Reliance Money Project Report

EXECUTIVE SUMMARY

The Indian capital markets have seen a lot of economic swing since last decade but still it has been flourishing with rapid transformations. Reforms are continuing and are bringing a lot of change in structure, process and governance of capital market. This is helping Indian capital market to gain an image of mature market place in the capital markets of the world. The working mechanism are now more flexible and transparent. The stock exchanges has been corporatized too. Other than this new instruments like index future, index options, derivatives etc. has been introduced.

Out of the major players showing their presence in the financial markets, Reliance Money is the one. Reliance Money is promoted by Reliance Capital; one of India's leading and fastest growing private sector financial services companies, ranking among the top 3 private sector financial services and banking companies, in terms of net worth. During past few years, it has picked up a considerable market share in the sector of financial services.

It is a one-stop-shop, providing end-to-end financial solutions (including mobile and web-based services). It has the largest non-banking distribution channel with over 10,000 outlets and 20,000 touchpoints spread across 5,165 cities/ towns; catering to the diverse needs of over 3 million existing customers.

During the internship, a research has been carried out on the on the topic “A study of investor behaviour at Reliance Money”. The objectives of the research were to create awareness about various products and services of the Reliance Money and to know about the investor behaviour and their preferences towards investment decisions and considerations. Other than this, the research included the study of position of Reliance Money in the market and its comparative position with other players. Page | 1

Descriptive research was used in the whole project. The data was collected through meeting investors and potential investors in various areas of Chandigarh and questionnaires were filled on the basis of their responses. The collected data was analyzed using percentage method.

Various findings were derived which revealed perception and behaviour of investors and potential investors toward financial market. Other than this, the attitude of investors were also observed towards Reliance Money. Based upon the findings, various suggestion were given with a view to improve the Position of Reliance Money in the market.

As a result of research, it was concluded that Reliance Money has a good brand image but it still has to work upon in various areas to excel in the financial sector.

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Chapter 1 – INDUSTRY PROFILE 1.1 General introduction about 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 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.

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1.2 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 dematerialisation 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 • 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. • Corporatization 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 capitalisation from US$ 40 billion in 19901991 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.

1.4 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. Page | 4

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 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 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 Page | 5

1994. The Capital Market (Equities) segment of the NSE commenced operations in November 1994, while operations in the Derivatives segment commenced in June 2000. 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 liberalisation. One aspect of this is financial liberalisation. There is a move towards privatisation of nationalised 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 liberalisation. 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 liberalisation in the less developed countries (LDCs). In the pro-liberalisation 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 crosscountry 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 197693 suggest a strong and positive relationship (see also Levine, 2001). Henry (2000) studied a sample of 11 LDCs and observed that stock market Page | 6

liberalisations lead to private investment boom. Recently, Bekaert et al (2005) analysed data of a large number of countries and observed that the stock market liberalisation ‘leads to an approximate 1 % increase in annual real per capita GDP growth’. There are some economists who are sceptical. 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 ill-done’. 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. In this perspective this study examines the nature of relationship between stock market and growth through capital accumulation in India.

1.4 Growth and Present Status of the industry The ever-growing and fast-maturing 'India Market' is a lucrative business destination for developed countries. With 7-8% of GDP growth, huge analytical, young and English speaking work force the 'pull' for opportunities are luring. The bandwidth of 'India Market' is enviably wide and very deep. 'Markets in India' are well protected by legal guidelines and efficient administrators. With a liberal and proactive government at the center the road ahead for 'Markets of India' is very rosy. 'Market India' has witnessed exponential growth over past one and half decade. Foreseeing sure and substantial returns on investments (ROI) companies are pro- actively listing on the stock market indexes. Government agencies once much hated for red tape and bribes has shed its image. Professionalism is their new mantra. Public Enterprises like IOC, ONGC, BHEL, NTPC, SAIL, MTNL, BPCL, HPCL and GAIL, SBI, LIC, Hindustan Antibiotics Limited, Air India etc. to name a few, are giving Private Indian companies a good run for their money. Private giants like Reliance Industries Page | 7

Limited, Infosys, Tata, Birla Corporation, Jet Airways, Ranbaxy, Biocon, Bajaj Auto, ICICI are breaking their own records every financial years. Indian Equity Market at present is a lucrative field for the investors and investing in Indian stocks are profitable for not only the long and medium-term investors, but also the position traders, short-term swing traders and also very short term intra-day traders. In terms of market capitalization, there are over 2500 companies in the BSE chart list with the Reliance Industries Limited at the top. There are about 22 stock exchanges in India which regulates the market trends of different stocks. Generally the bigger companies are listed with the NSE and the BSE, but there is the OTCEI or the Over the Counter Exchange of India, which lists the medium and small sized companies. There is the SEBI or the Securities and Exchange Board of India which supervises the functioning of the stock markets in India. Thus, the growing financial capital markets of India being encouraged by domestic and foreign investments is becoming a profitable business more with each day. If all the economic parameters are unchanged Indian Equity Market will be conducive for the growth of private equities and this will lead to an overall improvement in the Indian economy. Indian Stock Market including both NSE-National Stock Exchange and the BSEBombay Stock Exchange have certainly taken a tremendous beating in the past few weeks. We are sure most of us here knew that the correction in the trading curve was round the corner which would be healthy, and the markets would bounce back with the help of mutual fund investments & buying of Indian stocks again. However the anticipation went wrong, and the US recession story along with global and Indian commodity prices have added fuel to the global equity market turmoil on a whole.

1.5 Future of the industry The stock market is booming in spite of the low agriculture output. The monsoon is good in an overall sense but still the question remains who takes the credit? Page | 8

The answer is the karma of the people. I appreciate the Indian politicians and the industrialists who being pawns of destiny are doing things positive and productive. India, as a country is running a very good period and the position of planets in the transit are giving wonderful results. Less than one percent of population own stocks and less than 1000 individuals control the market, the majority being the FIIs, the promoters of the company. The credit should go to media for making stock market headlines. In any case if you are long terms players then step-in and buy now and forget for another 10 years. You will make a killing in the Indian markets. Most of the tech companies and the main index will do well but slightly in the lower side of expectations.

1.6 Structure, Processes and Governance of the industry Under this, various processes involved in the industry will be discussed. Other than this, the bodies governing the industry will also be brief upon and and an endeavour will be made to understand the whole structure of the industry.

1.6.1 Dematerialized Trading Indian investor community has undergone see changes in the past few years. India now has a very large investor population and ever increasing volumes of trades. However, this continuous growth in activities has also increased problems associated with stock trading. Most of these problems arise due to the intrinsic nature of paper based trading and settlement, like theft or loss of share certificates. This system requires handling of huge volumes of paper leading to increased costs and inefficiencies. Risk exposure of the investor due to this trading in paper. Some of these risks are: 1.

Delay in transfer of shares.

2.

Possibility of forgery on various documents leading to bad deliveries, legal disputes etc.

3.

Possibility of theft of share certificates in the market. Page | 9

4.

Multiplication or loss of share certificates in transit.

5.

Prevalence of fake certificates in the market.

The physical form of holding and trading in securities also acts as a bottleneck for broking community in capital market operations. The introduction of NSE and BOLT has increased the reach of capital market manifolds. The increase in number of investors participating in the capital market has increased the possibility of being hit by a bad delivery. The cost and time spent by the brokers for rectification of these bad deliveries tends to be higher with the geographical spread of the clients. The increase in trade volumes lead to exponential rise in the back office operations thus limiting the growth potential of the broking members. The inconvenience faced by investors (in areas that are far flung and away from the main metros) in settlement of trade also limits the opportunity for such investors, especially in participating in auction trading. This has made the investors as well as broker wary of Indian capital market. In this scenario, dematerialized trading is certainly a welcome move.

1.6.2 What is Dematerialization? Dematerialization or “Demat” is a process whereby your securities like shares, debentures etc, are converted into electronic data and stored in computers by a Depository. Securities registered in your name are surrendered to depository participant (DP) and these are sent to the respective companies who will cancel them after “Dematerialization” and credit your depository account with the DP. The securities on Dematerialization appear as balances in your depository account. These balances are transferable like physical shares. If at a later date, you wish to have these “Demat” securities converted back into paper certificates; the Depository helps you to do this. Dematerialization is the process of converting the securities held in physical form (certificates) to an equivalent number of securities in electronic form and crediting the same to the investor’s Demat account. Dematerialized securities do not have any certificate numbers or distinctive numbers and are dealt only in quantity i.e.; the securities are fungible. Page | 10

Dematerialization of your holdings is not mandatory. You can hold your secure Demat form or in physical form. You can also keep part of your holdings (in the same script) in Demat form & part in physical form. However, securities specified by SEBI can be delivered only in Demat form in the stock exchanges connected to NSDL and / or CDSL.

The Process 1.

Surrendering

of

certificate

to

Depository

Participants

for

dematerialization. 2.

NSDL is informed by the DP through electronic connectivity.

3.

Original share certificates are submitted to the registrar by the DP.

4.

The request for dematerialization from NSDL to the register.

5.

The registrar credits an equivalent number of shares in the account and informs NSDL.

6.

The NSDL updates its own account and the depository participants are informed.

7.

The depository agent credit it in the account of the investor and the same is informed to the investor.

1.6.3 Rematerialisation Sometimes the investor may like to convert his electronic holdings back into physical share certificate. The process undertaken for this purpose is called rematerialisation. The investor has to make a request to the depository participant for rematerialisation. The depository participant puts forward the request to NSDL after verifying whether the investor in having necessary security balances. NSDL in turn will intimate the registrar who prints the certificate and dispatch the same to the investor. The certificate has a new range of certificate numbers and new folio number. The Process 1.

Investor requests the DP for rematerialisation.

2.

The depository participant informs it to the NSDL. Page | 11

3.

NSDL intimates the Registrar.

4.

The Registrar of the company prints certificates with new number and informs NSDL.

5.

NSDL adjusts its account and passes on the details to the DP.

6.

The certificates are dispatched to the investor.

1.6.4 What is Depository? Depository functions like a securities bank, where the dematerialized physical securities are traded and held in custody. This facilitates faster, risk free and low cost settlement. Depository is much like a bank and performs many activities that are similar to a bank. Following table compares the two. Bank

Depository

Holds funds in accounts

Holds securities in account

Transfers funds between accounts

Transfers securities between accounts

Transfers without handling money

Transfers without handling securities

Safekeeping of money

Safekeeping of securities

1.6.5 NSDL and CDSL At present there are two depositories in India, National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL). NSDL is the first Indian depository; it was inaugurated in November 1996. NSDL was set up with an initial capital of US$28mn, promoted by Industrial Development Bank of India (IDBI), Unit Trust of India (UTI) and National Stock Exchange of India Ltd. (NSEIL). Later, State Bank of India (SBI) also became a shareholder. The other depository is Central Depository Services Limited (CDSL). It is still in the process of linking with the stock exchanges. It has registered around 20 DPs and has signed up with 40 companies. It had received a certificate of commencement of business from SEBI on February 8, 1999. These depositories have appointed different Depository Participants (DP) for them. An investor can open an account with any of the depositories DP. But Page | 12

transfers arising out of trades on the stock exchanges can take place only amongst account-holders with NSDL’s DPs. This is because only NSDL is linked to the stock exchanges (nine of them including the main ones-National Stock Exchange and Bombay Stock Exchange). In order to facilitate transfers between investors having accounts in the two existing depositories in the country the Securities and Exchange Board of India has asked all stock exchanges to link up with the depositories. SEBI has also directed the companies’ registrar and transfer agents to effect change of registered ownership in its books within two hours of receiving a transfer request from the depositories. Once connected to both the depositories the stock exchanges have also to ensure that inter-depository transfers take place smoothly. It also involves the two depositories connecting with each other. The NSDL and CDSL have signed an agreement for inter-depository connectivity.

1.6.5 What is a DP? A depository is like a bank where securities are held in electronic(dematerialized) form. In India, there are two Depositories – National securities Depositories Limited (NSDL) and Central Depository Services Limited (CSDL). Under the Depositories Act, investors can avail of the services of the Depositories through Depository Participants (DP) such as ICICI bank. DP’s are like bank branches wherein shares in physical form need to be deposited for converting the same to electronic (Demat) form. NSDL carries out its activities through various functionaries called business partners who include Depository Participants (DPs), issuing corporate and their Registrars and Transfer Agents, Clearing corporations/Clearing Houses etc. NSDL is electronically linked to each of these business partners via a satellite link through Very Small Aperture Terminals (VSATs). The entire integrated system (including the VSAT linkups and the software at NSDL and each business partner’s end) has been named as the “NEST” [National Electronic Settlement & Transfer] system. The investor interacts with the depository through a depository participant of NSDL. A DP can be a bank, financial institution, a custodian or a broker. Page | 13

Just as one opens a bank account in order to avail of the services of a bank, an investor opens a depository account with a depository participant in order to avail of depository facilities.

1.6.6 How to open a bank account with a DP Opening a depository account is as simple as opening a bank account. You can open a depository account with any DP convenient to you. To open an account you have to: 1. Fill up the account opening form, which is available with the DP. 2. Sign the DP-client agreement, which defines the rights and duties of the DP and the person wishing to open the account. 3. Receive your client account number (client ID). 4. This client ID along with your DP ID gives you a unique identification in theDepository system There is no restriction on the number of depository accounts a person can open. However, if your existing physical shares are in joint names, you have to open the account in the same order of names before you submit your share certificates for demat. A sole holder of the share certificates cannot add more names as joint holders at the time of dematerializing his share certificates. However, if the investor wants to transfer the ownership from his individual name to a joint name, he should first open an account as the sole holder (account A) and dematerialize the share certificates. He should then open another depository account (account B) in which he is the first holder and the other person is the second holder and make an off market transfer of the shares from the account A to account B. The investor will incur a charge on this transaction. Alternatively, the certificates can be transferred to the joint ownership and then sent for Dematerialization. Right now, as per the Companies Act, there is no nomination facility for shares (whether in the physical or in the electronic form). The nomination facility for shares can be availed of only when the relevant provisions in the Companies Act are amended. NSDL captures the details of the nominee when the account is Page | 14

opened so as to offer the facility as soon as the relevant amendments are effected in the Law. A client can choose to open more than one account with same DP. In addition to this, he has a choice of opening accounts with more than one DP. However a broker can open just one Clearing Member account per card/ stock exchange for clearing purpose, but he can still open multiple beneficiary accounts Beneficiary is the personal account wherein brokers can keep their personal holdings. A broker has only one Clearing Member-pool-account. One Clearing Member pool account is opened per card/ stock exchange to settle trades in the dematerialized form. The Clearing Corporation/ House just deals with one designated account for pay-in and payout and the broker's clients know to which account they have to deliver and receive securities from. A clearing member cannot hold his personal holdings in his clearing member account. A broker may deal in the depository system as a clearing member only through a special account, known as the Clearing Member account. This account can be used only for clearing purposes and not for holding his own securities in it. As this is a transitory account, the securities held in this account are not eligible for corporate actions. Therefore, the broker will have to open a separate beneficiary owner account to hold his investments. There is no compulsion for the client to open his account with the same DP as that of his broker. Even if he has an account with another DP, he can carry out normal business with his broker. There is no loss in operational efficiency. But it is possible that opening account with his broker's DP may work out to his advantage, as some DPs may offer special charge structure if the broker and his clients are dealing through him.

1.6.7 Trading Trading in dematerialized securities is quite similar to trading in physical securities. The major difference is that at the time of settlement, instead of delivery/ receipt of securities in the physical form, it is done through account transfer.

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An investor cannot trade in dematerialized securities through his DP. Trading at the stock exchanges can be done only through a registered trading member (broker) of the stock exchange irrespective of whether the securities are held in physical or dematerialized form. DPs role will only be to facilitate settlement of trade in the dematerialized form, by transferring securities from and to the account of the investor, for selling and buying respectively. Trading in dematerialized securities is presently available at NSE, BSE, CSE, DSE,LSE, MSE, ISE & OTCEI. These exchanges have a segment exclusive for trading in dematerialized securities and a segment where trades could be settled either in the physical or in the dematerialized form as per the choice of the delivering client. In unified (erstwhile - physical) segment securities can be delivered either in the physical form or in the dematerialized form at the choice of the delivering party. However, securities that have to be mandatorily settled in demat form (both by institutional investors & all category of investors) cannot be settled in physical form. Also for securities that have to be mandatorily settled in demat form by all categories of investors the concept of market lot is eliminated i.e. the tradable lot is one share from the date they become compulsory.

1.6.8 Settlement The settlement of trades in the stock exchanges is undertaken by the clearing corporation (CC)/ clearing house (CH) of the corresponding stock exchanges. While the settlement of dematerialized securities is effected through depository, the funds settlement is effected through the clearing banks. The clearing members directly with the CC/ CH settle the physical securities. Exclusive Demat segment follows rolling settlement (T+5) cycle and the unified (erstwhile - physical) segment follows account period settlement cycle. In case of rolling settlement cycle, the account period is reduced to one day. •

In case of settlement of trades done in exclusive Demat segments, the pay-in and pay out of funds and securities are effected on the same day afternoon and evening (same day) thus reducing the blockage of funds and limiting exposure to the clearing corporation. Page | 16

•

Settlement of funds is effected through the clearing banks and depository plays no role in this.

•

Settlement of securities is effected through NSDL depository system.

•

Clearing and settlement of the regular market trades is affected through the clearing members of the clearinghouses of respective stock exchanges. All trading members of stock exchanges are clearing members of clearing houses. In addition, for settlement of institutional trades, custodians are also allowed to act as clearing members.

•

Clearing members of clearinghouse, dealing in dematerialized securities are expected to open a clearing account with any DP for the purpose of settling trades in dematerialized securities. As, in the mixed (unified) segment, there is a possibility for all clearing members to receive dematerialized securities, they are expected to open clearing accounts.

•

If there is any short delivery at the time of pay-in of securities, these short positions are auctioned in the Demat segment as done in the Unified (erstwhile-physical) segment.

For trades executed on Wednesday (TD 1): •

Final/ Net obligation statement download - Friday (T+2nd working day)

•

Settlement day (SD 1) i.e. pay in and pay out of funds and securities - next Wednesday (T+5th working day)

•

Auction trade day (ATD 1) - next Thursday (T+6th working day)

•

Auction settlement day (ASD 1) - Monday (2nd working day from auction trade day i.e. T+8th working day)

Similarly, for trades executed on Thursday (TD 2): •

Final/ Net obligation statement download - Monday (T+2nd working day)

•

Settlement day (SD 2) - next Thursday (T+5th working day)

•

Auction trade day (ATD 2) - next Friday (T+6th working day)

•

Auction settlement day (ASD 2) - Tuesday (2nd working day from auction trade day i.e. T+8th working day) Page | 17

1.7 KEY PLAYERS IN THE INDUSTRY There are huge number of players existing in the market. Some of the main players have been briefed below

1.7.1 Religare

History of Religare Securities Ltd.Religare Securities Limited, a Ranbaxy Promoter Group Company, was founded by late Dr. Parvinder Singh (CMD Ranbaxy Laboratories Limited), with the vision of providing integrated financial care driven by the relationship of trust & confidence. It is a diversified financial services group with a pan-India presence and presence in multiple international locations, Religare Enterprises Limited ("REL") offers a comprehensive suite of customer-focused financial products and services targeted at retail investors, high net worth individuals and corporate and institutional clients. REL, along with its joint venture partners, offers a range of products and services in India, including asset management, life insurance, wealth management, equity and commodity broking, investment banking, lending services, private equity and venture capital. REL, through its subsidiaries, has launched India's first holistic arts initiative with a gallery - as well as the first SEBI approved film fund, which is an initiative towards innovation and spotting new opportunities for creation and maximization of wealth for investors. Presently, the company is headed by Mr. Sunil Godhwani who is CEO and managing director of the company. It has its registered and corporate office in New Delhi and it operates from seven domestic regional offices, 43 sub-regional offices, and has a presence in 498 cities and towns controlling 1,837 business locations all over India with a workforce of over 9500 people. Page | 18

Pursuant to expansion of REL's business, the company has grown from largely an equity trading company into a diversified financial services company. With the addition of RHH the REL group now operates out of multiple global locations, other than India, (the UK, the USA, Brazil, South Africa, Dubai and Singapore). Among the leading service provider in Capital Market In a span of less than five years of its retail operations, RSL recorded a healthy growth rate both in business volumes and profitability. In recent times, the market share has increased from 3.46% in Q4 FY08 to 3.86% Q1 FY09. Major portion of earning were contributed by broking related activities and for the first quarter of FY09, it accounted for 40% of revenues. Quarterly Total Revenue recorded at Rs. 2,887.49 mn, EBIDTA at Rs. 1,184.17 mn and Profit after tax at Rs. 36.68 mn

1.7.2 Angel Broking

Angel Broking's tryst with excellence in customer relations began in 1987. Today, Angel has emerged as one of the most respected Stock-Broking and wealth management companies in India. With its unique retail-focused stock trading business model, it is committed to providing ‘Real Value for Money’ to all its clients. Angel broking ltd. already has a good presence in India and offers world-class financial planning and a wide range of wealth management products to mass affluent and affluent customer segments. Angel Broking limited provides a complete range of financial products and services that include equity broking (internet based online trading as well as offline trading), financial planning, insurance, investment products, equity research, demat account and more. It is one of the leading and professionally managed stock broking firm involved in quality services and research. The membership of the company with The Stock Exchange Mumbai was originally in the name of Mukesh R. Gandhi, which was eventually turned into a corporate membership in the name of Angel Broking Limited. Angel Broking Limited is managed by Mr. Dinesh Thakkar, founder Page | 19

chairman and managing director and he is well supported by Mr. Mukesh Gandhi, a fifteen years veteran in the market. The group is well supported by a professional and qualified research team and efficient operations and back office team, which comprises of highly dedicated and qualified individuals. It has an in-house, state of art research department. Angel Broking Limited is primarily into retail stock broking, with a customer base of retail investors, which has been increasing at a CAGR of 100% every year. The company has huge network sub-brokers in Mumbai and other places outside Mumbai, registered with SEBI, who act as Chanel partners for the company. The company presently has total staff strength of around 150 employees who are spread accordingly across the head office and all the branches. It has also empowered its physical presence throughout India through various strategies which it has been adopting efficiently and effectively over a period of time, like opening up of branches at various places, tie-ups with various agencies and sales agents, buy-outs of smaller regional outfits and appointment of subbrokers and franchisees. Moreover, Angel has been tapping and including high net worth and self-employed individuals it its vast array of clients. Angel has always strived in the direction of delivering ultimate client satisfaction and developing stronger bonds with its customers and chose partners. Angel has a vision to introduce new and innovative products and services regularly. Moreover, Angel has been one among the pioneers to introduce the latest technological innovations and integrate it efficiently within its business.

1.7.3 Karvy

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Karvy Consultants Limited was established in 1982 at Hydrabad. It was established by a group of Hydrabad-based practicing Chartered Accountants. At initial stage it was very small in size. It was started with a capital of Rs. 1,50,000.

In starting it was only offering auditing and taxation services. Later, it acts into the Registrar and Share transfer activities and subsequently into financial services and other services like Financial Product Distribution, Investment Advisory Services, Demat Services, Corporate Finance, Insurance etc.

All along, Karvy’s strong work ethics and professional background leveraged with Information Technology enabled it to deliver quality to the individual. A decade of commitment, professional integrity and vision helped. Karvy achieving a leadership position in its field when it handled largest number of corporate and retail that proved to be a sound business synergy.

Today, Karvy has access to millions of Indian shareholders, besides companies, banks, financial institutions and regulatory agencies. Over the past one and half decades, Karvy has evolved as a veritable link between industry, finance and people. An ISO 9002 Company, Karvy’s commitment to quality and retail reach has made it an Integrated Financial Services Company.

Karvy ranks among the top player in almost all the fields itoperates. Karvy Computershare Limited is India’s largest Registrar and Transfer Agent with a client base of nearly 500 blue chip corporates, managing over 2 crore accounts. Karvy Stock Brokers Limited, member of National Stock Exchange of India and the Bombay Stock Exchange, ranks among the top 5 stock brokers in India. With over 6,00,000 active accounts, it ranks among the top 5 Depositary Participant in India, registered with NSDL and CDSL. Karvy Comtrade, Member of NCDEX and MCX ranks among the top 3 commodity brokers in the country. Karvy Insurance Brokers is registered as a Broker with IRDA and ranks among the top 5 insurance agent in the country. Registered with AMFI as a corporate Agent, Page | 21

Karvy is also among the top Mutual Fund mobilizer with over Rs. 5,000 crores under management. Karvy Realty Services, which started in 2006, has quickly established itself as a broker who adds value, in the realty sector. Karvy Global offers niche off shoring services to clients the US.

Karvy has 575 offices over 375 locations across India and overseas at Dubai and New York. Over 9,000 highly qualified people staff The company adds 5 new offices every month to the company’s ever growing national network in every nook and corner of the country. The company service over 16 million individual investors, 180 corporate and handle corporate disbursements that exceed Rs.2500 Crores.

1.7.4 Motilal Oswal

Motilal Oswal Securities Ltd. (MOSL) was founded in 1987 as a small subbroking unit, with just two people running the show. Focus on customer-firstattitude, ethical and transparent business practices, respect for professionalism, research-based value investing and implementation of cutting-edge technology has enabled us to blossom into an almost 2000 member team. Page | 22

Today it is a well diversified financial services firm offering a range of financial products and services such as Wealth Management, Broking & Distribution, Commodity Broking, Portfolio Management Services, Institutional Equities, Private Equity, Investment Banking Services and Principal Strategies.

It has a diversified client base that includes retail customers (including High Net worth Individuals), mutual funds, foreign institutional investors, financial institutions and corporate clients. We are headquartered in Mumbai and as of June 30th, 2009, had a network spread over 555 cities and towns comprising 1,308 Business Locations operated by our Business Partners and us. As at June 30th, 2009, we had 5,57,373 registered customers.

Motilal Oswal Securities Ltd. enters 'Limca Book of Records' for creating India's largest dealing room in Mumbai. It was 'Rated No.1 – Best recommendations Mid & Small Caps' and won awards in 3 out of 4 categories at the Starmine India Broker Rankings 2009 from Thomson Reuters

1.7.5 Kotak Securities

Kotak Securities Limited, a 100% subsidiary of Kotak Mahindra Bank, is the stock broking and distribution arm of the Kotak Mahindra Group. Kotak Mahindra is one of India's leading financial institutions, offering complete financial solutions that encompass every sphere of life. From commercial banking, to stock broking, to Page | 23

mutual funds, to life insurance, to investment banking, the group caters to the financial needs of individuals and corporate. Kotak also offers stock broking through the branch and Internet, Investments in IPO, Mutual funds and Portfolio management service.

Kotak Mahindra is one of India's leading financial conglomerates, offering complete financial solutions that encompass every sphere of life. The group has a net worth of over Rs. 5,609 crore, employs around 17,100 people in its various businesses

and

has

a

distribution

network

of

branches,

franchisees,

representative offices and satellite offices across 344 cities and towns in India and offices in New York, London, Dubai, Mauritius and Singapore. The Group services around 3.6 million customer accounts. Kotak Securities has 195 branches servicing more than 2, 20,000 customers and coverage of 231 Cities. Kotaksecurities.com, the online division of Kotak Securities Limited offers Internet Broking services and also online IPO and Mutual Fund Investments.

1.7.6 India Infoline

India Infoline Ltd is listed on both the leading stock exchanges in India, viz. the Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE). The India Infoline group, comprising the holding company, India Infoline Ltd and its Page | 24

subsidiaries, straddles the entire financial services space with offerings ranging from Equity research, Equities and derivatives trading, Commodities trading, Portfolio Management Services, Mutual Funds, Life Insurance, Fixed deposits and other small savings instruments to loan products and Investment banking. India Infoline also owns and manages the websites.

India Infoline Limited is listed on both the leading stock exchanges in India, viz. the Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE) and is also a member of both the exchanges. It is engaged in the businesses of Equities broking, Wealth Advisory Services and Portfolio Management Services. It offers broking services in the Cash and Derivatives segments of the NSE as well as the Cash segment of the BSE. It is registered with NSDL as well as CDSL as a depository participant, providing a one-stop solution for clients trading in the equities market. It has recently launched its Investment banking and Institutional Broking business

Chapter 2 - COMPANY PROFILE 2.1 Introduction Reliance Money is promoted by Reliance Capital; one of India's leading and fastest growing private sector financial services companies, ranking among the Page | 25

top 3 private sector financial services and banking companies, in terms of net worth. Reliance Money is a part of the Reliance Anil Dhirubhai Ambani Group.

It is a one-stop-shop, providing end-to-end financial solutions (including mobile and web-based services). It has the largest non-banking distribution channel with over 10,000 outlets and 20,000 touchpoints spread across 5,165 cities/ towns; catering to the diverse needs of over 3 million existing customers. Reliance Money is a comprehensive electronic transaction platform offering a wide range of asset classes. Reliance Money endeavors to change the way investors transact in financial markets and avails financial services. It provides customers with access to Equity, Equity and Commodity Derivatives, Offshore Investments, Portfolio Management Services, Wealth Management Services,

Investment Banking, Mutual Funds, IPOs, Life and General Insurance products and Gold Coins. Customers can also avail Loans, Credit Card, Money Transfer and Money Changing services. Reliance Capital Ltd. has also interests in asset management, life and general insurance, private equity and proprietary investments, stock broking and other financial services.

In addition to the home-grown portfolio of products and services that Reliance Money has to offer, Reliance Money also distributes a variety of third party financial products. It also assists millions of investors in creating customized individual portfolios based on their diverse investment needs and risk profiles

Reliance Money is the largest broker and distributor of financial products in India with the largest distribution network and almost over 3,174 employees. Money has increased its market share among private financial companies to nearly Convenient & effective – Anytime & anywhere financial transaction

Page | 26

2.2 Vision To build a global enterprise for all our stakeholders, and A great future for our country, To give millions of young Indians the power to shape their destiny, The means to realize their full potential…

2.3 Mission To create and nurture a world-class, high performance environment aimed at delighting our customers by providing endless financial products in all part of the country.

2.4 Success sutras of Reliance Money The success story of the company is driven by 8 success sutras adopted by it namely: 1. Trust 2. Integrity 3. Dedication 4. Commitment 5. Enterprise 6. Hard work and Team play 7. Learning and Innovation, 8. Empathy and Humility. These are the values that bind success with Reliance Money

2.5 Achievements 2.5.1 List of recent achievements Page | 27

•

In two successive joint surveys by The Economic Times’ Brand Equity and ACNielsen, Reliance was recognized as

India’s Most Trusted Mutual

Fund. •

The company also walked away with seven other scheme prizes – five of them being outright winners – in the Gulf 2007 Lipper Awards. These included the Fund House of the Year by Lipper GCC as well as ICRA Online and the Most Improved Fund House by Asia Asset Management.

•

It also received the NDTV Business Leadership Award 2007 in the mutual fund category and runners’ up recognition as the Best Fund House in the Outlook Money-NDTV Profit Awards.

•

In addition, the company received the coveted CNBC Web18 Genius of the Web distinction for the Best Mutual Fund Website in the country. RCAM was awarded the India Onshore Fund House 2008 instituted by the Asian Investor magazine.

•

The company also won the India Equities award in the 5-yearPerformance category.

2.5.2 Other achievements • Reliance Money generated revenues of Rs. 35 billion (US$ 767 million) for the year March 31, 2009 as against Rs. 24 billion of the corresponding previous period, an increase of 48%. It also achieved a net profit of Rs. 368 million (US$ 8 million) for the same period, as against a net profit of Rs. 1 million for the corresponding previous period

• Reliance Money is the one of the leading brokerage and distributor of financial products in India with more than 3 million customers Page | 28

• Reliance Money has tied up with global partners like Reuters, Vasco, Valcambi, Webaroo, optionsXpress Holdings, Goldride Securities, World Gold Council, Wincor Nixdorf and DBS Vickers to facilitate better access to wider world class choices to its customers

• It is amongst the leading Mutual fund distributors of the country distributing products of 20 AMCs. It is the the largest private sector partner for Western Union Money Transfer in India

• To further improve its position in the money changing and money transfer business, Reliance Money has acquired a significant share holding in Wall Street Finance Ltd, a leading provider of money changing and money transfer services in the Country

• Reliance Money has tied up with Kuoni India and plans to retail its forex products/services through the national network of over 70 Kuoni outlets

• Reliance Money has tied up with India Post and World Gold Council to sell gold coins through the post office network across the country

• Reliance Money has obtained Category I Merchant Banking License from the Securities and Exchange Board of India. This new license allows Reliance Money to provide a wide range of investment banking services such as Issue Management, Underwriting, Private Equity Advisory/ Syndication and Corporate Finance services in India

• Reliance Money is taking its first steps into the Commodities Exchange business and is in the process of acquiring a 15 per cent stake in Hong Kong Mercantile Exchange (HKMEx). With this holding, Reliance Money becomes the Page | 29

second-largest shareholder in the commodity exchange and will have a board membership. Reliance Money is the first Indian firm to acquire a stake in an international exchange

• It has also obtained approval from the Ministry of Consumer Affairs for acquiring 10% stake in the National Multi-Commodity Exchange of India Ltd. (NMCE).

Page | 30

Basic structure of Reliance ADA group

Chart 2.1

Page | 31

Organizational Structure

Chart 2.2

Working At Branch level

Reliance Money Chandigarh (Branch office)

Chart 2.3

2.6 Staff at Branch Level Page | 32

At Reliance Money Chandigarh, the following hierarchy exists:•

Three Centre managers.

•

Eight to ten Business Development Executives under each Centre manager.

•

Business associates under each Centre Manager their number depending upon the area allotted to each CM.

•

Remisars under each centre manager.

•

Team leader and PFC”s under him for life insurance.

•

One Customer Support Executive and One Senior Finance executive.

2.6.1 Centre Manager The Centre manager is the Heart of the office who acts as a connection between Head office (Mumbai), National head, Zonal head, Regional head, Area head, Cluster head, The Clients, Remisars, Business associates and the Business development executives. The Centre manager is responsible for the following functions; 1. Organizing all the BDE’s, Business Associates and Remisars under one banner. 2. Making sure that the BDE’s, Business Associates and Remisars are carrying out their functions well i.e. expanding the business in form of selling the Share trading A/c’s , mutual funds, selling general along with life insurance policies . 3. Planning strategies for increasing the business (i.e. installation of canopies at the right place, appropriate advertising in different business Expo’s or corporate meets. Etc.) Page | 33

4. Interviewing and Selecting Business development executive for the organization. 5. Identifying the potential agents in the market and making them the business associate or remisar of Reliance Money for good business prospects. 6. Assisting the new BDE’s or remisars in handling the clients. 7. Training the new BDE’s and the remisars about the product and how to approach the clients. 8. Reporting the regional head on the daily basis about the daily business performed.

2.7 Product Offering Reliance Money currently deals in the following financial products:

2.7.1 Trading Portal Online trading refers to buying and selling of the shares/stocks/contracts/bonds with the use of internet. In this shares are not issued in physical form rather they are transferred in the dematerialized form in the Demat account directly

. Demat account There are many broking houses doing business in India and they charge a brokerage on every transaction made online or offline. (Buying and Selling are treated as separate transaction). Reliance Money’s advantage over others is that Page | 34

it’s charging the lowest brokerage in the market which is just 1 paisa on every executive trade irrespective of the volume traded. Reliance Money, the brokerage and distribution arm of Reliance ADA Group, aims to tap investors in the smaller towns and cities through a flat fee structure. The new wonder is Reliance Money's pre-paid card for stock market brokerage. Reliance Money, the financial services division of Anil Dhirubhai Ambani Grouppromoted Reliance Capital, is bringing to the market pre-paid cards in denominations of Rs500, Rs1,000, Rs. 2500, Rs. 5,000 and Rs.10,000. Target low level of retail penetration in India - less than 3 per cent of household financing savings makes it into equity markets.

Reliance Money Demat Account Holders can trade in

• Equities Equity investment generally refers to the buying and holding of shares of stock on a stock market by individuals and funds in anticipation of income from dividends and capital gain as the value of the stock rises. It also sometimes refers to the acquisition of equity (ownership) participation in a private (unlisted) company or a startup (a company being created or newly created).

• Commodities A single platform to trade on both the major commodity exchanges i.e. NCDEX and MCX. In addition In-house research desk shall provide research reports on all major commodities which shall enable in getting views for trading and diversify client’s holdings. Trade Execution assistance is also provided to clients.

• Offshore Investments Offshore investment is the keeping of money in a jurisdiction other than one's country of residence. Offshore jurisdictions are a commonly accepted solution to reducing excessive tax burdens levied in most countries to both large and small Page | 35

scale investors alike. The advantage to this is that such operations are both legal and less costly than the solutions offered in the investor's country - or "onshore".

Offshore solutions are accessible to anyone who can meet the minimum investment amount or pay the obligatory fees required to open such an entity. Another reason why 'offshore' investment is superior to 'onshore' investment is because it is less regulated, and the behavior of the offshore investment provider, whether he be a banker, fund manager, trustee or stock-broker, is freer than it could be in a more regulated environment. Reliance Money has already tied-up with CMC Capital Plc UK to offer offshore Investment products to Indian consumers as per guidelines.

How reliance money scored over others?

1. Two way authentication: Reliance offers its customers with a token (an electronic gadget) that generates a password, which are a third level of security in addition to the customer log in and a password provided. The password generated by the token is valid only for a period of 20 seconds. If the web page expires, for the fresh login, a new password generated by the token has to be keyed in by the customer. 2. Lowest brokerage: Reliance offers the lowest brokerage of 1 paisa which

is very less with respect to the other DPs in the market. 3. User friendly software: The portal offered is very easy to understand and

use. 4. Better research and news: Reliance offers news from the DOW JONES

and REUTERS. Seeking to bring share trading closer to consumers just like ATMs, Reliance Capital's stock brokerage arm Reliance Money launched Internet trading services through web-enabled retail kiosk. Page | 36

Reliance Money Provide the kiosks (similar to ATM’s) Facilities, to their customer through which the customers can trade on available kiosks at the particular Branch of Reliance Money. The company are going to open these kiosks in the market as the ATM’s of the Banks

Reliance Money share trading account Reliance Money unlike other brokering houses has introduced a new prepaid system of brokerage for the share trading in which it provides the lowest form of brokerage charged from an investor.

Trading Plans Offered By Reliance Money

Target

Access

Validity (whichever is

Turnover Limit

Investor

Fee (Rs.)

earlier) Time

Non-delivery

or

Turnover

Delivery Page | 37

Small

500

Large

1000

Large

2500

Large

5000

Large

100000

Validity 12 months 2 months 6 months 12 months 12 months

Validity

Turnover

Turnover

or

Rs. 1 lac

Rs. 2 Lac

or

Rs. 1 cr

Rs. 90 lac

Rs. 10 Lac

or

Rs. 2 Cr

Rs. 2.7 Cr

Rs. 30 Lac

or

Rs. 7 Cr

Rs. 6.3 Cr

Rs. 70 lac

or

Rs. 20 Cr

Rs. 18 Cr

Rs. 2 Cr

Table 2.1

Following are also the main features of this share trading account provided by Reliance money:-

1. Flexibility to accessreliance money services in multiple ways through Internet, Transaction kiosks, Call and transact or seek assistance through Business partners.

2. This is a safeguarded account as reliance money provides an electronic token that flashes a unique security number in every thirty two seconds.This number works as a third level password (including the login ID and Password) keeping the account sage from any unauthorized access.

Page | 38

3. Flexibility to transact in Equity, Equity and commodity Derivatives, Offshore investments, mutual funds, IPO’s, Life insurance and General Insurance either through online or through channel partners.

4. With the help of this A/c investors can access to their banking, trading and Demat accounts without the hassle of writing cheques. Reliance money had tied up with UTI, HDFC and IDBI bank to link this share trading account for the investors.

These were some of the features of ‘Reliance money’ share trading account. A customer can do the share trading through trading kiosks installed by Reliance Money, through net, through business associates of R-Money.

2.7.2 Mutual funds

A mutual fund represents a vehicle for collective investment. When you participate in a scheme of a mutual fund, you become a part-owner of the investments held under that scheme. The most important characteristic of a mutual fund is that the contributors and the beneficiaries of the fund are the same class of people, namely the investors. The term “MUTUAL” means that investors contribute to the pool, and also benefit from the pool. The money held in the trust is divided into shares of equal value called “UNITS”. Investors become “unit-holders” and are allocated units based on the amount of their investment. The income earned through these investments and the capital

Page | 39

appreciation realized is shared by its unit holders in proportion to the number of units owned by them.

Investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. Mutual fund issues units to the investors in accordance with quantum of money invested by them. Investors of mutual funds are known as unit holders. Thus a mutual fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.

2.7.2.1 Equity/Growth Schemes The aim of growth funds is to provide capital appreciation over the medium to long- term. Such schemes normally invest a major part of their corpus in equities. Such funds have comparatively high risks. These schemes provide different options to the investors like dividend option, capital appreciation, etc. and the investors may choose an option depending on their preferences. The investors must indicate the option in the application form. The mutual funds also allow the

Page | 40

investors to change the options at a later date. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time. Some of the Equity/Growth schemes made available by Reliance Money are:

•

Reliance Growth Fund

•

Reliance Vision Fund

•

Reliance NRI Equity Fund

•

Reliance Equity Opportunities Fund

•

Reliance Index Fund

•

Reliance Tax Saver Fund

•

Reliance Equity Fund

2.7.2.2 Debt/Income Schemes The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures, Government securities and money market instruments. Such funds are less risky compared to equity schemes. These funds are not affected because of fluctuations in equity markets. However, opportunities of capital appreciation are also limited in such funds. The NAVs of such funds are affected because of change in interest rates in the country. If the interest rates fall, NAVs of such funds are likely to increase in the short run and vice versa. However, long term investors may not bother about these fluctuations.

Some of the Debt/Income schemes made available by Reliance Money are: •

Reliance Income Fund

•

Reliance Medium Term Fund

•

Reliance Short Term Fund

•

Reliance Liquid Fund Page | 41

•

Reliance Monthly Income Plan

•

Reliance Gilt Securities Fund

•

Reliance Floating Rate Fund

•

Reliance NRI Income Fund

2.7.2.3 Sector Specific Schemes These are the funds/schemes which invest in the securities of only those sectors or industries as specified in the offer documents. e.g. Pharmaceuticals, Software, Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the performance of the respective sectors/industries. While these funds may give higher returns, they are more risky compared to diversified funds. Investors need to keep a watch on the performance of those sectors/industries and must exit at an appropriate time. They may also seek advice of an expert. Some of the sector specific schemes made available by Reliance Money are: •

Reliance Banking Fund

•

Reliance Pharma Fund

•

Reliance Media and Entertainment Fund

•

Reliance Diversified Power Sector Fund

2.7.3 Porfolio management services Types of portfolio management sevices offered are:

Page | 42

2.7.3.1 Growth Fund A Moderate fund with growth approach and investments predominantly in largecap stocks. The objective is to ensure liquidity and lower impact cost leading to the construction of a relatively more stable portfolio. The portfolio management process will also focus on using cash as an investment tool and derivatives for protection of portfolio. Investment Objective – Generate capital appreciation in medium to long term through investments in equities and equity related instruments comprising of predominantly large cap companies. This scheme will be benchmarked to the Nifty 50 stocks.

Parameters Driving Investment Decision – The portfolio strives at all times to achieve an overall 70% allocation to large cap companies. Again the portfolio will limit the exposure to any sector to be less than 25% of the portfolio size and to any scrip to be less than 10%.

2.7.3.2 Value Fund A highly flexible investment option, which offers a diversified investment portfolio across both large-cap and mid-cap stocks. This option follows a moderately aggressive approach to portfolio construction. The portfolio management process will also focus on using cash as an investment tool and derivatives for protection of portfolio.

Investment Objective – The objective of this scheme is wealth creation by delivering superior returns over long term (18 months) through investments in value & growth stocks. This will be benchmarked with BSE 200. Page | 43

Reliance Money has launched portfolio management services (PMS), where managers will create a basket of stocks for each client, based on individual needs, for amounts as low as Rs5 lakh.

Such services are popular in India but almost all the offerings of large finance companies target high networth individuals (HNIs) with the ability to invest Rs1 crore and above.

Reliance Money, which helps clients invest in equities, derivatives and commodities, typically offers such services for amounts between Rs5 lakh and Rs75 lakh; Rs5 lakh is the smallest amount the industry’s regulator mandates for PMS. Reliance Money would not take a fee unless the portfolio earns a return higher than 8%. If the client earns a return of 8-20%, the fee charged will be 10% of the absolute returns and if the client earns more than 20%, the fee will be 20%.

The company offer a large-cap investment portfolio (where the stocks invested in will be those of large-cap companies), blue chip portfolio (blue chip companies) and an infrastructure portfolio (companies in the infrastructure sector)

2.7.4 Gold Coins Reliance money has Introduced “Pure Swiss Gold Coins”, a welcome addition to Reliance Money’s large offering of Financial Investments. Gold not only acts as a secure investment, but is an efficient store of value offering high security & credibility. An instrument of long term investment, Gold acts as a hedge against

inflation besides providing high liquidity. Most Indians share an emotional bond with Gold nearly Bordering with God. Page | 44

But in a highly disorganized Gold market, the purity aspect and thereby the value for one’s Money during the purchase of Gold has always been a question mark. For the customer, the lack of access to a branded, affordable, reliable Gold coin has always been a matter of concern.

Reliance aims to bridge this gap by giving 99.99% pure, 24 carat, Swiss Gold coins through its distribution network. Available in 0.5g, 1g, 5gm and 8gm denominations, these 24 carat, 99.99% pure, internationally certified Gold coins cater to a large segment of the society in both the retail and the corporate world. Available in tamper proof packaging, the overall look and feel of these coins is far superior & they possess a great finish. These Gold coins are Ideal for customers or corporates to be used as a gifting idea, for retail/agent contests, as employee rewards etc. Retail customers buy these coins just for the pleasure of owning it or as an investment idea.

2.7.5 LIFE INSURANCE

"Insurance is a contract between two parties whereby one party called insurer undertakes in exchange for a fixed sum called premiums, to pay the other party called insured a fixed amount of money on the happening of a certain event."

Life Insurance policies have been categorized in the following manner: 1. Solution for individuals 2. solution for groups Under the head of solution for individual there are four bifurcations

Page | 45

PROTECTION PLANS 1.

Term Plan

7.

Special Endowment Plan

2.

Simple Term Plan

8.

Connect To Life Plan

3.

Special Term Plan

9.

Whole Life Plan

4.

Credit Guardian Plan

10. Wealth + Health Plan

5.

Special Credit Guardian Plan

11.

6.

Endowment Plan

12. Special Cash Flow Plan

Cash Flow Plan

RETIREMENT PLANS

1.

Total Investment Plan II – Pension

4.

Wealth + Health Plan

2.

Super Golden Years Plan

5.

Automatic Investment Plan

3.

Super Golden Years Plan- Plus

6.

Money Guarantee Plan

SAVING AND INVESTMENT PLAN 1.

Super Invest Assure Plus Plan

9.

Endowment Plan

2.

Super Invest Assure Plan Total Investment Plan I –

10.

Special Endowment Plan

11.

Whole Life Plan

12.

Super Golden Years Plan - Value

3. 4.

insurance Wealth + Health Plan

5.

Super Automatic Investment Plan

13.

Super Golden Years Plan - Plus

6.

Money Guarantee Plan

14.

Connect To Life Plan

7.

Cash Flow Plan

15.

Imaan Investment Plan

8.

Super Market Return Plan

16.

Saving Linked Insurance Plan Page | 46

CHILD PLANS 1.

Child Plan

3.

Wealth + Health plan

2.

Secure Child Plan

4.

Super InvestAssure Plan

Under the Head of Solution for Groups, there are three bifurcations: 1. Group Superannuation EMPLOYER LIABILTY SOLUTION

EMPLOYEE VOLUNTARY BENEFITS EMPLOYEE PROTECTION SOLUTION

2. Group Gratuity 3. Group Leave Encashment Plan

1. Group Saving Linked insurance

1. Group Credit Shield Plan 2. Group Term Assurance Plan 3. Group Term Insurance Plan – EDLI

Other than above mentioned plans, Reliance has tie-up with many insurance companies like ING Vysya, Kotak , ICICI prudential, HDFC standard life insurance etc.

Reliance Money also offers life insurance policies of all the above mentioned companies other than its own life insurance products.

Page | 47

2.7.6. GENERAL INSURANCE It has also been categorized in the following manner:

2.7.6.1 For individuals

HEALTH INSURANCE

1. Health Wise Policy

2. Individual Mediclaim Insurance Policy

1. Two Wheeler Insurance Policy. MOTOR INSURANCE

2. Private Car Insurance Policy 1. Home Protect Policy

HOME INSURANCE TRAVEL INSURANCE

2. Householder’s Package Policy

1. Travel Care Insurance Policy For Individuals And Families 2. Travel Care Insurance Policy For Students 3. Travel Care Insurance Policy- Asia Page | 48

4. Pravasi Bhartiya Bima Yojana Insurance Policy 1.Individual Personal Accident Policy

ACCIDENT COVER INSURANCE

2.7.6.2 For Corporates 1. Standard Fire And Special Perils Policy FIRE INSURANCE

2. Consequential Loss Policy 3. Industrial All Risks Policy 1. Erection All Risks/ Stormage-cum-Erection insurance Policy 2. Contractor’s All Risks insurance Policy

ENGINEERING INSURANCE

3. Contractor’s Plant and Machinery Policy 4. Machinery Loss Of Profits Insurance Policy 5. Boiler and Pressure Plant Insurance Policy 6. Electronic Equipment Insurance Policy 7. Machinery Insurance Policy

MARINE

1.Marine Cargo Insurance Policy

INSURANCE

Page | 49

1. Directors and Official Liability Policy 2. Workmen’s Compensation Insurance Policy LIABILITY INSURANCE

3. Professional Indemnity Insurance Policy 4. Product Liability Insurance Policy 5. Public Liabilty Insurance Policy 6. Public Liability(Act) Insurance Policy

1. Office Package Policy PACKAGES

2. Commercial Care Insurance Policy

INSURANCE

3. Industry Care Insurance Policy 4. Shopkeeper’s Package Policy

2.7.6.3 Other miscellaneous plans 1. Money Insurance Policy 2. Burgulary and House Breaking Insurance Policy 3. Fidelty Guarantee Insurance Policy

The above mentioned products belong to reliance general insurance but reliance money is also engaged in selling general insurance policies of other companies like Chola mandalan, IFFCO TOKYO etc.

Page | 50

2.7.7 Consumer finance

2.7.7.1 Personal loans Easy and hassle-free personal loans at attractive interest rates are offered up to INR 17, 00,000 and which can be repaid in flexible EMIs. One can also avail a personal loan on the basis of his/her repayment track record of an existing loan.

2.7.7.2 Home loans Reliance also offers offer housing finance to fulfill myriad requirements. These home loans have been customized to meet individual needs and desires. Attractive interest rates with best-in-class features and benefits make the experience even more pleasant. The simple EMIs as per the tenor you choose, makes paying back your loan an absolute breeze. Whether one is a salaried professional, self-employed professional or a self-employed non-professional, housing loans are designed to meet your unique requirements.

2.7.7.3 Car loans With flexible monthly repayment option, one can repay the auto finance up to 7 years for finanace taken for both new car loans and used car loans. It alsoconsider the ‘on-road value’ of the vehicle for funding, i.e. it covers not just the insurance but also the road tax.

2.7.7.4 SME and Business loans 1. Business Line of Credit 2. Commercial Loans. 3. Expansion of business

Page | 51

4. Working capital loans

2.7.8 Money Transfer and Money Changing Reliance Money has given new brand identity for Travelmate Services and is dealing in Money Changing Services and Full-Fledged MoneyTransfer Business India is the largest recipient of global remittance of around $ 27 billion which is more than 10 percent of the total global remittance inflow of $ 240 billion. This is continuously rising due to labor migration

Currently Reliance Money Express operates through a network of 3400 outlets spread over 800 cities and towns across India and handling close to 100,000 transactions per month with a daily average inward remittance of USD 1.4 million.

2.7.9 Fixed Deposits Reliance Money is also involved in availing its customers facility of fixed deposits. Currently, it is making available fixed deposits for the following banks: •

HDFC Deposits

•

HDFC Premium Deposits

•

ICICI Home Finance

•

Mahindra and Mahindra Finance

Page | 52

FINANCIAL PERFORMANCE (Rs. Million) PARTICULARS

Q4 FY09

QYFY08

FY09

FY08

Broking Income

379

581

1,762

1,112

Distribution Income

153

583

879

1,062

Others

253

64

880

211

Total Income

785

1,227

3,520

2,385

Sub Brokerage

89

293

421

440

Personnel Costs

303

181

1,150

602

Other Expenses

450

602

1,369

1,342

Profit Before Tax

(56)

131

581

1

Profit After Tax

(106)

131

368

1

Table 2.2

2.8 Discussion of financial performance •

Reliance Money generated revenues of Rs. 35 billion (US$ 767 million) for the year ended March 31, 2009 as against Rs. 24 million of the corresponding previous period, an increase of 48 %. This increase was primarily due to the expansion of the distribution network and increase in its customer base

Page | 53

•

The revenue mix is well balanced with broking contributing to 50% of the total revenues and distribution of financial products & other services (money transfer, currency changing & precious metal retailing) contribute to the balance 50%

•

It achieved a net profit of Rs. 368 million (US$ 8 million) for the year ended March 31,2008,

as against a profit of Rs. 1 million of the

corresponding previous period

•

Reliance Money generated revenues of Rs.352 crore for the year ended March 31, 2009, as against Rs.239 crore – an increase of 47 per cent

Scale of operations As at Mar 31st,

As at Mar 31,

2009

2008

No. of outlets

10350

8512

Franchisees

10125

8279

225

233

No. of broking accounts

1010000

713636

Total No. of customers

3300000

2000000

15

15

PARTICULARS

Owned

Daily average stock exchange turnover (rs. Billion)

Table 2.3

Page | 54

.

2.9 Corporate Governance Reliance Money has a vision of being a leading player in the Mutual Fund business and has achieved significant success and visibility in the market. However, an imperative part of growth and visibility is adherence to Good Conduct in the marketplace. At Reliance Money, the implementation and observance of ethical processes and policies has helped us in standing up to the scrutiny of our domestic and international investors.

2.10 Management The management at Reliance Money is committed to good Corporate Governance,

which

includes

transparency and

timely dissemination

of

information to its investors and unit holders. The Board of Directors of RCAM is a professional body, including well-experienced and knowledgeable Independent Members. Regular Audit Committee meetings are conducted to review the operations and performance of the company.

2.11 Employees Reliance Money has at present, a code of conduct for all its officers. It has a clearly defined prohibition on insider trading policy and regulations. The management believes in the principles of propriety and utmost care is taken while handling public money, making proper and adequate disclosures. All personnel at Reliance Money are made aware of their rights, obligations and Page | 55

duties as part of the Dealing Policy laid down in terms of SEBI guidelines. They are taken through a well-designed HR program, conducted to impart work ethics, the Code of Conduct, information security, Internet and e-mail usage and a host of other issues. One of the core objectives is to identify issues considered sensitive by global corporate standards, and implement policies/guidelines in conformity with the best practices as an ongoing process. Reliance Capital Asset Management Ltd. gives top priority to compliance in true letter and spirit, fully understanding its fiduciary responsibilities.

2.12 Social Responsibilities “Organizations, like individuals, depend for their survival, sustenance and growth on the support and goodwill of the communities of which they are an integral part, and must pay back this generosity in every way they can.”

This ethical standpoint, derived from the vision of the founder, lies at the heart of the CSR philosophy of the Reliance Group.

While they strongly believe that their primary obligation or duty as corporate entities is to their shareholders – they are just as mindful of the fact that this imperative does not exist in isolation; it is part of a much larger compact which they have with their entire body of stakeholders: From employees, customers and vendors to business partners, eco-system, local communities, and society at large.

They evaluate and assess each critical business decision or choice from the point of view of diverse stakeholder interest, driven by the need to minimize risk and to pro-actively address long-term social, economic and environmental costs and concerns. For them, being socially responsible is not an occasional act of Page | 56

charity or that one-time token financial contribution to the local school, hospital or environmental NGO. It is an ongoing year-round commitment, which is integrated into the very core of their business objectives and strategy.

Because they believe that there is no contradiction between doing well and doing right. Indeed, “doing right is a necessary condition for doing well”.

Each of Reliance Capital’s different businesses vigorously implement their own CSR initiatives. Indeed, their CSR efforts are counted when calculating the business’s performance for the year. Some of the work done by them include: 1. Blood donation camps—in Mumbai, but also in other cities such as Bangalore, Chennai, and Hyderabad. 2. Donating old computers to local schools in Navi Mumbai. 3. Celebrating Independence Day with the less privileged—street children are taken to amusement parks, donations are given to NGOs working with children or the aged or to the Missionaries of Charity. Again, this is done across the country from Raipur to Jaipur, from Kolkata to Chandigarh. 4. Similar initiatives are undertaken on Diwali or on Christmas. 5. Bihar was stuck by calamitous flooding last year. Reliance Capital employees working with their businesses generously donated clothes and money for the relief effort. 6. Direct cash aid for paying the medical expenses of life-threatening requirements for some under-privileged people is also done by one of the businesses

Page | 57

2.13 Top Management Profile

Sudip Bandyopadhyay, 45 is the Managing Director of Reliance Money. He has been with Reliance Capital since May 2005 and spearheads its broking, distribution, OTC (over-the-counter) and exchange business, under the brand, Reliance Money. He has been responsible for making Reliance Money into India's largest broking and distribution house in three years.

Sudip has been instrumental in taking Reliance Money international through various innovative tie-ups and acquisitions. Sudip was also responsible for the acquisition of AMP Sanmar that launched Reliance's foray in the Life Insurance segment. He has 22 years of experience in the financial sector. Prior to joining Reliance Capital, Sudip was heading Treasury and Investment at ITC. A Charted Accountant and Cost Accountant by profession, Sudip started his career as a management trainee with Hindustan Unilever. An avid reader, Sudip believes that books have played a key role in shaping his life and making him the person he is today. He attributes his success to his learnings from books such as Pather Panchali, Overload, Moneychangers, etc., read by him during various phases of his life

.

Page | 58

2.14 SWOT Analysis Strengths •

One of India’s leading and fastest growing private sector financial services companies, and ranks among the top 3 private sector financial services and banking companies, in terms of net worth.

•

It is India’s first insurance company to be awarded the ISO 9001:2000 certification across all functions, processes, products and locations panIndia. The quality assurance provides an edge over other players.

•

Company issued 36.57 Lac policies during the year as compared to 14.60 Lac in the previous year thereby registering a growth of 150%.

•

RGIC has been able to give highest ROI of 11.27% in last five years. The net worth has doubled to Rs.4.94 billion from last year’s Rs.2.59 billion.

•

Excellent outreach with a large distribution network. It has 200 branches across 171 cities and over 20,000 intermediaries. The setup provides the company is very strong and very effective distribution network, and consequently a strong penetration in the market.

•

Expert’s and research team to make strategies and products for company as well as clients base to resolve the problem.

•

Capture the 17% of the Private Sector Share & 7% share of the General Insurance Industry

Page | 59

•

Reserves and Surplus has increased five times to Rs.4.998 billion from Rs.1.04 billion previous year.

•

The Company has earned Rs.1034 crore of New Premium Business in Financial Year 2008 which is 41% share of the Private Sector Industry & 33% of the Industry as whole.

•

Company is ranked number one in the New Premium Business in Financial Year 2008. Other than this, it maintains a good database of it existing and potential customer, has a brand image and low pricing strategy

•

Reliance Money unlike other brokering houses has introduced a new prepaid system of brokerage for the share trading in which it provides the lowest form of brokerage charged from an investor.

Weaknesses •

Dependence on fellow subsidiaries for various supplies. -Extra control or interference from fellow subsidiaries.

•

Sudden expansion in year 2007-08 by establishing more than 125 branches has increased operations and administration expenses due to which losses incurred.

•

Due to the emphasis on recruiting young people in the company, staff is inexperienced. Page | 60

•

Clientage is not so loyal as compared to the clientage of other competing companies in the same industry

•

The phenomenon of job hopping is very common in the company. So, the problem of loyalty towards the company on behalf of the employees is a major problmem

Opportunities •

IRDA has removed controls on pricing in General Insurance business with effect from 1st January, 2008. IRDA had notified that except for Motor Third Party risks, all other new insurances and renewals effective on or after 1st January, 2008, insurers shall be free to quotes rates of premium in accordance with file and use guidelines.

•

General insurance industry in India has grown at 15% CAGR in terms of gross premium collection.

•

The company has moved to 3rd position amongst Private Sector Insurers in Financial Year 2008 & is ranked 7th amongst the Industry with 14 General Insurance players.

•

In india, there is still a lot more market to be tapped which is getting supported by increasing spending and thereby saving of people.

•

The mindset of people have also started changing. Now, they consider trading as a good source of earning. Page | 61

•

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.

Threats •

New Entrants -Future General India Life Insurance Company Limited -Sep. 2007 -IDBI Fortis Life Insurance Company Ltd. –Dec 2007 -Bharti Axa General Insurance Company Ltd. -June 2008

•

New joint ventures (JVs) by industry giants - Max India forms JVC with Bupa Finance to foray into Health Insurance -Shriram Group is to enter General Insurance Market

•

Stiff competition from existing players in the market

Page | 62

Chapter 3 – Research Design

3.1 Statement of the problem To understand the perception and behaviuor of investors and potential investors this study has been conducted. In addition, attitude of investors towards Reliance Money has also been considered. So, research has been carried on the title “A study on trading behavior of investors at Reliance Money”

3.2 Need of the study The need of the study arises because of the reason that a trainee must understand the company, its achievements and tasks, products and services and also to collect information about its competitors.

But the major focus was on making a customer profile for Reliance Money and study the position of Reliance Money in the market as well as among its competitors. In addition, investors were to be made aware about various products and services offered by Reliance Money and checking the satisfaction level of present customers Page | 63

3.3 Objectives of the study •

To create awareness about the products offered by Reliance Money in the Market

•

To know about the investment preference or style of investors

•

To know about the awareness of demat account

•

To collect the real time information about preference level of customers using Demat account and their inclination towards various other brokerage firms e.g. Reliance Money, ICICI, Religare, Angel , Unicon, Sharekhan etc.

•

As an intern at Reliance Money, to know about response of investors towards Reliance Money

•

To know about the awareness of Reliance Money as a brand and services offered

•

To know about the availability of Reliance Money Franchisee

•

To know about the satisfaction level among customers of Reliance Money.

3.4 Research methodology 3.4.1 Sources of Data (Primary & Secondary) In this project work primary and secondary data sources of data has been used.

Primary data Primary data is collected through observation, or through direct communication or doing experiments. Under this, Survey method has been used.

Page | 64

For this report primary data was collected by personal interview with investors and potential investors in different areas of Chandigarh. The data was collected over a period of 6 days from 21th July to 26th July 2008.

Secondary data: Secondary data refers to existing primary data that was collected by someone else or for a purpose other than the current one. It means already available through books, journals, magazines ,newspaper, websites.

Data has been collected through various websites the list of which has been given in the end of report

3.4.2 Research Method or type of study The Research method used is descriptive research.

Descriptive research, also known as statistical research, describes data and characteristics about the population or phenomenon being studied. Descriptive research answers the questions who, what, where, when and how.

In the present Research I have collected data through Survey of 150 respondents

3.4.3 Sampling plan 3.4.3.1 Sample unit The sampling units are various areas of Chandigarh which have been approached to collect data from different people Page | 65

3.4.3.2 Sampling method Sampling method used in this research is simple random sampling which is also known as probability sampling. Under this sampling design every item of universe has an equal chance of inclusion in sample. It is say to a lottery method.

3.4.3.3 Sample size The size of the sample was restricted to 150, as to just get a quick analysis

3.4.4 Contact Method Personal interview is used as a method of contacting people.

It is a market research technique for gathering information through face-to-face contact with individuals. Personal interviews take place in a variety of settings-in homes, at shopping malls, in a business office. This type of research is relatively costly, because it requires a staff of interviewers, but it provides the best opportunity to obtain information through probing for clearer explanations. It is the best technique to use early on in the research process when the researcher is not yet sure which questions need to be asked, because new and better questions can come out of the dialogue

3.4.5 Data collection method Research Instrument used in this research was Questionnaire.

A questionnaire is a formalized set of questions for eliciting information. It is one of the most common instruments used for primary data collection. Page | 66

The questionnaire can be administered in various ways. It can be administered by means of a personal interviewer as well as by the telephone, Mail. Here, the questionnaire was administered by a personal interview

3.4.6 Tools of analysis For the proper analysis of data, Quantitative Technique such as percentage method was used. In addition, Microsoft excel was also used for preparing charts for deducing inferences.

3.5 Limitation Although full efforts have been made in the study but the following limitations should be kept in the mind before making any conclusion: •

Sample size was small in comparison of entire population (150)

•

The respondents may be biased or influenced by outside factors.

•

The time constraint was one of the major problems.

•

The respondents were limited and cannot be treated as the whole population.

•

The accuracy of indications given by the respondents may not be consider adequate.

•

The research has been conducted according to present market conditions of recession, so the finding and inferences may not hold good for every business cycle.

Page | 67

Chapter 4 - DATA ANALYSIS

4.1 Interest of respondents in investment Table showing the number of persons interested in investment Response

Frequency

Percentage

Yes

128

85

No

22

15

Table 4.1

Interpretation Page | 68

The above table deals with interest of respondents in investment of funds. Out of 150 people taken into consideration for knowing in their interest investment, 128 said that they are interested in investment avenues while 22 of them did not show any kind of interest in investment of funds available with them.

Chart 4.1

Inference It can be deduced from here that majority of people are interested in investing their money in various available schemes in market. However, some people are still there who do not want to invest funds available with them. So awareness needs to be spread among those who are not willing to invest their money. By telling them various benefits which can be availed by making investment this can be achieved. They should be introduced with products that suits their investment needs

Page | 69

4.2 Percentage of annual income kept for investment Table showing percentage of annual income kept for investment Response

Frequency

Percentage

Upto 5%

20

16

Upto 10%

45

35

Upto 15%

33

26

Upto 20%

21

16

Above 20%

9

7

Table 4.2

Interpretation This table tells about the amount of income people keep aside for investment purposes. Out of 128 people who were interested in investment, majority of people, that is, 45 respondents keep 10% of their income for investment and people who invest upto 15% are also in good number. But there are very few people who invest more than 20% of their income.

Page | 70

Chart 4.2

Inference Therefore, it can be said that more than 1/3rdof respondents invest upto 10% of their income and almost 1/4th of respondents employ upto 15% of their income in investments. On this basis, around 60% of people invest 5% to 15% of their income and this can be the target market for the players in the industry.

4.3 Classification of investors as per income category Description of respondents as per income category Response

Frequency

Percentage

Upper

22

17 Page | 71

Middle

94

74

Lower

12

12

Table 4.3

Interpretation This table deals with the number of people belonging to different income categories, i.e, upper, middle and lower. Out of 128 people who are interested in investing activities, 94 of them belong to middle class. Majority of respondents who are interested in investment belong to middle class.

Chart 4.3

Inference So, we can say that around 75% of the respondents who are interested in investment belong to middle class as they consider investments important for stable income and another criteria for targeting the potential investors can be the income categorization and products can be developed according to specific income category

Page | 72

4.4 Trends of dealing in securities Table showing number of persons dealing in securities Response

Frequency

Percentage

Yes

95

74

No

33

26

Table 4.4

Interpretation Out of 128 people, who showed their interest in investment, 95 said that they are dealing in securities while rest of them, that is, 33 respondents were not dealing In any kind of securities.

.

Chart 4.4 Page | 73

Inference Even though 128 respondents have shown interest in investment activities, not all of them are dealing in securities either due to lesser funds available with them for investment or due to lack of knowledge regarding financial markets. However, 74% of them are still engaged in selling and buying of securities,

4.5 Investment preferences of the investors Table showing investment preferences of the respondents Response

Frequency

Percentage

Bonds & Debentures

12

9

Shares & Warrants

58

45

Mutual fund

30

24

All of these

16

13

None of these

12

9

Table 4.5

Interpretation Page | 74

When asked about investment preferences, most of the investors were interested in shares & warrants anad mutual funds. 45% favoured shares & warrants and 24% favoured mutual funds.Some investors were also not interested in any of these but were investing their funds in fied deposits of banks and post office saving schemes.

Chart 4.5

Inference 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.

Page | 75

4.6. Awareness of demat account among investors Table showing awareness regarding Demat Account Response

Frequency

Percentage

Yes

123

82

No

27

18

Table 4.6

Interpretation This table was formed on the basis of respondents who were aware of demat account and those who were not aware of demat account. Out of 150 respondents, 123 replied yes as their answer when they were asked that wheter they were aware of demat account or not. But there were atill 27 respondents who did not even know what a demat account is all about.

Page | 76

Chart 4.6

Inference So, it can be said that around 82% of people know about demat account but there are still some people who do not know about all this and therefore are not able to exploit the earnings opportunities available in financial markets. Therefore, people should be educated about trading in securities so that they can reap benefits out of it

4.7 Opinion of investors about demat account

Page | 77

Table showing number of people holding different opinion about demat account Response

Frequency

Percentage

Easy to sell securities

22

24

Purchase in primarymarket

12

9

Helps in fast money & income growth

54

45

Helps in stable income

35

22

Table 4.7

Interpretation When asked about the opinion people have about demat account, for most of them, demat account was a mean of fast money & income growth and for some of them stable income. Few people also think that demat account for easy selling of securities and purchase in primary market.

Page | 78

Chart 4.7

Inference It is good to see that around 72% people know that trading through demat account helps in earning money and income growth. This kind of thinking pattern should be spread among people so that they can invest more and more. In addition, it will also help in mobilizing funds for development of economy.

4.8 Trends regarding holding a demat account Table showing number of respondents having demat account Response

Frequency

Percentage

Yes

98

65

No

52

35

Table 4.8 Page | 79

Interpretation This table shows that out of 150 people, 98 people had demat account and 52 people do not had demat account.Around 123 respondents are aware of demat account but only 98 of them hold it.

Chart 4.8

Inference This pie chart shows around 65% of respondents possess demat account and it is a majority part. So we can say that most of the people are trading in stock Page | 80

market. But there is need of advertisement so as to engage them stock trading and for that demat account is to opened with them.

4.9 Market holding of different players in the industry Table showing number of respondents having demat account in different depository participants: Response

Frequency

Percentage

Reliance money

32

32

ICICI

36

36

Religare

12

12

Others

18

18

Table 4.9

Interpretation

Page | 81

Out of 98 investors who had demat account, 36 people had their demnat account in ICICI and 34 investors had the same in Reliance Money. Some investors took name of religare and there was a mixed response about other depository participants like Karvy, Sharekhan, Indiabulls etc.

Chart 4.9

Inference From this pie chart, we can see the main leaders in the market are ICICI and Reliance Money. They have a stiff competition between them and together they hold around 68% of market share. While the other competitors like religare, sharekhan, Indiabulls, Karvy etc. are are still behind

Page | 82

4.10 Potential available for companies in the industry Table showing preferred depository participant by those who know about demat account but do not have one: Response

Frequency

Percentage

Reliance money

12

50

ICICI

8

35

Religare

2

4

Others

3

11

Table 4.10

Interpretation When asked from the respondents, who do not had demat account but know about it, about the preferred depository participant, out of 25 investors, 12 said that they would like to open their demat account in Reliance Money and 8 preferred ICICI for the same purpose. Some investors/ potential investors also took name of religare, sharekhan, indiabulls etc.

Page | 83

Chart 4.10

Inference It shows that even though ICICI is the market leader but Reliance Money is giving ICICI a good competition. More people want to open their demat account in Reliance Money as compared to people who prefer ICICI for the same purpose.

4.11Frequency of trading by investors Page | 84

Table showing how frequently investors trade: Response

Frequency

Percentage

Daily

17

17

Weekly

27

28

Monthly

43

44

Yearly

11

11

Table 4.11

Interpretation Out of the people who had demat account, 43 said that they usually trade once a month and 28 said that they trade weekly. Investors were also there who trade daily or yearly but those people were less in numbers. So almost 72% of investors trade weekly or monthly.

Page | 85

Chart 4.11

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

4.12 Awareness among investors about Reliance Money Table showing awareness of Reliance Money as a brand: Response

Frequency

Percentage

Yes

126

84

No

24

16

Table 4.12 Page | 86

Interpretation When people were asked about awareness of Reliance Money as a brand, 126 knew about Reliance money and 24 did not know. Around 84% said yes to this question while 16% said no. majority of people know about Reliance Money as a good brand.

Figure 4.12

Inference This pie-chart shows that reliance money has a reasonable amount of brand awareness in terms of a premier Retail stock broking company. This brand image Page | 87

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

4.13 Awareness of facilities provided by Reliance Money Table showing awareness regarding facilities provided by Reliance Money: Response

Frequency

Percentage

Yes

62

41

No

88

59

Table 4.13

Interpretation Out of 150 people, 62 people knew about reliance money facilities but a majority of people, that is, 88 people did not know about facilities provided by Reliance Money. Even though around 84% of people knew about Reliance Money as a brand but only 41% of people knew about the facilities provided or services offered by Reliance Money.

Page | 88

Chart 4.13

Inference Although there is sufficiently high brand equity among the target audience yet, it is to be noted that the customers are not aware of the facilities provided by the company meaning thereby, that, the company should concentrate more towards promotional tools and increase its focus on product awareness rather than brand awareness.

Page | 89

4.15 Availability of Reliance Money franchisee

Table showing availability of Reliance Money franchisee for trading purposes: Response

Frequency

Percentage

Easy

32

35

Difficult

66

65

Table 4.14

Interpretation When people were asked about the amount of efforts spent in locating Reliance Money franchisee for trading purpose, 32 said that it is easy to find Reliance money Franchisee while 66 of them could not find that so easily. Majority of them found it difficult to reach a franchisee for trading puposes.

Page | 90

Chart 4.14

Inference From the above pie chart we can see that 67% of people found it difficult to locate Reliance Money franchisee for trading and only rest of the investors, that is, only a small part of 33% can locate the same easily. The difficulty in locating the franchisee may harm Reliance Money as people will go for those depository participants whose services are widely available in market.

4.15 Satisfaction level experienced by customers of Reliance Money

Page | 91

Table showing satisfaction level among investors trading through Reliance Money demat account: Response

Frequency

Percentage

Good

4

13

Average

9

28

Bad

19

59

Table 4.15

Interpretation Talking about the satisfaction levels of customers of Reliance Money, out of 44 investors who had demat account in Reliance Money, 19 of them said that they are not at all happy with the services provided by Reliance Money. Only 4 customers had a good satisfaction level and rest of them had an average experience of dealing with Reliance Money.

Page | 92

Figure 4.16

Inference This pie-chart corroborate the fact that Strategic marketing, today, has still not gone beyond meeting sales targets and generating profit volumes only. That is why, around 59% of customers which comprises of more than half of the customers having a very low level of satisfaction.

Chapter 5 – FINDINGS, SUGGESTIONS AND CONCLUSIONS

5.1 Findings 5.1.1 Visibility of the outlet The visibility of the outlet has a problem because of the old tampered boards displaying the banner of Reliance Money. So the prospective leads may be left unnoticed.

5.1.2 Area Potentiality Chandigarh is one the few areas which hold the high net worth (HNI) individuals in a hub. So the area was a high potential area which can feed us with sufficient volume of business. So the area was not at all a problem for the poor Page | 93

performance. It implies that the problem was within the franchisee and it’s activities.

5.1.3 Sales Activities Being doing business in a high potential area, this franchisee can not extract the available potential in that area. All because of the un availability of Business Development Executives with the franchisee to contact the prospective HNIs at their door step.

5.1.4 Customers’ dissatisfaction Customer is not very much satisfied with the services because there is not a very good system of follow up by the company. This is leading to dissatisfaction among the clients or customers of Reliance Money

5.1.5 Bad word Of mouth Past experiences of customers, which were not good enough, are leading to unfavourable publicity of the company. This is a becoming a problem for generation of new leads and therefore the company is losing business somehow.

5.1.6 Lack of awareness about services offered There is lack of awareness amongst people about the services offered by Reliance Money. People know Reliance Money as a brand but due to lesser advertisement and promotional activities, they still do not know what this company is all about.

Page | 94

5.1.7 Target Market From the research it can be found out the major investors belong to middle income group who keep around 5% - 15% of their income for investment purposes. So it is very clear from that the target market or potential investors are coming from middle income group

5.1.8 Preferred mode of investment The preferred mode of investment has come out to be share trading and mutual funds. Most people are engaged in share trading but still many others have also shown interest in mutual funds too. So these are the two most preferred modest of investment.

5.1.9 Position of Reliance Money in market People are very much aware of Reliance Money as a brand but still at this point of time market leader in the industry is ICICI direct. However, Reliance Money is not vey behind as the new investors entering into the market want to open their account with Realiance Moncey. So, it has a good business potential in the future.

5.2 Suggestions 5.2.1 For visibility of franchisee To enhance the visibility of that franchisee, I recommend them to replace that old tampered sign board with a new one. As an initiative step from my side, I along with the business associate reported the branch office for providing the new banner for franchisees

5.2.2 For enhancing sales activities Page | 95

The first and foremost resource needed for enhancing he sales activities is the Human Power, that is, to recruit some business development executives to assist the sales activities of particular franchisees. The recommendation should pass through proper channel to the business associate.

5.2.3 For customers’ satisfaction When I had a chance to meet the existing customers, I came to know that they are not happy with the internet assistance provided by the Reliance money. They are reporting that the speed was very bad when compared with the online platform provided by ICICI direct. So Reliance money should take steps to upgrade the speed of their trading platform with user friendly services too

5.2.4 Creating awareness regarding benefits of investments The most vital problem spotted is of ignorance. Investors should be made aware of the benefits. Nobody will invest until and unless he is fully convinced. Investors should be made to realize that ignorance is no longer bliss and what they are losing by not investing.

So the advisors should try to change their mindsets. The advisors should target for more and more young investors. Young investors as well as persons at the height of their career would like to go for advisors due to lack of expertise and time.

5.2.5 Proper Follow up After sales services and follow up calls are important for getting new references. So trained tele-callers should be appointed for this purpose whose sole work should be to make feedback calls.

Page | 96

Regular customer meets should be arranged to know the satisfaction level of the customers.

5.2.6 Product Specialization Reliance is having too many financial products right from Demat account to General Insurance 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.

5.2.7 Suggestion Boxes There should be provision of complain suggestion boxes at each branch so that the problems of customers can be dealt with. This can be an effective system for showing hospitality towards customers

5.2.8 Customer Education The customer should be educated about the stock market to overcome his fear of uncertainty in these markets and must be assured of expert advice in case of market fluctuations. The customer should also be educated about the benefits of investment in stock markets over other investment schemes.

5.3 Conclusion As students, many of us are completely ignorant of the work cultures of various corporate organizations. SIP is an attempt to provide us a practical corporate exposure where we work in certain corporate organizations as interns. Working with Reliance Money is a nice opportunity by which I can explore my knowledge

Page | 97

A good brand is always welcomed. Everywhere, in general, people are more conscious with the brand. So they go for the brand and are ready to spend some extra bucks for the quality.

The Brand image of Reliance Money is good in market but according to customer satisfaction reviews the company have to provide better services and proper follow up

Reliance Demat Account is better than other Demat account . Reliance Money have good return of investment too.It also provides a sense of security with the use of special type of key

At last it can be on be concluded by that Reliance Money is still growing in the financial sector and has a huge potential for the coming times. . But this project also includes prospective investors, who can invest in stock market but presently does not invest in these markets. There are many reasons for such investors not to invest in stock market. The main reasons for the customer not to invest in stock markets are –

1. High risk 2. High uncertainty 3. Lack of knowledge 4. High rate of fluctuations

My Learnings •

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 Page | 98

get added up in the loyal clientage. Thus time and service are two most factors in his field.

•

Also the corporate remains a very important segment which gets business in bulk but retail cannot be ignored which makes your business ticking.

•

Apart from the assigned roles and responsibilities, the center manager facilitated me with a training which covers the product details of Reliance money, and how they are cheaper than other broking agencies, about their corporate culture, organizational structure, sales methodology, tele-calling, application handling, grievances handling with respect to aggressive customers , etc.

•

Regarding customer handling, they provide me with a database for cold call. As it is my first experience in tele calling, I got tense due to the harsh responses. Later by realizing the responses from the prospective lead calls boost my confidence in tele calling.

BIBLIOGRAPHY Page | 99

Books Referred: •

C R Kothari, “Research Methodology”,1st edition, New Age International Publishers, ISBN: 978-81-224-1522-3

•

Malhotra, Naresh "Marketing Research and Applied Orientation" IV Ed., 2005, Pearson

•

Agarwal, J.D. "Security Analysis & Portfolio Management: A Review, Finance India, Vol. II No. 1, March 1989.

Websites: •

www.reliancemoney.com

•

www.karvy.com

•

www.nseindia.com

•

www.bseindia.com

•

www.moneycontrol.com

•

www.religare.in

•

www.angelbroking.com

•

www.nsdl.co.in

ANNEXURE Page | 100

Financial Details PROFIT AND LOSS ACCOUNT Name

Mar-2008

Mar-2007

319.90

317.28

Other Income +

2.92

4.08

Stock Adjustment

0.00

0.00

322.82

321.36

271.72

269.53

Generation & Distribution Expenses +

6.62

7.42

Employee Cost +

22.24

22.04

Administration expenses +

4.48

4.26

Miscellaneous Expenses +

6.73

5.31

0.00

0.00

11.03

12.80

Interest & Financial Charges +

4.81

2.26

Profit before Depreciation & Tax

6.22

10.54

Depreciation

3.54

3.11

Profit Before Tax

2.68

7.43

Tax

1.63

2.17

Profit After Tax

1.05

5.26

INCOME : Sale of Electrical Energy

Total Income

EXPENDITURE : Cost of Fuel and Power Purchased

Less: Preoperative Expenditure Capitalized Profit before Interest, Depreciation & Tax

Page | 101

Adjustment below net profit +

0.00

0.00

P & L Balance brought forward

4.31

0.02

Appropriations +

-14.62

0.97

P & L Balance carried forward

19.98

4.31

Equity Dividend

0.42

0.53

Preference Dividend

0.00

0.00

Corporate Dividend Tax

0.07

0.09

Equity Dividend (%)

10.00

12.50

Earning Per Share (Rs.)

2.32

12.22

192.98

192.46

-0.06

1.34

Book Value

Extraordinary Items +

Table 2.9

BALANCE SHEET Name

Mar-2008

Mar-2007

Share Capital +

4.23

4.23

Reserves & Surplus +

80.07

79.85

Total Shareholders’ Funds

84.30

84.08

Secured Loans +

40.34

28.90

SOURCES OF FUNDS :

Page | 102

Unsecured Loans +

16.51

5.76

Service Line & Security Deposits from Customers

2.63

2.32

Total Debt

59.48

36.98

Total Liabilities

143.78

121.06

Gross Block +

125.22

93.49

Less: Accumulated Depreciation

27.44

24.52

Net Block

97.78

68.97

Capital Work in Progress

10.64

11.00

Investments +

5.17

4.05

Inventories +

8.18

8.60

Sundry Debtors +

85.05

86.36

Cash and Bank Balance

12.05

16.56

Loans and Advances +

9.22

9.51

Current Liabilities +

74.87

77.30

Provisions +

10.11

7.89

APPLICATION OF FUNDS :

Current Assets, Loans & Advances

Less: Current Liabilities & Provisions

Page | 103

Net Current Assets

29.52

35.84

Miscellaneous Expenses not w/o +

0.67

1.20

143.78

121.06

1.25

0.46

Total Assets

Contingent Liabilities +

QUESTIONNAIRE

Name: __________________________________________________ Address: __________________________________________________ Occupation: _____________________________________________________________ Telephone: _________________________

Date:

________________________

Q.1: Are you interested in investment? (a) Yes (b) No

Q.2: What percentage of your annual income you can keep for investment? (a) Upto 5% (b) Upto 10% (c) Upto 15% (d) Upto 20% Page | 104

(e) Above 25%

Q.3: In which category of income you will describe yourself? (a) Lower income group (b) Middle income group (c) Higher income group

Q.4: Are you dealing or interested in dealing with any security? (a) Yes (b) No

Q.5: What type of investment style are you looking for? (a) Bonds & debentures (b) Shares & warrants (c) Mutual funds (d) All of these (e) None of these

Q.6: Do you know about DEMAT a/c? (a) Yes (b) No

Q.7: In your point of view DEMAT A/C is for? (a) Easy in selling securities (b) Purchase in primary market (c) Helps in earn income & also grow money (d) Helps in earn a stable income Page | 105

Q.8: Do you have a DEMAT a/c? a) Yes b) No

Q.9: If yes, then where? (a) Reliance Money (b) ICICI (c) Religare (d) Others (please specify)

Q.10: If No, then where do you want to open? (a) Reliance Money (b) ICICI (c) Religare (d) Others (please specify)

Q.11: How frequently you are going to use your DEMAT a/c? (a) Daily (b) Weekly (c) Monthly (d) Yearly

Q. 12: Awareness of Reliance Money as a brand? a) Yes b) No Q.13: Awareness of Reliance Money facilities? a) Yes b) No Page | 106

Q.14: Availability of Reliance franchisee for trading purpose a) Easy b) Difficult

Q.15: Satisfaction level among customer with Reliance Money? a) Good b) Average c) Bad

Page | 107