (Hot Key) function you can

achieve important tasks very similar to a broker's terminal. Accessing important

reports is also one keystroke away.

MARKET DEPTH WINDOW: IT gives an immediate "at a glance" info about the

stock you are following. The view provides the best 5 bid and offer quotes and the

outstanding order quantities

BACK OFFICE ACCESS: View segment wise ledger bills and contract notes, trades,

positions, account balance, realized/unrealized profit & loss, and buying power all in

real time.

3) SMART START: SmartStart is a powerful browser based trading system for those

who are relatively new to online investing. A unique integrated account, which

integrates your banking, broking, and demat accounts. A comprehensive trading

service, which allows you to invest in equities and derivatives.

SmartStart trading platform allows you the flexibility of trading on any Internet

capable system, with access to both the NSE and BSE.

Software requirements of Smart start: The operating system needs to be either

windows 98/2000 or windows XP. The other requirement is that the system also

needs to be a Pentium 3 or Pentium 4.


34


dial up connection.

The Browser type should be Microsoft Internet explorer (version 6.0 or higher).

Benefits of using Smart start are as follows:

NSE& BSE ACCESS: Flexibility of trading on both the NSE & BSE via a single

screen.

FULLY CUSTOMIZABLE DISPLAY: The save desktop option allows you to save

your created trade screen layout, so the next time you access the application the

created layout is not lost

INTEGRATED ACCOUNTS (BANK. DEMAT & TRADING):Integrates your

banking, broking and demat accounts. This enables you to trade in shares without

going through the hassles of tracking settlement cycles, writing cheques and Transfer

Instructions, chasing your broker for cheques or Transfer Instructions etc.

LIVE ORDER STATUS: Tracking all your orders is made easy through the order

status screen. Further drill down into all details pertaining to an order is available in

the order detail sub report.

TRACK YOUR ORDERS: Track your stock order and trades.

DYNAMIC BUYING POWER: Reflects your credits and debits instantly on every

trade execution. No need to refresh each statement to know your latest buying limits.

WORKS BEHIND A PROXY: This platform can be accessed on any Internet enabled

network. You can access it even from your place of work.


35

BACK OFFICE ACCESS: View segment wise ledger bills and contract notes, trades,

positions, account balance, realized/unrealized profit & loss, and buying power all in

real time.


36

VALUE ADDS:

IL&FS offers its customers many other competitive features. These features add to

the authenticity of the product of IL&FS. The value adds are summarized below.

1) SMART CHART: Real time market moves and

easy trend analysis for the sophisticated trader.

One of the key elements of any trading system is market timing. Many traders fail to

account for timing when making trading decisions, and those who do often rely on

their instinct of market timing rather than empirical data.

SmartCharts allows the sophisticated investor to see markets move and spot trends

with intra-day and historical charts. One can view tick-by-tick pricing and volume,

plus add fully customizable technical studies and indicators

IL&FS Investsmart Securities Limited provides real-time charting which was

available only to a select audience earlier. SmartCharts is ideal for an active trader

who would like to take advantage of the intra-day movements in the market.

SmartCharts allows displaying charts of all stocks and derivatives. Many of the

popular technical analysis indicators can also be plotted. SmartCharts allows one to

view nearly 5 years of historical data, allowing you to back-test your strategies before

implementing them.

2) SMART EXPOSURE:IL&FS also provides this unique service where its

customers are allowed to have limits against shares to help them unlock the

hidden value of the stock they hold.

Avail of additional exposure in the markets: as an Investsmartonline customer one can

use Smart Limits to avail of fresh limits against the shares he has in his depository


37

account with IL&FS Investsmart Securities Limited for taking further exposure in the

markets.

Built-in solution for tracking and risk management: Smart Limits also come with a built-

in comprehensive tracking cum risk management solution to help you leverage, just that

extra bit without taking undue and unnecessary risk with your positions.

3) SMART SECURE: IL&FS INVESTSMART SECURITIES LIMITED has

taken adequate measures to ensure that your account is safe. Some of the key

SmartSecurity features are given below:

Security is important when transaction data is flowing across the Internet, and

when data is stored on computer systems. Investsmart Securities Limited takes

care to ensure that transaction data is safe at all times. Our computer systems are

protected by managed firewalls, intrusion detection system and hardware

redundancy to maximize the availability of service.

All transactions executed through our website are in a safe and secure

environment as it uses 128-bit SSL (Secure Socket Layer) technology. This

ensures that the User communicates with an authentic Internet website set up by

Investsmart Securities Limited and confidentiality is ensured as the data

exchanged over the Internet is encrypted.

Our computer systems are located in physically secure locations with restricted

access.

IL&FS Investsmart Securities Limited maintains daily back ups of the data

residing in our computer systems to meet any unforeseen calamity.

The Internet trading site is a secured one and is certified by Verisign

The Investsmart Securities Limited site also displays the date and time of your

last visit so that you can check whether there was any unauthorized log-in.

The password generation is completely system driven and even our employees are

unaware about it.


38

At Investsmart Securities Limited, we follow a two-step password authentication

to make your account more secure. The first password is entered at the time of

login and the second one prior to trading.

You are required to compulsorily change the password at the time of first login.

4) SMART CALL: An Investsmart online customer will receive quick and

efficient service from our Tele Trading Executives who are dedicated to assist

you for all your requirements related to order placement and dissemination of

Investsmart research inputs.

Investsmart online takes customer service very seriously. It constantly monitors its

performance and works continuously to make improvements.

One even need not have a computer to avail this service and can just call the customer

service, which is toll free, and get his or her order booked.

The customer is given a unique identification pin number, which needs to be given by

him to the customer service advisor so that he can book the order. This identification

number saves a lot of time as the customer need not wait in the queue with those of

the other calls and can get his work done quickly.

5) SMART ALERT: an IL&FS Investsmart Securities Limited customer can

avail of this service which provides you our daily Intra-day Calls and

Investment Ideas* on SMS.

Whether a person is a day-trader or serious investor, IL&FS will deliver stock

information (short-term and long-term calls) to his or her cell-phone everyday

This will help the customer in taking informed decisions before buying or selling

any stocks.

IL&FS Investsmart Securities Limited registered customers will receive this

service completely FREE of charge for the first month.


39

6) SMART NEXT: an Investsmart online customer will have the power of one

more unique product - SRS (Sell Receivable Shares)* at his fingertips

Freedom to exit overnight positions immediately: One can have the freedom to

exit his open positions before they are settled without waiting for two whole days

Unlock value: SRS unlocks value for its customer by letting him capitalize on the

price escalations and also helps him exit positions in case he is of the view that

the market trend is downwards.

The customer needs to Just login to his Investsmart online account and sell them

from the Unsettled Positions Statement under the Trading Menu.


40

MEDIUMS USED BY IL&FS TO REACH OUT TO THE

POTENTIAL CUSTOMERS

As mentioned earlier, IL&FS Investsmart covers virtually the entire country.

The company has a sound base in every part of the country and can cater to

different types of customers from different parts, having a different point of

view as well as different financial capabilities.

However, this is not an easy task and considering all the hurdles coming in the

way of reaching out to the customers everywhere across the country. As a

result IL&FS has not just used one channel to reach out to the customers but

has six different mediums to communicate with them.

All these different types of channels make the decision of the potential customer to be or

not to be with IL&FS very easy as all the information that he wants can be received

quickly and efficiently.

CALL:IL&FS has two dedicated phone numbers out of which one is toll free. The

toll free number is 1800-22-4444 and for people with difficulty in accessing this

CALL

SMS

E_MAIL

REGISTER ONLINE

BRANCH

COURIER

CHANNELS/MEDIUMS


41

toll-free number, there is also a Reliance number 022-3063-7777.Once the call is

made the company s customer acquisition executive will get in touch with the

person who has made the call within the next 24 hours.

SMS: All one needs to do here is type TRADE and send it as an SMS to 7827

and the company s customer acquisition cell will get in touch with that person

by calling him.

E MAIL: One only needs to register himself at the company s e-mail address,

which is [email protected] outlining his requirements and

company s customer acquisition cell will get in touch with that person within

the next 24 hours.

REGISTER ONLINE: One can register online by logging on to the company s

website and Click on the Open an Account link on any of its pages or key in his

basic details on the Investsmartonline home page and the Customer Acquisition

Executive will get in touch with him within 24 hours.

BRANCH: With 202 outlets in over 87 cities across INDIA, IL&FS covers almost

every state. One can walk in at any of these IL&FS outlets to get his doubts sorted

out. The branch executives will guide him accordingly keeping in mind his needs

and requirements.

COURIER: This is the conventional and the simplest of all the methods in order

to get any information one wants to get regarding online share trading account at

IL&FS.One can send a mail by courier or through the regular post service at the

company s registered office address which is:

Online Trading Customer Service,

IL&FS Investsmart Securities Limited,

The IL&FS Financial Centre,

Plot C-22, G-Block,

Bandra Kurla Complex,

Bandra (E),

Mumbai - 400 051.

On receipt of the letter the concerned person will be contacted at the earliest


42

COMPARING IL&FS WITH ITS COMPETITORS:

IL&FS has recently entered into the online share trading market and faces

competition with many giants such as ICICI, HDFC and KOTAK .It also has a new

competitor in the name of 5PAISA, which has been promoted by INDIAINFOLINE.

With so many firms in this field as well as some big brokers it becomes very crucial

for IL&FS to bring the right kind of product that suits it target customers and

achieves competitive advantage as well.

We will now compare each of the above-mentioned firms with IL&FS and later conclude

as to what are the advantages that IL&FS has and what are the areas where it needs an

improvement. The following table and the points that follow will give a useful insight

regarding the same

NAME INVESTSMART 5 PAISA HDFC ICICI KOTAK

Account type 2 in 1 2 in1 3in 1 3 in 1 3 in1

A/C opening charges Rs 750

smartinvest

Rs 1000

smarttrade

Rs 500 Rs 700 Rs

750

If margin

is more

than

1000000-

no

charges

Rs 750

Min bal in e

brokerage A/C

Nil Nil Nil Nil Nil

Min bal in trade

account

Nil 5000 Nil Nil Nil

Type of

trading

Cash

Yes Yes Yes Yes Yes


43

Exposure

4 times, no carry

forward

Delivery-

2times, trading

a/c-4 times

Delivery-

2times,

trading a/c-4

times

3 to 4

times

4 to 6

times,

depends

on ac

time

Brokerage

structure

Delivery

0.6% of the value

of trade

0.25%(advance

brokerage)

0.5% of the

trade or Rs

15,whichever

is higher

0.75%

of the

value

of the

trade

0.5% to

0.18%-

depends

on slab

Square

off

0.10% 0.05% 0.15%-1 leg

(0.30% both

sides)

0.2-

0.425

0.6 to

0.3-

depends

on slab

Per trade

Rs 14 Delivery 25p

per Rs

100.trading 25p

per Rs 100.spot

sale-Rs 1

Nil

(brokerage

for below

rs50000 will

be less than

Rs 25 or

2.5% of

transaction

value)

5 paisa

Trading

platforms

3 1 1 1 1

Links

with

banks

5 1 1 1


44

ANALYSIS:

All the above firms charge an annual maintenance charge of Rs 500 over and above the

normal account opening charge, which is waived off for the first year. However it can be

observed that apart from this there are many differences between the products of all the

above-mentioned firms.

It can be observed that all the above products differ not only in the way they charge the

brokerage to their customers but also the services they give to them which also means

that they may be targeting different types of customers.

Some provide a 3 in 1 account which links the customer s demat account with his

trading and savings account while some of them only provide a 2 in 1 account

which only links the customer s demat account with his trading account. The

advantage in a 3 in 1 account is that the customer can trade smoothly without

facing any obstacles as his amount gets credited to the service provider s account

quickly as there is a link between the demat account and the saving account of the

customer. The advantage in having a 2 in 1 account especially with IL&FS is that

one can not only trade online but also trade offline. One can give cheques of a

particular amount to IL&FS in advance and can later trade within that much

amount. This also reduces the risk of over trading which can prove very costly at

times. However, with a 2 in 1 account the rigidity increases as the customer does

not have a direct link between his demat and savings account.

Another difference especially between IL&FS and its various other competitors is

regarding its account opening fees .IL&FS charges Rs 750 for the SMART

INVEST trading platform and Rs 1000 for SMART TRADE trading platform

while all its competitors i.e. 5 PAISA, HDFC, ICICI and KOTAK charge a flat

account opening fee of Rs 500, rs 700, Rs 750 and Rs 750 respectively. This is

because none of the competitors of IL&FS provide as much flexibility as IL&FS

does. IL&FS charges Rs 1000 for those customers who trade regularly and hence

provide them with software through which they can trade further efficiently. They

overcome the problem which people who browse and trade go through such as


45

website not in working condition, website or the page under construction. A

website is also found slow as compared to software itself so obviously for the

people who trade regularly and for those for whom even a slightest increase or

decrease in the price of a particular stock makes the difference, SMART TRADE

is the best option available as compared to any other product or a service by

anyone. Again IL&FS also provides the normal browser based SMART INVEST

which is just like any other web based product of any other competitor, be it

ICICI or KOTAK or 5 PAISA. It means that the company is not only targeting the

high end customers which trade in bulk but is also trying to attract normal

customers considering that the number of people in India who trade in bulk are far

lesser than the huge mass that trades in normal quantities

Another point of difference between all the above-mentioned firms is that of the

type of trading and the exposure given by them to their customers. Exposure

means the freedom to trade till a particular amount. For example if a person is

trading with Rs 10000 and if the exposure provided by his service provider is 4

times than he can trade upto the value of Rs 40000.

Now, over here, IL&FS provides exposure of 4 times but only on daily

trading and not on delivery based trading as compared to others who do provide

exposure on delivery as well. This aspect needs to be looked into as there are

many traders who would like to get exposure on delivery and not just on daily

trading.

The next and one of the most important aspects to be considered is the difference

in brokerage structure between all the firms providing the online share trading

account. While ICICIdirect (ICICI s online share trading wing) charges the

highest brokerage of 0.75 %, 5 PAISA and KOTAKSTREET (KOTAK s online

share trading wing) are those companies whose brokerage on delivery is one of

the lowest. KOTAK charges a brokerage of a mere 0.18% on select slabs on

delivery. IL&FS charges a brokerage of 0.60% on delivery which means it is not

as high as that of ICICI but certainly a little above average considering the fact

that even the big players such as HDFC and KOTAK charge a brokerage which is

less than 0.50%. This aspect needs some attention as the company is new and


46

brokerage is the first and the foremost thing, which attracts or detracts a potential

customer.

However brokerage on square off is one area where IL&FS scores above

the majority of its competitors. It charges a mere 0.10% on square off as

compared to the likes of ICICI and HDFC who charge a brokerage of 0.15 and

0.20 respectively and only KOTAK scores above IL&FS in this regard. It means

that the company is trying to attract customers who trade on a daily basis and not

those who purchase a particular stock and take its delivery. The thought behind

this being that daily trades will bring in regular income through the brokerage that

is charged to its customers

IL&FS provides three different trading platforms in the form of Smart trade,

Smart invests and Smart start as against only one trading platform provided by all

its competitors. This is another area where the company stands apart from all the

other players in the market. It scores above when compared with its competitors

as the different products under one common roof are customised and suit to the

varied trading needs of different individuals. It further means that the company

wants not just one type of customer, say the one who trades in bulk on a daily

basis or a normal investor, but wants to get people from all the brackets of society

as far as possible.

One more area where IL&FS scores above its competitors is the number of banks

it has got links with. It has links with five premier banks of the country, namely

HDFC, CITIBANK, CENTURION BANK, UTI and .On the other hand market

players such as ICICI and HDFC provide only one bank account link with their

online trading account, which is with their own bank account. This again leads to

a conclusion, which is similar to the one, mentioned above that the firm is not just

aiming one type of customer but it is aiming diversity. Through so many trading

links the company also aims to get a huge customer base as a person wanting to

trade with a big player such as ICICI but not having a savings account with it will

automatically get attracted to a market player like IL&FS.

In addition to the above mentioned distinction between IL&FS and its various

other competitors providing a similar product with their own unique selling


47

propositions there is one more set of competitors who are called as brokers.

Before online trading was introduced in the BSE and the NSE, trading used to be

carried out only by these brokers. However, this type of trading was highly

ambiguous, froth with the danger of scams and frauds, involved a lot of paper

work and also resulted in the customer getting cheated by the broker who most of

the times used to provide him with unreal information about a particular

company. As a result, the customer used to end up picking up a wrong stock and

make huge losses. However, with the advent of online trading, the impact of these

type of brokers has lessened as there is no paper work, prices of the stocks come

streaming online which are there for everyone to see along with their annual

results, their annual sales.etc. Still the brokers claim that they charge a brokerage

that is far lesser than what almost all the online share trading firms charge. A

normal broker is said to be charging a brokerage of 0.50% on delivery, which is

0.10% less than what IL&FS charges. However, the facilities such as general

economy news, company news and analysis, streaming quotes, multiple watch

lists of the stocks listed at both THE BSE and THE NSE, ability to create own

market watch list and view own portfolio anytime are not provided by the normal

broker. A customer need not call his broker but straight away log on to the

company s website and trade himself. This also saves time, which is a very

important factor in stock trading as share prices change by every minute. Further

at IL&FS, the customer is provided with a unique client identity number, which

no one apart from the customer himself has. Thus all the important facts about the

customer s portfolio, his stocks and their market value can be viewed by none

other than that particular himself and are kept 100% secret. This increases the

security level as well as makes the product authentic. Again there are no hidden

charges with an IL&FS online share trading account such as delivery charges,

service tax, demat charges and other charges which one might face when trading

with a normal broker.

IL&FS thus, is a clear winner when compared to a normal broker, as there is more

security and greater satisfaction to a customer when trading with the former than

with the latter.


48

RESEARCH METHODOLOGY:

Research Methodology is a systematic method of discovering new facts or verifying old

facts, their sequence, inter-relationship, casual explanation and the natural laws which

governs them.

Research Methodology explained by Redman and Mory are as follows systematized

effort to gain new knowledge Research Methodology is original contribution to the

existing stock of knowledge making for its advancement. It is the purist of truth with the

help of study. Observation, comparison and experiment. In short also covers the

systematic method of finding solution to a problem is research. It also covers the

systematic approach concerning generalization and the formulation of the theory.

Different stages involved in research consists of enacting the problem, formulating a

hypothesis, collecting the facts or data, analyzing the facts and reaching certain

conclusion either in the form of solution towards the concerned problem or in

generalization for some theoretical formulation.

In Research Methodology mainly Data plays an important role.

The Data is divided in two parts:

a) Primary Data.

b) Secondary Data.

Primary is the data, which is collected directly by direct personal interview,

interview, indirect oral investigation, Information received through local agents,

drafting a schedule, drafting a questionnaire.

Secondary is the data, which is collected from the various books, magazine and material,

reports, etc. The data which is stored in the organization and provide by the HR people

are also secondary data. The various information is taken out regarding that subject as


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well other subject from various sources and stored. The last years data stored can also be

secondary data. This data is kept for the internal use of the organization.

This is the Research Methodology used in the project. The primary and secondary data

method has been used in this project. Unless the data is collected no project can be

complete. So both these data is very important in the project.

The research instrument used for this survey is a structured questionnaire. The

questionnaire contains both open-ended and closed-ended questions. The

questionnaire provides a provision with respect to rating scales.


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MARKET POTENTIAL OF IL&FS ONLINE SHARE TRADING

ACCOUNT-SURVEY ANALYSIS:

Online trading in India started in February 2000 when a couple of broking houses started

offering online trading to their customers. However, IL&FS introduced online share

trading only a year ago. As of today there are more than 7 big players offering the online

share trading product and this number is sure to rise. The last six years has seen a lot of

changes in the Indian markets. With the boom in the Indian economy and the stock

markets going through a bull run the popularity and the attraction towards trading in

shares has increased manifold. Again its knowledge has also increased amongst the

people. The market is huge but it also needs to be tapped appropriately.

Anything less offered by IL&FS as compared to its competitors or any feature not

convincing enough from the customer s point of view can be detrimental to the success

of the firm s product.

Hence in order to know the market potential of IL&FS vis-à-vis its competitors, a survey

was conducted to assess the popularity and awareness among people about shares and

IL&FS online share trading account.

SAMPLING METHOD:

The sampling method so as to obtain a representative sample is the Non-probability

sampling methods. Under Non-probability sampling, the question addressed the basic

questions relating to investing or trading in stocks and whether trading takes place online

or offline, if online-which broking house and why.

A random sample of 50 people was taken. I selected the respondents to the survey on the

basis of judgment sampling with convenience taken into account.

ASSUMPTIONS:

The sample selected represents the population fully


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The data has been collected by administering an open and close-ended

questionnaire of end investors with the assumption that the primary data collected

is true and reflects the actual preferences of the investors/traders.

The sample selected has thorough knowledge of the subject of shares.

LIMITATIONS OF STUDY:

The respondents who have not given any information are not included in the

sample but do come under the population.

It was not possible to cover each and every client of each and every broking house

and hence a sample of 50 people was taken.

The market share of all the online share trading products is only for the city of

MUMBAI. The market share of all the companies may differ in different cities. It

may also differ nationally.


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INTERPRETATION OF DATA:

Chart 1: Penetration of online trading products among respondents

0

5

10

15

20

25

30

35

40

45

50

A B

WEST

Out of the 50 respondents, 43 (86%) had invested in shares through any online trading

product. this shows that the penetration of online share trading product among the

populace is high inspite of the fact that it was introduced only 6 years ago. However, this

reach is in a city like Mumbai, which is considered the commercial hub of the country;

hence one can expect the penetration level of online share trading products to be a little

low in other smaller cities/towns.


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Chart 2: Age wise distribution of online trading products

0%

1000%

2000%

3000%

4000%

5000%

6000%

18-35yrs 35-50yrs 50& above

West

As can be seen from above charts, 50% of the people using online share trading products

fall in the age group of 18-35 years, which shows that the popularity of online share

trading products is at its peak in this age group and is the lowest for the age group of 50

years and above. This may be due to the fact that people in the age group of 18-35 years

are well versed with computers, have fewer responsibilities and can afford to take risks.

The age group of 35-50 years shows a little smaller figure, which may be because at this

stage some people use computers while some don t and some are just unwilling to put

money into shares due to increasing responsibilities and hence the question of online

trading does not arise. People above 50 years are nearing retirement and in some cases

even retired, so they might have some excess cash and hence they too are willing to

invest in shares through Internet, which is less cumbersome and tedious as compared to

offline trading.


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Chart3: Gender wise distribution of online trading products

0

5

10

15

20

25

30

35

40

MALE FEMALE

West

In the sample of 50 respondents although 72 % of the male respondents traded online, 28

% females also used online trading products to buy and sell shares which is an

encouraging sign as it means that online trading has made it possible even for females to

participate in an area which was untreaded by them until recently. It s an encouraging

sign as the number of potential customers has now increased.


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Chart 4: Information source

0

5

10

15

20

25

30

35

PRINT TV NEWSLETTR INTERNET OTHERS

WEST

39% of the respondents came to know about the online trading account through the

Internet itself, hence it may be concluded that the Internet is the most effective medium

as far as getting the customer s attention is concerned. Second most popular medium

turned out to be newsletters, which are not much far from the internet.32% of the

respondents, came to know about the online trading account through the newsletter

subscription. The potential of television and print medium of promotion doesn t seem to

have been utilized fully as they lag behind with only 8% and 13% respectively of the total

respondents interviewed came to know about the online trading accounts them.8% of the

respondents also came to know about the online share trading products through other

sources such as getting messages on the phone, getting calls from the company s call

centre, getting influenced by friends or relatives etc which again means that there are

many other mediums apart from those specified above which can be tapped to market this

product.


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Chart5: Satisfaction with their choices

0

10

20

30

40

50

60

70

80

YES N0

West

Most of the people are satisfied with their choices. However 30 % of the total

respondents were not satisfied with their products, which could be a potential avenue for

consumers waiting to be tapped by the competitors as well as new firms entering into the

e-trading market.


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Chart6: popularity of various online trading products

0

5

10

15

20

25

30

35

40

ICICI KOTAK HDFC IL&FS 5 PAISA

West

ICICI is the most popular online share trading product followed by KOTAK but there is a

huge difference between them. HDFC is at par with KOTAK. IL&FS is at the fourth

position with 14% popularity and 5 PAISA is fifth with less than 10% popularity.

IL&FS s popularity is quite encouraging from the company s point of view considering

the fact that it has begun its online trading operations only about a year ago


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CONCLUSIONS:

It can be concluded that IL&FS INVESTSMART, although new to the online

share trading field, has been able to build a sound customer base if the survey

conducted is to be believed.

IL&FS INVESTSMART has a strong presence in almost every part of the country

which can eventually lead to a very big customer base.

The company will find it relatively easy to further introduce its other latest

products through its strong reach throughout the country.

IL&FS has varied product platforms which are specifically designed to cater to

varied customer needs which leads to a conclusion that the firm has designed the

product keeping the customer in mind.

A sound base in almost the entire country and as much as six different mediums

used by the company to reach out to potential customers means that the company

is going all out to increase its market share.

The brokerage charged by IL&FS INVESTSMART is relatively high as

compared to some of the big players in the market such as HDFC and KOTAK

but low as compared to ICICI.

An IL&FS online trading customer can even trade offline and he/she need not

have an internet connection. This facility is not available with all the companies

providing online trading facility.

Considering the data it can be concluded that there is a high level of penetration

of online trading products, women are also beginning to trade online and it is the

younger generation (18 to 35 yrs) that trades the most.

Considering the data it can also be concluded that most of the people are satisfied

with their choices of online trading accounts and that ICICI DIRECT is a clear

market leader as far as the popularity of the various online trading companies are

concerned.


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RECOMMENDATIONS:

The brokerage structure needs to be revised. It is already on the higher side with

0.60% as compared to HDFC and KOTAK.

Again, the brokerage charged should be customized. It should be based on the

client s turnover. Slabs should be made on the basis of the client s turnover.

Higher the turnover- lesser the brokerage.

IL&FS should also try and increase its level of presence in certain sections of the

media such as Television and Radio. Tie-ups with business channels such as

CNBC, NDTV PROFIT or ZEE BUSINESS can be of great advantage.

IL&FS can also sponsor certain business related events or programmes .It may

lead to greater awareness about the product amongst the people .Already certain

business houses are doing it. It is also a good idea from the point of view of

maintaining corporate social responsibility. This will not only benefit the

company s online share trading product but will also benefit the other products

which may be launched later on.

Increase the distribution network for in form of drop boxes and get in tie ups with

mobile phone galleries with reliance web shops or set up drop boxes at railways

stations which will facilitate easy payment opportunities for the client.

Have incentives 2 the clients when they give references, 5 references - 50%

brokerage waiver on the next 2 trades or 500 rupees credit to your account. Kotak

is already offering such a kind of service.

Increase after market hours time to benefit of the customers.

The above mentioned steps might increase the company s expenditure initially

but it can be a profitable exercise in the long run.


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ANNEXURE

QUESTIONNAIRE

1) WHAT IS YOUR NAME?

ANS:

2) WHAT IS YOUR AGE?

1] MALE 2] FEMALE

3) WHAT IS YOUR OCCUPATION?

1] STUDENT 2] SERVICE

3] PROFESSIONAL 4] SELF EMPLOYED

4) WHAT WOULD BE YOUR LIKELY INVESTMENT OVER THE

NEXT ONE (1) YEAR?

1] UPTO RS 1 LAKH 2] RS 1- 3 LQKH

3] RS 3- 5 LAKH 4] RS 5 LAKH AND ABOVE

5) DO YOU TRADE OFFLINE OR ONLINE?

ANS:

6) WHICH IS THE MOST IMPORTANT PARAMETER WHILE

SELECTING AN ONLINE SHARE TRADING ACCOUNT?

1] BRAND NAME 2] BROKERAGE

3] SECURITY 4] LOCATION

5] OTHER FACILITIES

7) THROUGH WHICH ONLINE SHARE TRADING ACCOUNT

DO YOU TRADE?

1] ICICI 2] KOTAK 3] HDFC 4] IL&FS


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5] 5 PAISA

8) HOW DID YOU COME TO KNOW ABOUT IL&FS ONLINE

TRADING ACCOUNT?

1] TV 2] PRINT 3] INTERNET 4]

FRIENDS

9) WHY DID YOU CHOOSE IL&FS ONLINE TRADING

ACCOUNT?

1] BROKERAGE 2] ADVISE 3] EFFICIENT AND

QUICK TRADING 4] SECURITY

10) ARE YOU SATISFIED WITH YOUR CHOICE? IF NOT, WHY?

ANS:

11) GIVEN AN OPPORTUNITY, WOULD YOU LIKE TO

CHANGE OVER TO ANOTHER ONLINE SHARE TRADING

ACCOUNT AND FOR WHAT REASONS?

ANS:


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BIBLIOGRAPHY:

Websites:

www.investsmartonline.com

www.icicidirect.com

www.kotakstreet.com

www.hdfcsec.com

www.5paisa.com

www.INVESTools.com

Books:

NSE s capital markets module

http://www.investsmartonline.com

http://www.icicidirect.com

http://www.kotakstreet.com

http://www.hdfcsec.com

http://www.5paisa.com

http://www.INVESTools.com


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Comparitive study of online share trading account and market potential of il&fs online share trad

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