Copy of Motilaloswal Proj-A(2)

A PROJECT REPORT ON

CLIENT INTERACTION, ANALYSIS & DEALING IN STOCK MARKET FOR PRODUCT OF MOTILAL OSWAL SECURITIES LTD. SUBMITTED TO:

Singhad institute of business administration and research

Kandhwa, PUNE PROJECT GUIDE:

Deepali kulkarni SUBMITTED BY:

GIRIMALLIKA DEURI(PGDM, FINANCE) YEAR: 2009-2011

(A)

DECLARATION I, the undersigned Girimallika deuri hereby declare that the Project Work entitled “client interaction, analysis & dealing in stock market ” for Product Of Motilal Oswal Securities Ltd.” undertaken during the Period from 21st May 2010 to 10th August 2010, is the result of my Own efforts and the same has not been previously submitted to any Examination of the singhad institute of business administration and reserch, Pune or any other University. Signature Date:

18th August 2010

Place:

Pune

(GIRIMALLIKA DEURI)

(B)

ACKNOWLEDGEMENT I would like to express my sincere thanks courses for giving me an opportunity to work with Motilal Oswal Securities Limited for my Summer Internship Program. I would also like to thank Mr. Hemal Raval, Business Development Manager of Motilal Oswal fo for his guidance during the course of my project for his suggestions which has lead to a successful completion of my Summer Internship Program. Last but not the least I would also like to acknowledge contributions of various official websites and books named in the references for helping me with the data collection and analysis which have provided me with the relevant information for me to successfully complete my Project Report. GIRIMALLIKA DEURI (C)

CONTENTS SR. NO

PARTICULAR

1.

Introductory profile of company &the

2.

area which it covers. Introduction To Project subject &

3.

Products Research Methodology

4.

Market Segmentation

5.

Market Target

6.

Market Positioning

7.

Comparative Study/Response

8.

SWOT Analysis

9.

Conclusion

10.

Suggestion

11.

Bibliography

12.

Annexure

PAGE NO.

(D)

Introductory Profile of the Company & the area which it covers Motilal Oswal Securities Ltd.

Motilal Oswal Securities is a leading research and advisory based stock broking house of India, with a dominant position in both institutional and retail broking. Asiamoney Brokers Poll 2005 has ranked us the best Indian brokerage firm. There are various other categories where we have been rated number one – most

independent research, sales and service etc by the Brokers Poll. In March 2006, AQ Research, a firm that analyses the accuracy of a broker’s research call, declared Motilal Oswal Securities the best research house for Indian stocks. Motilal Oswal Securities has witnessed rapid organic growth due to favorable market conditions as well as efforts put in by the company itself. FY05 and FY06 saw the company grow inorganically through acquisition of three significant regional broking firms from Andhra Pradesh, Karnataka and Kerala. Over a period of time many more regional broking firms may be acquired to gain solid footing in various regions of India. The company was founded in 1987 as a small sub-broking unit, with just two people running the show. Focus on customer-first-attitude, ethical and transparent business practices, respect for professionalism, research-based value investing and implementation of cutting-edge technology have enabled us to blossom into an almost two thousand-member team. Our institutional business unit has relationships with several leading foreign institutional investors (FIIs) in the US, UK, Hong Kong and Singapore. In a recent media report we were rated as one of the top-10 brokers in terms of business transacted for FIIs. The retail business unit provides equity investment solutions to more than 1,61,000 investors through 1017 outlets spanning 375 cities and 24 states. We provide advice-based broking (equities and derivatives), portfolio management services (PMS), e-Broking, depository services, commodities trading, IPO and mutual fund investment advisory services. Its Value PMS Scheme gave a 402.74% return since inception ( Feb 2003) , ( Sensex is 270.69% & Nifty is 245.11%). The perfomance of Value Hedging since inception ( Oct 2005) is 32.76%. Such an outstanding performance can be only attributed to our single-minded focus on research-based value investing. Motilal Oswal Securities invests almost 5-10% of its revenue on equity research and hires and trains the best resources to become advisors to its valued clients. Our unique Wealth Creation Study, authored by Mr Raamdeo Agrawal, Managing Director, is now in its eleventh year. Investors keenly await this annual study for the wealth of information it has on how companies created

wealth during the preceding five years. The organization finds its strength in its team of young, talented and confident individuals. Qualified professionals carry out different functions under the able leadership of its promoters, Mr.Motilal Oswal and Mr. Raamdeo Agrawal Stringent employee selection process, focus on continuous training and adoption of best management practices drive the quest to achieving our Vision. MOSt Vision

MOSt Guiding Principles & Core Values Customer interest is paramount Ethical and transparent business practices Respect for professionals,associates and business partners Research based value investing Cutting edge technology to ensure world-class customer service People behind the organization

Mr. Motilal Oswal Chairman and Managing Director Mr. Motilal Oswal is the promoter of Motilal Oswal Securities Ltd. He is an member of Institute of Chartered Accountants of India and started the business along with the copromoter Mr. Raamdeo Agarwal in 1987. Business Administration is his forte, Honesty, transparency and client goodwill form the core of his business practice. “Service is required in everything, in research, in execution and in settlement. It is going to be the key to survival. If you give good service and value to your clients, it will translate into good business.” This has been a strong belief of Mr. Motilal Oswal and he has not only practiced it himself but also made efforts to inculcate similar values in the employees of the organization. He had been elected as a Director of BSE and joined its governing board in 1998. He is currently a member of various committees of CDSIL and SEBI.

Mr. Raamdeo Agrawal Joint Managing Director Mr. Raamdeo Agrawal is the co-promoter of Motilal Oswal Securities Ltd. A member of the Institute of Chartered Accountants of India & an equity research stalwart, he is the man behind the strong research capability at MOSt. He is respected by all in the research and broking industry for his valuable insights on issues related to equity research. His firm belief in “Value-Investing”, as practiced by the legendary Warren Buffett and Charlie Munger, forms the core of MOSt investment philosophy. Management Team MOSt management team is regularly engaged in finding ways to improve operational

efficiencies and customer satisfaction. You will find CAs, CFAs, ICWAs, CSs, MBAs and IT professionals managing crucial functions, to bring you best products and services - from research & advice to trade execution & settlement. At MOSt we practice meritocracy and each of the team members is provided extensive training. Training & Manpower Development MOSt conducts various training and development programs regularly to enhance the capabilities of its team. As much as 5% of the salary bill is spent on such programs, which is amongst the highest for a broking organization in India. MOSt is truly a learning organization with lead being taken by the Directors, who regularly participate in top management learning programs like Strategic Management Program at Indian School of Business, Hyderabad, Strategy Summits with Management Gurus like Tom Peters and Dr. Lester Thurow, Dean, Sloan School of Management, (MIT) and Brand Management Seminar by Al Ries etc.

MOSt History & Milestones The story of MOSt goes back many years, when Mr. Motilal Oswal and Mr. Raamdeo Agrawal met each other as students in a Mumbai suburban hostel in the early eighties. Both the young chartered accountants hailing from a rural & an unpretentious background had a common dream viz 'to build a professional organization with strong value systems, to provide reliable & honest investment advice to investors'. Thus was born their first enterprise called "Prudential Portfolio Services" in 1987.

Introduction to Project Subject & Products

Motilal Oswal Securities Ltd. was founded in 1987 as a small sub-broking unit, with just two people running the show. Focus on customer-first-attitude, 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. Today we are 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

We have 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 30, 2008, had a network spread over 450 cities and towns comprising 1,496 Business Locations operated by our Business Partners and us. As at June 30, 2008, we had 486,648 registered customers.

In 2006, the Company placed 9.48% of its equity with two leading private equity investors based out of the US – New Vernon Private Equity Limited and Bessemer Venture Partners. The company got listed on BSE and NSE on September 9, 2007. The issue which was priced at Rs.825 per share (face value Rs.5 per share) got a overwhelming response and was subscribed 27.18 times in turbulent market conditions. The issue gave a return of 21% on the date of listing. As of end of financial year 2008, the group networth was Rs.7 bn and market capitalization as of March 31, 2008 was Rs.19 bn. For year ended March 2008, the company showed a strong top line growth of 91% to Rs.7 bn as compared to Rs.3.68 bn, last year. New businesses like investment banking, asset management and fund based activities have contributed to this growth. Rs. Crores

FY 200708

Growth (YoY)

Total Revenues

701

91%

EBIDTA

270

97%

PAT

156

100%

Credit rating agency Crisil has assigned the highest rating of P1+ to the Company’s short-term debt program. Shareholding Pattern at on June 30, 2008 As of 30th June, 2008; the total shareholding of the Promoter and Promoter Group stood at 70.37%. The shareholding of institutions stood at 9.78% and noninstitutions at 12.26%. Our Business Streams Our businesses and primary products and services are: Wealth Management Financial planning for individual, family and business wealth creation and management needs. These are provided to customers through our Wealth Management service called ‘Purple’ Broking & Distribution services •

Equity (cash and derivatives)

•

Commodity broking

•

Portfolio Management Services

•

Distribution of financial products

•

Financing

•

Depository Services

•

IPO distribution

We offer these services through our branches, Business Partner locations, the internet and mobile channels. We also have strategic tie-ups with State Bank of India and IDBI Bank to offer our online trading platform to its customers. Commodity Broking Through Motilal Oswal Commodities Broker (P) Ltd our fully owned subsidiary; we provide commodity trading facilities and related products and services on MCX and NCDEX. Besides access to the best of research in the form of Daily Fundamentals & Technical Reports on highly traded commodities, our clients also get access to our exclusive Customized Trading Advice on both the trading platforms. We offer these services through our branches, Business Partner locations, the internet and mobile channels Portfolio Management Services Motilal Oswal Portfolio Management Services offer a range of investments solutions through discretionary services. We at Motilal Oswal have helped create wealth for our customers through our Portfolio Management Services. Our knowledge of the markets together with our understanding of our customers and their risk profiles has helped us design a range of portfolio offerings for our clients. These include the Value PMS, Bulls Eye PMS, Trillion Dollar Opportunity and Focused Portfolio Series I. As of June 30th, 2008, the assets under management of our various portfolio schemes stood at Rs.6.92 bn.

Motilal Oswal group has applied to the regulatory bodies for a license to operate as a Domestic Asset Management Company (Mutual Fund) and we expect to begin operations soon. Institutional Equities We offer equity broking services in the cash and derivative segments to institutional clients in India and overseas. These clients include companies, mutual funds, banks, financial institutions, insurance companies, and FIIs. As at March 31, 2008, we were empanelled with over 300 institutional clients including 191 FIIs. We service these clients through dedicated sales teams across different time zones. Investment Banking We offer financial advisory services relating to mergers and acquisitions (domestic and cross-border), divestitures, restructurings and spin-offs through Motilal Oswal Investment Advisors Private Ltd. (MOIAPL) We also offer capital raising and other investment banking services such as the management of public offerings, private placements (including qualified institutional placements), rights issues, share buybacks, open offers/delistings and syndication of debt and equity. MOIAPL has closed 23 transactions in 2007-08 worth US$ 1.8 billion and had 18 mandates in hand as at March 31, 2008. Private Equity In 2006, our private equity subsidiary, Motilal Oswal Venture Capital Advisors Private Ltd (MOVCAPL) was appointed as the investment manager and advisor to a private equity fund, India Business Excellence Fund, which was launched with a target of raising US$100 mn. The fund is aimed at providing growth capital to small and medium enterprises in India, with investments typically in the range of US$3 mn to US$7 mn. MOVCAPL will manage and advise the fund and other private equity funds, which may be raised in the future. In its final closing, in December 2007, the fund obtained commitments of US$125 mn (Rs.4,875 mn) from investors in India and overseas. The Fund has deployed/ committed $ 58 mn across 8 deals. MOVCAPL has recently launched an INR 750 crores domestic Real Estate Private Equity Fund called “India Realty Excellence Fund” sponsored by Motilal Oswal Financial Services Ltd. Principal Strategies Group For effective management of treasury operations and to capitalize on market opportunities, the Group has set up a 30 member team which would be responsible for effective deployment of funds into different trading and arbitrage strategies.

Research Methodology

Focus on Research Research is the solid foundation on which Motilal Oswal Securities advice is based. Almost 10% of revenue is invested on equity research and we hire and train the best resources to become advisors. At present we have 28 equity analysts researching over 27 sectors. From a fundamental, technical and derivatives research perspective; Motilal Oswal's research reports have received wide coverage in the media (over a 1000 mentions last year). Our consistent efforts towards quality equity research has reflected in an increase in the ratings and rankings across various categories in the AsiaMoney Brokers Poll over the years Our unique Wealth Creation Study, authored by Mr. Raamdeo Agrawal, Managing Director, is now in its 13th year. Investors keenly await this annual study for the wealth of information it has on the companies that created wealth during the preceding five years. Awards and Accolades Motilal Oswal Financial Services has received many accolades in the year gone by. Some of them are: •

Rated ‘Best Overall Country Research’ for a Local Brokerage in the 2007 AsiaMoney Brokers poll

•

Rated India’s top broking house in terms of total number of trading terminals by the Dun & Bradstreet survey

•

Rated ‘Outstanding Commodity Broking House-2007’ by Globoil India

•

Ranked second best for Customer Responsiveness in the Financial Sector at the Avaya GlobalConnect Customer Responsiveness awards

Strong Management Team The organization finds its strength in its team of young, talented and confident individuals. Qualified professionals carry out different functions under the able leadership of its promoters, Mr. Motilal Oswal and Mr. Raamdeo Agrawal. Our talented pool of people comprises qualified and experienced professionals with an established track record. We believe that our management's entrepreneurial spirit, strong technical expertise, leadership skills, insight into market/customer needs provide us with a competitive strength which will help us implement our business strategies. Motilal Oswal Financial Services Ltd. (MOFSL) is a well-diversified, financial services

company focused on wealth creation for all its customers, such as institutional and corporate clients, HNI and retail customers. Our services and product offerings include equity broking, commodity broking, distribution of third party products, investment banking and venture capital management. Mr. Motilal Oswal and Mr. Raamdeo Agrawal laid the foundation for MOFSL and initially conducted business as a sub-broking firm. Thus, began the expedition of building a professional organisation with strong value systems, to provide investment advice to investors. Today, Motilal Oswal Financial Services Ltd. is a well-established brand among retail and institutional investors in India, with a presence in over 1430 business locations across over 430 cities. From a sub-broking firm, Motilal Oswal Financial Services Ltd. has today become a solid financial services company straddling a spectrum of businesses in the financial services space. These businesses include Wealth Management, Institutional Equities, Investment Banking and Venture Capital Management. Motilal Oswal Financial Services Limited is the holding company of the following five subsidiaries:

Market Segmentation

Market Target

Market Positioning

2006 2005 2004 2003 2002 2001 2000 1999 1998 1996 1995 1994 1990 1987 » Places 9.29% with two leading private equity investors - New Vernon Private Equity Limited and Bessemer Venture Partners » Issues 14% of companies equity to employees as ESOPs » Acquires a leading south Indian brokerage firm - Peninsula Capital Markets » Enters Private Equity and plans entry into Investment Banking businesses » Value PMS gives 390% returns to its investors between Feb 2003 and March 2006 » 2006 » Relaunches its e-Broking service through a nationwide campaign. First » advice-based online trading proposition in the Indian markets » Another milestone in distribution - 1017 outlets, 375 cities, serving 1.61 lakh clients Has a 1400 member team working to achieve the company's vision » Asiamoney Brokers Poll 2005 rates Motilal Oswal Securities - Best Local Brokerage, Most Independent Research House, Best in Sales and Service » Launches two new Portfolio Management Schemes - Value Hedging for derivatives and Discover Value for the Rs5 lakh to Rs50 lakh category 2005 » Acquires local brokerage Gayatri Capitals from Andhra Pradesh and Varghese » from Bangalore Deepest distribution in the stock broking segment with 700 outlets in 320 cities and 1.2 lakh clients » Presence expanded to 270 outlets in 150 cities and 20 states » Value PMS delivers a whopping 160% post tax returns for the period ended 2004 April 2004 » Bulls Eye PMS - A momentum based PMS launched » Start of the Solid Research Solid Advice campaign » MOSt Portfolio Management Services launched with Mr. Raamdeo Agrawal as the Portfolio Manager. Uniquely structured performance related fees. » Inquire team is successful in capturing the uptrend in Banking, Auto and Infrastructure sectors. 2003 » 15,000 Depository clients acquired. » 9 own branches setup at 7 cities to provide Equity Advisory Services. More in the pipeline. » 150 outlets in 110 cities across 18 states & one Union Territory in India manned by 1000 people servicing over 15,000 Retail and Institutional Investors. 2002 » Mr. Navin Agarwal, Head of Equity Research & Institutional sales, is inducted in the Board of Directors » MOSt consolidates its retail operations & upgrades its IT / Back Office infrastructure to cater to its growing network of branches, Franchisees and Channel Partners.

2001

2000

1999

1998 1996 1995

1994

1990 1987

» Retail network completes coverage of 100 cities in India. » Direct servicing of HNI clients is initiated. » 10,000 Depository clients acquired. » Legendary marketing guru Shunu Sen’s services taken to revitalise retail marketing strategy and branding efforts. » Starts offering Derivatives products and advisory services on both BSE as well as NSE » Both Mr. Motilal Oswal and Mr. Raamdeo Agrawal receive Rashtriya Samman Patra from Central Board of Direct Taxes for being amongst the top 50 tax payers in India from FY94-FY98 » Acquires its 100th Franchisee / Channel Partner and emerges as a leading player in the Indian Broking Sector » Becomes a Depository Participant of Central Depository Services Limited (CDSIL) » Mr. Raamdeo Agrawal starts attending legendary billionaire investor Warren Buffett’s Annual General Meetings of Berkshire Hathway Inc. He still continues to attend it every year. » The Wealth Creation Study started in 1996 culminates into Wealth Creation Seminar and Awards function in 1998. » First Stock Broking house to brand its services as a research and advise based broker. » “Wealth Creation” Campaign started. » www.MotilalOswal.com launched. First broking house in India to go on the web. » Becomes a Depository Participant of National Securities Depository Limited (NSDL). » Inducts Mr. Ivan Mathias, former country head of Watson Wyatt Worldwide, on its Board to Directors to shape HR initiatives. » Mr. Motilal Oswal joins the Governing Board of The Stock Exchange, Mumbai. » Wealth Creation Study started. First of its kind study initiated to identify biggest and fastest wealth creating companies in Indian Stock markets. » ”Motilal Oswal” gets incorporated as Motilal Oswal Securities Ltd. » MOSt acquires NSE Membership and plans for major expansion of its retail network. » Inquire (Indian Equity Research) is formally created at a 2500 sq. ft office in South Mumbai with bigger and better quality infrastructure than the corporate office. Since then nearly 20% of revenue is allocated to research. First Domestic Stock broking house to have such a strong Research focus » ”Motilal Oswal” enters Institutional Broking business. » After just three years in the business, ”Motilal Oswal” is formed through acquisition of membership on The Bombay Stock Exchange (BSE). Three more memberships taken in later years. » Mr. Motilal Oswal and Mr. Raamdeo Agrawal lay the foundation of a great partnership by starting a sub-broking firm. The venture stands out from the rest due to their approach of Research-based broking even when sub-brokers.

Comparative Study & Response

SWOT Analysis

Conclusion

Suggestion

Bibliography

Annexure