Invest Smart Project Report Nirmal Dhruva

8/6/2019 Invest Smart Project Report Nirmal Dhruva

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1. Introduction

1.1 Executive Summary

With the advent of technology, the needs, taste and preferences of the

customers are changing. Companies often ends up in doing lot more in getting new

customers but often forget to do the precise little to find out what they should do to

keep the customer in their hands. It is a well-known truth that loss of one's customer

is the gain of the competitor. A satisfied customer eventually multiplies the number of

customers. It's more cost effective doing business with existing customers than

looking for new ones.

Despite this fact companies do face customer attrition. Over a period of time,

some of their customers get in-active. However, no organization can afford to loose

its customers. An attentive organization always tries to identify reasons of customer

in-activism. The current study is also an attempt to examine the in-activism of equity

customers of IL&FS Investsmart Limited, with an aim to help the company to find out

the crucial issues to improve upon and also figure out the future potential customers

among those old customers.


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IL&FS Investsmart Limited is a premier financial services organization. It

focuses on stock broking, portfolio management, mutual fund, insurance and housing

loan advisory services.

The study has been completed in six phases starting with initial orientation and

ending with recommendations. Primary data was collected through telephonic survey

For the purpose of analysis qualitative data were converted into quantitative data. Six

factors were identified to figure out potential customers. Each customer was rated on

all the six factors and a composite score was calculated for each of them. Finally all

customers were divided into three categories high, medium and low potential based

on their respective composite scores.

From the total database of 300 customers, 82 customers were interviewed and

among them, 19 were identified as high potential, 31 as medium and 32 as low

potential customers. The main reasons for in-activism were identified as better

services offered by other players, shifting to online trading, change in customers and

companys location. However, satisfaction level of companys services was very

good. Many customers were interested in companys research reports and mutual

funds advisory services as well. Overall this study has helped the company to

regain/retain relationship with its old and in-active customers.


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1.2 Theoretical Background of the Study

Modern marketing revolves around the Customer. It is an old and by-now

universally accepted concept that the Customer is the King. Customers are treated

as the eyeballs of all major companies in the world. The little-guy-the-customer is the

person who has unique interests, needs, attitude preferences, issues and

opportunities, and most importantly the authority to spend the money on the offerings

of the company. Therefore the traditional approach of making one-time sales is being

replaced with making long term commitment to the customer that focuses on keeping

and improving the current customers, rather than acquiring new customers.

This concept assumes that the consumer prefers to have an ongoing

relationship with one organization rather than switching organizations. Building on

this assumption and also on the fact that retention is cheaper than acquiring new

customers, the marketers of today offers prime importance in the strategy of

acquiring-satisfying-maintaining customers. Marketing companies often ends up in

doing lot more in getting new customers but often forget to do the precise little to find

out what they should do to keep the customer in their hands. It is a well-known truth

that loss of one's customer is the gain of the competitor.


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An organization might lose its customers over a period of time for a number of

reasons; sometimes this can't be prevented, however, in many occasions it will be

able to take some corrective actions to retain/regain its customers. Therefore

customer retention is very important for success of any business whether it is

manufacturing or trading or service. Satisfying the existing customer eventually

multiply the number of customers as researches suggests, one satisfied customer

creates four new customers whereas one unsatisfied customer spreads bad message

to ten customers. An unsatisfied customer makes more harm to the business than the

benefits a satisfied customer brings. Hence all companies try to keep their existing

customers satisfaction at top priority.

It's more cost effective doing business with existing customers than looking for

new ones. An old customer does not require understanding about the product or

service which organization offers which is necessary for a new customer. For a

marketer it is easy to understand needs of existing customers then new customers.

The cost of retaining one existing customer is much lower than creating a new

customer, so it is always preferable to retain old customers than trying to make new

customers. It becomes easy to get new customers if existing customers are satisfied

in all aspects. If an organization keeps adding new customers and does not care

about its old customers, cannot survive in the long run. Companies that realize this

fact at an early stage survive and grow in their business.


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With the advent of technology, the needs, taste and preferences of the

customers are changing. Banking industry, for instance, has seen lot of changes and

now ATM card has become basic need for most of the customers unlike 6-7 years

back when people did not even think about depositing and withdrawing money

through ATM card. As customers move from one life cycle stage from another, needs

evolve, buying pattern fluctuates and product choices shift. A smart and live

relationship company should recognize such change of needs and wants, and should

gear itself up to suit the advantage. Failure to do so might result in drifting of the

customer.

Many organizations have attempted to automate many routine interactions with

their customers, because face-to-face customer service is the most labor-intensive,

expensive, and risky way to do business with consumers. This is why banks

encourage customers to use ATMs, many gas stations have self-service pumps with

built-in credit-card readers, and many supermarkets have self-checkout stands.

Despite all these efforts, it is still argued that many organizations are not good

at service and that large organizations in particular are still frustrating to deal with

their customers. For example, automation can go awry if not executed correctly, as

shown by widespread dissatisfaction with voice mail systems. Therefore human

interaction is still important. A machine cannot read customers face and understand

his mind; it is only human being who can understand what is going on in customers

mind and customize the product or service accordingly. In absence of that, it leads to


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customers dissatisfaction and eventually customers switching. The reason being

that such organization could not accustom with the changing needs of its customers

and at the same time other players see opportunity with those customers and attract

them by satisfying their needs. Hence customer satisfaction, customer loyalty and

customer retention are believed to be three important pillars on which any

organization is built on. Simply delivering variety of products does not guarantee a

satisfied customer.

However, no organization can afford to loose its customers. An attentive

organization always tries to identify reasons if any of its customers are getting

inactive. There could be several reasons to that. They did not get desired quality of

goods or service or they got better service with other company or their taste and

choice has changed and so on and so forth. Reasons could be different depends on

the nature of business. However, it is very important for an organization to find out

those reasons if any of its customers are getting inactive. Reuniting business

relationship with a lapsed or inactive customer will improve the profitability quicker

than targeting a new one, which will inevitably involve extra spending on advertising

and promotion.


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1.3 Statement of the Problem

For a stock broking company like Investsmart equity investors are very

important because they are their bread and butter. In the competitive market, all

players try to attract the customers towards them and customer switching becomes

one of the important issue for them. In such a scenario it is essential for the company

to figure out the reasons for switching.

Investsmart has been encountering this issue for quite some time. The

company has realized that some of its customers are not availing its services for

some time. The study is an examination of the in-activism of such equity customers of

the company with an aim to help the company to find out the crucial issues to improve

upon and also figure out the future potential customers among those old customers.

1.4 Importance of the Study

The importance of examining in activism lies in the fact that in the absence

of it, company may completely loose its old customers which could be brought back

had they tried to figure out their problems and resolve them. On one hand company

looses old customers and on the other hand they do not refer to other people and

new customers do not attract to the organization. Reemphasizing on the importance


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of customer retention, a loyal customer appreciate referring new people about the

product or service of the organization.

The study has helped the company in the following ways:

To understand the problem of its inactive customers, to find out reasons for

their in-activism, so as to find out ways to make them active.

To improve customer relationship. When an inactive customer is contacted

after long time, he feels very good that company is still caring about him even

though he is not giving any business to them.

To figure out potential customers among those old inactive customers.

To improve its product or service to its existing active customers because the

study may reveal some new areas to improve upon.

To find out customers expectations from the company.

To improve its image and goodwill in the market.

To increase its business.


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1.5 The Topic

In-activism of equity customers an examination. For the purpose of study,

in-activism was defined as an event when a customer was not availing companys

services from certain period of time. The period was defined as six months or more.

Equity customers are those customers who invest in equity shares either through

Initial Public Offerings (IPOs) or through secondary market and have trading account

with the company. Examination of the in-activism of equity customers is a process of

finding out reasons for their in-activism, their past experience with the services of the

company, their present and future expectations from the company. There might be

many reasons for in-activism such as: not having interest in equity investments, prior

bad experience with equity trading, dissatisfaction from the companys services,

better services offered by another company, convenience and so on.

1.6 Objectives of the Study

The objective of the study is to find out the reasons for in activism of equity

customers of IL&FS Investsmart Limited, suggest the company what initiative it

should take to make them active and figure out the future potential customers among

those old customers.


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2. Design of the Study

2.1 Methodology

2.1.1 Various Phases

PHASE I: An initial orientation for understanding the organizational culture and its

products.

PHASE II: Learning the process by actual working experience

PHASE III: Preparation of the plan

PHASE IV: Data collection

PHASE V: Facts finding and data analysis

PHASE VI: Recommendations to the organization.

PHASE I: An initial orientation for understanding the organizational culture and its

products.

Phase I started with initial training about the products and services Company

offers and its work culture that was essential for researcher before directly interacting

with the customers.


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PHASE II: Learning the process by actual working experience

Phase II included actual working experience with the senior executives and

relationship officers that helped the researcher to understand how company delivers

its services to the customers.

PHASE III: Preparation of the plan

Having understood the process, the third phase started with preparation of

plan how to approach the in-active customers, interact with them and try to

understand their problems and expectations from the company. The company had

provided the database of about 300 old customers. These customers had opened

their stock trading account with the company from October 2000 to March 2004. The

study was concentrated on the in-active customers. For the purpose of the study,

inactive customers were defined as those customers who were not availing

companys services for last six months or more.

It is important to follow a planned strategy. First, the customer should be

contacted by either of the following methods:

To contact directly through face to face meeting or telephone or e-mail.

To invite them to avail any new offer, the company is offering.


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To invite them for any seminar or customer meet if company is conducting

or sponsoring.

To send them greetings or gift on their birthday or marriage anniversary.

Each method has its own advantages and disadvantages. All possible

methods were explored with their pros and cons. With respect to nature of business

and kind of customers, the most suitable method identified was to contact them

directly. Most of the customers were not comfortable with face to face meeting hence

telephonic conversation was given preference over face to face meeting or e-mail

to get fast response depending on the convenience of the customer. However,

customers preference was always given top priority.

PHASE IV: Data collection

Fourth Phase was the most important phase comprising data collection. It has

given great opportunity to the researcher to understand what customers expect from

the company.

Telephonic interview had an unstructured talk covering all the vital areas

required. A typical telephonic conversation used to start with greeting the customer,

introducing the researcher, the purpose for calling and asking him/her to have a word.

If the customer was not comfortable talking that time then he was approached later.


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Once the customer agrees, he/she was asked about status of the trading account

with the company. The conversation was concentrated to find out how far he is using

the services of the company or if he has stopped using then what are the reasons for

discontinuation, whether he is interested in re-availing the services, how satisfied he

was with companys services, currently how actives he is in stock trading, what is his

occupation and what are his expectation from the company.

PHASE V: Facts finding and data analysis

The fifth phase was actually more rigorous work summarizing the data, sorting

the points, sequencing the conversation, converting the qualitative data into

quantitative data and analyzing. Essentially fourth and fifth phases were not mutually

exclusive; they were both happening simultaneously because the telephonic

conversation cannot be remembered for long time until and unless it is written down

and reshuffled.

After collection of the qualitative data from the customers, it was converted into

the quantitative data and finally the customers were divided into three categories such

as: High, medium and low potential customers based on their Composite Score

(hereinafter defined). Six factors (as explained below) were taken to arrive at

Composite Score.


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A. Deciding Factors for Potential Customer

There are many factors which can decide the potential of the customer such as

his interest level, occupation, age, income level, knowledge level, risk taking capacity,

activeness, size of current portfolio, previous experience with the company and stock

trading, future expectations and so on. However, there are few factors which mostly

contribute to potential and capture the other factors into them.

To find out the potential, finally six factors were considered which contribute to

the overall potential. Each factor was given equal weightage and each customer was

rated on the scale of 1 to 5 on all factors based on the data collected. One being

lowest and 5 being highest rating. The six factors were as follows:

1. Interest level of the customer

2. Activeness of the customer

3. Satisfaction level from the companys services

4. Occupation of the customer

5. Current Portfolio

6. Expectations from the company in future


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1. Interest level of the customer: Interest level of the customer includes how

much the customer was interested in availing companys services. It is very

important as interest level of the customer is indicative of his/her future

potential for the company. Customers were rated on the following scale:

1 2 3 4 5Highly

uninterested

Somewhat

UninterestedInterested

Somewhat

Interested

Highly

Interested

2. Activeness of the customer: Activeness was defined as how actively the

customer was involved in the stock trading and related business possibly with

another stock broking firm. This factor was included to find out the customers

who are actively involved in equity related trading but by any reason shifted to

another firm. Customers were rated on the following scale:

1 2 3 4 5Not at all

active

Somewhat

inactiveActive

Somewhat

Active

Very Much

Active

3. Satisfaction level from the companys services: This factor measures

satisfaction level of those customers. In other words, how satisfied the

customer was from the services provided by the company in past. This could


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help to find out reason for discontinuing the services. If the customer was

satisfied from the companys services then there might be other reasons for

discontinuing its services or if he was not satisfied earlier then this was the first

reason for discontinuing the services. Customers were rated on the following

scale:

1 2 3 4 5Highly

Dissatisfied

Somewhat

Dissatisfied

SatisfiedSomewhat

Satisfied

Highly

Satisfied

4. Occupation of the customer: Occupation plays a major role in deciding the

potential. Thus occupation of the customer was taken as an important

parameter. Customers were rated on the following scale:

1 2 3 4 5

UnemployedRetired/

Housewife

Government

Job

Self employed/

Private Job

Industrialist/

Manager/Speculator

5. Current Portfolio: Current portfolio means size of the portfolio the customer

has. If he has large portfolio already invested, that means he is an active trader

but availing the services from other company so the company can target such

customer by providing value added services and set him back to the company.

The size of the portfolio also indicates the risk taking ability of the customer. If


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he has invested only Rs 1 lakh or Rs 2 lakhs in equities, he is a moderate risk

taker and probably long term investor. On the other hand if he has equity

portfolio of more than Rs 7 lakhs, he would be an active trader and high risk

taker. Some customers even has Rs 30-40 lakhs equity portfolio as well. The

size of the portfolio also correlated with occupation. Customers were rated on

the following scale:

1 2 3 4 5Below Rs. 1

Lakh

Rs 1 Lakh to

Rs 3 Lakhs

Rs. 3 Lakhs

to Rs 5 Lakhs

Rs 5 Lakhs to

Rs 7 Lakhs

Above Rs 7

Lakhs

6. Expectations from the company in future: This factor was included to find

out customers expectations from the company in future. For example one

customer might have very high expectations and other might have no

expectations. Customers were rated on the following scale:

1 2 3 4 5No

Expectations

Low

Expectations

Some

Expectations

High

Expectations

Very High

Expectations

B. Composite Score

Composite score for each customer was calculated. Each customer was given a

composite score out of 5. Following formula was used to calculate Composite score:

n

CS = Ri/ n


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i = 1

Where CS = Composite Score of a customer

Ri = Rating of the factor i

n = Number of factors (six)

Finally customers were divided into the following three categories based on their

respective composite scores:

High Potential = CS equal to 4 and up to 5

Medium Potential = CS equal to 3 and below 4

Low Potential = CS below 3

PHASE VI: Recommendations to the organization.

The last and the final phase comprised of recommendations to the company.


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2.2Statistical Tools and Techniques

The tools used for the analysis were SPSS (Statistical Package for Social

Science) and Microsoft Excel. The following techniques were used for the analysis:

Frequencies

Charts and Graphs

Bar Chart and Pie Chart.

Cross tab and chi square test

A cross tabulation displays the number of cases in each category defined

by two or more grouping variables. Cross tabulations are useful for

summarizing categorical variables -- variables with a limited number of

distinct categories.

The chi-square measures test the hypothesis that the row and column

variables in a cross tabulation are independent. A low significance value

(typically below 0.05) indicates that there may be some relationship

between the two variables. While the chi-square measures may indicate

that there is a relationship between two variables, they do not indicate the

strength or direction of the relationship.

Correlation

The correlation explains relationship between the two variables. Pearson

correlation coefficients assume the data are normally distributed. The


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Pearson correlation coefficient is a measure of linear association between

two variables. The values of the correlation coefficient range from -1 to 1.

The sign of the correlation coefficient indicates the direction of the

relationship (positive or negative). The absolute value of the correlation

coefficient indicates the strength, with larger absolute values indicating

stronger relationships.

The significance level is the probability of obtaining results as extreme as

the one observed. If the significance level is very small (less than 0.05)

then the correlation is significant and the two variables are linearly related.

If the significance level is relatively large (for example, 0.50) then the

correlation is not significant and the two variables are not linearly related.

Other suitable statistical techniques

2.3 Limitations

The study had been conducted with the customers of the Hyderabad branch of

the company and findings may not be as applicable to the other branches of the

company through out India as it applies to the Hyderabad branch.

The data collection was done through telephonic survey so mood of the

customer at that time played a major role and some times the answers may not reveal

the real facts which become one of the limitations of the study.


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2.4 Problems faced during the study

Following difficulties were faced during execution of the study:

Meeting the customers for face to face interview was challenging task

especially with old and in-active customers. Many customers did not entertain

face to face meeting or they did not have time. So telephonic survey was

suitable in that context.

Approaching the customers through telephone also had limitations. Many

customers could not be contacted due to the following reasons:

Change of their location in the City.

Have gone abroad.

Change in the phone number or old number not working.

Sometimes other person talks on behalf of the customer and did not co-

operate the researcher.


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2.5 Analysis of the Data

From the total database of 300 customers, data was collected from 82 customers.

They were asked many qualitative questions as explained in methodology. After

collection of the qualitative data from the customers, they were converted into the

quantitative data with respect to all six factors.


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1 Factor wise Analysis:

1. Interest levelChart - 1

Interest

Highly Interested

Somew hat Interes ted

Interested

Somew hat uninteres te

Highly uninteres ted

Percent

40

30

20

10

0

11

35

2018

16

We can see from the above bar chart that more than 65 percent of customers are

interested in re-availing companys services. 35 percent customers are fairly

interested and 11 percent are highly interested. Only 16 percent customers are not at

all interested. It indicates that most of the inactive customers were interested in re-

availing companys services. Those customers fallen either in medium or high

potential.


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2. Activeness

Chart - 2

Activeness

Highly Active

Somew hat Ac tive

Active

Somew hat Inactive

Highly Inactive

Percent

40

30

20

10

0

9

27

29

20

16

We can identify from the above chart that around 65 percent of the interviewed

customers were actively doing the stock trading with some or the other company. It

clearly indicates that majority of the people were still doing stock trading but they had

shifted to other service provider. Among those 65 percent, 9 percent customers (7

customers) were highly active and doing very good business. This result has given

clear indication and immense scope for the company to target those active

customers. Only 35 percent customers were not active traders.


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3. Satisfaction

Chart - 3

We can observe from the above chart that maximum numbers of customers were

satisfied from the past services of Investsmart. Almost 90 percent of the customers

were satisfied and only 10 percent customers were dissatisfied. It clearly indicates

that customer dissatisfaction was not major reason for discontinuation of services with

most of the customers.

Satisfaction

Satisfaction

Highly Satisfied

Somewhat Satisfied

Satisfied

Somewhat Dissatisfied

Highly Dissatisfied

P e r

ce

nt

50

40

30

20

10

0

11

46

33

46


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4. Occupation

Chart - 4

Occupation

Industrialist/Specul

Pvt. Service/Self em

Govt. Service

Retired/Housewife

P

ercent

50

40

30

20

10

0

24

41

28

6

It can be observed from the above chart that no customer was in the un- employment

category and only 6 percent of the customers were retired or housewife. About 69

percent of the customers was either doing government or private service or self

employed in their business. Interesting to note that 24 percent customer has been

given rating of 5 i.e. they were either working at managerial position or they were

industrialist or speculators. This indicates that there was a large potential for the

company to make those customers active.


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5. Current Portfolio

Chart - 5

Current Portfolio

9%

15%

22%

32%

23%

Above Rs 7 Lakhs

Rs 5 Lakhs to 7 Lakh

Rs 3 Lakhs to 5 Lak

Rs 1 Lakh to 3 Lakhs

Below Rs. 1 Lakh

It can be observed from the above pie chart that almost one third of the customers

had a portfolio between Rs 1 lakh to Rs 3 lakhs but also 26 percent customers had

portfolio of more than Rs 5 lakhs. Among them 9 percent (8 customer) customers had

equity portfolio more than Rs 7 lakhs. Some of them even had more than Rs 30 lakhs

of portfolio. 22 percent customers had portfolio between Rs 3 lakhs to Rs 5 lakhs The

result was a positive signal for the company as it can target such customers by

providing value added services and make them active customer again.


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6. Expectations

Chart - 6

Expectations

Very High Expectati

High Expectations

Some Expectations

Low Expectations

No Expectations

Perce

nt

50

40

30

20

10

0

9

39

23

17

12

We can observe from the above chart that the customers have lot of expectations

from the company. About 50 percent customers have high or very high expectations.

Only 12 percent customers do not have any expectations from the company. The

balance 40 percent have some or the other expectations. Most of the customers

expect regular updates or periodic consultation from the company. Few customers

expect proactive service like information about any good buy or sell beforehand.


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2. Composite Score

As explained in the methodology, customers were divided as high, medium and low

potential customers based on their respective composite scores.

Chart - 7

Composite Score

31 / 38%

32 / 39%

19 / 23%Medium

Low

High

There were 19 customers who were categorized as high potentialcustomers. These

customers were highly interested in re-availing companys services and had high

expectations from the company. The result has evolved many new areas where the

company can target those customers such as mutual funds, derivatives and portfolio

management. With the change in time and the mode of trading, many customers

were expecting online trading platform.


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There were 31 customers who were categorized as medium potential customers.

These customers were interested in re-availing companys services but not had very

high expectations. Equity investment was not their main business. The analysis has

shown that if company concentrates on those customers by providing value added

services, they can become highly active customers in future. It is the time when

customers expect continuous updates and prompt service otherwise they have

number of alternatives.

There were 32 customers who were categorized as low potentialcustomers. These

customers were very less interested or not at all interested in re availing companys

services. There were many reasons for that such as:

They have incurred losses in equity trading.

They opened their trading account just to dematerialize their physical shares to

sell them off and were not interested in equity investments.

They were availing services from other broker and were very happy with that

and not interested to re-shift.

They felt inconvenient to re-avail service because of the change in companys

location.

They were not interested in equity or mutual fund investments.


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3. Correlation between Interest Level and Expectations

Null Hypothesis: H0 There is no relationship between Interest level and Expectations.

Alternative Hypothesis: H1 There is a relationship between Interest level and Expectations.

Table 1

Corre la t ions

.8 90**

.000

82

Pearson Corre la t ion

Sig. (2-tai led)

N

Interest

Expectat ions

Co rrelat ion is s igni ficant at the 0 .01 level

2 - ta ile d .

**.

From the above table it can be observed that there is very high correlation between

the Interest Level and Expectations. The Pearson Correlation coefficient 0.89 signifies

that customers who are interested in re-availing companys services also have good

amount of expectations and customers who are not interested, do not have

expectations from the company. The significance level .0005 is very small and

explains that the correlation is significant and the two interest level and expectations

are linearly related.


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4. Cross Tabulation and Chi-Square Test between Current Portfolio and

Interest Level

Null Hypothesis: H0 There is no association between Current Portfolio and Interest level.

Alternative Hypothesis:H1 There is an association between Current Portfolio and Interest

level.

Table 2

Current Portfolio * Interest Crosstabulation

7 5 3 4 19

9% 6% 4% 5% 23%

2 8 9 6 1 26

2% 10% 11% 7% 1% 32%

2 1 4 10 1 18

2% 1% 5% 12% 1% 22%

2 1 8 1 12

2% 1% 10% 1% 15%

1 6 7

1% 7% 9%

13 15 16 29 9 82

16% 18% 20% 35% 11% 100%

Count

% of

Total

Count

% of

Total

Count

% of

Total

Count

% of

Total

Count

% of

Total

Count

% of

Total

Current Portfolio

Below Rs. 1

Lakh

Rs 1 Lakh to

Rs 3 Lakhs

Rs. 3 Lakhs to

Rs 5 Lakhs

Rs 5 Lakhs to

Rs 7 Lakhs

Above Rs 7

Lakhs

Total

Highlyuninterested

Somewhatuninterested

InterestedSomewhatInterested

HighlyInterested

Interest

Total

The above cross tabulation is done to figure out what kinds of customers (with

respect to their portfolio) are interested in re-availing companys services. From the

above cross tab, it can be observed that 56% (7) of highly uninterested customers

(13) had less than Rs 1 lakh of portfolio. Similarly, more than 75% (6) of the

customers who has more than Rs 7 lakhs of portfolio (7) are highly interested. Most of


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the customers are uninterested among those who have Portfolio below Rs 3 lakhs

and most of the customers are interested among those who has portfolio worth Rs 3

lakhs or more. This indicates that high portfolio customers are more interested in re-

availing companys services comparative to low portfolio customers.

Table 3

Chi-Square Tests

69.063 16 .000Pearson Chi-Square

Value df

Asymp. Sig.

(2-sided)

Table 4

Symmetric Measures

.676 .000Contingency CoefficientNominal by Nominal

Value Approx. Sig.

Chi-square test output table shows significance level of .0005 so the null hypothesis

is rejected. Therefore there is a significant association between Current Portfolio and

Interest Level. Chi-square test is carried out at a 95 per cent confidence level.

The contingency coefficient gives the measure of strength of the output. If the value is

close to 0, there is no strong association between the two variables. However, if the

value ranges between 0.5 and 1, there exists an association. From the above table, it

can be seen that the contingency coefficient value is .676 that is greater than 0.5

hence the variables are strongly associated.


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5. Cross Tabulation and Chi-Square Test between Occupation and

Activeness

Null Hypothesis: H0 There is no association between Occupation and Activeness.

Alternative Hypothesis: H1 There is an association between Occupation and Activeness.

Table 5

Occupation * Activeness Crosstabulation

4 1 5

5% 1% 6%

6 7 6 4 23

7% 9% 7% 5% 28%

3 7 14 7 3 34

4% 9% 17% 9% 4% 41%

1 4 11 4 20

1% 5% 13% 5% 24%

13 16 24 22 7 82

16% 20% 29% 27% 9% 100%

StatisticsCount

% of Total

Count

% of Total

Count

% of Total

Count

% of Total

Count

% of Total

Occupation

Retired/

Housewife

Govt. Service

Pvt. Service/

Self employed

Industrialist/

Speculator

Total

Highly

Inactive

Somewhat

InactiveActive Somewhat

Active

Highly

Active

ActivenessTotal

From the above cross tab, it can be observed that all housewives or retired people

are inactive. Majority of in-active customers belongs to first two categories of

occupation. Out of total 82 customers, 36% of the customers are somewhat (27%) or

highly active (9%). Among them all Highly Active customers (7) and more than 80%

(7+11=18) of Somewhat Active customers (22) belong to only last two categories of

occupation. It all indicates that as soon as the occupation level increases people tend

to become active stock traders.


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Table 6

Chi-Square Tests

40.077 12 .0001Pearson Chi-Square

Value df Asymp. Sig.

(2-sided)

Table 7

Symmetric Measures

.573 .000Contingency CoefficientNominal by NominalValue Approx. Sig.

Chi-Square test revealed the significant association between the Occupation and

Activeness. From the Chi-square test output table, significance level of .0001 has

been achieved so the null hypothesis is rejected. Chi-square test is carried out at a 95

per cent confidence level. It can also be seen that the contingency coefficient value

is .572 that is greater than 0.5 hence the variables are strongly associated.


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Page 36 of 65

3. Facts and Findings

3.1 Reasons for Customers In-activism

Online trading, more convenient mode of trading: Customers who have

good knowledge about the stock market and dont have much time prefer to

opt online trading. One of the major reasons for customer switching was online

trading being offered by other brokers. Many customers have shifted to other

brokers because of this reason.

Better service offered by other stock broking company: Some customers

have switched because they were offered better service from other stock

broking company such as much faster response, early settlement, and more

stocks specific advisory services.

No continuous updates from Investsmart: Some customers told that there

were no regular updates from Investsmart and no body regularly approached

them from Investsmart for availing services.


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Page 37 of 65

Change in customers location: Many customers have moved away from

their old location and probably availing companys services from their new

location was not convenient for them.

Change in companys location: Many customers have shifted to other

company because Investsmart has shifted its office to Raj Bhavan Road,

Somajiguda from its previous location Secunderabad and continuing services

from the new office was not convenient for them.

No interest in stock trading: Some customers not had good experience with

stock trading and they did not want to do stock trading any more.

3.2 Other Findings

Most of the customers came to know about Investsmart through their friends.

Most of the customers have brand loyalty towards Investsmart.

The customers, who were availing services, were satisfied and company

maintains good relationship with them.

Response rate of the queries from Investsmart is fast.


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Page 38 of 65

3.3 Expectations

Continuous Market Updates: Investment in stocks is such type of investment

in which one cannot sit idle. If someone invest and keep idle. He may loose his

principle money as well. It requires periodic reassessment of the invested

stocks. Many customers are expecting stock and sector specific advisory

services, regular updates about new IPOs and current happening in the stock

market.

Research Reports: Investsmart provides many research reports to its

customers in each asset class: Equity, Mutual Funds, Fixed Income Products

and Derivatives. Its researchers and financial analysts evaluate market trends

and prepare unbiased and objective reports to make value added

recommendations to the clients - so that they in turn can make better, well-

informed decisions. Many customers are not aware about those reports;

however most of the customers were interested in those research reports.

Mutual Fund Advisory Services: For a new and long-term equity investor,

mutual funds are also good investment opportunity through which they can

diversify their risk by indirectly investing in the stock market under the

professional management of their money by the fund manager. Many


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Page 39 of 65

customers were interested in mutual fund investments and expecting good

advisory services.

Educating about Derivatives: Derivative are another emerging financial

instruments which are highly complex to understand. People who have good

knowledge in derivatives make lot of money. But still, large proportion of

people does not understand it clearly, though they want to trade in derivatives.

Thus it is necessary to educate customers about derivatives to increase its

awareness. Many customers have shown their interest towards it.

Some Interesting Quotes from the customers

I am happy that somebody has called me from Investsmart after so long. You

are good in servicing, very diligent but I want little proactiveness. Sometimes

customer has to wait a long to talk to right person.

I wanted to invest some money in mutual funds but the concerned person did

not help properly otherwise your services are ok. Surprisingly whenever I

receive any courier from Investsmart, I did not find any local address of

Investsmart, so please do mention your local address.

I would appreciate if somebody from Investsmart would continuously provide

me market updates and periodic advice about stocks.


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Page 40 of 65

4. Recommendations

1. Feedback Mechanism: A good customer feedback system is an essential

ingredient of customer care. Not all companies give due importance to the

feedback from the customers. The company should emphasize on developing

a feedback mechanism wherein customer can give their feedback and

suggestions to improve the services.

2. Continuous Updates: As expected by customers continuous stock market

updates and proactive stock and sector specific advisory services should be

offered to customers. It also helps in maintaining Customer Relationship with

existing customers. New employees could be hired to fulfill this requirement

whose responsibility is to continuously update the customers by interacting

with them and help them resolve their queries.

3. Special focus on high potential customers: High potential customers

figured out from the results of the analysis must be given greater attention.

Going forward these customers can give very good business to the company if

they handled properly. Special focus is required for those customers.


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Page 41 of 65

4. Cross selling: Company offers advisory services for variety of products like

Mutual Funds, Insurance, Portfolio Management, IPOs etc. The result of the

study can be used in building a strategy to promote or to cross sell more

products to the equity customers at the time of contact and thereby continuing

relationship with them.

5. Research Reports: Investsmarts research reports are highly accepted in the

industry. Research reports provide lot of information to customers and add

value to companys services. Company should regularly send research reports

to its old customers whoever has expressed their interest. Company must

concentrate on this issue.

6. Free home service: Customers who have shifted to other companies because

of the long distance to the new office should be tackled efficiently. Free home

service should be provided to those customers whenever they require. It will

definitely help the company to tap large market in the medium to long run.

7. Recruitment of Relationship Officers/executives: To provided value added

and proactive services to the customers, at least two-three new officers or

executives should be appointed.

8. Invitation to Customers/Investors Meet: Investsmart often organizes

Customers/Investors meets to interact with customer, to provide them a


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Page 42 of 65

platform to talk with Industry experts and to update them about companys

performance and future plans. This is one of the effective tools to maintain

relationship with customers. The in-active customers should also be given a

privilege to attend those meets.

9. Online Trading Service: Many customers have shifted to other brokers

because of online trading being offered by them; therefore the company should

sincerely think on this issue and start online trading service for the customers.

Since there is no human interaction in online trading, therefore web site should

be made user friendly and flexible. Company should tie-up with at least two-

three prominent national level banks to facilitate the financial transactions.

However, it should be offered at competitive price to attract more customers as

there are already established players in the market.


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5. Bibliography

References:

K Madhavi Latha Analytical CRM, Marketing Mastermind, January, 2004.

G. dhananjayan Services marketing Integrating People, technology and

Strategy, Marketing Mastermind, February, 2005.

Prof. S. Anand & Dr.V.Murugaiah Marketing of Financial Services: Strategic

Issues, SCMS Journal of Indian Management, Volume 1, Number 3, July

Sept. 2004.

Web-sites:

http://www.businesseurope.com

http://www.indiainfoline.com

http://www.investsmartindia.com

http://www.moneycontrol.com

http://www.nseindia.com

http://sify.com/finance/equity/fullstory

http://www.thehindubusinessline.com

http://www.ulearntoday.com/magazine/physics
http://www.businesseurope.com/http://www.indiainfoline.com/http://www.investsmartindia.com/http://www.moneycontrol.com/http://www.nseindia.com/http://sify.com/finance/equity/fullstoryhttp://www.thehindubusinessline.com/http://www.ulearntoday.com/magazine/physicshttp://www.businesseurope.com/http://www.indiainfoline.com/http://www.investsmartindia.com/http://www.moneycontrol.com/http://www.nseindia.com/http://sify.com/finance/equity/fullstoryhttp://www.thehindubusinessline.com/http://www.ulearntoday.com/magazine/physics


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6. Appendix

6. 1 Profile Stock Broking Industry

6.1.1 History of Stock Trading in India

The stock trading history in India is obscured in the mists of time. Historical

records, as and where they exist, rarely speak about business and speculative activity

except in passing. However, the origin of stock broking in the country may go back to

a time, when shares, debentures and bonds representing titles to property were first

issued on the condition of transfer from one person to another and the earliest record

of dealings in securities in India is the East India Company's loan securities, way back

in the 18th century.

The first stock exchange in India, Bombay Stock Exchange was established in

1875 as 'The Native Share and Stockbrokers Association' and has evolved over the

years into its present status as the premier stock exchange in the country. It may be

noted that BSE is the oldest stock exchange in Asia, even older than the Tokyo Stock

Exchange, which was founded in 1878. The country's second stock exchange was

established in Ahmedabad in 1894, followed by the Calcutta Stock Exchange (CSE).

India's other major stock exchange National Stock Exchange (NSE), promoted by

leading financial institutions and was established in April 1993. Over the years,

several stock exchanges have been established in the major cities of India. Today,


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most of the global stock exchanges have become highly efficient, computerized

organizations. Computerized networks also made it possible to connect to each other

and have fostered the growth of an open, global securities market.

6.1.2 Automation of the Stock Exchanges in India

Technology has changed the landscape of the stock markets. The look of the

stock Exchanges has undergone enormous changes in the recent years. Prior to their

automation all Stock Exchanges in India had an outcry system of trading. The

G.S.Patel Committee report 1996 recommended the stock exchanges to go in for

computerization of their trading operations if they desired to offer the facility of carry

forward deals. The Bombay Stock Exchange was the first to automate its trading with

the Bombay Online Trading (BOLT) System on March 14, 1995.

In recent years Investments in stocks have become one of highest returns

giving investments and large amount of investors are attracted towards stock trading.

As investors are getting educated about the market complexity they want even faster

trading system. Sometimes, it takes substantial time to complete a trading transaction

and customer does not get right price as stock prices change every second. Investor

has to be dependent on stock broker for the execution of their transaction. The best

alternative solution to it, is online trading wherein the customer can trade from

anywhere in the world sitting on a desktop.


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Main Objectives for the introduction of Online Trading:

Facilitate easier transaction processing;

Facilitate easy Surveillance so that there is less scope for speculation;

Provide the investor with best possible facilities and services;

Bring in transparency in the operations of the Exchanges;

Simplify Trading procedures and make them fully automated.

6.1.3 Recent Developments in Stock Broking Industry

Indian Stock broking industry is one the emerging and developing industry in

the financial services sector. It has seen many ups and down over a period of time.

Significantly it has experienced lot of speculative activities in the Harsad Mehta and

Ketan Pareek time when stock market touched new heights and attracted lots of

investors to the market. But such attraction to the stock market was not real. It was

only because of the increase in the stock prices due to speculation. The real growth

started from the year 2003 when market consistently seen a growth momentum by

touching all time high. During these period large disinvestments of the Navratna

PSUs has also motivated the small investors to enter into the market. In all that

process the ultimate gainers are stock broking companies whose revenue is all

depends on the market volumes. Trading Volumes have significantly increased in the

last years. Following statistics indicates the growing trading volumes and market

capitalization of securities at National Stock Exchange:


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Table - 8

Daily Trading Volumes on National Stock Exchange

Date

No. of

companies

traded

No of trades

Traded

quantity

(lakhs)

Traded

Value

(Rs.crore)

1-Apr-05 822 2,017,647 2,976.66 4,498.46

1-Apr-04 749 1,499,082 2,271.66 4,781.23

1-Apr-03 667 996,622 1,319.80 2,369.57

1-Apr-02 749 753,120 1028.34 2,025.50

2-Apr-01 820 451,258 708.00 1,395.78

3-Apr-00 1,066 385,779 815.00 3,089.891-Apr-99 1,119 275,097 653.00 2,389.76

1-Apr-98 1,129 189,346 571.00 1,763.00

1-Apr-97 1,233 129,811 546.00 1,219.21

1-Apr-96 954 39,905 206.00 411.22

3-Apr-95 477 5,383 21.00 25.25 (Source: nseindia.com)

It is evident from the above statistics that trading volume in last 10 years on the

National Stock Exchange has increased by more than 140 times. In April 1995, only

21 lakhs shares were traded in a day whereas the number has increased to 2,977

lakhs in April, 2005. The traded value has sharply increased in last four years. It has

increased by more than 300% in the same period from 1,396 crore to 4,498 crore. It

can also be observed from the Graph-8 that market capitalization in 2004-05 has

increased by more than 4 times and reached to Rs 1585 Thousand Crore which was

only Rs 363 Thousand Crore in 1994-95. It has seen tremendous growth after 2002-

03. The effect of growing volume and market capitalization can be seen in increasing

business and market share of stock broking companies (Table - 9). Number of


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companies traded on the exchange has declined till 2003 but after that it has again

started increasing because of the rally of Initial Public Offers coming in the market.

Graph - 8

Market Capitalization of securities in Cash Market Segment

Market Capitalisation in Cash Market Segment

2003-

2004

2002-

2003

2001-

2002

2000-

2001

1999-

2000

1998-

1999

1997-

1998

1996-

1997

1995-

1996

1994-

1995

Market Capitalisation Rs. crore)

(Source: nseindia.com)

6.1.4 Changing Phase of Stock Broking Industry

The stock-broking business has undergone a sea change over the last decade.

There are three main factors behind the changes in the stock-broking business.


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a) First, the shift from floor-based to screen-based trading in 1994. This brought

transparency into trade execution and raised the confidence of investors. The

result has been lower transaction charges and increased convenience. This

has helped both the investors and the brokers.

b) The second change was dematerialization. Before this, buying or selling

shares was a difficult matter. Even when an investor bought shares, he was

not sure whether they would be transferred in his name. But now these

concerns are no longer there.

c) The introduction of futures and options was the third major factor that has

changed the face of the stock-broking business as it is a new avenue for

revenue.

6.1.5 Changing role of Stock Brokers

Traditionally, a broker's main role was just to buy and sell shares. However,

with the changes in the corporate and regulatory systems, his role has changed from

just execution of trades to advice along with execution. In this case, a broker has to


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understand the need of the client, his risk assessment, period of holding and returns

expectation. He has also to provide research-based advice.

6.1.6 Players in the Stock Broking Industry

There are two types of stock broking services provided by the companies

namely offline and online. In offline trading IL&FS Investsmart, Karvy, Anand Rathi

securities are major players in offline and ICICIDirect, Kotak Securities, Sharkhan are

top players in online trading. However, many brokers provide both offline and online

to customers. Following are the prominent players in Indian Stock Broking Industry:

Indiabulls

IL&FS Investsmart Limited

Motilal Oswal Securities

Kotak Securities

Sharkhan.com

5Paisa.com

ICICIDirect.com

HDFC Securities

Karvy Stock Broking Company

Way to Wealth

Anand Rathi Securities

JM Morgan Stanlay Securities

DSP Merrill Lynch

CLSA Securities

The top retail domestic brokerage firms include Kotak Securities, Indiabulls,

ICICI direct, IL&FS Investsmart and Sharekhan. The competition in the intra-day

trading and arbitrage business is primarily between these entities. Most of the

traditional brokers and sub brokers are increasingly opting to keep their personal

memberships in suspension or closing them down. They are choosing to become


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franchisees of these players as not all brokers have adequate funds to manage the

risk involved in the business.

Indian stock broking industry has attracted prominent foreign players as well.

JM Morgan Stanley Securities, DSP Merrill Lynch and CLSA Securities are among

the top foreign brokers with a sizeable institutional business. Most of the foreign

brokerages continue to dominate the delivery based institutional business of around

20-25% of the average daily turnover of around Rs 4,500 crore.

The retail broking business has seen a tremendous growth in the last few

years because of booming stock market and increased stock activity. But then

consolidation in the stock broking industry also seems to have taken place which is

reflected in the increasing market share of brokers. The market share of top 10 and

50 NSE brokers increased from 12% and 36% respectively in 2002 to 17% and 44%

respectively in 2004. As of June 2004, the top ten brokers accounts for 19% of the

total turnover in the cash market, according to data collated from the National Stock

Exchange (NSE). The share of the top 5 brokers has surged to 13% from 7% three

years ago.

Table - 9

Market Share of Top Brokers

(in percentage)

YearNumber of Brokers

5 10 25 50 100


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June 04 13 19 33 48 642003-04 12 17 30 44 612002-03 10 16 29 42 592001-02 7 12 24 36 53

2000-01 8 13 23 34 49(Source: Economic Times July 20, 2004)

The statistics point to increasing consolidation in the stock broking industry as

part of which domestic brokers are expanding their business by aggressively

increasing the number of franchisees. The rapid increase in derivatives trading and

subsequently in arbitrage activity has made stock broking a very capital intensive

business.

6.1.7 Changing international scenario in the stock broking

industry, and its likely effects on the Indian stock broking

industry

Over the last several decades, the decline in the trade barriers resulting from

the GATT agreements, the emergence of large trading blocks such as the European

Union (EU), NAFTA, ASEAN, etc. and substantial reduction in transportation costs

have significantly altered the international competitive environment. The securities

markets worldwide have gone through a dramatic structural change, reflecting the


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above trend. Now, economies are not only affected by domestic changes but also the

changes taking place all over the world either directly or indirectly. Changes in the

major markets around the world, either causes changes in other securities markets

directly or gives a cue to the other markets of the changes to come in the near future.

Indian markets are slowly coming in line with the international markets, due to

the efforts of SEBI and individual exchanges. The starting of rolling settlement,

Internet trading, increasing circuit filters, huge increase in volumes are all signs of the

Indian market coming in line with the more developed markets such as those of the

US, UK, Japan, Germany, and many of the Asian giants. So it is important that

Indian brokers also keep in tune with and take signals from the international markets

because thats the only way they can brace themselves for the future. Following

recent and more important changes may give an indication of the times to come in the

Indian market:

1. Mergers between brokers

With stock exchanges, banks and firms at it, i.e. merging to form bigger and

better corporations the stock broking industry cannot be far behind. For instance,

number of small stock broking firms in Malaysia merged with bigger firms by following

the order of Malaysian securities commission. The merged entities were called

"Universal brokers". The universal brokers must have a share capital of $250 million

and capital adequacy ratio of 1.5 times. They were able to open branches through out


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the country. These steps were designed to make Malaysia ready for foreign

competition. As the name suggests, universal brokers, are aimed at making the

Malaysian firms truly global. This change has a serious impact on the brokers of any

developing market like India where the brokerage houses are small and fragmented.

With international competition coming in, and infrastructure requirements increasing,

mergers could be the only way to survive and thrive in the future.

2. Streamlining of licensing regime

For facilitating more effective regulation, these changes are necessary in

todays world. They not only facilitate better supervision but also provide a breathing

space for intermediaries such as brokers, who are facing lots of other challenges.

Changes such as these can be seen in countries like Hong Kong.

3. Investor protection measures

Globally the equity culture is booming. With one of the major reasons being is

the investors confidence in the securities market. This confidence has been built

because of better investor protection measures being taken worldwide. Examples

include, the investor protection measures issued by SEBI and promotion of quality

disclosure measures by the Hong Kong authorities.

4. Capital adequacy ratios


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Another very important issue is the capital adequacy ratio to be maintained by

the brokers and other financial intermediaries. These measures are a way the

government can keep in check the financial viability of an intermediary. Internationally

speaking taking example of Malaysia, where the capital adequacy ratio (CAR) for

stock broking companies have been revised to replace the existing minimum liquid

fund rules. Under the new CAR, the measurement of risk is based on the total risk

exposure related to the activities of the stock broking companies. Previously, the CAR

was dependent on minimum liquid fund requirements which were computed on the

basis of changes in the level of indebtedness, regardless of the risk involved.

5. Interest on margin money

With the growth of the internet as a medium for buying and selling of shares

the brokerage rates of the brokers in the US have also come down dramatically.

When Internet trading started the brokerage was $19.95 per trade and now it is

possible for $9.95 per trade, which means a fall of 50.12%. Meanwhile the cost of

research has been spiraling, as the brokerage houses have to keep track of

everything that is happening in the financial world. So how do the brokerage houses

give facilities at such low costs? The answer lies in putting up the margin money for

their clients and earning interest income. This works in two ways; first they earn

interest incomes and secondly since they are putting up the margin money the clients

have more money with which they can buy shares and are hence increasing the


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brokerage margin. Just to give an idea of how significant this has become a part of

the US broking houses, here are some figures:

Ameritrade tops the list of margin lending brokers with 25% of its revenues

coming from margin interest. Not so far behind is TD Waterhouse with 22%

followed by E*trade and Charles Schwab with just under 20%. As Internet

broking has already arrived in India with reduced brokerage charges, given the

nod by SEBI this is also becoming a major feature in the income of Indian

brokers.

6.2 Profile IL&FS Investsmart Limited

IL&FS Investsmart Limited is a premier financial services organization. It deals

in stock broking, mutual fund, insurance, housing loan consultancy, portfolio

management. Its customers include individual and corporate who deals in equity

trading, mutual fund.

Initially the company started in the domain of infrastructure lending (e.g. one of

the largest Toll Bridge between Delhi and Noida is funded by IL&FS). Later on, it

diversified in brokerage, consultancy mutual fund, insurance, housing loan etc. Today

Company is mainly concentrating on retail financial services and consultancy. Its


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retail broking and business of distribution of financial products contribute close to

three quarters of its total income. It's strong team of Relationship Managers,

Customer Service Executives, Advisory Managers and Research Analysts, offers

efficient execution backed by in-depth research, knowledge and expertise to more

than 53,000 retail customers across the country through its network of 30 branches,

120 franchisees and 153 outlets spread across 63 cities and its content rich

transactional website www.Investsmartindia.com

Companys core objective is to add value for the investors and to give more

services to customer. Its core competencyis financial advisory.

6.2.1 Pedigree

IL&FS Investsmart leverages on its pedigree of Infrastructure Leasing &

Financial Services (IL&FS), which has the core competency of institutional and retail

financial services. IL&FS is a financial institution known for its innovative and

pioneering initiatives in the areas of Infrastructure and Corporate Finance. IL&FS has

four foreign and four Indian promoters which includes reputed names such as:

Foreign Promoters: International Finance Corporation - Washington, Credit

Commercial de France Paris (part of the HSBC group), Orix Corporation of

Japan and Indivest Private Limited, an affiliate of the Government of

Singapore.


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Indian Promoters: UTI, SBI, HDFC and Central Bank of India.

6.2.2 Companys Business

A. Retail Banking

Retail banking is the main business of the company which constituted 38% of

the companys total revenues in 2005. Though the company faced price competition

last year, it managed to hold ground. The company collected revenues from non-

metros clients, where the margins were better. It plans to add 17 more branches,

which could boost its revenues from non-metro areas. The company is also setting up

branches abroad in five countries to attract the NRI customers. Investment in IT

infrastructure and CRM is a necessary evil in this business and the company is doing

that.

B. Retail-Other Services

The company earns a significant part of its revenue (33%) from non-broking

retail services. It distributes IPOs of companies, mutual funds, insurance (through its

subsidiary) and is also active in portfolio management services. IL&FSs share has

grown by leaps and bounds from 5% levels that existed in 2002. This certainly is good


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as a sustainable business model, since traditionally the companys revenues and

profit have largely been in sync with the performance of the stock market.

C. Institutional Business

The institutional business, which constitutes 25% of income, is also more or

less linked to capital market activities by way of merchant banking, broking and

project syndication. At last count, it had over 76 institutional clients.

6.2.3 Divisions:

A. Investment Advisory and Broking Division

This division provides end-to-end Personalized Investment Management

Services, which includes Planning, Advisory, Execution and Monitoring. IAB division

has a presence across asset classes - Equities, Fixed- Income, Mutual Funds,

Derivatives and Insurance. It partners in planning its customer's complete investment

decisions towards wealth generation, retirement planning and capital built up at

different stages of their life.

B. Merchant Banking Equity Capital Market Division


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IL&FS Investsmart's Equity Capital Markets Division's product portfolio

comprises of entire gamut of merchant banking services comprising advisory services

and resources raising through either the capital markets or private

placement/syndication of equity. This includes management of IPOs, Rights Issues,

Buyback of Equity, Open Offers, and private placements of Equity.

Few Important Mandates

1. Advisor for Noida Toll Bridge Company Limited - first toll bridge BOOT project

in India

2. Co Book Running Lead Manager for Balaji Telefilms Limited

3. Book Running Lead Manager for Mid Day Multimedia Limited, Divis

Laboratories Limited, Datamatics Limited

C. Project Syndication Business

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. 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.


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Under this division, the entire spectrum of services for clients are covered right from

structuring the instrument, preparation of the offer document, marketing of the

instrument to post fund mobilization formalities.

D. Institutional Debt Division

This 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 with the attendant advantages of

speed, transparency and lower costs. It also offers one of its kinds, complex and

robust investment valuation tools, in addition to value research and information on the

debt and money markets in India.

6.2.4 Products & Services

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.

A. Securities Broking Equities and Derivatives

1. Equity Trading


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IL&FS Investsmart offers easy and effective transaction ability that is both

personal and transparent. It is members of the National Stock Exchange (NSE) for

both Capital and WDM segment and Bombay Stock Exchange (BSE). It has a team of

experienced dealers networked across the country.

2. Derivatives Trading

IIL offers derivatives trading in equities, in the NSE Futures and Options

segment through its specialist dealers in this function. Under derivatives trading, it

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

products and opportunities of riskless arbitrage between various segments.

B. Distribution of Financial Products

1. Mutual Fund Investments

IIL's Mutual Funds team has a wealth of experience and knowledge,

monitoring and studying a large number of Mutual Funds/schemes (more than 500

schemes) available. It helps customers in selecting the right scheme to match their

financial needs, goals and risk profiles.

2. Fixed Income Products

IIL offers a comprehensive range of Fixed Deposits, Bonds and Debt

instruments. These are screened and evaluated for safety and suitability to individual

liquidity requirements before recommendation. Besides, it also has dedicated Debt

Desk to cater to Institution/Bank/Corporate.


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3. Home Loans

Its Home Loan Consultants evaluate clients needs and help them select the

best suited scheme, besides providing the highest level of convenience while keeping

in mind the value of speedy loan processing, thus enabling them to overcome biggest

challenge and translating the dreams into reality.

4. Insurance Advisory

IIL provides a complete range of insurance products and solutions through its

subsidiary companies. Its Insurance Team having the required expertise and backed

by quality research applies a professional approach to assess ones need for

insurance, advise them on product suitability and guide them on policy selection.

C. PMS (Portfolio Management Scheme for Individual Investors)

In personal financial advisory services, IL&FS Investsmart offers IIL-PMS, a

discretionary portfolio management service for retail investors. The primary focus of

IIL PMS is to provide individualized portfolio management services for clients,

personalized portfolios designed to fit a specific investor's investment parameters.

Each portfolio contains individually selected securities, which are not mingled

(pooled) with those of other investors, ensuring transparency and flexibility in

operations.

D. Depository and Custodial Services through IL&FS


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IL&FS Investsmart facilitates the entire process of "dematerializing" shares and

Custodial Accounts for the safe keeping of securities through its parent company

IL&FS.

6.2.5 Companys Research & Analysis

Research is the fundamental ingredient of all sound investment decisions. It

has a dedicated research team for each asset class: Equity, Mutual Funds and Fixed

Income Products. Its researchers and financial analysts evaluate market trends and

prepare unbiased and objective reports to make value added recommendations to the

clients - so that they in turn can make better, well-informed decisions. This valued

analysis is shared through following reports:

Smart Update - Extensively researched monthly reports detailing the market

performance of various investment options.

Mutual Fund Updates - Monthly and Quarterly analysis of the Mutual Fund

Industry

Flavour of the Week - Detailed company analysis

Pre-market review - Pre market analysis

Market Wrap - A post market analysis

Tech Ticks - A daily technical analysis report

Tech Talk - A weekly technical analysis report

Deristrat - Daily Futures market report


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Morning Coffee - Daily update on global debt/equity/forex markets

6.2.6 Online Services and Tools

IL&FS Investsmart's website www.investsmartindia.com reflects the

commitment of IL&FS Investsmart to use technology to make the process of investing

convenient and effective. The offerings on this site are unique features such as real

time news and analysis, portfolio manager, comprehensive research, corporate

profiles and data, mutual funds, IPO center, Smart Stock alerts, investment advisory

services online, information, query based tools and much more.

Invest Smart Project Report Nirmal Dhruva

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