Id Bi

PROJECT REPORT AT

A Project Report submitted in partial fulfillment of the requirements for the award of the degree of PGPBM

TO

SUBMITTED BY

CHANDRA GUPTA

ENROLL.ID-N08BM047 SUBMITTED TO

ITHILEKHA DASH TIWARI FACULTY GUIDE COMPANY GUIDE

RAKESH

NOIDA

DELHI

Acknowledgement To acknowledge all the persons who had helped for the fulfillment of the project is not possible for any researcher but in spite of all that it becomes the foremost responsibility of the researcher and also the part of research ethics to acknowledge those who had played a great role for the completion of the project. So in the same sequence at very first, I would like to acknowledge my parents because of whom I got the existence in the world for the inception and the conception of this project. Later on I would like to confer the flower of acknowledgement to Ms. Ithilekha Dash and other faculty members who taught me that how to do project through appropriate tools and techniques. Because IDBI Capital has trusted me and given me a chance to do my integrated research study, I would like to give thanks to the organization and especially to Mr. Nishant Komalam from the depth of my heart. Rest all those people who helped me are not only matter of acknowledgment but also authorized for sharing my success.

2

CONTENTS CHAPTER

1

INTRODUCTION

1.1 General Introduction 1.2 Objectives of the study 1.3 Industry Profile. CHAPTER 2.1 2.2 2.3 2.4 2.5 2.6

3

DISCUSSIONS ON TRAINING.

Student’s work profile (Role and responsibilities). Description of live experience. Student’s contribution to Organization.

CHAPTER 4.1 4.2 4.3 4.4 4.5

PROFILE OF THE ORGANIZATION

Introduction of the Organization. Milestones of the organization Financial synopsis & Business overview of the organisation Product and Service profile of the Organization. Organization structure and Organization chart. detailed overview of servieses provided by the oraganization.

CHAPTER 3.1 3.2 3.3

2

4

STUDY OF SELECTED RESEARCH PROBLEM

Statement of research problem. Statement of research objectives. Research design and methodology. Analysis of data. Summary of Findings.

CHAPTER 5 SUMMARY AND CONCLUSIONS 5.1 Summary of Learning Experience. 5.2 Conclusions and Recommendations. APPENDIX

3

Annexure like copy of questionnaires Bibliography.

Chapter 1

INTRODUCTION 1.1 General Introduction about the sector Financial sector The financial sector is in a process of rapid transformation. Reforms are continuing as part of the overall structural reforms aimed at improving the productivity and efficiency of the economy. The role of an integrated financial infrastructure is to stimulate and sustain economic growth. The US$ 28 billion Indian financial sector has grown at around 15 per cent and has displayed stability for the last several years, even when other markets in the Asian region were facing a crisis. This stability was ensured through the resilience that has been built into the system over time. The financial sector has kept pace with the growing needs of corporate and other borrowers. Banks, capital market participants and insurers have developed a wide range of

4

products and services to suit varied customer requirements. The Reserve Bank of India (RBI) has successfully introduced a regime where interest rates are more in line with market forces. Financial institutions have combated the reduction in interest rates and

pressure

on

their

margins

by

constantly

innovating

and

targeting attractive consumer segments. Banks and trade financiers have also played an important role in promoting foreign trade of the country.

Banks The Indian banking system has a large geographic and functional coverage. Presently the total asset size of the Indian banking sector is US$ 270 billion while the total deposits amount to US$ 220 billion with a branch network exceeding 66,000 branches across the country. Revenues of the banking sector have grown at 6 per cent CAGR over the past few years to reach a size of US$ 15 billion. While commercial banks cater to short and medium term financing requirements, national level and state level financial institutions meet longer-term requirements. This distinction is getting blurred with

commercial

banks

extending

project

finance.

The

total

disbursements of the financial institutions in 2001 were US$ 14 billion.

5

Banking today has transformed into a technology intensive and customer friendly model with a focus on convenience. The sector is set to witness the emergence of financial supermarkets in the form of universal banks providing a suite of services from retail to corporate banking and industrial lending to investment banking. While corporate banking is clearly the largest segment, personal financial services is the highest growth segment. The recent favourable government policies for enhancing limits of foreign investments to 49 per cent among other key initiatives have encouraged such activity. Larger banks will be able to mobilise sufficient capital to finance asset expansion and fund investments in technology.

Capital Market The Indian capital markets have witnessed a transformation over the last decade. India is now placed among the mature markets of the world. Key progressive initiatives in recent years include: • The depository and share dematerialization systems that have enhanced the efficiency of the transaction cycle • Replacing the flexible, but often exploited, forward trading mechanism with rolling settlement, to bring about transparency

6

• The infotech-driven National Stock Exchange (NSE) with a national presence (for the benefit of investors across locations) and other initiatives to enhance the quality of financial disclosures. • Corporatisation of stock exchanges. • The Securities and Exchange Board of India (SEBI) has effectively been functioning as an independent regulator with statutory powers. •

Indian

capital

markets

have

rewarded

Foreign

Institutional

Investors (FIIs) with attractive valuations and increasing returns. • The Mumbai Stock Exchange continues to be the premier exchange in the country with an increase in market capitalization from US$ 40 billion in 1990-1991 to US$ 203 billion in 1999-2000. The stock exchange has about 6,000 listed companies and an average daily volume of about a billion dollars • Many new instruments have been introduced in the markets, including index futures, index options, derivatives and options and futures in select stocks.

Venture Capital Technology and knowledge have been and continue to drive the global economy. Given the inherent strength by way of its human capital, technical skills, cost competitive workforce, research and entrepreneurship, India is positioned for rapid economic growth in a sustainable manner. To realize the potential, there is a need for risk

7

finance and venture capital (VC) funding to leverage innovation, promote technology and harness knowledge based ideas. • The Indian venture capital sector has been active despite facing a challenging external environment in 2001 and a competitive market scenario. • There were 34 VCFs and 2 Foreign VCFs registered with SEBI in March 2002. • According to a survey conducted by Thomson Financial and Prime Database, India ranked as the third most active venture capital market in Asia Pacific (excluding Japan). It recorded 115 deals in 2001 with average investment per deal amounting to US$ 7.9 million. 57 VCFs invested US$ 908 million in 101 Indian companies during 2001. • Disbursements for 2002 are expected to be US$ 2 billion and are estimated to reach US$ 10 billion by 2007. • There is an increased interest in India: 70 VC funds operate in India with the total assets under management worth about US$ 6 billion. • The amount has grown nearly twenty fold in the past five years. Most VCs believe that 2002-03 will be driven by a relatively stable economy and new initiatives that will boost the e-commerce sector, particularly on-line trading and e-banking sectors.

8

INDUSTRY PROFILE A.

Origin and Development of the industry

The Bombay Stock Exchange (BSE) is known as the oldest exchange in Asia. It traces its history to the 1850s, when stockbrokers would gather under banyan trees in front of Mumbai’s Town Hall. The location of these meetings changed many times, as the number of brokers constantly increased. The group eventually moved to Dalal Street in 1874 and in 1875 became an official organization known as ‘The Native Share & Stock Brokers Association’. In 1956, the BSE became the first stock exchange to be recognized by the Indian Government under the Securities Contracts Regulation Act.

The Bombay Stock Exchange developed the BSE Sensex in 1986, giving the BSE a means to measure overall performance of the exchange. In 2000 the BSE used this index to open its derivatives market, trading Sensex futures contracts. The development of

9

Sensex options along with equity derivatives followed in 2001 and 2002, expanding the BSE’s trading platform.

Historically an open-cry floor trading exchange, the Bombay Stock Exchange switched to an electronic trading system in 1995. It took the exchange only fifty days to make this transition.

Capital market reforms in India and the launch of the Securities and Exchange Board of India (SEBI) accelerated the integration of the second Indian stock exchange called the National Stock Exchange (NSE) in 1992. After a few years of operations, the NSE has become the largest stock exchange in India.

Three segments of the NSE trading platform were established one after another. The Wholesale Debt Market (WDM) commenced operations in June 1994 and the Capital Market (CM) segment was opened at the end of 1994. Finally, the Futures and Options segment began operating in 2000. Today the NSE takes the 14th position in the top 40 futures exchanges in the world.

In 1996, the National Stock Exchange of India launched S&P CNX Nifty and CNX Junior Indices that make up 100 most liquid stocks in

10

India. CNX Nifty is a diversified index of 50 stocks from 25 different economy sectors. The Indices are owned and managed by India Index Services and Products Ltd (IISL) that has a consulting and licensing agreement with Standard & Poor’s.

In 1998, the National Stock Exchange of India launched its web-site and was the first exchange in India that started trading stock on the Internet in 2000. The NSE has also proved its leadership in the Indian financial market by gaining many awards such as ‘Best IT Usage Award’ by Computer Society in India (in 1996 and 1997) and CHIP Web Award by CHIP magazine (1999).

The National Stock Exchange of India was promoted by leading Financial institutions at the behest of the Government of India, and was incorporated in November 1992 as a tax-paying company. In April 1993, it was recognized as a stock exchange under the Securities

Contracts

(Regulation)

Act,

1956.

NSE

commenced

operations in the Wholesale Debt Market (WDM) segment in June 1994. The Capital Market (Equities) segment of the NSE commenced operations in November 1994, while operations in the Derivatives segment commenced in June 2000.

11

Since the early 1950s till the early 1990s, Indian policy makers had been nourishing the goal of Socialist pattern of society. They had been following the development planning strategy of the former Soviet Russia in a mixed economic framework. From July 1991, in the face of an unprecedented foreign exchange crisis, Indian economy started experiencing an IMF-World Bank dictated regime of liberalization. One aspect of this is financial liberalization. There is a move towards privatization of nationalized banks – these banks are selling their shares in the stock market. Transnational banks are encouraged to operate in the Indian banking sector. Attempts are made to attract foreign direct investment in different sectors. There is an increasing entry of foreign portfolio capital due to stock market liberalization. People are encouraged to invest in stocks through income tax benefits and abolition of capital gains tax. There is a move to develop a national pension fund which will be invested in different stocks to get returns out of which pension will be provided to retired people. It is expected that boosting up of stock market will accelerate the process of capital accumulation and growth. Stock market development has been an important part of financial liberalization in the less developed countries (LDCs). In the pro-

12

liberalization circle, stock market is assigned to play an important role in the capitalist development of LDCs. There are many studies supporting the positive link between stock market development and growth. Let us mention some of the recent studies. One important study was undertaken by Levine and Zervos (1998). Their cross-country study found that the Development of banks and stock markets has a positive effect on growth. In another study

Levine

(2003)

argued

that

although

theory

provides

ambiguous relationship between stock market liquidity and economic growth, the cross-country data for 49 countries over the period 1976-93 suggest a strong and positive relationship (see also Levine, 2001). Henry (2000) studied a sample of 11 LDCs and observed that stock market liberalizations lead to private investment boom. Recently, Bekaert et al (2005) analyzed data of a large number of countries and observed that the stock market liberalization ‘leads to an approximate 1 % increase in annual real per capita GDP growth’. There are some economists who are skeptical. Long time back Keynes

(1936)

compared

the

stock

market

with

casino

and

commented: ‘when the capital development of a country becomes the by-product of the activities of a casino, the job is likely to be illdone’.

13

Referring to the study of World Bank (1993) Singh (1997) pointed out that stock markets have played little role in the post-war industrialisation of Japan, Korea and Taiwan. He argued that the recent move towards stock market liberalisation is ‘unlikely to help in achieving quicker industrialisation and faster long-term economic growth’ in most of the LDCs.

Chapter 2 Chapter 2

Chap PROFILE OF THE ORGANISATION IDBI Capital Market Services Ltd., (IDBI Capital) is a wholly owned subsidiary of IDBI Bank Ltd and is a leading Investment Banking & Securities Company. IDBI Capital offers a full suite of products and services to Corporate, Institutional and Individual clients. The range of services include:          

Investment Banking Capital Market Products Private Equity Corporate Advisory Services Mergers & Acquisitions Project Appraisals & Debt Syndication Stock Broking - Institutional & Retail Distribution of Financial Products Debt Placement and Underwriting Fund Management (Managing Clients' Assets-Pension/PF Fund Managers) Research Group

IDBI Capital is highly regarded for safety and trust and enjoys a credit rating of “AAA” by CARE for its medium-term borrowings and P1+ by ICRA for its short-term borrowings.

14

Milestones 1995 March

Commenced segment

Equity

Broking

1996 October

Commenced segment

Debt

1996 December

Started operations as a Depository Participant

1996

Started to act as Arranger to Privately Placed Bond issues

1998 April

Commenced operations as a Portfolio Manager

1999 February

Acquired membership of BSE, Mumbai

1999 November

Started operations as a Primary Dealer

2002 March

Achieved an outright secondary market turnover exceeding Rs.100000 crore in G-Secs

2002 October

Commenced trading in Interest Rate Swaps

2004 June

Commenced Merchant Banking & Corporate Advisory Services

2006 January

Launched the online www.idbipaisabuilder.in

Broking

on on

investing

NSE NSE

CM WDM

portal

–

15

2006 September

IDBI Capital bags CNBC TV18 'Best National Financial Advisor-Institutional' award.

2006 November

IDBI Capital ties up with Punjab National Bank and Bank of Rajasthan Bank.

2007 March

IDBI Capital ties up with Oriental Bank of Commerce

2007 May

IDBI Capital ties up with Karur Vysya Bank (KVB)

2008 January

IDBI Capital bags CNBC TV18's prestigious National Financial Advisor Award

2008 March

IDBI Capital ties up with Union Bank of India

QUICK FINANCIAL SYNOPSIS IDBI (BSE:IDBIBANK) is one of India's leading public sector banks and with 2008 net income of Rs 9415.9 Crores, India's 4th largest bank in overall ratings. With 871 ATMs, 504 branches and 316 centers IDBI is currently the tenth largest development bank in the world in terms of the reach. IDBI grew total revenues of Rs 14,481 Crores in 2006 to Rs 17,923 Crores in 2008. Over a similar period, the company grew total assets from Rs 65,979 Crores in 2005 to Rs 120,601 Crores in 2008, an increase of 83.33%.] IDBI is hampered by its status as a public sector, development bank. The company has weak core operations and net interest margins of <1%. A large part of the bank's equity holdings are in unlisted stocks and other illiquid investments that are difficult to sell in rough markets. That said, the first quarter of 2009 was marked by strong loan growth of 31%. Despite a slow-down in recoveries from Rs100 Crores in Q1FY08 (Rs160 Crores in Q4FY08)], an ease in interest rates by the Reserve Bank of India helped increase net profit from Rs 160 Crores in Q2FY09 to Rs 226 Crores in Q3FY09.

16

Business Overview IDBI, also known as Industrial Development Bank of India was established in 1964 by an Act of Parliament to provide credit and other facilities for the development of the fledgling Indian industry. IDBI provides financial assistance, both in rupee and foreign currencies, for green-field projects as also for expansion, modernization and diversification purposes. IDBI also provides indirect financial assistance by way of refinancing of loans extended by State-level financial institutions and banks and by way of rediscounting of bills of exchange arising out of sale of indigenous machinery on deferred payment terms. In September 2003, IDBI diversified its business domain further by acquiring the entire shareholding of Tata Finance Limited in Tata Home finance Ltd., signaling IDBI’s foray into the IDBI Bank, with which the parent IDBI was merged, was a vibrant new generation Bank. The Pvt Bank was the fastest growing banking company in India. The bank was pioneer in adapting to policy of first mover in tier 2 cities. The Bank also had the least NPA and the highest productivity per employee in the banking industry.. IDBI Bank was ranked in the Top 5 Indian banks on the basis of Business Segment size.

17

SERVICES PROVIDING BY THE IDBI CAPITAL Investment Banking Capital Market Products Private Equity Corporate Advisory Services Mergers & Acquisitions Project Appraisals & Debt Syndication Stock Broking - Institutional & Retail Distribution of Financial Products Debt Placement and Underwriting Fund Management (Managing Clients' Assets-Pension/PF Fund Managers)  Research Group          

ORGANISATION STRUCTURE

18

National Level Zonal Level Regional Level Divisional level Branch Level Area Level

: : : : : :

National Head Zonal Head Regional head Cluster Head Center Manager Business Development Executives & Freelancers

SALES METHODOLOGY

19

DETAIL OVERVIEW OF SERVICES 20

(A) Capital Markets IDBI Capital as an institutional player provides the entire gamut of Capital Market services encompassing: 1. 2. 3. 4. 5. 6.

Public Offerings Qualified Institutional Placements Buyback Takeover Preferential Allotments External Commercial Borrowings, FCCBs, etc.

The above activities entails liasioning with institutional investors such as treasury departments of Domestic Institutions, Banks and corporates, fund managers of mutual funds, private equity firms, FIIs, HNIs. 1. IPO / FPO / Right Issues Initial Public Offerings / Follow on Public Offerings / Rights Issues IDBI Capital Market Services Ltd. (ICMS), as a Securities and Exchange Board of India (SEBI) registered Merchant Banker, provides the following services: 

  



Public issue of Equity and Debt Instruments in Indian markets through Initial Public Offering (IPO), Follow on Public Offering (FPO) and Rights Issue Acts as a Book Running Lead Manager, a Lead Manager, a CoManager or an Advisor to the Issue. Underwrites Issues of Equity and Debt Instruments. Markets various instruments with Qualified Institutional Buyers (QIBs), High Networth Individuals (HNIs), Corporate and Retail investors. Prepares all documents like Prospectus / Letter of Offer and assists the Issuer in complying with legal and statutory requirements of SEBI, Stock Exchanges, Registrar of Companies (ROC) and authorities under various corporate laws and economic laws for issue of securities.

21

Advisory services on structuring of capital and debt, timing for raising the same, choice of agencies to assist in the process of raising funds, etc. 2. TakeOver IDBI Capital helps corporate and institutional clients to carry out successful takeovers on the Exchange listed companies. IDBI Capital helps carry out the Due Diligence exercise in accordance with relevant SEBI Rules / Regulations / Guidelines followed by the preparation of legal documentation connected with Buybacks and Take-overs 3. Buyback of Securities IDBI

Capital

is

active

in

assisting

its

clients

in

buy-back

programmes. With the presence of a strong Broking services, the Company is in a position to offer comprehensive solutions to accomplish buy-back programmes 4. Qualified Institutional Placement IDBI Capital adds value to QIP issues which can be done only by listed

Companies

to

raise

additional

equity

from

Qualified

Institutional Buyers (QIBs). The strong relationship of IDBI Capital with the different categories of QIB, FIIs, Fis, Mutual Funds, Banks etc., makes a difference to the QIP placement

22

programmes of the Companies. This is backed by a strong research support. 5. Private Equity They have developed strong expertise across different industries, which enable customers to structure the transaction in that context. In Private Equity (PE), they focus on sectors ranging from Infrastructure, Power, Telecom, Healthcare & Life Sciences, Pharmaceuticals, Hospitality, Banking, Logistics, Media, Auto Ancillaries / Components, Cement, Steel, etc to name a few. Their strength in Private Equity advisory is on account of:   

Strong relationships with PE funds and their key decision makers Strong execution team gives an edge on optimal structuring and efficient closure of transactions Value addition on entire structure of activities

Their PE transaction doesn’t come to an end with the transfer of funds but also cater to entire gamut of Investment Banking needs. IDBI Capital enables strong growth oriented companies raise capital through; • • • •

Preparation of Business and Financial Plans Preparation of the Information Memorandum Discussions and Negotiations with prospective investors Deal closure and Execution

(B) Investment Banking Their Clients They represent Government organizations, Public Sector Enterprises and Indian Corporates covering sectors such as Steel and other metals, Mines, Minerals, Chemicals, Healthcare, Hospitality, Financial Services and other Core Sectors.

Their Team They have a combination of professionals with varied background who shares our values of truthfulness, objectivity, innovation and analytical accuracy. The professional qualification of their team provide a rock solid foundation for giving consulting services and their depth of experience ranges from young management 23

graduates from premier business schools to experienced finance professional and qualified chartered accountants as well.

1.Financial Advisory Financial Advisory has been considered as a strategic function requiring innovative and distinct financial solutions both long and short term focused on delivering greater shareholder value. IDBI Capital Market Services Limited occupies a leading position being a wholly owned subsidiary of IDBI Bank in the Corporate Finance Market place. We support our clients by offering those creative ideas and solutions that facilitates in enhancing the value. They broadly advise on the following on the Financial Advisory space:         

Business Valuation Financial & Commercial Due Diligence Merchant Financial Appraisal Joint Venture & Contract Bid Process Management Disinvestments Infrastructure Advisory Financial / Debt Restructuring Structured Finance & Securitisation

2.Project Advisory IDBI Capital has considerable expertise in Project Advisory / Finance. They advise their clients right from the project conception stage followed by preparation of the Project Report and its TechnoCommercial Appraisal with the support of accredited institutions with optimal financial structuring. These reports pave the way for contracting project loans for green-field as well as expansion projects. Their Project Advisory would also include turnkey advisory services on financial structuring, implementation and documentation aspects of Green-field Projects, Brown Field Projects and Public Private Partnership Projects. The scope of work ranges from negotiations

24

with Banks, Financial Institutions and Multilateral agencies for obtaining the final loan sanctions. Their Project Advisory Services broadly include:        

Overview of the promoting company / SPV Review of the Project Structure and Project Costs including various assumptions. Capital Structuring Real Estate Advisory Identification and evaluation of various sources of finance Financial modeling Risk Analysis and Allocation Development of a Security Package

3.Mergers & Acquistions There are several means a Corporate adopt to improve shareholder value e.g. increased revenue, market share, geographical expansion, diversification, economies of scale; or to integrate through Merger & Acquisition. Broadly speaking, M&A drivers could be customer acquisition and top line growth, new market entry or competence building. IDBI Capital’s M&A Advisory services covers right from the initial negotiation stage to the final deal conclusion. We address the following while taking up Mergers and Acquisitions;       

Business valuations and managing the entire merger process Assisting companies in acquisitions as sell off as joint ventures Assisting the Company in financing the deal Managing Open Offers Evaluating bids on the basis of the evaluation criteria set out Assisting in closing the deal Post Merger Integration

4.Strategic Advisory Strategic Planning provides the framework for all the major business decisions of an enterprises-decision on businesses, products & markets, manufacturing facilities, investments & organizational structure. It is indeed act as a pathfinder to various business opportunities.

25

IDBI Capital assists clients in formulating strategy, developing solutions and successfully managing results. They work with clients to define their business strategy and implement interactive solutions that redefine relationships with customers, suppliers and employees.

They help clients improve business performance by delivering a complete, business-focused menu of end-to-end business solutions. We broadly cover:

      

Business and Strategic Planning Business Restructuring Entry Strategy Policy Advisory Organisation Restructuring Bid Process Management Process Consulting

(C) Institutional Broking & Distribution Institutions and Corporates have surplus funds to manage on daily basis as well as investible surplus for a defined period. The risk differs for Institution and Corporates subject to their preferences. The reward by way of return is always in proportion to the risk taken. IDBI Capital define, advise and manage the same by blending caution with aggression in the desired proportion to teach client. The range of services include from Equity Broking with customised research, advisory and distribution services for investment in Mutual Funds, Debt/Bonds, Equity IPOs to placement of Equities etc

26

 EQUITY

Equity Sales & Dealing 



 

The Institutional Broking Desk offers the Clients with a dealing platform for trading in NSE and BSE. The parameters on market conditions with an astute technical analysis from the Dealing Desk enable the clients to take an apt decision. The intra day analysis and reports are also available to clients on customized basis. Further the Institutional Clients are provided with the Derivatives Trading desk for Futures and Option. The Institutional Clients are updated with fresh research Ideas on the happening Scrip and Sectors. Being well connected with the global market Via Bloomberg, the updates are shared from time to time. The interpreted brief report on the Futures and Option positions before the Expiry is published for Client’s Circulation.

Daily market information is disseminated to the clients under ‘Heard on Street’ News heads.

Equity Research They have research desks covering all aspects of the equities. Their equities research desk publishes high quality research on all major sectors of the industry and covers a wide spectrum of companies listed on the Indian stock exchanges. Their derivatives research team publishes daily/monthly reports on the trends in the equity derivatives markets. Their objective, uncomplicated and reliable research reports on global markets and equity empower institutional investors and make it possible for them to make informed investment decisions. Their research teams have made a name for themselves in a very short time.

27

 MUTUAL FUNDS Mutual Fund Sales & Dealing Several factors need to be taken into account when choosing an instrument for investment – among these being safety, liquidity & return related to the risk undertaken. Coming to the choice of instruments, we have equity, debt, money market, commodity based or even global equities. Mutual funds provide all this and more. Mutual funds offer an investment portfolio which can be either diversified in nature or specific in category with risk skewed towards debt to equity in varying proportions, all in one under one umbrella. Mutual Funds cater to the specific requirement of the Investor be it Institutional or Individual. IDBI Capital Market Services Ltd. is into Mutual Fund Distribution, Advisory and Fund Management. We address the needs of any type of investor from corporate, banks, trusts, firms, and societies to NRIs, HNIs and individual retail clients We have been recognized as among the best financial advisers in the country, and have been conferred with the CNBC TV 18 Financial Advisor Awards as the Best Performing National Financial Advisor –Institutional segment in India for the past two consecutive years. As a distributor registered with almost all the SEBI Registered Mutual Funds in India, we have also started offering Mutual funds to our retail customers, both off-line and on-line.

Mutual Fund Research The degree of risk in a Mutual Fund varies with the diversity in portfolio and the combination of assets. Add to this the different classes of instruments. Judging the best investments avenues calls for astute incisive knowledge on markets and individual companies. The research desk of IDBI Capital Market Ltd. publishes a number of detailed research Reports on the Mutual Fund Industry viz.

28

(i) Daily Report – detailing the NAV and growth of the schemes on various periods (ii) MF Monthly – with coverage on the Equity, Debt and Mutual Fund market (iii) Customized Sector Reports and (iv) Scheme Reports for Special Clients. Customized Reports are provided to specific institutional / corporate clients. The universe for every category is selected from the entire industry and rigorous analysis undertaken including peer comparison. Various tools and techniques are used, from studying the Alpha of every scheme with Standard Deviation to Beta Analysis to Tryenor and Sortino.  BONDS   

ICRA Rating Letter CARE Rating Letter Information Memorandum of IDBI Home Finance

(D) Retail Broking & Distribution In addition to offering corporate, institutional clients, IDBI Capital also offers a gamut of financial products and services that cater to a

varied

cross

section

of

investors.

IDBI Capital also offers to financial planners, retail intermediaries and

consumers

to

deliver

lasting,

innovative

solutions.

Looking at the opportunities in our market and the growth of our country, they believe it is high time investors are educated about the nuances of investments. The knowledge and awareness gained will empower investors and help them create wealth. They firmly

29

believe brokers, media and regulators have a pivotal role in assisting the individuals to become wealthy. They will go extra mile to empower the investors in managing their wealth to ensure a

more

rewarding

future.

IDBI Capital aims to provide a single-point source for retail investors

in

their

requirements

for

trading

and

investment

products.

Online Investing Online investing provides investors with a convenient method to take part in today’s financial markets. With their commitment to enhancing investor education and awareness as a foundation stone,

they

have

created

an

online

investing

website

www.idbipaisabuilder.in for trading and depository services. This platform enables easy and informed investing in Equity shares, Futures & Options (F&O), IPO’s and Mutual Funds, for the retail investors with a wealth of information, news, analysis and tools sourced from the best in the industry. It also brings a large database of information about companies which will assist them in making

an

informed

investment

decision.

They strive to empower customer with information that helps

30

them

make

informed

decisions

and

bank

upon

the

right

opportunity. They bring cunsumers lots of useful information by way of their varied market research reports on equity, derivatives, and

mutual

funds

They offer an integrated three-in-one account linking savings account, trading account and the demat account.

IPO Distribution Investment Banking Activities They have in the last financial year successfully lead managed public/rights issues mobilizing more than Rs.900 crores. Some of the notable examples were the Central Bank of India ‘s IPO and Varun Industries Ltd fixed price issue. The responses to their issues have been heartening.

Initial Public Offerings (IPO) They are reaching out to the investors thru   

10,000 sub-brokers/agents spread across the country. Our 40 thousands online investors. And our own 25 branches.

They market and distribute IPOs of all lead investment bankers, including their owned lead managed issues. In IPO distribution, the marketing effort is the key, which enables them to carry out the vigorous exercise of   

Putting the banners of the IPO on their portal and all across branches. Sending the emails to all investors about the impending IPOs and the product note. Sending SMS to all of them. 31



Making available the IPO application forms, in all of their branches.

All their branches are in marketing & distribution of IPO application forms, where they accept and bid the application forms to the exchange.

32

Mutual Fund Distribution Several factors need to be taken into account when choosing an instrument for investment – among these being safety, liquidity & return related to the risk undertaken. Coming to the choice of instruments, we have equity, debt, money market, commodity based or even global equities. Mutual funds provide all this and more. Mutual funds offer an investment portfolio which can be either diversified in nature or specific in category with risk skewed towards debt to equity in varying proportions, all in one under one umbrella. Mutual Funds cater to the specific requirement of the Investor be it Institutional or Individual. IDBI Capital Market Services Ltd. is into Mutual Fund Distribution, Advisory and Fund Management. We address the needs of any type of investor from corporate, banks, trusts, firms, and societies to NRIs, HNIs and individual retail clients We have been recognized as among the best financial advisers in the country, and have been conferred with the CNBC TV 18 Financial Advisor Awards as the Best Performing National Financial Advisor –Institutional segment in India for the past two consecutive years. As a distributor registered with almost all the SEBI Registered Mutual Funds in India, we have also started offering Mutual funds to our retail customers, both off-line and on-line. We distribute and advise on the schemes of all the Mutual Fund Houses registered with SEBI.

33

(E) Fund Management IDBI Capital Market Services Ltd. (ICMS) is a leading Fund Manager in the country for Provident, Pension and Retirement Benefit Funds. The Company is a SEBI registered Portfolio Manager and manage its Client’s assets under both discretionary and non-discretionary mandates. These services are provided to various public and private sector undertakings and their provident, pension, retirement benefit and surplus funds. The Company’s client base includes leading pension and provident funds in the country. IDBI capital has been advising institutions, banks and corporates for their investment in Debt, Mutual Funds and Equities over several years. Its services include managing Client Assets--Pension & Provident Funds, Surplus fund Management, Equity Portfolio Management and Mutual Fund Advisory. The funds have continuously yielded superior returns, which are significantly higher than the benchmark.

ISO Certification 9001:2000 Keeping in view the importance of standardized processes and service levels, the Company has gone in for ISO Certification for Fund Management, and is the only company to have done so in this sector. Being a public sector, the Company is also audited by Comptroller and Auditor General (CAG) office and follows transparent practices.

Regulatory Approval IDBI Capital is a registered Portfolio Manager with Securities and Exchange Board of India (SEBI) since 1998 and is authorised to undertake Funds Management activities (Debt & Equity) for clients. These activities would be governed by Securities and Exchange Board of India (Portfolio Managers) Rules and Regulations, 1993. SEBI Regisration No. of IDBI Capital is INP000000209, valid till the year 2010.

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The Key strengths of IDBI capital Market Services in the areas of Debt Fund Management are: 1. 2. 3. 4.

Fund Management experience of 10 years Expertise in managing large corpus Expertise in both Debt & Equity Market IDBI Capital is the only Portfolio Manager in the Country to achieve ISO 9001: 2000 Standard for Quality Management Systems in Fund Management operations, with certification from TUV NORD an accredited German standards firm 5. Substantial Returns Over Benchmark 6. IDBI Capital is a SEBI registered Portfolio Manager 7. Minimum Idle Days 8. Our fund management skill covers Portfolio Analysis that includes ALM, Asset Allocation, Risk Analysis, Maturity Analysis and Yield Analysis 9. Transparency of Operations 10.Strict adherence to Compliance Procedures 11.Highly Rated Debt Research 12.Presence in All Segment/ Asset of the Financial Services: IDBI Capital deals in Equity and Equity related products and is one of the highly rated Mutual Fund Distributor (won two consecutive CNBC TV18 Institutional Financial Advisor Award). In Investment Banking and Debt Capital Market- Rated in Top 15 by Prime Database 13.Group Strength in Debt Market: IDBI Capital is one of the leading players in debt market with presence in primary dealership since July 2007. The current operations of primary dealership is conducted by a group company, IDBI Gilts

Infrastructure 



Experienced Fund Management Team: The Fund Management team comprises of experienced professionals (experience ranges between 2 years to 15 years) in Portfolio Management with requisite exposure in the fixed income and equity segment and qualifications Experienced Back-Office: The Clearing and Settlement Operations are manned by experienced personnel with requisite exposure to capital market and particularly debt market. The process is standardized as per the regulatory and other specific norms and mainly technology driven in most areas

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





 

Accounting: Real time accounting of Remittances, Investments, Interest and Redemption proceeds ensures accurate reconciliation Professional Custodian: Member of NSDL for demat services and offers Constituent SGL Account facility for Government securities through IDBI Gilts Ltd. Functional Separation of Front and Back Office: Separate personnel handle the front and back office functions to ensure transparency and complete regulatory compliance Internal Controls: Adequate Risk Management systems in place to ensure complete regulatory compliance Audit Systems: Audit of all transactions and reports by an independent firm of chartered accountants. The accounts and transactions are also subject to CAG audit and other regulators

Their Credentials They are a leading full service securities house, offering a complete suite of financial products and services to individual, institutional and corporate clients:    

Wholly owned subsidiary of IDBI Bank Ltd. A well-capitalized financial position - networth of over Rs.350 crores as on 31st March 2008. A private equity fund of Rs.100 crores for investment in Mid Cap and SME Growth Companies A leading player in Private Placement of Tier II bonds and debentures for institutions, banks and corporates.

They manage Provident and Pension Funds of more than Rs.8,250 crores

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Chapter 3

DISCUSSION ON TRAINING

Student’s work profile(role and responsibilities) I worked there with IDBI CAPITAL with a profile of sales trainee. This profile offers me to understand the need of customer and provide them the best deal possible with maximization of the profit, both for the company as well as for the customer. The most important aspect for the role of trainee is trust. So far fulfillment of the targets one needs to: •

Capitalize on the old and loyal clientage which can be building slowly by advising people in the best possible way.

•

Generating new leads through various activities.

Generation of leads Since I was new in the field so I had to start from scratch and generate new leads to sustain in the market. Cold calling is one of the trusted ways of getting to the customers without meeting them. Although the rate of conversion remained very less. For cold calling the quality and accent remains a very important criterion. This activity give me mixed result. I often got success and generated many leads through it but it also landed me in 37

awkward position where the customer were in different mood and made us hear words for which a marketer should be always prepared to hear. Corporate calls always remained more difficult to crack with respect to retail sector. The corporate were the most difficult and most temping to get the business from. It took me one one day to crack Hi-tech Gears. At IDBI CAPITAL after getting the product knowledge in the first week at the branch I was also allotted distributor to work with. In the initial phase I was accompanied by more experienced staff. After I became known to the market and procedure I started attending calls alone only. After the third week my performance also improved and I was able to get close to the targets, though it looked difficult to achieve in the beginning. To get awareness of the every product I attended diversified calls. This helped me to implement cross selling to get better results.

LIMITATIONS: 1. Cold Calling •

Voice and accent plays a major role.

•

The right time to call a customer cannot be decided, as the

customer may in a different mood at the time of calling. •

Time consuming

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•

Less success rate

2. Corporate •

Time consuming

•

Contacts with higher authorities play a major role

Description of live experience I was supposed to use the database provided by the company to make cold calls or by directly meeting people to get new leads. While making cold calls, we need to have: •

Good Communication Skills (Voice quality is clear and

articulate) •

Persistent and able to bounce back from rejection

•

Good organizational skills.

•

Ability to project a telephone personality (Enthusiasm,

friendliness) •

Flexibility: can adapt to different types of clients and new

situations. Using a good database is very essential. “Eighty percent of our business comes from 20 percent of our customers" is a frequent statement at any sales convention. There's hardly a sales executive who is not aware of the 80/20 rule”.

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While talking to customers, I analyze their needs. Whether they want to go for investment purpose. Suggest them the plan that best suits them. If they agree to it then either we send across the agents to close the deal or close it themselves.

SWOT ANALYSIS Weakness • • •

Low awareness due to lack of advertisement. Lack of loyal clientage Developing product.

Opportunity • • • •

Untapped Market Increased spending power Changing Mindset of Customers Unpredictable Sensex

Strength •

• • •

Co-operative and Experienced Branch Managers Good Database IDBI Brand Low pricing

Threat • •

•

Reach Stiff competition from existing players in the market Better products

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Chapter 4

STUDY OF SELECTED RESEARCH PROBLEM Statement of Research objectives

•

To find the market potential and market penetration of IDBI CAPITAL product offerings in Patna.

•

To collect the real time information about preference level of customers using Demat account and their inclination towards various other brokerage firms e.g. Indiabulls, Sharekhan, Indiainfoline, Religare, Alankit , Unicon.

•

To expand the market penetration of IDBI Capital.

Research design and methodology It was important to collect detailed information on various aspects for effective analysis. As “Marketing today is becoming more of a battle based on information based society companies with superior information enjoys a competitive advantage. Methodology Adopted The information was collected through person interview and interview was conducted through the mode of questionnaire.

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Analysis of Data: Data collection The data collection was collected through primary as well as secondary source.

PRIMARY DATA : Primary data was collected from 155 respondents using a schedule of question and a survey was conducted. The tabular and graphical data was Microsoft excel.

SECONDARY DATA : Secondary data was collected mainly from internet ,printed journals on the capital markets of India ,newspaper articles and books written on the Indian stock markets.

SAMPLING: Judgment, non-random sampling was used. Respondents were request to help with the schedule at their offices , homes or at the IDBI office.

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SUMMARY OF FINDING

1. Preference of Investment

Fig4.5.1 Result of Preference of Investment

Interpretation: This shows that although the mutual funds market is on the rise yet, the most favored investment continues to be in the Share Market. So, with a more transparent system, investment in the Stock Market can definitely be increased.

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2. Awareness on Online Share Trading

Fig4.5.2 Result of Awareness of Online Share Trading

Interpretation: With the increase in cyber education, the awareness towards online share trading has increased by leaps and bounds. This awareness is expected to increase further with the increase in Internet education.

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3.

Awareness of IDBI CAPITAL as a Brand

Fig4.5.3 Result of Awareness of IDBI as a Brand

Interpretation:

This

pie-chart

shows

that

IDBI

capital

has

a

reasonable amount of Brand awareness in terms of a premier Retail stock

broking

company.

This

brand

image

should

be

further

leveraged by the company to increase its market share over its competitors.

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4. Satisfaction Level among Customers with current broker

Fig4.5.5 Result

of

satisfaction level among customers with current broker

Interpretation: This pie-chart corroborate the fact that Strategic marketing, today, has gone beyond only meeting Sales targets and generating profit volumes. It shows that all the competitors are striving hard not only to woo the customers but also to make them Brand loyal by generating customer satisfaction.

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5. Frequency of Trading

Fig4.5.6 Result of Frequency of Trading

Interpretation: Inspite of the huge returns that the share market promises, we see that there is still a dearth of active traders and 47

investors. This is because of the non – transparent structure of the Indian share market and the skepticism of the target audience that is generated by the volatility of the stock market. It requires efficient bureaucratic intervention on the part of the Government.

6. Percentage of earnings invested in Share Trading

Fig4.5.7 Result of percentage of earning invested in share trading

Interpretation: This shows that people invest only upto 10% of their earnings in the stock market, again reiterating the volatile and non-transparent structure of the Indian stock market. Hence, effective and efficient steps should be undertaken to woo the customers to invest more in the lucrative stock market.

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Chapter 5

SUMMARY AND CONCLUSIONS

SUMMARY OF LEARNINGS EXPERIENCE •

To get initial success in this field is very difficult. Although the

business generation becomes easier with time as we serve more people who then get added up in the loyal clientage. Thus time and service are two most factors to get in this field. •

Also the corporate remains a very important segment which

gets business in bulk but retail cannot be ignored which makes your business ticking. •

Customer remains in the pivotal position.

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CONCLUSION AND RECOMMENDATIONS Based on the findings of our project we would like to suggest the following:•

After sales services and follow up calls are important for

getting new references so trained telesales should be appointed for this purpose whose sole work should be to make feedback calls. •

Investment is having too many financial products and not all

the salespeople are familiar with each and every product so the work force should be segregated each group dealing in a specific product and the sales target should be given likewise. •

While interacting with the investors I found that most of the

customers are unaware about the Mutual fund. Some of the people look upon mutual funds and equity trading as gambling. Thus a mutual fund awareness program can help to increase the penetration of mutual funds in the market. •

Company should have a scheme of rewards and recognition to

employees and the field persons to boost their motivation.

KEY ISSUES AND CONCLUSIONS Based on the above SWOT analysis and study of the available data I have come to the following conclusions:

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HUGE POTENTIAL: •

All though relatively new entrants in the market, IDBI Capital

is slowly but surely gaining a strong hold because it is finally able to grasp the investment climate in Patna. Secondly the branch managers at all the branches are very knowledgeable with a lot of experience in the financial markets so under their leadership can definitely expand its base •

The entire workforce consists of mostly youngsters, which

means they can be encouraged and motivated to do good work because they have a long way to go and most of them are eager to climb the ladder. •

Right now IDBI is at its nascent stage and will surely grab the

major market under its belt very soon like in other fields.

Huge investments taking place: •

The Stock Market has been very buoyant until now especially in

the past 3 years. This particular trend is very favorable because a soaring SENSEX means higher returns, which encourages the investors to invest their money in the market. Although in the past 3 months the market has shown very unpredictable trend and has already lost over 1000 points.

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•

So in order to make the best the only thing required is to recruit

more field staff who should be trained in a proper way to get better results.

APPENDIX

QUESTIONNAIRE Q1. In which of these Financial Instruments do you invest into? Shares

Mutual Funds

Bonds

Derivatives

Q2. Are you aware of online Share trading? Yes

No

Q3. Heard about IDBI Capital? Yes

No

Q4. Do you know about the facilities provided by IDBI Capital? Yes

No

Q5. With which company do you have your DEMAT account? 52

Religare

ICICI securities

IDBI capital

India Bulls

Others (please specify) Q6. What differentiates your Share trading company from others? (in regards of brokerage, satisfaction, services, products )

Q7. Are you currently satisfied with your Share trading company? Yes

No

Q8. How often do you trade? Daily

Weekly

Monthly

Yearly

Q9. What percentage of your earnings do you invest in share trading? Up to 10%

Up to 25%

Up to 50%

Q13. How do you rate these share trading companies? 1. 4.

2. 5.

3.

Above 50% a. Religare

b. ICICI Securities c. India Bulls d. IDBI Capital e. Others (Please specify)

Q14. What more facilities do you think you require with your DEMAT account?

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Personal Information

Name

:

Age Sex Phone No

: :

Male

Female

:

Occupation:

References and Bibliography

Articles •

Capital Market Review 2003-04,Published by SHCIL

Books •

Financial Management Prashanna Chandra,6th edition

•

Financial Management Khan & Jain ,3th edition

•

Securities Analysis and Portfolio Management ,Fischer & Jordon

•

Research Methodology ,David .R. Cooper and Schindler

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Websites •

www.shcil.com

•

www.icicidirect.com

•

www.investsmart.com

•

www.nseindia.com

•

www.economicstimes.com

•

www.idbibank.com

•

www.idbicapital.com

•

www.google.com

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