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2012

SHIKHA SINHA

INDIABULLS SECURITIES

IBS HYDERABAD

5/26/2012

FACTORS AFFECTING INVESTMENT DECISIONS AND

COMPETITIVE ADVANTAGES OF INDIABULLS



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A REPORT ON

FACTORS AFFECTING INVESTMENT DECISIONS ANDCOMPETITIVE ANALYSIS OF INDIABULLS

SUBMITTED BY:

SHIKHA SINHA

11BSPHH010767

A report submitted in the partial fulfillment of

MBA Program of IBS Hyderabad

Submitted to:

FACULTY GUIDE COMPANY GUIDE

DR. P SHASHIKALA MR. ATISH GUPTA

IBS HYDERABAD V.P., INDIABULLS

Date of submission:



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AUTHORIZATION

I, Dr. P Shashikala, hereby authorize the submission of the projectwork titled, “ Factors affecting investment decision and competitive

advantage of Indiabulls”, undertaken by Ms. Shikha Sinha

(Enrollment no. 11BSPHH010767) as partial fulfillment of MBA

Program of IBS Hyderabad. This project work was executed under

my guidance and no part of this project has been submitted for any

degree or recognition before.

Sincerely,

Dr. P Shashikala

(Faculty Guide, IBS Hyderabad)

Dated:



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ACKNOWLEDGEMENT

I hereby take this opportunity to thank INDIABULLSSECURITIES, for providing me a corporate exposure through the

course of my summer internship.

I would like to express my sincere gratitude towards my company

guide Mr. Atish Gupta, for providing me great insights about stock

markets, real estate, home loans and various other ventures, for

guiding me all throughout and for being a great support.

I would also like to thank Dr. P Shashikala, my faculty guide for

instructing me and giving me her valuable advice on my project.

I am also like to thank Mr. Ashish Yadav, Mr. Ankit Gupta, Mr.

Jadish Yadav, Mr. Naveen and all members of Indiabulls family who

were a great co-operation and help all throughout.

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

Last but not the least all my friends and family for their support and

co-operation.

Thanking You,

Shikha Sinha,

11BSPHH010767



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EXECUTIVE SUMMARY

The increasing trend towards globalization and industrialization hasincreased the trend of competition in the financial market, intensified

by the coming of Non Banking Financial Company (NBFC), like

Indiabulls Securities, and so has the need for the marketing of

financial instruments has intensified.

NBFCs are financial institutions are ones which provide banking

services without meeting the legal definition of a bank, i.e. one which

does not hold a license. They are not allowed to take deposits from

public. Nonetheless all the operations of these institutions are covered

under banking regulations.

This project is completely focused to identify some of the demand

drivers, rather factors that make people invest in such institutions and

in this regard what are the various differentiating factors that provide

Indiabulls a competitive edge over other players in the market.

There has been an emphasis on the various businesses and of

Indiabulls that make it standout in this league, rather than being a “me

too” product. In words of Al Ries and Jack Trout, “differentiate or

die”.



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TABLE OF CONTENTS

SL

NO.

CONTENTS PAGE

NO.

01 Authorization 302 Acknowledgement 4

03 Executive summary 5

04-a Introduction- Background and Literature review 9

b Objective of project 10

c Methodology 11-12

d Scope and Limitations of study 13

05-a Financial industry overview 14-15

b Introduction to brokerage industry 16-18

c Porter‟s 5 factor model of industry 19-21

d Demand drivers of the industry 22

e Supply drivers of the economy 23

f Domestic economic conditions 24-25

g Global economic conditions 26

h Critical success factors of the industry 27

i Measures taken by Indian government 28

j PESTEL analysis of industry 29-30

k Fiscal and monetary policies (legal issues) 31-32

06-a Company overview-History 33-34

b Business life cycle 35-37

c Indiabulls group of companies 38

d Company financials 39-40

e Mission and vision 41

f Strategies and focus 41g Marketing mix of Indiabulls 42-46

h SWOT of Indiabulls 47-48

i BCG of Indiabulls 49-50

j Porter‟s 5 factor model of Indiabulls 51-54

k Indiabulls in News 55

l Recent CSR done by Indiabulls 56-57

m Customer relationship 58

n Affect of market dynamics 5907-a Factors affecting investment decisions 60-62



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b Factor Analysis and interpretation 63-68

08-a Comparison of Indiabulls brokerage services 69-71

b Different charges in the industry 72-81

c SWOT analysis of different firms 82

d Competition in real estate industry 83

e Competition in home loans 84

f Competitive advantage 85

09 Conclusion and recommendation 86

10 Outcome and contribution 87

11 Learning from SIP 88

12 References 89

13 Appendix (Questionnaire) 90-91

LIST OF FIGURES AND TABLES

Sl.

NO. CONTENT Pg.

NO.

01 Research Methodology 11

02 Methodology 1203 Products of financial market 14

04 Classification of financial market 15

05 Brokerage terminals in various areas 17

06 Percentage of branches in each region 18

07 Percentage of sub brokers in various regions 19

08 Analysis of Porter‟s 5 factor model of the industry 24

09 Indian economy‟s growth factors 2610 Stable and robust growth in face of global

challenges27

11 Critical success factors of the industry 28

12 Various measures taken by Indian Government 29

13 PESTEL analysis 30

14 PESTEL analysis of the industry 33

15 Indiabulls at glance 35

16 Business life cycle 37



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17 Journey of Indiabulls 38

18 Indiabulls group of companies 39

19 Indiabulls a leading finance company 40

20 Asset growth of Indiabulls 4121 Products of Indiabulls 42

22 Places of Indiabulls 44

23 Promotion of Indiabulls 45

24 SWOT of Indiabulls 47-48

25 BCG of Indiabulls 49

26 Competition in the industry 51-52

27 Suppliers of Indiabulls Power 5328 Indiabulls in news 55

29 KMO and Bartlett‟s test 63

30 Variables used in the test 64

31 Communalities 65

32 Total variance explained 66

33 Rotated component matrix 67

34 Condensed/final factors 6835 Different brokerage charges in the industry 69

36 Comparison of various rates 70

37 Price comparison chart 71

38 SWOT of Sharekhan 72-73

39 SWOT of India Infoline 74-75

40 SWOT of ICICI Direct 76-77

41 SWOT of Motilal Oswal 78-7942 SWOT of Angel Broking Firm 80-81

43 Competition in real estate 82

44 Competition in home loans 83

45 Housing Finance Companies competition 83



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BACKGROUND AND LITERATURE REVIEW

The Securities Brokerage Industry is cyclical and comprised of twodistinct types of businesses. Brokerages, also known as financial

services companies, strive to meet the investing needs of their clients,and exchanges facilitate securities trading. Net profits correlate to the performance of the broader equity market.

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

1. Al Ries and Jack Trout, in his wor k said “differentiate or die”,too many less differentiated products creates a kind of

information overload, and in this clutter of too much

information, products which are not properly differentiated or

advertised just end up becoming a me too product. To avoid it

every marketer needs to position his/ her products in a way that

makes a specific image in the minds of consumers.

2. Jack Miller, in his work published on June 03, 2010, talked

about how investors make investment decisions. He broke the

process of decision making in pulling the buy or sell trigger.

According to him investors made the investment decisions in the

ways like simple screening, then lateral recommendation,

followed by piggy bank investing.

3. According to U.S. Securities and Exchange Commissions’,

one of the articles: investors first evaluate their current financial

roadmap, and then they evaluate their comfort zone in taking on

risk. Consider an appropriate mix of investments, create and

maintain an emergency fund, consider dollar averaging,

consider rebalancing portfolio occasionally, and in the process

also try to avoid the circumstances that can lead to fraud.



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OBJECTIVE OF THE PROJECT

An increasing trend has been observed in demand for the services of

Non Banking Financial Institutions nowadays. This project is aimed

to find out factors affecting investment decisions in these firms. There

has also been emphasis to find out the plus points of Indiabulls or the

differentiating factors that give Indiabulls a competitive edge. In

short:

To find out the factors affecting investment decisions in a

NBFC.

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



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METHODOLOGY

This is a two dimensional project focusing on two aspects, as already

mentioned (objectives). For my project work I have focused on both

primary and secondary data as well.

Basically any research work proceeds as:

Fig: 1

For this project my challenge was to find out the factors and the

competitive advantages. For which I conducted a descriptive

research.



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I have collected primary data through questionnaire and

survey.

For secondary data, company records, some reviews in

economic times, data on moneycontrol site, some onlineresearch works have been referred.

I have taken 11 factors in my survey so my population size is of

66. I have targeted only investors, who were customers, general

investors and company employees.

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

influential factor.

For rest my own analytical skill is used.

Fig: 2



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SCOPE OF THE PROJECT

This project has been a great insight for me as I came to know aboutstock market, demat accounts, buying and selling of dematerialized

securities, who are brokers, how to make investment and how to track

portfolio of investments.

The project is aimed to cover maximum factors affecting the demand

drivers and competitiveness.

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

LIMITATIONS OF STUDY

The population size is limited to Hyderabad area.

There may be interviewer bias or judgmental bias.

There may be redundancy of data or area surveyed.

Due to time and resource constraints some important segment of

population might have been missed out.



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INDUSTRY OVERVIEW

The Financial Market

The financial industry or financial services industry includes a widerange of companies and institutions involved with money

management, lending, investing, insuring and securities insurance and

trading services. The following institutions are a part of the industry:

Banks

Credit card issuers

Investment companies

Investment bankers

Securities traders

Financial planners

Security exchanges

Products of the financial market:

Fig: 3



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The major crises that have shaped the modern financial industry

are:

The Great Depression(1929)

Black Monday(1987)

Asian Financial Crisis(1990)

Stock Market Downturn(2002)

Sub-prime Crisis(2007)

The Classification of financial market in India

Fig: 4



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THE BROKERAGE INDUSTRY

The brokerage industry is currently characterized by a large number

of companies (private or unorganized). In effect it is a fragmented

industry with a large number of participants. The industry thus has

„monopolistic competition‟, i.e. a large number of firms selling a

slightly differentiated product.

Indian stock broking industry is the oldest trading industry that has

been around even before the establishment of BSE in 1875. Despite

passing through a number of changes in post liberalization period, the

industry has found its way towards sustainable growth. With the purpose of gaining deeper understanding about the role of Indian

stock broking industry, in the country‟s economy, here are some data

gleaned from analysis of secondary research.

On the basis of recent research:

On the basis of geographical concentration, Western region has

maximum of 52%, around 24% are located in the North, 13% inSouth, and 10% in the East.

3% of firms started broking operations before 1950, 65%

between 1950-1995, and 32% post 1995.

On the basis of terminals 40% are located in Mumbai, 12% in

Delhi, 8% in Ahmadabad, 7% in Kolkata, 4% in Chennai, and

29% in other cities.

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

commodities.

In the cash market, 34% trade in NSE, 14% in BSE, 45% in

both. Whereas in debt market, 31% trade in NSE, 26% trades in

BSE, and 43% in both.

Majority branches are located in North, i.e. 40%, 31% in West,

24% in South, and 5% in East.



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In terms of sub-brokers, around 55% are located in South, 29%

in West, 11% in North, and 4% in East.

Trading, IPOs and Mutual Funds are the top three products

offered by 90% of firms offering trading, 67% IPOs, and 53%offering Mutual Fund transaction.

In terms of various areas of growth, 84% of firms have shown

their interest in expanding their institutional clients, 66% firms

intend to increase FIIs, and 34% are interested in setting up Joint

Ventures in India and abroad.

In terms of IT penetration 62% firms provide their website, and

90% have email facility.

Brokerage terminals in various regions:

Almost 52% of the terminals in the sample are based in the Westernregion of India, followed by 25% in the North, 13% in the South and10% in the East. Mumbai has got the maximum representation from

the West, Chennai from the South, New Delhi from the North andKolkata from the East.

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

Fig: 5



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Branches and sub-brokers in various regions:

The maximum concentration of branches is in the North, with asmany as 40% of all branches located there, followed by the Western

region, with 31% branches. Around 24% branches are located in theSouth and East constitutes for 5% of the total branches of the totalsample.

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

Fig: 6 Fig: 7

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

model



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Fig: 8

Competition

The industry is now in a fairly high growth phase. However the

brokerage industry is very cyclical and is impacted by activity levels

in the markets. During the downturns such as 2008-2009 periods, thesmaller players were squeezed out of the business. As a result there is

a contrast consolidation happening in the industry.

Potential of new entrants

A new entrant in addition to the above also needs a reasonable level

of capital to fund the working requirements of the business (finance to

customers, deposits with exchanges, etc).

Competition in the industry


Power of suppliers

Power of customers

Threat of subsitutes



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The scale requirements are increasing constantly and as a result a new

entrant will require higher levels of investments in the future to enter

the business. As pointed out, it is likely to see many entrants in the

industry. On the contrary, it is likely that the smaller players will exit by selling out or closing.

Power of the supplier

Not much relevant in most segments except investment banking,

where employees control client relationships and hence have to be

highly compensated.

Power of the buyers/customers

This is important in the institutional brokerage business which

involves high volume and low brokerage charges. The extent of buyer

power is very low to non-existent in all kinds of retail segments.

Threat of substitutes

The products offered by all firms in this industry are more or lessdifferentiated. Investing rather saving in the bank rather than

investing in a brokerage firm can be one option; else this is not

applicable for this industry.

In a summary the industry has a moderate to low level of competitive

advantage. There is low level of customer lock-in and customer willmove his or her business if the brokerage rates are not competitive

with rest of the industry. The only competitive advantage for

companies in this sector comes from size and scale which enables

them to leverage their size to reduce average costs and thus make a

profit on low brokerage margins.

In addition to high fixed costs, the industry has very low margin cost.

As a result the cost of adding an additional customer is low and per



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transaction costs are limited. Due to this reason, we are seeing a

constant pressure on the brokerage rates has intensified the

competition in the industry and is resulting in consolidation with the

top players.

The basic brokerage business is now sometimes a loss leader to

enable the brokerage firm to acquire customers and sell other products

such as wealth management services, or third party mutual funds.

This segment will provide adequate returns in the future for a

company with scale.



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DEMAND AND SUPPLY DRIVERS OF THE INDUSTRY

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

Potential yield

The expectation of financial incentives or return on investment is a

great demand driver which tempts people to invest or engage into

transactions of the financial markets.

Risk Rating

Higher risks assumes higher profits and vice versa. Risk ratings are

a vital point when making a decision to park ones resources into

this industry.

Liquidity

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

Availability of information

The more disclosure, the more is information symmetry, and so

will be visibility and access to returns and so will be the

expectation from this market increase along with investment.

Access to alternatives

More the disclosure in the market more will be the competition

with more profits, so more will be the choices and access to

alternatives to park ones resources.



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The major supply drivers are:

Money supply

The supply of money has a big role to play in this industry, themore the supply of money in this industry; more will be the

availability of financial services and products.

Interest rates

Interest rate determines the terms of trade, fluctuations in interest

rates can entirely fluctuate this industry. Higher interest rate= will

give higher returns, with great supply no doubt but borrowing or ascertaining the real market value may become difficult.

Inflation

Value of a currency appreciates and depreciates with the rates of

inflation. Inflation thus serves as a great supply driver in this

market. As in high inflation with higher supply of money there will

be higher supply and vice versa.

Economic conditions

Rates of inflation, the upsurge or downturn in the domestic and

global economy is another supply driver which is beyond the

control of any business firm.

Government Regulations

The attitude of the government towards the trade policies and

various other financial firms and industry matters a lot. Various

restrictions or duties or taxes may restrict the supply and may

hinder the growth of this industry. And will flourish with the ease

of trade.



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GLOBAL AND DOMESTIC ECONOMIC ENVIRONMENT OF

The financial industry

According to global 2000 (annual report by Forbes), seven of thetop 10 companies belonged to the financial industry. These included

the Citygroup, Bank of America, HSBC Holdings, and JPMorgan

Chase. Their combined revenue in 2007 was worth $647 billion,

down from 2006 high of $785 billion.

According to Fortune 500 rankings, in 2006 financial services

generated $257 billion in profits, a third of total Fortune 500 profits.

In 2008, however, they lost a staggering $213 billion, a total swing of

$470 billion. Big players on the list, such as Citygroup and Bank of

America, may only be alive today just because of government money.

The financial industry is an industry in itself as well as an ancillary

that supports other industries. Trade and commerce across the world

would come to standstill if there was no means to fund, pay and

protect the transactions.

The Brokerage industry

Domestic Economic Environment

In 1991, Manmohan Singh, as Finance Minister in Narasimha Rao‟s

government, embarked on a programme of liberalization prompted by

an acute balance-of-payment crisis.



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Fig: 9 (Indian economy growth factors)

Indian Brokerage Industry-Pre 2000

Post liberalization period. Business restricted to friends and relatives.

Settlement T+15 days.

Low trade volumes- No derivatives trading allowed.

Lack of investment in technology- No front or back office

software.

Indian Brokerage Industry 2000-2008

Venture capital funding for brokerage businesses.

Investment in technology- Front end and back end.

National presence.

Integrated risk management system.

Significant increase in trade volumes- Derivatives trades play a

major role.

Margin funding for the retail clients.

Indian Brokerage Industry 2009 onwards

Paradigm shift from transaction oriented to research/ portfolio

based advisory. Focus on franchisee based business model.

Dematerialized accounts access for international trade.

Access to international stock exchange.

Trading on hand held platform (mobile phones etc) allowed.



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Current Global Economic Environment

The global economy is slowly recovering from a deep recession,

with significant risks remaining. Countries are looking for ways to achieve sustainable economic

growth and job creation.

Competitiveness has become more important than ever

-Globalization will continue and strong international

competitors are emerging.

-Companies are re-examining everything in terms of how and

where they operate. India has achieved a long-term competitive transformation, but

the next stage of development will be more challenging.

Stable and robust growth in face of global challenges

Fig: 10



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Critical Success Factors of the Industry

Fig: 11

Seeing the overall brokerage as a single unit, the key success factors

or the winning strategy of Indian Brokerage Industry is a mixture of:

People

Process

Technology

There are the three ingredients that together create value for both

international and domestic customers.

By people it indicates to the service providers or the employees of the

various firms of this industry, who day in and day out interact with

the customers and provide them services and satisfy them.

Transparency of the process followed and disclosure method is yet

another success factor. The settlement of transactions is generally

done in a process of T+2 days. And the government support even still

plays a very vital role in forming the rules and norms of such processes.

Technology enables to stay competitive and on edge with the

competitors; facilitating the ease of processes and speed and to

maintain and be up to date. This serves as a great success of the

brokerage industry.

All these factors together help create value to the customer.



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VARIOUS MEASURES TAKEN BY INDIAN GOVERNMT TO

IMPROVE THE SITUTATION OF INDIAN STOCK MARKET

MEASURES OBJECTIVES

Allow foreign institutional investors to

invest in equity and debt markets.

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

Expanding the product range offered by

the stock exchanges.

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

Allowing Indian companies to issues

ADRS and GDRS.

Allowing Indian companies to invest

abroad.

Facilitate market integration and give freedom to thecompanies.

Access to more funds for investment.

Divestment of government ownership Facilitate growth through privatization

Strengthening of institutional framework

in primary and secondary markets

Demutualization

To ensure transparency.

Investor protection.

Provide a standard framework for operations.

Deregulation.

Reduces the conflict of interest.

BSE and NSE to set up and maintain

corporate bond reporting platforms

To capture all information relating to trading. Investor protection

Making PAN compulsory Strengthening KYC (Know Your Client)

Fig: 12



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PESTEL ANALYSIS OF BROKERAGE INDUSTRY

PESTEL analysis stands for "Political, Economic, Social,

Technological, Environmental and Legal analysis" and describes aframework of macro-environmental factors used in the environmentalscanning component of strategic management. It is a part of theexternal analysis when conducting a strategic analysis or doingmarket research, and gives an overview of the different macroenvironmental factors that the company has to take into consideration.It is a useful strategic tool for understanding market growth or decline, business position, potential and direction for operations.

Fig: 13

Political factors are how and to what degree a governmentintervenes in the economy. Specifically, political factors includeareas such as tax policy, labour law, environmental law, trade

restrictions, tariffs, and political stability.

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

Social factors include the cultural aspects and include health

consciousness, population growth rate, age distribution, career



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attitudes and emphasis on safety. Trends in social factors affectthe demand for a company's products and how that companyoperates.

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

Environmental factors include ecological and environmentalaspects such as weather, climate, and climate change, which

may especially affect industries such as tourism, farming, andinsurance.

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

Fig: 14



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LEGAL ISSUES WITH A BROKERAGE FIRM

Securities Exchange Act of 1934 (Exchange Act)

In contrast to the Securities Act, the Exchange Act primarily regulatestransactions of securities in the secondary market - that is, sales thattake place after a security is initially offered by a company (theissuer). These transactions often take place between parties other thanthe issuer, such as trades that retail investors execute through brokerage firms. The Exchange Act operates somewhat differentlyfrom the Securities Act. To protect investors, Congress crafted amandatory disclosure process that is designed to force companies to

make public information that investors would find pertinent to makinginvestment decision. In addition, the Exchange Act provides for direct regulation of the markets on which securities are sold (thesecurities (stock) exchanges) and the participants in those markets(industry associations, brokers, and issuers).

Monetary and Fiscal Policies

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

The 3 major US government agencies that govern the securitiesindustry and frame monetary and fiscal policy, they are: the FederalReserve System, the Securities Exchange Commission (SEC), and theOffice of Comptroller of the Currency.

Federal Reserve System

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

The Fed is responsible for establishing and enforcing monetary policy and for regulating the amount of credit outstanding. The fed

http://www.law.cornell.edu/wex/securities_act_of_1933

http://www.law.cornell.edu/wex-cgi/wexlink?wexns=USC&wexname=15:chapter2B

http://www.finra.org/Resources/Glossary/P011153




http://www.law.cornell.edu/wex-cgi/wexlink?wexns=USC&wexname=15:chapter2B

http://www.law.cornell.edu/wex/securities_act_of_1933



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does this by establishing the bank discount rates and the rules for credit. The market‟s response to the Fed‟s determination to control

inflation by raising and lowering the discount rate affects long terminterest rates, which have a significant impact on the securities‟

market.

Securities Exchange Commission

The Securities Exchange Commission (SEC) is the primary regulatoryagency that oversees the securities industry. The SEC is anindependent bipartisan, quasi-judicial agency of the government. Thelaws administered by SEC deal with securities and finance and seek to

provide protection for investors in their securities‟ transactions.

Office of the Comptroller of the Currency

The Office of the Comptroller of the Currency‟s (OCC) principalfunction is supervising the national banking system. The OCC mustapprove the establishment of new national banks, bank mergersinvolving national banks, and the liquidations of national banks.



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COMPANY OVERVIEW

Fig: 15

History of Indiabulls

In middle of 1999, when e-commerce was just about starting in India,

Sameer Gehlaut and his close IIT Delhi friend Rajiv Rattan got

together and bought a defunct securities company with a NSE

membership and started offering brokerage services. A Few months

later, their friend Saurabh Mittal also joined them. By December

1999, the company embarked on its journey to build one of the first

online platforms in India for offering internet brokerage services. In

January 2000, the 3 founders incorporated Indiabulls Financial

Services and made it as the flagship company.

In mid 2000, Indiabulls Financial Services received venture capitalfunding from Mr. L.N. Mittal & Mr. Harish Fabani. In late 2000,Indiabulls Securities, a subsidiary of Indiabulls Financial Services

started offering online brokerage services and simultaneously opened physical offices across India. By 2003, Indiabulls securities had



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established a strong pan India presence and client base through itsoffices and on the internet.

In September 2004, Indiabulls Financial Services went public with an

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

Lower Parel, another textile mill auctioned by NTC.

With real estate business gaining size, Indiabulls Financial Servicesdemerged the real estate business under Indiabulls Real Estate andeach shareholder of Indiabulls Financial Services received additionalshare of Indiabulls Real Estate through the demerger. Subsequently,Indiabulls Financial Services also demerged Indiabulls Securities andeach shareholder of Indiabulls Financial Services also received a

share of Indiabulls Securities.

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

Today, Indiabulls Group has a net worth of Rs 16,796 Crores & has astrong presence in important sectors like financial services, power &

real estate through independently listed companies and IndiabullsGroup continues its journey of building businesses with strong cashflows.



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BUSINESS LIFE CYCLE OF INDIABULLS

Fig: 16

The business life cycle is a model that enables businessmen toidentify the level of performance at which their business is operatingand to determine exactly what needs to be done to move to the nextlevel.

The various levels of a business life cycle are:

Start up

Rapid Growth

Maturity

Decline

Re-birth/ death

The startup of Indiabulls

Indiabulls was in start up phase in the year 1999. Sameer Gehlaut,Rajiv Rattan and bought a defunct securities company with NSE



36 | P a g e

membership and started brokerage services. Saurabh Mittal joined thefounders.

-The founders were usually involved in running the business.

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

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

The rapid growth stage

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

-Indiabulls Financial Services received venture capital funding fromMr. L. N. Mittal and Mr. Harish Fabani and started online brokerageservices.

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

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

-Became a private ltd. in the year 2005. Participated in governmentauction and bought Jupiter mills to start its „real estate business‟, andso on.

-In 2007, started „Power Indiabulls‟.

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



37 | P a g e

Maturity stage

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

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

Decline/Re-birth

With an upsurge in demand for financial services. NBFC‟s like

Indiabulls have a great opportunity to develop and expand in themarket with its current potentials and probably will never reach thisstage unless it gives up to its competitors in the maturity stage.

JOURNEY OF INDIABULLS

Fig: 17



38 | P a g e

INDIABULLS GROUP OF COMPANIES

Fig: 18



39 | P a g e

COMPANY FINANCIALS

Total group net worth: Rs.16,844 Crs

Total group PAT for FY 10-11: Rs 944 Crs

Total group capital expenditure: Rs 6,200 CRs (US $ 1.4 bn)

capex in financial year 10-11. Planned capex of 29000 (us $ 6.5

bn) in the FY 2014-2015.

Focus on execution and on the ground results translating into

profits.

For its ongoing projects Indiabulls groups customers 385 MTs

of steel, 550 MTs of cement, and 1700 CUM of RMC on daily

basis.

Creating value for shareholders: Dividend payout of 232 Crs in

FY 10-11.

INDIABULLS IS A LEADING FINANCE COMPANY

Fig: 19



40 | P a g e

ASSET GROWTH

Fig: 20

Assets have grown at a quarterly average of Rs. 2000 Crs,

over last 9 quarters with a decrease in non-performing assets.

Long duration mortgage loans have lead to steady asset

growth and increase in Net Asset Income.

Company continues to grow its branch networks and now has

170 branches across the country.

Company has well trained „in house direct sales team‟, over

1300 people to promptly attend to prospective customers.



41 | P a g e

MISSION AND VISION

MISSION:

Rapidly increase the number of client relationships by providing a

broad array of products offering to emerge as a clear market leader.

VISION:

To be the largest and most profitable financial services organization

in Indian market and become one stop shop for all non banking

financial products and services for the retail customers.

STRATEGIES AND FOCUS

CONSOLIDATION

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

years.

NO NEW PRODUCTS

Focus on gaining size and scale in existing core products.

NO CAPITAL MARKET FUND RAISING

All businesses are well funded to achieve growth and size. Avoiding

excessive debt from the capital market.

GOAL

FY 2013/2014, target of US $ 1.4 bn in cash generation from 3

companies (real estate, finance and power).



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MARKETING MIX OF INDIABULLS

Being a service industry Indiabulls will have 7P‟s rather than 4, they

are:

PRODUCTS

Fig: 21

a) Power India bulls (PIB)

PIB is the advanced online trading platform from Indiabulls SecuritiesLimited. PIB provides the best in the class internet trading featuresand delivers a seamless and rich online trading experience for itsusers. PIB comes with a whole host of online features for the internettrading users ranging from real-time stock prices, to live tradingreports, charting, News Room. PIB provides an integrated onlinetrading platform for the internet trading community to invest inequity, F&O, Online IPOs and base their decision on soundfundamental research and technical analysis. It also provides variouskinds of trading reports, each developed to cater to internet tradingusers‟ distinct needs.

b) Indiabulls Signature account

Indiabulls Signature account caters to remain on top of your investments. It provides you the platform to trade in Equity and

Derivatives. With an unmatched service and nationwide presence, theIndiabulls Signature account comes bundled with a variety of exclusive features.

c) Depository Services

Indiabulls is a depository participant with the National SecuritiesDepository Limited and Central Depository Services (India) Limitedfor trading and settlement of dematerialized shares. Indiabulls performs clearing services for all securities transactions through its

http://indiabulls.com/securities/services/indiabulls-equity-analysis.htm

http://indiabulls.com/securities/services/indaibulls-IPO-online.htm

http://indiabulls.com/securities/services/currency_derivatives.htm

http://indiabulls.com/securities/services/indiabulls-depository-services.htm

http://indiabulls.com/securities/services/indiabulls-signature-account.htm

http://indiabulls.com/securities/services/power-indiabulls.htm

































43 | P a g e

accounts. We offer depository services to create a seamlesstransaction platform – execute trades through Indiabulls Securitiesand settle these transactions through the Indiabulls DepositoryServices. Indiabulls Depository Services is part of our value addedservices for our clients that create multiple interfaces with the clientand provide for a solution that takes care of all your needs.

d) Currency Derivatives

Indiabulls offers trading in the Currency Derivatives Segment in NSE.Currency Derivatives are similar in nature to Stock Futures & Optioncontracts. Currency Derivatives Contracts (USD-INR, EUR-INR,

GBP-INR and JPY-INR) at exchange rate as the underlying areavailable for trading with a monthly expiry. At any given time,Currency Derivatives Contracts are available for trading for the next12 months expiry for futures whereas 3 months expiry and 1 quarterlyexpiry for options.

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

PRICE

Indiabulls has various models at different price ranges targeted at a

particular market segment. It caters to both the service and enterprisesegment of customers.

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

Indiabulls provides home loans @ 10.75 (fluctuating) to salaried

people and 12% (fluctuating) to non-salaried professionals.



44 | P a g e

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

PLACE

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

Fig: 22



45 | P a g e

PROMOTION

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

Fig: 23

PEOPLE

This includes the employees of the organization. The employees of Indiabulls have expertise in the field and are well versed in all thetricks of the trade. The employees are given importance in the

organization because a satisfied employee creates a satisfiedcustomer. They provide excellent and time to time services.



46 | P a g e

PROCESS

A hierarchical process is followed for execution of all services. Firstthe sales lead is generated by the employees and sales calling is done

on that database. The employees then approach interested customers,negotiation of sales is done, and the customers are explained thenorms and sale is closed. Continuous services and assistance is provided to existing customers, they are made aware of new beneficial offers from time to time.

PHYSICAL EVIDENCE

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



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SWOT ANALYSIS OF INDIABULLS

This is a strategic planning method to evaluate the Strength,Weaknesses (limitations), Opportunities and Threats involved in a

project or business venture. It involves specifying the objectives of the business venture or project and identifying internal and externalfactors that are favorable or unfavorable to achieve it. This techniqueis credited to Albert Humphrey of Stanford University.

• Online trading platform.• Diverse branches and networks provide a greatoppourtunity to cater tapped and untappedmarket as well.

• Provides competitive brokerage and DP charges.

• Equity analysis reports to support its clients.

• Both online and offline trading facility.

• Real time online transfer of funds and exposurefacility with HDFC, Citybank, ICICI, etc

Strength

• It should have its own mutualfunds asit provides advises onmutual funds.

• Position to answer the questionsof the clients in their fields.

• It does not provide indices onmajor world markets, ADR prices of Indian scripts.

• Lacks banking arm

Weaknesses



48 | P a g e

Fig: 24

• Financial services like mutual funds andinsurance.

• It is registered with Luxemberg Stock Exchange so can target other stock exchanges also.

• ATM facility should be provided for easy withdrawals.

• Tie-ups with third party companies for selling products.

• High client base will help for cross salesof its products.

Oppourtunities

• Companies like Sharekhan, ICICIDirect, Kotak Securities, and private

brokers are major threats.

• Banks with demat facilities are jockeying for position.

• Local brokers capable of charginglower brokerage.

• Changes in SEBI guidelines and other tax implications.

• Government regulations

Threats



49 | P a g e

BCG MATRIX OF INDIABULLS

Companies that are large enough to be organized as strategic business

units face the challenge of allocating resources among these units. In

the early 1970‟s Boston Consultancy Group developed a model to

manage the portfolio of these business units (or major product lines).

The BCG growth share matrix displays different business units on a

graph of market growth rate vs. market share relative to competitors.

BCG MATRIX OF INDIABULLS

Fig: 25



50 | P a g e

Question Marks

Indiabulls Retail and Indiabulls Securities Indiabulls Retail (Now known as Store One) can be classified as

question mark as it is new to the market and need to compete withestablished retailers like Future Group and K Raheja Group to gainmarket share. Indiabulls Securities also comes in this category due to pertinent competitors like Sharekhan, Karvy Stock Broking andothers. Though broking industry is expanding by 12-15% annually,Indiabulls Securities is not able to cope with this high pace.

Stars

Indiabulls Real Estate and Indiabulls Financial Services

Indiabulls Real Estate can be considered to be in the Star category. It

is considered star as it has a high market growth rate and enjoys a

high market share as well. Real Estate sector in India is growing at

34% annually(www.sethassociates.com/Real_estate_sector_in_india.php) while

growth of Indiabulls Real Estate has surged to 97%. Its profit rose to

Rs. 201.32 Crores in 2010-2011 from 6.75 Crores in the preceding

year. (www.indiabulls.com/ibgroup/media.htm). Financial services

sector in India grew at 8 % last year but had a steady growth rate of

15% for the last few years. For FY 2011, net profits of Indiabulls

Financial more than doubled to Rs. 743 Crores.

Cash Cows

None of the companies of Indiabulls comes in this category.

Dogs

None of the companies of Indiabulls comes in this category



51 | P a g e

PORTER’s 5 FACTOR MODEL OF INDIABULLS

Named after Michel E. Porter, this model identifies and analyses 5

competitive forces that shape every industry and determines

industry‟s weaknesses and strength. They are:


Indiabulls faces competition from various firms like:



52 | P a g e

Fig: 26



53 | P a g e


The market for Non Banking Financial Companies or rather

broking houses are flourishing. This new trend poses for new

threats also; this may be either the entry of local players who can

provide lower rates or a very big player who can enter into a price

war. Threat of new entry is high when:

Capital requirements to start the business are less

Few economies of scale are in place

Customers can easily switch (low switching cost)

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

well

Your product is not differentiated

Power of suppliers

Indiabulls Group has very high profile corporate suppliers, who for obvious reasons have great bargaining power and offers from

competitors also. The operations largely depend on these supplies.

Some of suppliers of Indiabulls Group (PIB) are:

Fig: 27



54 | P a g e

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

Suppliers are concentrated and well organized

Few substitutes available to suppliers

Their product is most effective or unique

Switching cost, from one suppliers to another, is high

You are not an important customer to Supplier

Power of customers

Customer is the king of the market. They have a lot of options while

planning to purchase products. Products offered by Indiabulls are

unsought in nature and are industry dependent. The threats which lies

here are:

Too many goods chasing too few consumers.

Buyer purchases in bulk quantities and are mostly corporateclients.

Product is not much differentiated.

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

Shopping cost is low.

Credible Threat of integration.

Threat of substitutes

Indiabulls poses great threat of substitutes like people of low risk

appetite would like to invest in bank rather than in share market, real

estate, commodities, etc. Its products can very well be substituted by

substitutes offered by competitors.



55 | P a g e

INDIABULLS IN NEWS

Fig: 28



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RECENT CORPORATE SOCIAL RESPONSIBILITY

BY INDIABULLS

THE NOA PROGRAM

Indiabulls CSR Initiative - Drug Access Program for cancer

patients in partnership with Novartis

As a part of its deep commitment to social causes, Indiabulls has

taken up this noble project named „ Novartis Oncology Access‟, in

partnership with Novartis (drug manufacturing company) and Max

Foundation (NGO). Indiabulls as financial partner is helping themaccess actual income of the patient and their families, and based on

the accessed income; recommend the drug donation slabs as per

approved guidelines.

Novartis are the developers & makers of Glivec- a medication for the

treatment of Ph+ chronic myeloid leukemia (CML) in chronic phase,

accelerated phase and blast crisis for both pediatric and adult

patients. This drug is also indicated for adult patients with specificconditions.

NOA program:

The NOA program is a drug access program for to help patients whohave been prescribed Glivec and Tasigna but cannot afford to pay for the entire treatment cost. This program is run by Novartis along with

its partner Physicians- enrolls patient under this program after diagnosis, The MAX Foundation- independent NGO – Assist patient throughout the program in completing formalities & procurement of medicines, Indiabulls Financial Services -independent body for financial evaluation of patient, collection &safekeeping the submitted documents with confidentiality and outlets – Independent pharmacist, dispenses drugs to patients & manage druginventory.



57 | P a g e

Indiabulls Financial Services:

As a NOA partner Indiabulls are performing task of the local creditevaluation agency which works as an independent and unbiased body

for the financial analysis and assessment of the patient and familymembers‟ earning capacity to afford medical expenses on criticaldisease. The analysis bases on income levels assessment by way of financial evaluation, field verification, living standard, personaldiscussion with patient/ care taker & guidelines as per standardoperating procedure (SOP) which is prepared by Novartis based onthe WHO guidelines for drug donation programs using Business for Social Responsibility‟s (BSR) cost of living index, a well-established

international guide often used as eligibility criteria for determiningaccess to drug assistance programs. Based on the family compositeIncome a suitable donation decision is given.

ACCORDING TO 12th

ANNUAL REPORT OF MARCH 2011-12

DIRECTOR’S REPORT IN ECONOMIC TIMES

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

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

Foundation.

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



58 | P a g e

CUSTOMER RELATIONSHIP

With a great team of highly motivated staff, Indiabulls maintains a

great customer. Customer retention being of great importance in such

market where margin is usually low and profit mainly comes due to

scale of operations.

The dedicated workforce is always at the service of the customer at

the very first call. There are always schemes, discounts and

exemptions to existing customers.

Also if there is any new product or scheme old customer is always

called before sales call is made to the new ones. There is guidance at

each step.

Not only customer retention important but clients new to the market

are also given great importance. Relationship managers are always

there to take care of all such affairs. Continuous follow ups call are

made time to time to remind customers for any kind of dates or

investments is to be made.



59 | P a g e

MARKET DYNAMICS

The pricing signals that are created as a result of changing supply and

demand level in a given market. Market dynamics describe the

dynamic, or changing, price signals that result from the continual

changes in both supply and demand of any particular product or group

of products. Market dynamics is a fundamental concept in supply,

demand and pricing economic models.

There is great shift in the Indian consumption pattern that is being

observed like:

69% of the population is less than 35 years of age and has

spurred consumption demand.

54% of the population is in the working group.

High savings and investment rate (over 35% of GDP).

India‟s manufacturing growth is amongst the fastest in the

world. India‟s manufacturing base is the fourth largest globally.

The growth potential of the services sector in India is enormous

at $200 billion offering employment to 40 million people. The

confidence of a robust growth in the services sector is the

highest in India among the 4 BRIC countries including Brazil,

Russia, China and India service sector. Among 60% of firms

there expect a rise in activity while

The above factors along with many other factors are some of those

market dynamics which greatly affect this market.



60 | P a g e

FACTORS AFFECTING INVESTMENT DECISIONS

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

Risk Tolerance

Risk refers to the volatility of portfolio‟s value. The amount of risk the investor is willing to take on is an extremely important factor.While some people do become more risk averse as they get older; aconservative investor remains risk averse over his life-cycle. Anaggressive investor generally dares to take risk throughout his life. If

an investor is risk averse and he takes too much risk, he usually panicwhen confronted with unexpected losses and abandon their investment plans mid-stream and suffers huge losses.

Return Needs

This refers to whether the investor needs to emphasize growth or income. Younger investors who are accumulating savings will wantreturns that tend to emphasize growth and higher total returns, which

primarily are provided by equity shares. Retirees who depend on their investment portfolio for part of their annual income will wantconsistent annual payouts, such as those from bonds and dividend- paying stocks. Of course, many individuals may want a blending of the two Þ some current income, but also some growth.

Investment Time Horizon

The time horizon starts when the investment portfolio is implementedand ends when the investor will need to take the money out. Thelength of time you will be investing is important because it candirectly affect your ability to reduce risk. Longer time horizons allowyou to take on greater risks with a greater total return potential because some of that risk can be reduced by investing across differentmarket environments. If the time horizon is short, the investor has greater liquidity needs some attractive opportunities of earning

higher return has to be sacrificed and the result is reduced in return.

http://en.wikipedia.org/wiki/Risk_aversion


http://en.wikipedia.org/wiki/Retirement

http://en.wikipedia.org/wiki/Portfolio_%28finance%29

http://en.wikipedia.org/wiki/Time_horizon


http://en.wikipedia.org/wiki/Risk

http://en.wikipedia.org/wiki/Total_return

http://en.wikipedia.org/wiki/Market_liquidity

http://en.wikipedia.org/wiki/Market_liquidity

http://en.wikipedia.org/wiki/Total_return

http://en.wikipedia.org/wiki/Risk


http://en.wikipedia.org/wiki/Portfolio_%28finance%29

http://en.wikipedia.org/wiki/Retirement




61 | P a g e

Tax Exposure

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

Management Outlook

lf the management is progressive and has an aggressively marketingand growth outlook, it will encourage innovation and favor capital proposals which ensure better productivity on quality or both. In someindustries where the product being manufactured is a simplestandardized one, innovation is difficult and management would be

extremely cost conscious. In contrast, in industries such as chemicalsand electronics, a firm cannot survive, if it follows a policy of 'make-do' with its existing equipment. The management has to be progressive and innovation must be encouraged in such cases.

Competitor’s Strategy

Competitors' strategy regarding capital investment exerts significantinfluence on the investment decision of a company. If competitors

continue to install more equipment and succeed in turning out better products, the existence of the company not following suit would beseriously threatened. This reaction to a rival's policy regarding capitalinvestment often forces decision on a company'.

Opportunity created by technological change

Technological changes create new equipment which may represent a

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

http://www.wikinvest.com/metric/Investments


http://en.wikipedia.org/wiki/Investor

http://en.wikipedia.org/wiki/Tax_bracket

http://en.wikipedia.org/wiki/Tax_bracket

http://en.wikipedia.org/wiki/Investor




62 | P a g e

Market Forecast

Both short and long run market forecasts are influential factors incapital investment decisions. In order to participate in long-run

forecast for market potential critical decisions on capital investmenthave to be taken.

Fiscal Incentives

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

investment decisions.

Cash Flow Budgets

The analysis of cash-flow budget which shows the flow of funds intoand out of the company may affect capital investment decision in twoways. 'First, the analysis may indicate that a company may acquirenecessary cash to purchase the equipment not immediately but after say, one year, or it may show that the purchase of capital assets now

may generate the demand for major capital additions after two yearsand such expenditure might clash with anticipated other expenditureswhich cannot be postponed. Secondly, the cash flow budget shows thetiming of cash flows for alternative investments and thus helpsmanagement in selecting the desired investment project.

Non-economic Factors

New equipment may make the workshop a pleasant place and permitmore socializing on the job. The effect would be reduced absenteeismand increased productivity. It may be difficult to evaluate the benefitsin monetary terms and as such we call this as non-economic factor.Let us take one more example. Suppose the installation of a newmachine ensures greater safety in operation. It is difficult to measurethe resulting monetary saving through avoidance of an unknownnumber of injuries. Even then, these factors give tangible results and

do influence investment decisions.



63 | P a g e

FACTOR ANALYSIS BASED ON FACTORS AFFECTING

INVESTMENT DECISIONS

Factor analysis is a data reduction/summarization technique.

Generally in market research there are many factors/variables which

are correlated which needs to be reduced to manageable levels.

Generally factor analysis is used where multi co-linearity exists. For

factor analysis to run the null is that the correlation matrix is an

identity matrix.

KMO and Bartlett’s test

Kaiser-Mayer-Olkin (KMO) test is to test the appropriateness of the

factor analysis, if the value is between „0.5 to 1‟, the test is considered

to be significant.

Bartlett’s Test

Using Bartlett‟s test of sphericity we test the null hypothesis, if the

significant value is <0.5, then the null hypothesis is rejected, i.e. thereis multi co-linearity, so we can proceed with factor analysis.

Fig: 29

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

more than 0.5.



64 | P a g e

For Bartlett‟s test:

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

un-correlated to others (i.e. r=0).

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

Calculated value: 758.225

Analysis: the null hypothesis is rejected as the significance level is

less than 0.5. Hence, the variables are correlated.

Variables used in the project are:

No.(sign used)

Variables

V1 Income

V2 Market Situation

V3 Company

V4 Risk Appetite

V5 Management Outlook

V6 Market forecastV7 Financial Incentives

V8 Cash-flow Budgets

V9 Non-economic Factors

V10 Age Factor

V11 Other Factors

Fig: 30



65 | P a g e

Communalities:

Fig: 31

Extraction Method: Principal Component Analysis

Principal Component Analysis works on the assumption that all the

variance is common, therefore before extraction all communalities are

1. After extraction table shows shared variance of each variable in all

the factors.



66 | P a g e

Total variance explained

Fig: 32

Extraction Method: Principal Component Analysis.

Factor Component: The initial number of factors is the same as the

number of variables used in the factor analysis. However, not all 11

factors will be retained. In this project only 1st

2 factors will be

retained.

Initial Eigen Values: Eigen value is the variance explained by each

factor. Because the analysis is conducted based on a correlation

matrix, the variables are standardized, which means that each variable

has a variance of 1, and the total variance is equal to the number of

variables used in the analysis, in this case its 11.

Total: This column contains the Eigen values. The first factor will

always account for the most variance (and hence it has the highestEigen value), and the next factor will account for as much of the left

over variance as it can, and so on. Hence, each successive factor will

account for less and less variance.

% of Variance: This column contains the percent of total variance

accounted for by each factor.



67 | P a g e

Cumulative %: This column contains the cumulative percentage of

variance accounted for by the current and all preceding factors.

Component Matrix

In this approach, factors only with Eigen value more than 1 are

retained. Factors with variance less than 1 are no better than a single

variable, because due to standardization, each variable has a variance

of 1. If numbers of variables are less than 20 this approach will result

in a conservative number of factors. Here, the number of variables is

11 so to select the number of factors, Eigen value method is the best

method.

Rotated Component Matrix

Fig: 33

Extraction Method: Principal Component Analysis.

Rotation Method: Varimax with Kaiser Normalization.

Rotation is converged in 3 iterations.



68 | P a g e

As a result of the Factor Analysis the 11 variables are condensed to

2 factors. From the Component Matrix we can identify all variables

which come under a particular factor. Here‟s a depiction of it:

Factor What it explains

Personal/Internal Factors

Income

Risk appetite

Financial incentives

Non-economic factors

Age factor

Others

External Factors Market Situation

Market forecast

Management outlook

Company

Cash flow budgets

Fig: 34

Thus there are some internal and external factors that affect a person‟s

investment decisions.



69 | P a g e

COMPARISON OF INDIABULLS BROKERAGE SERVICES

COMPARISON OF DELIVERY AND INTRADAY

*MMC – Minimum Monthly Charges.

Fig: 35



70 | P a g e

COMPARISON OF VARIOUS RATES

FIRMS

FACTOR

HDFC SHAREK

HAN

MOTILAL

OSWAL

ICICI KOTAK INDIABULLS

BROKERAG

E

5p to 50p 5p to 25p 5p to50p,

1p-10p ( min)

3p to 25p 4p to 40p 2p to 20p or

1p to 10p (min)

MINIMUM

AMOUNT

Rs 10000,

Rs 0

(for big

corporate

clients)

Rs 10000 Rs 50000 Rs 0 Rs 10000 Rs 0

MINIMUMOPENING

CHARGES

Rs 799 Nil Rs 200 Rs 555 Rs 550 Rs 1350

PRODUCTS -Equity, features

and options,

ETF, IPO,

mutual funds.

-Do it yourself

systematic

investment

planning, and

-NRI offerings,loans, FD.

Trade

Tigers,

IPO, MF

online,

contract note

on paper,

and ODIN

Software.

ETF, IPO,

mutual

funds, and

NRI

offerings.

IPO,

Mutual

Funds,

and

Commod

ities

K-25 and

T-25.

Brokerage,

IPO,

Mutual

Funds,

Commodit

ies.

IPO, Mutual

Funds, Real

Estate, Home

loans, Commodity,

and Derivatives.

SERVICES-J2 ME windows,

blackberry,

android, iphone.

- Call and trade,

online and

offline services

for different time

zones.

Brokerage

services,

trade on

mobile,

online, call

and trade,

dedicated

dealer desk

at every city.

Call and

trade.

Brokerag

e-e and

banking

services.

Brokerage

and

banking

services.

Brokerage, Online

and Offline

Trading available

on all phones, No

extra charges on

calls from clients.

QUALITY OF

SALESPERSO

N

Good Good Good Good Good Good

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

Fig: 36



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PRICE COMPARISON CHART

Fig: 37

In the above price band, Indiabulls is facing somewhat strongcompetition from Sharekhan, as it is more or less near to what

Indiabulls is charging. At the same time Kotak Securities also poses a

threat because of the improved technology used by them and constant

research and development. Where ICICI Direct is a little below

Kotak. Motilal Oswal and HDFC both are commodity side of the

graph with relatively higher prices charged for their product. Thus

with its current pricing Indiabulls enjoys price leadership as far as

brokerage is concerned.



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SWOT ANALYSIS OF COMPETITOR FIRMS

SWOT OF SHAREKHAN

• Market share leadership.

• High Research andDevelopment.

• Strong management team,financial position and

competitive pricing.• Reputation management,

Unique products diverse products and offers for thecustomers.

• Strong brand recall andstrong reach to masses.

Strength

• Diseconomies of scale.

• Not much differentiated products.

• More employee turnover.

• Less small investors.Weaknesses



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Fig: 38

• Financial markets (raise moneythrough debt, etc)

• Innovation, OnlineProduct and

services expansion.• Penetration in developing

cities.

• Increase in awareness of peopleabout stock market

Oppourtunities

• Competition.• Cheaper technology.

• Economic slowdown.

• External changes (government, politics, taxes, etc).

• Exchange rate fluctuations.

Threats



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SWOT OF INDIA INFOLINE

• Brand image.

• Brand experiance.

• Innovative products.

Strength

• High targets for thefinancial advisors and salesdepartment.

• Many competitors, lessdifferentiated products.

• The reach in semi-urbanareas and rural markets isstill very less.

Weaknesses



75 | P a g e

Fig: 39

• Growing FinancialServices industry's shareof wallet for disposableincome.

• Regulatory reforms wouldaid greater participation byall class of investors.

• Leveraging technology toenable best practices and

processes.

• Increased appetite (need)of Indian corporate for growth

Oppourtunities

• Execution risk.

• Slowdown in globalliquidity flows.

• Increased intensity of competition from local andglobal players.

• Unfavorable economicconditions.

Threats



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SWOT ANALYSIS OF ICICI DIRECT

• Banking arm.

• Upgraded product designand development facilitiesto develop new products.

• Ongoing activities tosupport up gradation of operational performance.

• Team of talented andcommitted professionals

available to improvecompanies performance.

Strength

• Not innovative.

• Not diversified

• high employee turnoverless.

• small investorsWeaknesses



77 | P a g e

Fig: 40

• Innovation.

• Increse in penetration inthe market.

Oppourtunities

• Constant pressure to be costcompetitive to meetcustomer expectations.

Threats



78 | P a g e

SWOT OF MOTILAL OSWAL

• Large and diversedistribution network.

• Strong research and salesteam..

• Brand recognition.

• Experienced topmanagement.

• Strong financial results.

Strength

• Charges are high compare to

other companies in industry.Weaknesses



79 | P a g e

Fig: 41

• Growing FinancialServices industry's shareof wallet for disposableincome.

• Regulatory reforms wouldaid greater participation byall class of investors.

• Leveraging technology toenable best practices and

processes.

• Increased appetite (need)of Indian corporate for growth capital.

Oppourtunities

• Execution risk.

• Slowdown in globalliquidity flows.

• Increased intensity of competition from local andglobal players.

• Unfavorable economicconditions.

Threats



80 | P a g e

SWOT OF ANGEL BROKING

• Service

• Distribution network

• Products

Strength

• Customer Satisfaction.

• Branding.

• Competition from Banks.Weaknesses



81 | P a g e

Fig: 42

• Ever increasing market.

• Improving technology.

• Unfulfilled needs of customers..

• Education level.

Oppourtunities

• New competitorsTechnology based business.

Threats



82 | P a g e

COMPETITION IN REAL ESTATE

Real Estate prices in Hyderabad have touched new heights, even

though some political issues act as a dampener once in a while .A

rising trend has been observed in the demand for luxuriant residential

and IT spaces. The demand for Real Estate development sites and

projects have increased, as have the Hyderabad Realtors, including

the Real Estate agents of the city. Indiabulls real estate business is

currently active in various cities: Hyderabad, Mumbai, Bangalore,

Gurgoan, Kolkata, Jodhpur, Ahmadabad, Nasik, and many other

cities.


The booming Real Estate Sector has given rise to a number of

companies which give stiff competition to Indiabulls Real Estate. In

the Premium Housing category, Indiabulls Real Estate mainly faces

competition from players such as DLF and Ansal Properties and

Infrastructure Limited. In the Affordable Housing segment, it faces

competition from players such as Sobha Developers.

Fig: 43



83 | P a g e

COMPETITION IN HOMELOANS

In earlier days, Nationalized and Public Sector Banks were the sole

providers of Home Loans but the entry of the Public Sector Banks

marked a change in the interest rates, which came down considerably.

The decrease in Interest Rates in turn, enhanced the borrowing power

of customers.

Some competitors in the market who also provide also provide home

loans are:

Fig: 44

Some Housing Finance Companies which provide home loans and fall

in Indiabulls‟ competitor league are:

Fig:45



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COMPETITIVE ADVANTAGE OF INDIABULLS

BROKERAGE SERVICES

Lowest brokerage charge in the industry (currently).

Best software in the industry.

Listed company and aggressive in brand promotion.

Mobile trading tie ups with Blackberry and other phones, where

one can trade with ease.

Both online and offline facilities are provided.

Competitive commissions and service support at fair price

(value for money).

Relationship manager facility to assist customers as and when

they need assistance and guidance.

Full access to Indiabulls Equity Analysis, follows a fact based

approach to rating stocks.

Easy access to customers of the snap shots of their account

statement and portfolio statements and to digital contract notes.



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CONCLUSION

Indiabulls, the young bull on the run, within some years of its

inception has established itself as a business super brand. The

company which began as a simple brokerage firm has now spread its

wings in real estate, home loans, power, etc.

The arch of the bull, Indiabulls Financial Services Limited (IBFSL)

which is the flagship company of the group, offers consumer finance,

including secured and unsecured personal loans; commercial vehicle

and tractor financing; loan against property and housing loans; retail

IPO financing; loans against shares; and commercial credit to smalland medium scale industries.

Breaking free, Indiabulls Securities Limited, (ISL) before its

demerger in 2008, was a subsidiary of IBFSL. ISL provides securities

brokerage services including equities, futures, commodities, and

options; depositary services; research services; insurance, initial

public offering (IPO), and mutual fund distribution.

RECOMMENDATIONS

While working in the real time and while making this project many

things came into scene, they are:

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

Services of Indiabulls are available on all phones except on i-

phones, which is in trend now.

Indiabulls has tie-ups with all banks except SBI. This can be a

reason why customers move away.

Indiabulls should go for aggressive advertising, as most of its

products and the brand itself is not much advertised.



86 | P a g e

OUTCOME AND CONTRIBUTION

A factor analysis was conducted to find out the factors affecting the

investment decisions. A total of 11 factors were considered, on a

population of 110, out of only two dominant factors came out. Which

the help of which it can be explained that there are some external and

personal/internal factors that affect a persons‟ investment decision.

Another part of the project was a competitive analysis to find out

competitive advantage that Indiabulls has over its competitors.

My task at Indiabulls was to bring sales leads and to do sales calling

to them to convert them into sales. Another task assigned to me was

to call the existing customers and explain them about what Indiabulls

could offer them at that point of time.

My project‟s data collection on different kind of rates prevailing in

the market of different competitors is of great importance and time to

time help for the company. Also the factors affecting investment

decisions can be help in future when deciding on the various demanddrivers.



87 | P a g e

LEARNINGS FROM SIP

Through the course of my summer internship programme, I got a

glimpse of the brokerage industry‟s new upcoming giant firm

Indiabulls. My task during SIP was to go to various corporate offices

and explain some target population about various investment options

offered by Indiabulls and its advantages; and generate sales leads on

its basis. Then make sales call, clarify the customer‟s doubt and create

sales.

During this process I learnt about the stock market, various kinds of

securities, commodities, metals, spices, etc that are traded. I also cameto know about different kind of loan potions and gained knowledge

about real estate sector also.

I learnt how to keep a track of the very fluctuating stock prices and

how to invest in them. I also learnt how to talk to customers when

doing a sales calling or when really approaching them. And in the

process of explaining them and clearing their doubts, many of mine

were cleared too.

This SIP has been a great insight to me and it would always help me

when I work for a firm in future or invest myself.



88 | P a g e

REFERENCES

Sites:

www.indiabulls.com www.secgov/investor/pubs/financialnavigating.html

www.tradestreaming.com/2010/06/04/investment decisions

economicstimes.indiatimes.com>opinion

en.wikipedia.org/wiki/marketing_research

www.quickmba.com/strategy/matrix/bcg

www.smallbusiness.wa.gav.au/business-life-cycle

www.valueline.com/stock/industry

en.wikipedia.org/wiki/porters-five-factor

Books:

Kotler Philip et al, 2009. Marketing Management. A South

Asian Perspective. New Delhi: Dorling Kindersley (India) Pvt

Ltd. Pearson Education

Al Ries and Jack trout, 1972. Principles of Marketing

Management.

http://www.secgov/investor/pubs/financialnavigating.html


http://www.tradestreaming.com/2010/06/04/investment


http://www.quickmba.com/strategy/matrix/bcg


http://www.smallbusiness.wa.gav.au/business-life-cycle


http://www.valueline.com/stock/industry









89 | P a g e

APPENDIX

Questionnaire for factors affecting investment decision

1. Do you invest?Yes: No:

2. If yes, what is your investment portfolio?

Or

How much do you invest?

3. Where do you put your money?

Stocks:

Commodities:

Currencies:Derivatives:

Others (specify):

4. More than one of the above?

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

5. Why do you invest?



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

Income:

Market situation:Company:

Risk appetite:

Management outlook:

Market forecast:

Fiscal incentives:

Cash flow budgets:

Non-economic factors:Age factor:

Others (specify):

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

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

8. Name:

9. Salaried/ Non-salaried

10.

Occupation:

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