Customer relationship management in kotak securities ltd by Sanjay Gupta

PROJECT REPORT ON “CUSTOMER RELATIONSHIP MANAGEMENT IN KOTAK SECURITIES LTD”

ACKNOWLEDGEMENT

The last few days have been full of learning and sense of contribution towards the organization. I would like to thank Advent Institute of Management Science and Technology for giving me an opportunity of learning and contributing through this project. I would like to thanks all the people who knowingly and unknowingly supported me in the Endeavour. It is said; the most important single word is “WE” and the zero important single word is “I”. This true even in today’s modern era. It is absolutely impossible for a single individual to complete the assigned job without help and assistance from others. It is my greatest pleasure to acknowledge sincere gratitude towards MR. Rajan Baya(Manager ) Kotak Securities ltd. ,Udaipur, for the Completion of the project work. I would also like to acknowledge to my sincere gratitude to our Principal Mrs. Amita Singhvi Mem and my project guide Miss Ankita Lakhani Mem for helping me in this project work. I am thankful to all of my friends and batch mates for their help in completing this project work. Finally, I am thankful to my entire family members for their great support and encouragement.

XYZ BMS-IV SEMESTER

Executive Summary

This project has been a great experience for me and at the same time, it gave me enough scope to implement my analytical ability. Stock Broking leading industry, which is my concern industry around which my project has to be revolved, is really a very complex industry. The growth of any company whether it is working in stock market or retail sector desire to capture a large share of the existing and future market. They need to create relationship with customer and maintain it for lifetime is the success tools. This project report on “customer relationship management at Kotak Securities ltd” is based on understanding customer relationship management that is taking place at Kotak securities ltd. Kotak being the market leader in PMS, which is having corpus 3200 crore out of 6200 crore total market corpus. Kotak securities limited are a subsidiary of Kotak Mahindra Bank Limited is one of largest private brokerage and distribution house Set up in 1994 by Mr. Uday Kotak. Kotak securities have 25% equity participation from Goldman Sachs. Kotak securities have been the largest in IPO distribution and were ranked no.1 in the year 2003-2004 as book running lead managers in I PO’s by prime database. The biggest management challenge in the new millennium of liberalization and globalization for a business is to serve and maintain good relationship with the king – the customer. The objective of the project “customer relationship management at Kotak Securities ltd.” was to find out the strategies required for good customer relationship, how to achieve customer, how we can handle customer problem, how we can build customer loyalty, how we can increase customer satisfaction, How we can reduce customers defection, How we can attract customer. Such knowledge will assist managers to better understand and segment their Markets and design appropriate marketing communication strategies.

Table of Contents S

Index

. No. .

Chapter one 1.1 Evolution of CRM 1.2 In the beginning 1.3 Advances in the 1990’s 1.4 Introduction to CRM 1. 5 Customer Relationship Management Techniques 1.6 Why- Customer Relationship Management 1.7 How to introduce CRM in the company

Chapter two 2.1 Industry Overview 

Industry Profile



Industry Evolution



Salient Features of the Industry in India



Recent Trends



Performance / Growth Scenario



Top five companies of the industry 2.2. COMPANY OVERVIEW 2.2.1 Overview of the organization



Brief history



Nature of the organization



Business volume



Number of employees



Product lines



Main office & Branch Offices



Organizational Structure

Chapter three 3.1 Project Profile

Chapter four

. 4.0 Research Methodology

Page No.



4.1 Research Design



4.2 Sampling Plan



4.3 Collection of Data



4.4 Data collection 4.5 Limitations 4.6 Questionnaire Design

Chapter Five 5.1 Data Analysis and Interpretations 5.2 Observation 5.3 Findings 5.4 Recommendation 5.5 Conclusion 5.6 Learning Outcome

. .

Reference and Bibliography

Annexure

Chapter

INTRODUCTION TO CRM

1.2 Evolution of CRM: Customer Relationship Management (CRM) is one of those magnificent concepts that swept the business world in the 1990’s with the promise of forever changing the way businesses small and large interacted with their customer bases. In the short term, however, it proved to be an unwieldy process that was better in theory than in practice for a variety of reasons. First among these was that it was simply so difficult and expensive to track and keep the high volume of records needed accurately and constantly update them. In the last several years, however, newer software systems and advanced tracking features have vastly improved CRM capabilities and the real promise of CRM is becoming a reality. As the price of newer, more customizable Internet, solutions have hit the market place; competition has driven the prices down so that even relatively small businesses are reaping the benefits of some custom CRM programs.

1.2 In the beginning…: The 1980’s saw the emergence of database marketing, which was simply a catch phrase to define the practice of setting up customer service groups to speak individually to all of a company’s customers. In the case of larger, key client sit was a valuable tool for keeping the lines of communication open and tailoring service to the clients needs. In the case of smaller clients, however, it tended to provide repetitive, survey-like information that cluttered databases and didn’t provide much insight. As companies began tracking database information, they realized that the bare bones were all that was needed in most cases: what they buy regularly, what they spend, what they do.

1.3 Advances in the 1990’s: In the 1990’s companies began to improve on Customer Relationship Management by making it more of a two-way street. Instead of simply gathering data for their own use, they began giving back to their customers not only in terms of the obvious goal of improved customer service, but in incentives, gifts and other perks for customer loyalty. This was the beginning of the now familiar frequent flyer programs, bonus points on credit cards and a host of other resources that are based on CRM tracking of customer activity and spending patterns. CRM was now being used as a way to increase sales passively as well as through active improvement of customer service. 1

1 Source:- http://www.crm-software-guide.com/history-of-crm.htm

1.4 Customer Relationship Management Introduction: The biggest management challenge in the new millennium of liberalization and globalization for a business is to serve and maintain good relationship with the king â&#x20AC;&#x201C; the customer. In the past producers took their customers for granted, because at that time the customers were not demanding nor had alternative source of supply or suppliers. But today there is a radical transformation. The changing business environment is characterized by economic liberalization, increasing competition, high consumer choice, demanding customer, more emphasis on quality and value of purchase etc.2 A CRM is a collection of people, processes, software, and internet capabilities that helps an enterprise manage customer relationship effectively and systematically. The goal of CRM is to understand and anticipate the needs of current and potential customer to increase customer retention and loyalty while optimizing the way product and services are sold. CRM stands for Customer Relationship Management. It is a strategy used to learn more about customers' needs and behaviors in order to develop stronger relationships with them. After all, good customer relationships are at the heart of business success. There are many technological components to CRM, but thinking about CRM in primarily technological terms is a mistake. The more useful way to think about CRM is as a process that will help bring together lots of pieces of information about customers, sales, marketing effectiveness, responsiveness and market trends. 3 The objective is to capture data about every contact a company a company has with a customer through every channel and store it in the CRM system to enable the company to truly understand customer action. CRM software helps an organization build a database about its customer that management, sales people, customer service provider and even customer can access information to access customer needs with product and offering. All these changes have made todayâ&#x20AC;&#x2122;s producer shift from traditional marketing to modern marketing. Modern marketing calls for more than developing a product, pricing it, promoting it and making it accessible to target customer. It demands building trust, a binding force and value added relationship with the customers.

1.5 Customer Relationship Management CRM Techniques: The CRM is a new technique in marketing where the marketer tries to develop longterm relationship with the customers to develop them as lifetime customers. CRM aims to make the customer climb up the ladder of loyalty. 2 Source:-http://www.ezinarticles.com/?Emerging-Trends-In-Customer-Relationship-

Management&id=1092607

3 Source:-http://www.scribddocuments.wordpress.com/2009/09/17/crm-project-report

The company first tries to determine that who are likely prospects i.e. the people who have a strong potential interest in the product and ability to pay for it. The company hopes to convert many of its qualified prospect into first time customers and then to convert those first time customers into repeat customers. Then the company tries to convert these repeat customers into clients – they are those people who buy only from the company in the relevant product categories. The next challenge for the company is to convert this client into advocates. Advocates are those clients who praise the company and encourage others to buy from it. The ultimate challenge is to convert these advocates into partners where the customers and the clients work actively together to discover ways of getting mutual benefit. Thus in CRM the key performance figure is not just current market share but share of lifetime value by converting customers into partners. In CRM, the company tries to identify that small percentage (20%) of key account holders whose contribution to the company revenues is high (80%). So from this point of view, CRM is also known as KEY ACCOUNT MANAGEMENT.

1.6 Why – Customer Relationship Management  Satisfied customers in 10 years will bring100 more customers to the company.  It costs 7 times more to attract a new customer than to serve an old one.  20% of the company’s loyal customers account for 80% of its revenues. (Pareto’sprinciple).  The chances of selling to an existing customer are 1 in 2, the chances of selling to a new customer are 1 in 16. Eight ways to keep customers for life 1. Every part of the company’s marketing effort should be geared towards building lifetime relationships. 2. People want to do business with friendly people. To have effective relations a friendly attitude must permeate in the organization. 3. Information technology developments should be positively used to serve the customers. 4. The company should always be flexible to bend its rules and procedures in the client’s favor. 5. The company should communicate with its customers even when it is not trying to sell something. 6. The company can communicate and develop stronger customer bonding by providing financial and social benefits.

7. The company should try to know all its customers including their lifestyles, hobbies, likes or dislikes etc. 8. The company should make it a point to deliver more than what is promised.

1.7 How to introduce CRM in the company There are four key steps for putting one tone marketing program to work â&#x20AC;&#x201C; Step 1: Identify your customers To launch a one to one initiative the company must be able to locate and contact a fair number of customers or at least a substantial portion of its valuable customers. It is crucial to know the customer details as much as possible, not just their names or address, but their habits, preferences and so forth. Step 2: Differentiating your customers Customers are different in two principal ways; they represent different levels of value and have different needs. Once the company identifies its customers, differentiating them will help the company to focus its efforts to gain the most advantage with the most valuable customers. Step 3: Interacting with the customer Interaction is also a crucial component of successful CRM initiative. It is important to remember that interaction just not occur through marketing and sales channels, customer interact in many different ways with many different areas of the organization so to foster relationship all the areas of the organization must be accessible to the customer. Step 4: Customize your enterpriseâ&#x20AC;&#x2122;s behavior Ultimately, to lock a customer into a relationship a company must adapt some aspect of its behavior to meet customerâ&#x20AC;&#x2122;s individually expressed needs this might mean mass customizing a manufactured product or it might involve tailoring some aspect of the service surrounding the product.

Chapter

INDUSTRY OVERVIEW & COMPANY OVERVIEW

2.1 Industry Overview

2.1.1 Industry Profile: A stockbroker is nothing but a registered and qualified working professional who buys stocks and derivatives for other people. The stockbroker thus performs all the transactions for people on the stock exchange. The stockbroker maintains information of the people for whom he is buying or selling stocks. This information includes name, address, PAN no and other relevant information. No transaction can take place in the stock market with out a stockbroker. The stockbroker cannot give inputs, advice to people buying, or selling stocks unless he is registered with the Securities and exchange board of India as a portfolio manager. The stockbroker takes a certain brokerage for the transactions he does for his clients on the stock exchange. The brokers are expected to issue contract notes to the clients after a particular transaction has been done. They are also expected to issue periodic reports to their clients with respect to the transactions that have been done by them in that periodic interval. If you are looking to become a portfolio manager then there is a different policy and procedure that you need to follow for it. Stockbrokers can be individual stockbrokers or form a company or an organization there by making a brokerage. All brokerages have to pay a certain sales tax for the transactions that are done with the brokerage by other clients wither through selling or buying a certain stock. Thus, any person who wants to buy or sell any stock with a particular stock exchange has to do that with a particular stockbroker affiliated with that stock exchange. 4 Securities Markets is a place where buyers and sellers of securities can enter into transactions to purchase and sell shares, bonds, debentures etc. Further, it performs an important role of enabling corporate, entrepreneurs to raise resources for their companies and business ventures through public issues. Transfer of resources from those having idle resources (investors) to others who have a need for them (corporate) is most efficiently achieved through the securities market. Stated formally, 4 Source:- http://www.stockbroking.co.in/what-is-stockbroking.html

securities markets provide channels for reallocation of savings to investments and entrepreneurship. Savings are linked to investments by a variety of intermediaries, through a range of financial products, called ‘Securities’.5 The Securities Contract (Regulation) Act, 1956 [SCRA] defines ‘Stock Exchange’ as any body of individuals, whether incorporated or not, constituted for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities. Stock exchange could be a regional stock exchange whose area of operation/jurisdiction is specified at the time of its recognition or national exchanges, which are permitted to have nationwide trading since inception. NSE was incorporated as a national stock exchange. 6

2.2.2 Industry Evolution The history of stockbrokers can be traced back to the origins of the first stock exchange in 1602 at Amsterdam. Even before that brokers are said to have existed in France dealing with government securities. The Amsterdam Stock Exchange was involved in buying and selling of shares for the Dutch East India Company. However, the first real stock exchange came up in Philadelphia in the United States during the late 18th century. Later it was the New York stock exchange, which saw a rise in its popularity. Wall Street, as it was called, became the hub of brokerage activities. Earlier stockbrokers were largely unorganized, but later most of them joined hands to form institutes and organizations. Until the 1980’s stock broking, services were used only by the wealthy class who could afford them. Later with the advent of the Internet, stock broking became very easy. Thus, the price tag on stockbrokers lowered considerably and their services became available even to the common man. The stock broking duties are now mostly taken up by major organizations with the smaller companies being absorbed by them. In India, too with increasing globalization the major corporations are penetrating deeper into the society. 7 A Stockbroker is nothing but a person who buys and sells securities from the stock market on behalf of other investors. Stock broking began in the United States of America. Philadelphia was the first city in America to have a stock exchange. After which New York

5 Source:-http://www.gasci.com/faq.htm 6 Source:-http://www.aumassociate.co.in/sharebazar.aspx 7 Source:-http://www.indiacom.com/yellowpage/category-gyan/articles/Stock-Brokers/Stock-

Broker-Introduction.asp

became the heart of all stock transactions and Wall Street became synonymous with investing and trading.

Since the early part of the 1980's stock broking was allowed in America. In addition, in the late part of 1990's stock broking went online and now, there are several online stock brokerages on the internet and hence online transactions happen in a jiffy these days. A stockbroker may also be a financial advisor or an investment consultant these days but in India you need to be registered with the Securities and exchange board of India in order to act as a financial advisor. As the name suggests a stockbroker mainly deals in stocks that is the shares of a company. Other professionals such as foreign exchange brokers deal with currencies where as commodity brokers deal with commodities. All stock market transactions that is buying or selling of shares have to take place through a broker or a brokerage. Even if you make online transactions, you need to do it through an online stockbroker. For performing, the transaction online stockbrokers charge a small brokerage fee or commission fee for the transactions that they do for other companies or retail investors. The brokerages that a stockbroker may charge are different for various brokerages as they might have a different business model for the same.8 The history of stock broking in the United States parallels the growth of the nation's economy since colonial times. The industry has tended to be cyclical in nature, and has survived several downturns, including a major economic depression in the 1930s. Government regulations have been introduced at times in an effort to place controls on what were viewed as harmful trading practices. Origin The first stock brokerage house in the United States started in Philadelphia in 1800. While the practice had been around since the early 1700s, the Philadelphia Stock Exchange was the first organized body that brought brokers together and served to codify the rules and regulations under which business had been conducted. The profession continued to expand with the growth of corporations and the dawning of the Industrial Revolution. Crash 8 Source:- http://www.stockbroking.co.in/origin-of-stockbroking.html

The first major negative event in the industry occurred when the stock market crashed in 1929, which was followed by the Great Depression. The result of the crash was due to investors who had borrowed heavily to purchase stocks and began to realize that they were hugely overvalued and attempted to sell them off, resulting in a panic. Securities Act In an effort to prevent the recurrence of the 1929 crash, the Securities Act was implemented in 1933 as a way to regulate the industry. Eventually, the stock market began to rebound, and continued a general pattern of steady growth over the next several decades. Change In the early 1970s, the growth of technology led to reforms in the United States that helped to reopen the markets to more liberalized trading. In the late 1980s, another crash in the market occurred due to the dropping of prices of stock index futures. Much like the Great Depression, this led to a mass selling of these securities, causing the stock market to plummet. Rebound Stock broking again saw a boom as tighter regulations were put in place following the 1987 crash. The markets reached new heights in the late 1990s. The terrorist attacks of September 11, 2001 slowed the pattern of growth. Another Crash In 2008, the largest single-day drop since 1987 occurred, as the market lost $1.2 trillion of its value on September 29. The drop occurred because of several factors, including the collapse of the mortgage industry and a worsening credit crisis. The market has rebounded only slightly as of mid-2009.9

2.2.3 Salient Features of the Industry in India

9 Source:-http://www.eHow.com/m/about_5208105_history-stockbroking.html



On the basis of geographical concentration, the west region has the maximum

representation of 52% around 24% firms are located in the North, 13% in the South and 10% in the East. 

3% firms are started broking operations before 1950, 65% between 1950-1995 and

32% Post1995.  On the basis of terminals 40% are located at Mumbai, 12% in Delhi, 8% in Ahmadabad, 7% in Kolkata, 4% in Chennai and 29% are from other cities.  From the study, we find that almost 36% firms trade in cash, derivatives and commodities.  In the cash market, around 34% firms trade at NSE, 14% at BSE and 52% trade at both exchanges. In the derivative segment, 48% trade at NSE, 7% at BSE and 45% at both, whereas in the debt market, 31% trade at NSE, 26% at BSE and 43% at both Exchanges.  Majority of branches are located in the North, i.e. around 40%. West has 31%, 24% are located in South and 5% in East.  In terms of Sub brokers, around 55% are located in the South, 29% in West, 11% in North and 4% in East.  Trading, IPOs and Mutual funds are the top three products offered with 90% firms offering trading. 67% IPOs and 53% firms offering mutual fund transactions.  In terms of various areas of growth, 84% firms have expressed interest in expanding their institutional clients, 6% firms intend to increase FII clients and 43% are interested in setting up JV in India and abroad.  In terms of IT penetration, 62% firms have provided their website and around 94% firms have E-mail facility.10

2.2.4 Recent Trends Equity brokerage industry in India is experiencing rapid growth and diversity. Following the wide range of stock market reforms in the early 2000’s, brokerage industry underwent major transformations from being engaged in only brokerage business to offering a wide range of financial services. A modern broking house in India may well be a corporate entity that offers a wide range of products, relies on research for advice, uses modern technology, has large distribution network connecting the country, provides investor education and awareness and is compliance focused. These developments have resulted in a huge spurt in business as also growing market share of the large sized brokerage

10 Source- http://www.dnb.co.in/equitybroking/industry%20insights.asp

houses that led to surge in enterprise value, thus becoming objects of interest for global investing. In the recent period, global and domestic private equity firms have taken stake in brokerage firms such as Anand Rathi (Citigroup), Edelweiss (Lehman Brothers), Geojit (BNP Paribas), SMC (Millennium India), Motilal Oswal (New Vernon), Marwari Shares (India Capital Growth Fund), J R G Securities (Barings Pvt Equity) and Network Broking (Amas Bank of Hindujas), India Infoline (Orient Global) etc. Initial Public Offerings of large firms in2007 such as Motilal Oswal, Edelweiss and Religare received huge response from the markets (over subscription going more than 100%) and also high premiums. Large issues of these brokerage firms debuted in the stock exchange with premiums ranging from 20% to 75%. With the stock market momentum likely to continue, broking firms could look forward to scaling up their resource mobilization to fund growing operations and expansion. Brokerages mopping up huge resources from the market are not unusual even in the emerging markets. For instance, Citic Securities, a Chinese securities firm is reported to have raised US $ 3.3 bn last year and other firms such as Haitong and Gold state are planning to come out with IPOs of US $ 4-5 bn in 2008. In India, about 45 equity brokerage houses are at present listed on the stock exchanges that together reported Rs 3.5 bn of equity, total income of Rs 47 bn and net profit of Rs 3 bn for the second quarter of FY08. Prospects and Outlook Indian broking houses could look forward to a period of growth and consolidation. Indiaâ&#x20AC;&#x2122;s economic growth and deepening of the financial system will present the broking firms with numerous opportunities for growth and expansion. Integration of the financial markets will enhance the scope of their business and scalability. Access to public equity markets will enable them to raise resources to fund expansion and growths as pursue useful business acquisitions. Growing international investor interest in India will add newer opportunities to scale up the business as also harmonsing with global standard and practices. Introduction of new products such as mini contracts in the derivatives and other futures and options products will add new opportunities for creating new business segments. While opportunities abound, there is a great need for reform and restructuring of the equity broking industry. There are about 9,000 brokers registered with SEBI but 80 percent of the turnover in NSE and BSE is accounted for by about 100 brokers. Consolidation thus

becomes relevant to forge a stronger industry. Similarly, capital levels too need to be strengthened. The 45 odd listed broking firms in India together have a meager Rs 3.5 bn of capital, which is far less than what one top broking firm in China could raise from the capital markets. Better performance and practices will enable broking firms to increase capital levels that will be essential for funding expansion. Investor education and awareness is another aspect broking industry should promote in the long-term interest of the market. As the product mix and risk matrix in financial markets are continuously changing, it becomes imperative for the intermediaries to educate and create awareness in the clients that would be mutually beneficial. Better understanding of the financial products and associated risks by the investors will be in the interest of the growth and stability of the markets. The Indian broking industry is coming of age. It has enormous opportunities for growth and diversity. As markets expand and get globalised, these firms will have increased opportunity to cater to a large and diverse range of clientele with a wide mix of products and services. Expanding markets offer enhanced opportunities. Those who are well prepared will be in a better position to garner the benefits.11

2.2.5 Performance / Growth Scenario Some of the major recent developments in the global securities markets have been summarized below:

ď&#x201A;§ Equalization Equity markets have expanded significantly in a large number of countries across the world. The market capitalization of the worldâ&#x20AC;&#x2122;s leading stock exchanges rose from about USD11 trillion in 1991 to USD35 trillion in 1999 to about USD51 trillion in 2006. The growth of market capitalization is evident across regions. Market capitalization in Asia nearly doubled from USD6.8 trillion in 1999 to USD11.8 trillion in2006, where as in America it grew from USD17.9 trillion to USD22.6 trillion and in Europe/Africa/Middle East; it rose from USD10.2 trillion to USD16.1 trillion. Market capitalization as a percent of GDP witnessed steep growth in several countries during this period. Similarly, trading volumes in stock exchanges too has shown rapid growth. Value of share trading in stock exchanges rose from about USD5.4 trillion in 1991 to USD33 trillion in 1999 to about USD70 trillion in 2006. During the period 1999 and 2006, value of share 11 Source- http://www.dnb.co.in/equitybroking2008/Emergingtren.asp

trading in Asia Pacific rose from USD4.2 trillion to USD12 trillion, in Europe/Africa/Middle East from USD8.3 trillion to USD21.8 trillion and in Americas from USD20 trillion to USD35 trillion.

 Institutional investment The rapid growth of stock markets in the world, to a significant extent could be explained by the surge in the institutional investors consisting of pension funds, insurance companies and mutual funds. During the period 1995 and 2005, the assets under management of the institutional investors doubled from USD21trillion to USD53 trillion. A large number of institutional investors are moving away from the home bias investing in outside world. Emerging markets with higher economic growth and rapidly growing financial markets became major centers of destination for the investments of institutional investors. For instance in the US, in 1994, pension funds invested 41% of their portfolio in domestic equity and 7% in international equities, where as by 2005 that share rose to 48% in domestic equities and 15% in international equities. The portfolio allocation to bond markets during the same period reduced from 42% to 32%. Emerging markets received sizeable portion of the investments. In the US, the dedicated emerging markets mutual funds rose from about USD27 bn in2000 to USD 230 bn in 2006.

 International listings On the back of the liberalization of cross border financial flows, companies in several countries are seeking listing in international exchanges to garner benefits from international investors as also widen their investor base. The number of foreign companies listed in the London Stock Exchange rose from 387 in 1970 to 553 in 1990 to 636 in 2006. The number of foreign companies listed on the NYSE has also risen rapidly in the 1990s. There is a keen competition across the world’s leading stock exchanges to promote international listing and gain greater influence. In the recent period, the US experienced a slowdown in the listing of foreign companies. The decline is attributed to stringent corporate governance norms that were applied following the corporate abuses found in the beginning of the decade. The US is now examining in greater detail measures to gain the prominence once it enjoyed in the international listings. The Alternative Investment Market of London Stock Exchange attracted huge interest from SMEs from a large number of countries.

 Emerging markets as an investment destination

Liberalization of capital flows led to surge in international investment into emerging economies finding value on the back of huge prospects for growth. The flow of net Foreign Direct Investment (FDI) into developing countries increased from USD170 bn in 1998 to USD325 bn in 2006 and net portfolio equity flows increased from USD6 bn to USD94 bn during the same period. Net debt flows during this period are rather subdued with net debt flows from official creditors turning negative. Net portfolio equity flows to China between the year 2000 and 2006 rose from USD6.9 bn to USD32 bn and in India from USD2.3 bn to USD8.7 bn. Other emerging markets such as Brazil, Mexico, South Africa, Thailand and Russia too, showed surge in the net portfolio equity flows. Emerging markets showed significant growth in stock prices making them attractive investment destinations though issues of valuations are beginning to become a concern now.

 Growing correlation of returns Greater harmonization of stock markets in mature and emerging markets is in evidence by the increasing correlation in market returns across different markets. The higher correlation in the stock price movements gained momentum in the late 1990s due to growing foreign institutional investment in several markets, and growth of the technology sector that pervaded many markets and has driven stock price momentum in the late 1990s.

 Emerging markets in the new issuance market Emerging markets also became very active in the new issuance market. In 2006, all the ten largest cross border new capital issues were from the emerging markets. These ten issues were from China, Russia, Mexico, Thailand and Kazakhstan. Of these ten issues, four each were listed in London and Hong Kong and only one in the US. The value of the new listings by emerging market companies in the US exchanges declined from USD2.9 bn in 2004 to USD2.7 bn in 2006 where as that of London rose from USD0.7 bn to USD9.6 bn and in Hong Kong from USD7.2 bn to USD30.4 bn. Emerging markets in the first five months of 2007 have raised USD53.7 bn in global financial markets, which is reported to be the highest ever amount raised for a year. Some of the leading issues during this period include the USD8 bn IPO by VTB, second largest Russian bank, USD1.85 bn by Turkish financial institution Halk bank and USD1.4 bn by a Russian real estate company, AFI Development. Some of the largest issues from the emerging markets in the recent period include; USD21.9 bn issue of China’s ICBC Bank (Oct 2006), USD11.2 bn issue of Bank of China (May 06), USD10.7 bn issue of Russian energy company Ros neft (Jul 06), USD5.9 bn pubic issue of China’s Citic Bank.

ď&#x201A;§ Alternative markets In view of the limitations on listing of small and medium scale companies in the big boards of the main exchanges, several stock exchanges have developed alternative markets for encouraging listing of small and midcap stocks. Almost every major exchange has an alternative platform for listing and trading of small and midcap stocks and new generation companies without much listing history. The market capitalization of the alternative markets in the year 2006 has grown at an impressive rate of 30 %. More than 12000 companies are listed in these alternative markets and the value of share trading of these for SMEs markets rose 15% in 2006 from USD802 bn to USD919 bn. New capital (IPOs) rose in the alternative markets rose 59% in 2006 from USD13.6 bn to USD21.6 bn.

ď&#x201A;§ Growth of Derivatives The growth of derivatives picked up on the need for risk transfer products. The size of global derivatives industry in 2006 USD370 trillion of notional value and USD10 trillion of market value in the Over the Counter (OTC) derivative markets and USD84 trillion of notional value and USD10 trillion market value in the Exchange traded derivative markets. According to the International Swaps and Derivatives Association, more than 90 percent of the global 500 corporations use derivatives for hedging risks in interest rates, foreign exchange and equities. In the OTC markets, derivative products accounting for large share of market value include interest rate (78.5%) and Foreign Exchange (11.4%) where as in the Exchange Traded segment, derivative products on interest rate, government debt and equities form the major part of the volumes.

ď&#x201A;§ Dark Pools and Private Markets In the third week of May 2007, Goldman Sachs launched GSTrue, which is a platform developed to allow exclusive club of big investors to trade unregistered, privately placed securities, which is considered to be a major challenge for the public equity capital markets in the US. Goldman Sachs in that deal helped underwrite the private sale of 15% of hedge fund manager Oak tree Capital Management for USD800 mn. The investors in this sale would be able to buy and sell Oak tree shares through the new Goldman Sachs Tradable Unregistered Equity System, which has its acronym GSTRue. Under the rules of the Securities and Exchange Commission of the US, companies can sell securities without registering them as long as the issues are limited to qualified institutional buyers, which are investors with at least USD100 mn of assets and there are

no more than 500 stockholders. Private pools of capital are growing in size and significance in international markets to overcome the costs and pressures from stringent regulation. According to an estimate of NASDAQ, in 2006, companies in the US raised USD162 bn of capital through unregistered private placements (also known as 144A private placements) compared with USD154 bn through IPOs, which are registered with the regulator. A group of world’s largest banks are developing “Project Turquoise” which is a hybrid share trading system that allows transactions both on exchange and outside it (called as dark liquidity pools) where firms with large asset base can buy and sell large blocks of shares away from the regulatory oversight.

 Private Equity Private equity is growing in size and significance. In view of the regulatory standards prevalent in the public equity capital markets, several firms seek the private equity option to raise resources. According to Dialogic, the top 50 private equity firms raised USD551 bn out of the USD800 bn estimated to have been raised by the total private equity since Jan 2002. Of the top 50 private equity firms, more than 30 are from the US, 11 from the UK, five from Western Europe and one from Asia Pacific. Private equity is now involved in high value deals and recent transactions include USD35 bn HCA buyout in the healthcare industry and bids of USD39 bn and USD41 bn for Equity Office Property Trust, a commercial office real estate trust in the United Trust. It is expected that the transaction values of the private equity may go up to USD50-100 bn in the near future. Private equity market in India raised USD2.2 bn in 2005 about USD4 bn in 2006 and is expected to raise about USD10 bn by 2010, according to a recent study.

 Hedge Funds Hedge Funds emerged from the need of investors seeking alpha to earn an excess return and beat the market and the returns from the conventional investments. Alpha is a common measure of assessing an active manager’s performance, as it is the return in excess of a benchmark index or “risk-free” investment. The difference between the fair and actually expected rates of return on a stock is called the stock’s alpha. In view of rapid growth of hedge funds and their complex nature of operations and lack of adequate regulatory control, these funds became a major concern of global financial regulation. Notwithstanding these concerns, hedge funds continue to grow, with the size of the market growing from about USD30 bn in 1990 to more than USD1.4 trillion in 2005, and the number of funds rising from about 530 to about 7,000 during this period. An interesting development in the recent period is the growing institutional investment in the

hedge funds which is estimated at USD360 bn in 2005 and the rising allocations to these funds that was evident in the US and XXVII the European markets. The investor base of the hedge funds consists of individuals/families, fund of funds, corporations and institutions, public and private pensions and endowments and foundations in that order.

ď&#x201A;§

Investor Protection

With democratization of markets leading to greater participation of individuals and investments and wide choices of asset classes now available, issues of investor interest and protection have assumed centre stage. Following the corporate crises in the US that adversely affected the investor interests, extensive federal investigations were launched that led to imposition of huge penalties and punitive damages leading to billions of dollars. Such actions were taken against a wide spectrum of global investment banks, brokerage firms and other related entities. Simultaneously, growth of litigation and class action suits showed significant rise when the market intermediaries failed to meet their obligations or did not provide all the material facts to the investors that were crucial for an investment decision. Securities regulators imposed penalties on market participants who were found to have indulged in market abuses. In India, disgorgement orders were passed on certain entities that were found to making money by unfair means and for violating regulatory norms and procedures. Top institutional investors in several countries devised their own review process for investing in countries and companies that brought into light greater need for higher standards in corporate governance, disclosure and transparency standards and in some cases concern towards issues such as democracy and social equity, environment, economic and political reforms.

ď&#x201A;§ Surge in Chinese capital markets A major change in the year 2007 is the sudden leap of China into big league of global stock markets. On 9 May 07, Shanghai Stock Exchange, Chinaâ&#x20AC;&#x2122;s top stock market, recorded turnover of USD33.2 bn and Shenzhen Stock Exchange, a stock market for SMEs, an equally powerful USD15.8 bn, taking the combined turnover of both these stock exchanges on that day to USD49.5 bn. In the first three months of the year 2007, value of share trading in both these Chinese stock markets reached 89% of the whole turnover of the year 2006. Value of share trading in Shanghai Stock Exchange rose from USD256 bn in 2003 to USD736 bn in 2006 and in the first three months of the year 2007, it already recorded USD652 bn. Market capitalization in China between Apr 2006 and 2007 rose by almost 4 times, pushing it to a position among the top 10 exchanges in the world and

value of share turnover rose 6 times making Shanghai 6 the biggest. Main indexes of Shanghai Stock Exchange and Shenzhen Stock Exchange posted returns of 194% and 204% respectively in the 12 months proceeding Apr 2007.

 Rise of smaller markets The growth and momentum of the stock markets is spreading across a large number of markets big and small. Recent evidence of big surge in stock markets include countries in the Middle East, which witnessed exceptional growth in 2005/2006, China in 2007 and several smaller European and Latin American countries in the last one year. As international investing is spreading its presence, domestic financial institutions and investors are finding stocks as an important asset class and stock markets all over the world have experienced rapid growth in the last five years

 Stock exchange consolidation A big wave of stock exchange consolidation is taking place across the global financial markets. The most notable merger in the recent period is that of the New York Stock Exchange with Archipelago that led to the demutualization of the former, which subsequently acquired Euro next to form, NYSE Group that makes it a formidable force in the North America and the Euro region. Another American exchange NASDAQ after the merger with Instinet, announced plans to acquire OMX, which is Europe’s leading exchange as also provider of cutting edge technology solutions for stock exchanges worldwide. Deutsche Borse’s recent acquisition of International Securities Exchange gives the former a powerful position in the derivatives markets in Europe and America. There was also sizeable consolidation within the domestic securities markets in several countries with the merger of equities and derivatives markets in countries such as Korea, Malaysia, and Hong Kong. In India, the issue of appropriate solutions for the 20 odd stock exchanges that currently lack proper liquidity is engaging the attention of policy and regulation.

RECENT DEVELOPMENTS GOVERNING REGULATION OF STOCK MARKETS Systematic and streamlined regulation is the key strength and sustainability of the securities markets. Though formal regulation of the securities markets is about 70 years old, some of the recent developments in the financial markets are reshaping the scope and focus of the regulation. These include –



There is growing harmonization of regulation across different markets. Organizations

such as International Organization for Securities Commissions (IOSCO) are playing a very important role in adoption of uniform principles and guidelines across the markets.  The size and scope of the securities markets is rapidly changing from being one or two product markets to multi product markets with diverse features and different investor base.  Markets have become more democratized with more people and institutions participating in the market related activities. 

Rapid increase in the size of the institutional participation in the financial markets. For

instance equity markets, which in the past were retail investor driven, are now increasingly become institutional induced. 

Securities markets are transforming from being membership driven to public

corporation following demutualization and corporatization of stock exchanges in mature and emerging markets. Two most important pieces of regulation that came into being in the recent period are in the form of market structure reforms in the US, known more popularly as regulation NMS, which underlines the promotion of competition across the markets under three major principles; best price, open access and transparency. Under the new trade-through role, in whichever market a customer placed his order, it should be able to access the best price that is immediately and automatically available anywhere in the national market system. The trade-through rule will not allow markets to ignore better-priced automated quotes displayed by the competitors. Similarly, open access to displayed prices will be a major feature governing the competition of the markets. The regulation also stipulates that all significant markets must display their quotations and trade reports should be available to all interested parties on fair terms and non-discriminatory manner. Another equally important development is the Markets in Financial Industry Directive (MiFiD) that will come into force from 1 Nov 2007 and stipulates wide-ranging norms for financial institutions in the European Union. Major features of the MiFiD include wider scope of coverage of the financial institutions and the related business activities, greater degree of harmonization across the European markets and facilitate cross border business and stipulated capital requirements.

MiFiD is envisaged to bring major changes in the manner financial institutions in the European Union will be monitored. Simultaneous with stringent norms of regulation, the scope of regulation is considerably delegated to the markets and institutions in the form of self-regulation. Self-regulation brings a number of benefits to the business. Institutions such as National Association of Securities Dealers (NASD) have played an important role in promoting self-regulation. However, self-regulation has certain limitations it needs to overcome, before it becomes widely accepted across the markets. 12

2.2.5 Top five companies of the industry Many time new investor or trader gets confusion for open a D Mat and trading account in broking House. Many of broking House promises to you for better service but clients get problem due to trading session in theirs Broker house firm. Here is the list of Indiaâ&#x20AC;&#x2122;s top 5 broking House on base of survey of investors and traders of many cities. In their views, following Broking Houses gives best and reliable services.13

1. ICICI direct.com ICICI Securities empowers over 2 million Indians to seamlessly access the capital market with ICICIdirect.com, an award winning and pioneering online broking platform. The platform not only offers convenient ways to invest in Equity, Derivatives, Currency Futures, Mutual Funds but also other services Fixed Deposits, Loans, Tax Services, New Pension Systems and Insurance are available. ICICIdirect.com offers a convenient and easy to use platform to invest in equity and various other financial products using its unique 3-in-1 account, which integrates customerâ&#x20AC;&#x2122;s saving, trading, and demat accounts. Apart from convenience, ICICIdirect.com also offers access to comprehensive research information, stock picks and mutual fund recommendations among other offerings. Tailored services and trading strategies are available to different types of customers; long term investors, day traders, high-volume traders and derivatives traders to name some. ICICIdirect.com uses the most advanced commercially available 128-bit encryption technology enabled Secure Socket Layer (SSL), to ensure that the information transmitted between the client and ICICIdirect.com across the internet is safe and cannot be accessed by any third party.14 12 Source- http://www.dnb.co.in/equitybroking/global%20scenario.asp 13 Source:- Http://www.indianstockmarket.org/indias-top-10-stock-broking-house/ 14 Source:-http://www.icicisecurities.com/OurBusiness/?

SubSubReportID=10223&shortCode=INST

2. India Infoline India Infoline Ltd (India Infoline), established in 1995, is the holding company of the India Infoline Group. It has membership in the cash and derivative segments of both the NSE and BSE. India Infoline is also registered as a DP with NSDL and CDSL. India Infoline through its subsidiary, India Infoline Commodities Limited also offers commoditytrading services, which is a registered member with DGCX since 2006. It also operates in the currency futures market segment. India Infoline offers a wide range of products and services which include investment banking, distribution of financial products, demat services, private equity, PMS, institutional broking, WMS, insurance broking among others. In addition, it also offers research services in areas of economy, derivative strategies, mutual funds, IPO, credit policy and various others. The company has 15 domestic subsidiaries and five foreign subsidiaries. The company has global presence through its subsidiaries in New York, Singapore and Dubai. India Infoline caters majorly to retail clients. During CY09, the company added 303,480 client accounts. Address: 75, Nirlon Complex, Off. Western Express Highway, Goregaon (East), Mumbai 400063, Maharashtra Telephone: 91 22 42499000 Fax: 91 22 26850451 Email: mail@indiainfoline.com, Website: www.indiainfoline.com Registration Number: NSE - INB/INF231097537; BSE - INB/INF011097533 15

3. Kotak Securities Ltd. Kotak Securities Ltd (Kotak Securities) is the stock-broking and distribution arm of the Kotak Mahindra Group and a subsidiary of Kotak Mahindra Bank. Kotak Securities was established in 1994. It has memberships in the cash, derivatives and currency futures segments of NSE and BSE. Kotak Securities is also a DP with NSDL and CDSL. Apart from stock broking, the company is engaged in offering depository services, asset management, margin financing, PMS and distribution of financial products like IPO’s, mutual funds and insurance. The company has a full-fledged research division, which offers macro economic, sectoral research and company specific equity research. Its domestic network spans over 383 cities and 1,048 offices. Trading in equities and derivatives contributes to major part of the company’s revenue. During CY09, Kotak Securities added around 62,194 accounts of which around 27% are e-broking accounts. The company’s overseas operations include one subsidiary and two associate firms operating in two foreign locations. 15 Source:-http://www.dnb.co.in/EquityBroking2010/showpdf.asp?path=Profile

%5CIndia+Infoline+Limited%2Epdf

Address: 1st Floor, Bakhatawar, Nariman Point, Mumbai - 400021, Maharashtra Telephone: 91 22 66529191 Fax: 91 22 66617041 Email: service.securities@kotak.com Website: www.kotak.com Registration Number: NSE - INB/INF230808130; BSE - INB010808153/ INF011133230 16

4. Share Khan Sharekhan Ltd (Sharekhan) is one a leading brokerage houses, established in 2000. Sharekhan has membership in the cash and derivative segments of both BSE and NSE. It also operates in the debt and currency futures segment. The company is registered as a DP with CDSL and NSDL. Besides trading, the company also offers PMS demat services and mutual funds. Share khan provides a comprehensive set of research reports relating to IPO and mutual funds. Other value added facilities offered to clients include online trading, dial-n-trade, share shops, fundamental and technical research. The company serves large number of retail clients with a client network of more than 1,00,000 clients which includes HNIâ&#x20AC;&#x2122;s, corporate, and other retail customers. The company through its subsidiary Share khan Commodities Ltd provides commodity-trading services. Address: A - 206, Phoenix House, 2nd Floor, Senapati Bapat Marg, Lower Parel, Mumbai - 400013, Maharashtra Telephone: 91 22 67482000 Fax: 91 22 66104533 Email: compliancelp@sharekhan.com Website: www.sharekhan.com Registration Number: NSE - INB/INF231073330; BSE - INB/INF011073351 17

5. Indiabulls Indiabulls Securities Ltd (Indiabulls), part of Indiabulls Group, was established in 1995. The company is in the business of providing securities and advisory services. It is a corporate member of capital market, wholesale debt market and derivative segments of NSE and of capital market and derivative segments of BSE. Indiabulls also operates in currency futures and is a DP of CDSL and NSDL. It provides a wide range of products and services which include internet trading, NRI trading, demat services, margin financing and distribution of financial products like IPO online, mutual funds etc. Power Indiabulls (PIB) is the advanced online trading platform offered by the company. Indiabulls also offers research services in the areas of economic, equity, mutual fund, IPO and others. The company operates in commodity segment through its 16 Source:-http://www.dnb.co.in/EquityBroking2010/showpdf.asp?path=Profile

%5CKotak+Securities+Limited%2Epdf 17 Source:-http://www.dnb.co.in/EquityBroking2010/showpdf.asp?path=Profile%5CSharekhan+

Limited%2Epdf

subsidiary, India bulls Commodities Pvt Ltd which is a member of MCX and NCDEX. It is listed on both NSE and BSE Address: F-60, Malhotra Building, 2nd Floor, Connaught Place, New Delhi - 110001, Delhi Telephone: 91 11 41523700 Fax: 91 11 41529071 Email: helpdesk@indiabulls.com Website: www.indiabulls.com Registration Number: NSE - INB/INF230875632; BSE - INB/INF010875632. 18

18 Source:-http://www.dnb.co.in/EquityBroking2010/showpdf.asp?path=Profile

%5CIndiabulls+Securities+Limited%2Epdf

2.2 Company Overview

2.2.1 Overview of the Organizations: The Kotak Mahindra Group was born in 1985 as Kotak Capital Management Finance Limited. Uday Kotak, Sidney A. A. Pinto and Kotak & Company promoted this company. Industrialists Harish Mahindra and Anand Mahindra took a stake in 1986, and that's when the company changed its name to Kotak Mahindra Finance Limited. Since then it's been a steady and confident journey to growth and success. Kotak Securities Ltd., is one of India's largest brokerage and securities distribution house in India. Over the years Kotak Securities has been one of the leading investment broking houses catering to the needs of both institutional and non-institutional investor categories with presence all over the country through franchisees and coordinates. Kotak Securities Ltd. offers online (through www.kotaksecurities.com) and offline services based on well-researched expertise and financial products to the non-institutional investors. Kotak Securities Limited is the world of Capital Markets where everything newsworthy exists only in the present moment and where knowing the importance of timing, sentiments and strategic forecasting makes the difference between profit and loss. Kotak Securities Limited, a strategic joint venture between Kotak Mahindra Bank and Goldman Sachs (holding 25% - one of the world’s leading investment banks and brokerage firms) is India’s leading stock broking house with a market share of 7 - 8 %. Kotak Securities Limited is one of the larger players in distribution of IPOs - it was ranked number One in 2003-04 as Book Running Lead Manager in public equity offerings by PRIME Database. It has also won the “Best Equity House” Award from Finance Asia -April 2004. The Company has a full-fledged Research division involved in macro economic studies, Sectoral research and Company specific equity research combined with a strong and well Networked sales force, which helps deliver current and up-to-date market information and news. Kotak Securities Limited is also a depository participant with National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL) providing dual benefit services wherein the investors can use the brokerage services of the Company for executing the transactions and the depository services for settling them. Kotak securities provide portfolio Management Services, catering to the high end of the market. Portfolio Management from Kotak Securities comes as an answer to those who would like to grow exponentially on the crest of the stock market, with the backing of an expert. Kotak Securities Limited manages assets over Rs. 1700 crores through it’s Portfolio Management Services (PMS) servicing high net worth clients with a large

investible surplus through its preferred client services in the mass affluent and wealth management segments. The company has a full-fledged research division involved in Macro Economic studies, Sectoral research and Company Specific Equity Research combined with a strong and well networked sales force which helps deliver current and up to date market information and news.

2.2.2 MARKET SHARE Kotak Securities Ltd. is India’s leading stock broking house with a market share of around 8.5 percent as of March 31, 2006. It handles more IPOs than any other brokerage. The company has a full-fledged research division involved in macroeconomic studies, sect oral research and company-specific equity research combined with a strong and wellnetworked sales force, which helps deliver current market information and news. The firm has 195 branches servicing more than 2,200,000 customers across 231 cities. Kotaksecurities.com, the online division, offers Internet brokerage services and also online IPO and mutual fund investments. Kotak Securities manages over 2500 crores of Assets under Management (AUM).

2.2.3 AWARDS AND RECOGNIZATION Kotak Securities Ltd. 100 % subsidiary of Kotak Mahindra Bank is one of the oldest and largest broking firms in the Industry. The company’s offerings include stock broking through the branch and Internet, Investments in IPO, Mutual funds and Portfolio management service. Kotak Securities has a full-fledged research division involved in Macro Economic studies, Sect oral research and Company Specific Equity Research combined with a strong and well-networked sales force, which helps deliver current, and up to date market information and news. Kotak Securities’ network spans over 321 cities with 877 outlets, with an employee workforce beyond 5100. The company is also a depository participant with National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL), providing dual benefit services wherein the investors can avail the company’s brokerage services for executing the transactions and the depository services for settling them. Kotak Securities Ltd processes

more than 4, 00,000 trades a day, which is much higher even than some of the renowned international brokers. Kotak Securities Limited has over Rs. 3300 crore of Assets under Management (AUM) as of 31st March 2008. The portfolio Management Service provides top class service, catering to the high end of the market. Portfolio Management from Kotak Securities comes as an answer to those who would like to grow exponentially on the crest of the stock market, with the backing of an expert. Unlike many other companies, Kotak Securities Ltd. has a Centralized Risk Management System and an in-house Research Team, which allows it to offer the same levels of service to customers across all locations. Kotak Securities was awarded as the most customer responsive company in the Financial Institution sector by AVAYA Global Connect Award both in 2006 and in 2007. Kotak Securities Ltd has been the first in providing many products and services, which have now become industry standards. Some of them are:      

Facility of Margin Finance to the customers Investing in IPOs and Mutual Funds on the phone SMS alerts before execution of depository transactions Mobile application to track portfolios Auto Invest – A systematic investing plan in Equities and Mutual funds Provision of margin against securities automatically against shares in the customer’s

Demat account Kotak Securities’ Accolades include:         

Best Brokerage Firm in India by Asia money in 2008, 2007 & 2006 Best Performing Equity Broker in India – CNBC Financial Advisor Awards 2008 Avaya Customer Responsiveness Awards (2007 & 2006) in Financial Services Sector The Leading Equity House in India in Thomson Extel Surveys Awards for the year 2007 Euro money Award (2007 & 2006) – Best Provider of Portfolio Management: Equities Euro money Award (2005)-Best Equities House In India Finance Asia Award (2005)-Best Broker In India Finance Asia Award (2004)- India’s best Equity House Prime Ranking Award (2003-04)- Largest Distributor of IPO’s

2.2. KOTAK SECURITIES RESEARCH CENTER Kotak Securities Research Center is a special research cell where some of India's finest financial analysts bring you intensive research reports on how the stock market is faring, when is the right time to invest, when to execute your order and more. KSL provides both types of research reports.

 Fundamental Research reports A. B. C. D. E. F. G. H.

Intraday calls Special Reports Market Mornings Daily Market Brief Sectoral Report Stock Ideas Derivatives Reports Portfolio Advices

 Technical Research reports A. Weekly Technical Analysis

Depending on what kind of investor you are, Kotak Securities Ltd. (KSL) brings customers from fundamental or basic research and technical research. As an investor with Kotak Securities, Customers get access to these research reports exclusively. Customers get access to the following reports. Research process is given below.

2.2.4 PRODUCTS OFFERED BY KOTAK SECURITIES LIMITED 1) Portfolio Management Services [PMS]: Managing investments in equities requires time, knowledge, experience and constant monitoring of stock market. Those who need an expert to help to manage their investments portfolio management services (PMS) comes as an answer. The business of portfolio management has never been an easy one. Juggling the limited choices at hand with the twin requirements of adequate safety and sizeable returns is a task fraught with complexities. Given the unpredictable nature of the share market, it requires solid experience and strong research to make the right decision. In the end, it boils down to make the right move in the right direction at the right time. That is where the expert comes in. Kotak Securities is one of India’s oldest portfolio management companies with over a decade of experience. It is also one of the largest, with Assets under Management of over Rs. 3300 Crores. Kotak Portfolio Management comes as an answer to those who would like to grow exponentially on the crest of stock market, with backing of an expert. We, at Kotak, measure our success through the success of our clients. Whatever be your requirement, we will tailor your stock market portfolio to your specific investment need. At the very base of a financially sound portfolio lies the identification of one's investment objective. We help you identify your investment

objectives, also outline important requirements like liquidity, capital appreciation, current income, time span and fiscal implications, and then suggest an appropriate scheme. 19

2) EquitiesThe term equity trading and stock trading are sometimes used synonymously; however, there are a few minor differences between the two. Let us start with the basic definition; equity trading is essentially the purchase or sale of company stock through one of the major stock exchanges, just as stock trading is. An equity trade can be placed by the owner of the shares, through a brokerage account, or through an agent or broker; again, similar to stock trading. The key difference between equity trading and stock trading lies in their investment options and management firms. Equity trading firms specialize in offering in-depth market research, trading expertise, unique trading systems (even algorithmic), and have direct access to the trading floor for better executions. These equities trading firms predominately exist in the form of hedge funds and are setup to trade within a larger investment bank; such as, Morgan Stanley, Goldman, Sachs, JPMorgan, and Bank of America to name a few.20

3) Derivatives Commodities whose value is derived from the price of some underlying asset like securities, commodities, bullion, currency, interest level, stock market index or anything else are known as â&#x20AC;&#x153;Derivativesâ&#x20AC;?. In simpler form, derivatives are financial security such as an option or future whose value is derived in part from the value and characteristics of another security, the underlying asset. It is a generic term for a variety of financial instruments. Essentially, this means you buy a promise to convey ownership of the asset, rather than the asset itself. The legal terms of a contract are much more varied and flexible than the terms of property ownership. In fact, this flexibility appeals to investors. 19 Source:-http://www.kotaksecurities.com/whatweoffer/portfoliomanagement.html 20 Source:- http://tradingsim.com/blog/equity-trading/

When a person invests in derivative, the underlying asset is usually a commodity, bond, stock, or currency. He bet that the value derived from the underlying asset will increase or decrease by a certain amount within a certain fixed period. ‘Futures’ and ‘options’ are two commodity traded types of derivatives. An ‘options’ contract gives the owner the right to buy or sell an asset at a set price on or before a given date. On the other hand, the owner of a ‘futures’ contract is obligated to buy or sell the asset. The other examples of derivatives are warrants and convertible bonds (similar to shares in that they are assets). But derivatives are usually contracts. Beyond this, the derivatives range is only limited by the imagination of investment banks. It is likely that any person who has funds invested an insurance policy or a pension fund that they are investing in, and exposed to, derivatives – wittingly or unwittingly.21

4) IPOs An initial public offering or Initial Purchase Offer (IPO), referred to simply as an "offering" or "flotation", is when a company (called the issuer) issues common stock or shares to the public for the first time. They are often issued by smaller, younger companies seeking capital to

expand,

but

can

also

done

large privately

owned

companies looking to become publicly traded. In an IPO the issuer obtains the assistance of an underwriting firm, which helps determine what type of security to issue (common or preferred), best offering price and time to bring it to market. 22

5) Mutual Funds A mutual fund is made up of money that is pooled together by a large number of investors who give their money to a fund manager to invest in a large portfolio of stocks and / or bonds. Mutual fund is a kind of trust that manages the pool of money collected from various investors and it is managed by a team of professional fund managers (usually called an Asset Management Company) for a small fee. The investments by the Mutual Funds are made in equities, bonds, debentures, call money etc., depending on the terms of each scheme floated by the Fund. The current value of such investments is now a days is calculated almost on daily basis and the same is reflected in the Net Asset Value (NAV) declared by the funds from time to time. This NAV keeps on changing with the changes in 21 Source: - http://finance.indiamart.com/markets/commodity/derivatives.html 22 Source:- http://en.wikipedia.org/wiki/Initial_public_offering

the equity and bond market. Therefore, the investments in Mutual Funds is not risk free, but a good managed Fund can give you regular and higher returns than when you can get from fixed deposits of a bank etc.23

6) Structured Products Structured products are synthetic investment instruments specially created to meet specific needs that cannot be met from the standardized financial instruments available in the markets. Structured products can be used: as an alternative to a direct investment; as part of the asset allocation process to reduce risk exposure of a portfolio; or to utilize the current market trend.24

2.2.5 Main office & Branch Offices Registered Office Address: 1st Floor, Bakhatawar, Nariman Point, Mumbai - 400021, Maharashtra Telephone: 91 22 66529191 Fax: 91 22 66617041 Email: service.securities@kotak.com Website: www.kotak.com Registration Number: NSE - INB/INF230808130; BSE - INB010808153/ INF011133230

Branch Offices Address: Kotak Securities Ltd, Near New Liberty Showroom, Town Hall Link Road, Udaipur-313001

2.2.6 ORGANIZATIONAL STRUCTURE

23 Source:- http://www.allbankingsolutions.com/Mutual-fund-definition-basics-for-dummies.htm 24 Source:- http://www.hedgefund-index.com/d_structured.asp

MR. DHEERAJ PUROHIT (AVP)

MR. SHAKTI SINGH (BRANCH HEAD)

ONLINE DEALER

NAMITA GUPTA

VERTIKA SHARMA

DEALER

SHYAM SHARMA

OPERATION

ASHU SHARMA

RISK MGMT.

YOGENDRA TIWARI

SALES TEAM

PANKAJ SHARMA

PRABHU DAYAL

PRIYANKA SHARMA

ABHISHEK SHARMA

SHREYASI DIWEDI

YOGENDRA RANKAWAT

RAJEEV SHANKAR

GUNJAN KURKUREJA

ANIL AUDITCHYA

DURGA NARAYAN

VED PRAKASH SHARMA

N.K.KHANDELWA

KAVITA BUDANIA

VIKAS MEHRA

MAHESH KHANDELWAL

LABHANKUR SONI

DEELIP JAIN

Chapter PROJECT PROFILE

3.1 PROJECT PROFILE The objective of the project was to analyze “Effective Customer Relationship Management” for Kotak Securities Ltd., Udaipur for that we have to understand current CRM System and Services provided from the company and its effect on Customer Needs, Satisfaction Level, their response and emotions. The objective of this study to analyze existing customer satisfaction as those customers are the key sources to new customers with respect to the performance, sales efforts and sales service. As the company stands first in India in aspect of turnover. it s clear that it has very strong Customer Relationship Management System and perfect people to handle it properly for the benefit of customers and company as well. Actual and personal meeting with existing customers and employees has brought me to the reality of the effectiveness of the system and their success. For analyzing the same factor, I staked my whole duration of the project and simultaneously for internal study and market watch and other group assignments. Scope the this study is it will assist Kotak Securities ltd to get its own Customer Relationship Management system mirror well and it will get all the important things before eyes to apply all the possible ways to provide a superb service to the customers and accordingly make them loyal and retain them long lasting and to get new customers to be served. I have chosen to do research project on customer relationship management with Kotak securities because we can find problem and solutions of customer’s problem. We all know that research work is better then you write a project in training. Reason behind choosing this topics was as follows    

Maintain current / existing customers. Achieve new potential customers. Retain all the customers. Profitability Increment Reputation and credibility Increment, etc.

Chapter

RESEARCH MEHODOLOGY

4.0. RESEARCH METHODOLOGY A research design is simply a plan for study in collecting and analyzing the data. It helps the researcher to conduct the study in an economical method and relevant to the problem. Research methodology is a systematic way to solve a research problem. The methodology should combine economy with efficiency.

4.1 PROBLEM DEFINITION How companies makes relationship with customers and what they do for achieve more and more customers.

4.2 OBJECTIVES OF THE STUDY This study has been conducted with crystal clear objectives and with a view to learn a few things that are listed below: 1. 2. 3. 4.

To study the customer relationship of company To have a good experience in marketing department To know how company make new-new innovation for achieving customer To know the corporate world

4.3 RESEARCH DESIGN The study conducted here is exploratory cum descriptive.

4.4 METHODOLOGY OF THE STUDY

The sources for the information and data in this report have been classified into two broad groups: ď ś

Primary data - I used a well-devised Questionnaire, to try to attempt to get to the

crux of what consumer expects. For our research, we used the following methods to get Information.



Questionnaire for customers- I have developed a questionnaire to collect the

demographic data (ordinal category) & nominal data about their preference about Customer Relationship. In my questionnaire, there are 13 questions. Some are dichotomous and have multiple choices.  Data collected from the customer of Kotak securities ltd and from some professionals of different organizations. My area of research is limited to Udaipur city only. 

Secondary data - As for the secondary data, I got hold of some of the Research

Reports available on different well-known websites to understand some complex issues. I also found very good information on the Internet from various sites and different magazines.

4.5 SAMPLING PLAN 

Sample Type

I have selected people of the Udaipur Society and some professionals of different organizations as a sample population. 

Sample Size

Our sample size is 100, which comprises of persons of the two age groups—20to 40and 41 to 75 (Both Male and Female).



Sample Frame

Since our Research is being conducted on a small scale and the population is considerably large, we could not obtain the Sample Frame. 

Area of Research

Our Area of Research is Udaipur city only. 

Time Period

The Time Period of our Research is July-August 2011. 

Sampling Technique

I have used convenience-sampling technique.

4.6 SCOPE AND LIMITATIONS OF THE STUDY

The Scope of the project is limited to Udaipur, as the research has been carried out on the customers residing in Udaipur only. The various constraints or limitations, which may have affected our project, can be summarized as follows: 1. Some kind of misled or misguided information may have adversely affected our findings. 2. Sample size is very small(only 100). 3. The scope of the project is limited to Udaipur. 4. Though the sample has been taken from different regions but doesâ&#x20AC;&#x2122;nt represent the complete Indian scenario. 5. The time for study and survey was very limited. 6. The population could not represent the people from various occupations and cultures. 7. Inadequate disclosure of information is also the problem. 8. Financial problem is also there in completing this project in a proper way.

4.7 QUESTIONNAIRE DESIGN What comes to our mind initially is that we could have selected just one survey for consumers. The survey questions have been designed taking into consideration that the data collected should answer questions mentioned in Objectives of this research project. We have selected all questions that would directly answer those questions in Objectives and questions, which are close but not directly answering questions in Objectives. All of our questions are both multiple choices and open-ended questions. The questionnaire used was a printed, well structured formalized schedule to obtain and record specified and relevant

information with fair accuracy and completeness. The

questioning process was face to face interviews and the questionnaire was design in such a way that it could be understood and answered easily by the respondents.

Chapter

DATA INTERPRETATION AND ANALYSIS

Age group Age 20 to 30 year 31 to 40 year 41 to 50 year Above 51 year

Frequency 15 40 30 15

Age Group

above 51 years ; 15% 20-30 years

; 15%

41-50 years ; 30% 31-40 years

Interpretation:

; 40%

According to the above diagram, 40% customer comes into age group 31 to 40 who deals more in stock broking. Followed by 30% customer whose age 41 to 50 and 15% customer are age of 20 to 30 and above 51 year.

Gender compositions: Gender Male Female Total

Frequency 95 5 100

Gender composition

female ; 5%

male; 95%

Interpretation:

It is evident from the above graph that out of the sample of 100 respondents 95% were males and 5% female. This reflects a male majority in the sample taken.

Respondents Occupations: Respondentâ&#x20AC;&#x2122;s Business Man Proprietor HNIs

frequency 30 24 8

Individuals

Respondents Occupation

Individuals; 38%

HNIs; 8%

Interpretation:

Business Man; 30%

Proprietors; 24%

Above pie chart represents that research contains 100 respondents which are Businessmen, HNIs, Proprietors and Individuals and they are 30, 8, 24, 38 respectively in numbers and percentages.

Monthly Income: Monthly Income Less then RS 10,000 Rs 11,000-Rs 20,000 Rs 21,000-Rs 30,000 Rs 31,000-Rs 40,000 Above Rs 41,000

Frequency 15 35 30 13 7

Monthly Income

Above Rs 41,000; 7% Rs 31,000-Rs 40,000; 13% Less then RS 10,000; 15%

Rs 21,000-Rs 30,000; 30%

Rs 11,000-Rs 20,000; 35%

Interpretation: Above pie chart represents that the research contained 100 investors and customers of Kotak Securities Ltd. All the people were from different Income group, which are in numbers shown above. W e can clearly see sample includes more customers from second income group i.e. INR Rs 11,000 to Rs 20000.

Company Interaction via Email and Telephone Calls: Degree Poor Fair Good Very Good

frequency 2 11 59 18

Interaction via E-mail and Phone Calls

Poor; 2% Very Good; 20%

Fair; 12%

Good; 66%

Interpretation: From the above result of Company Interaction via Email and Telephone calls, we can imagine the satisfaction level of customers and accordingly Customer Relationship is managed through electronic media to maximize the wealth of customers. In Kotak Securities ltd, mostly dealers are in touch of regular traders / customers and customers also get loyal to the company through this practice. Every call is taped by default for the evidence of orders to buy or sell the stocks and Emails too.

Do you find company’s investment tips useful and beneficial? Response Yes No Can't Say

Frequency 96 1 3

Company's investment tips are useful or not

No; 1% Can't Say; 3%

Yes ; 96%

Interpretation: When it was asked sudden and on the time answer was the same of maximum people, it means the credibility and trustworthiness of the company is on the height. It is nothing but the result of Relationship Management. It is said that Share Market means „Well of Loss, nevertheless Kotak Securities ltd Customer don’t have any tension in investing because they believe in Companies Researchers and Analysts and their investment tips too.

Where do you rate Kotak Securities Ltd in terms of Services? Scale of 1 to 10 Poor Fair Good Very Good

Frequency 4 14 40 42

Rate Kotak Securities on the Scale of 10 in terms of service

Poor ; 4% Fair; 14%

Very Good; 42%

Good; 40%

Interpretation: From the above answers Customer Relationship can be very well highlighted because out of 100, 43 people have rated Kotak Securities ltd on the scale of 1 to 10 and again in remaining maximum customers say that they rate Kotak Securities ltd at on the scale of 1 to 10. Every customer has his own value and consideration about Kotak Securities ltd because they invest their Hard Earned money and take risk to earn more cause of Kotak Securities ltdâ&#x20AC;&#x2122;s Services and Attachment and it is all the output of Customer Relationship Management.

Where do you invest/ trade mostly? Where Customer invest Mostly? Equity Commodity Currency

Frequency 66 19 15

Invest/Trade mostely

Currency ; 15%

Commodity ; 19%

Equity ; 66%

Interpretation: One general question was asked in questionnaire to know the investment flow of customers towards Kotak Securities ltdâ&#x20AC;&#x2122;s Services. When it was asked why they invest in specific area mostly then it was answered by many people that liquidity market is easy to make money out of investment and take money out whenever we feel not to put. Moreover, other reason many customers do not want to invest for long time. In addition, about currency some people were not interested.

Where do you trade mostly? Trade Mostly Intraday Delivery Both

Frequency 48 37 15

Where do you trade mostely?

Both; 15%

Intraday

; 48%

Delivery; 37%

Interpretation: From the above view of graph we come to know that maximum people, 61% customers trade in Intraday Trading. On this, customers say they like to trade in Intraday because of Short-term investment and high level of excitement and sometimes they feel their money seems to sink. In Delivery, people say here is „No / Low Risk, More Money‟ , in this people say if scrip goes down like „Satyam‟, then also we get chance to book profit buying current stocks in low price and putting old stock aside temporarily. Here we find people hesitate to invest in Intraday and confident to trade in Delivery trading. Very less traders population do trade in both area, for few people its nothing but fund managing, if one finds difficulty in making money in Intraday, they simultaneously manage their fund for Delivery, but very few people feel do this type of management. Eventually Kotak Securities ltd is the Broking firm and it does not lose its attention from making money for its customers and lose its attention from Customer Relationship Management.

10.

Do you trade in any other broking firm?

Response Yes No Can't Say

Frequency 69 27 4

Trade in any other Broking firm

Can't Say; 4%

No; 27%

Yes; 69%

Interpretation: Above pie chart represents, the maximum people have their D‟mat A/c and Trading A/c somewhere else also nevertheless they say they trade from Kotak Securities Ltd’s only and few of their other A/Cs are put Non-Operating by them. Here we get a fact that Kotak Securities Ltd’s Customer Relationship Management really has something very attractive and attachable to emotions cause of services. Few of them were hesitating while answering this question.

11.

Are you satisfied with the services provided by Kotak Securities ltd? Satisfying Level Strongly Yes Slightly yes No Slightly No Strongly NO

frequency 64 35 1 0 0

Satisfied with the Service provided by Kotak Securities Ltd

No; 1%

Slightly yes; 35%

Strongly Yes; 64%

Interpretation: Above chart represents us the output of Customer Relationship Management with the help of the services and customers satisfaction can show a mirror of the efforts of the company towards making their customers loyal to them. Here 64% customers have

selected and stated that they are fully satisfied with the services that they are getting from Kotak Securities Ltd.

Chapter

OBSERVATIONS AND FINDINGS

Observations

1) Many consultants, vendors, and analysts today define CRM in terms of being a customer-centric business strategy that is enabled by a set of applications that support customer-facing functions and management decision making. That may capture the essence of what CRM is, but while it does not concentrate on the extra expenses occurring on Companies A/c due to increment in expenses in serving customers all the ways and Return on investment means consideration may

not

than

expected.

Customer may not give that much business transactions, which is estimated or expected.

2) It needs specific staffs to handle all the tasks of Customer Relationship Management because the data that is feed in system cannot be handled merely by Relationship Managers who has to make new customers and take care of their dealings and also to accomplish their additional responsibilities.

Findings  Many consultants, vendors, and analysts today define CRM in terms of being a customer-centric business strategy that is enabled by a set of applications that support customer-facing functions and management decision making. That may capture the essence of what CRM is, but while it does not concentrate on the extra expenses occurring on Companies A/c due to increment in expenses in serving customers all the ways and Return on investment means consideration may not be more than expected. Customer may not give that much business 

transactions, which is estimated or expected. It needs specific staffs to handle all the tasks of Customer Relationship Management because the data that is feed in system cannot be handled merely by Relationship Managers who has to make new customers and take care of

their dealings and also to accomplish their additional responsibilities.  It empowers management with a real-time pipelines and forecasting so they can build and focus on high profit, sustainable relationships.  It increases customers acquisition, retention, loyalty, and profitability by integrating information across the enterprise.  It enables executive and management to gain customer insight.  Generally people whom I have contacted they were from different domains like Business, Proprietors, High Net worth Income Group (HNIs) and students.  Their responses may not be proper because of their “Busyness” in Dealing Room.  This data is called Primary Data, which is considered very genuine but is this case it misrepresents the Reality and Credibility.  Some people, its felt that they gave fake response, with impression that this questionnaire is from Kotak Securities internal.  Some people did not take it serious because this was not important to them, as they are busy for trading at dealing Room.  Every data interpretation and statistics cannot be think worthy from their results because this study is for only two months altogether.

Conclusions From this study, it can be concluded that the customer relationship management in Company is satisfactory. The company is using various CRM practices like customization of the product, maintaining interaction with the customers regularly and providing good quality product etc. Customer relationship management has a certain impact on the profitability of the company. Average investment per customer has increased 15% over the last two years. Customer response rate towards marketing activities is also improving. There are various factors affecting the customer relationship management like working environment of the company, support from top management and coordination among the departments of the company. Information technology is not used as much as it should be. The company is using traditional tools of CRM like quantitative research, personal interviews. The company should modern tools like data mining, contact center, eCRM and web based survey tools. Customers are encouraged to give suggestions and complaints so that the company can improve its working and services. If the customerâ&#x20AC;&#x2122;s complaints are not resolved, the customers will be dissatisfied and the company may lose its customers. Different customers have different requirements. Therefore, the company customizes its product accordingly to satisfy the customers. It also gives more choice to the customers. To get the information about the customers and to measure the satisfaction the company conducts surveys. Because of the expertise needed in the research, the company should give this work to research agencies like AC NILSON. The company maintains frequent communication with the customers. As soon as the product is ready or a new service is launched the information is provided to the customers. Communication is also necessary to maintain the interest of the customers in the company.

Learning Outcome Learning any thing in our life is such an amazing experience, which give us a selfconfident feeling when we learn by practically doing a work. In working life, we meet everyday to many new people and share our information always inspire us to do something more well in future. While doing a work we already decide which type of work we are going to do after finishing the collage because now we have collected lot of practical idea about doing a work. In collage, we always set in the class and passed our time by talking to our friends and making fun of other persons, but we always have some fear from our future because we were not sure that what we have to do in our future. That types feeling I felt while doing summer internship. Some learning outcomes are as follows  The right way to approach different consumer classes. The beginning one and after that gradually telling the customer about the product and convinced them.  The perfect way to solve the queries of the customers.  The sincerity of doing work, in the right time by which creating a good impression to staff persons as well as high-level executives.  I got clear idea to attend customers by telephone, by appointments.  I would be able to know the working condition and practical knowledge of     

completing work. I got a clear idea about the complaints handling. I got a clear view of how to interact with other people, customer. I got a clear idea about problems faced by the organization. I got a clear idea about problems faced by the customer. I got a clear idea about how to solve these problems.

Bibliography



http://www.crm-software-guide.com



http://www.ezinarticles.com



http://www.stockbroking.co.in



http://www.gasci.com



http://www.aumassociate.co.in



http://www.indiacom.com



http://www.stockbroking.co.in

 http://www.eHow.com 

http://www.dnb.co.in



Http://www.indianstockmarket.org



http://www.icicisecurities.com



http://www.kotaksecurities.com



http://tradingsim.com



http://finance.indiamart.com

 http://en.wikipedia.org 

 http://www.allbankingsolutions.com  http://www.hedgefund-index.com  http://www.scribddocuments.wordpress.com

Questionnaire On Customer Relationship Management at Kotak Securities ltd

Personal Information:1. Name:________________________________________________ 2. Age: Less than 20 years

20-30 years

30-40 years

above 40 years

3. Gender: Male

Female

3. Occupation: Businessman

Proprietor

Professional

Other

4. Monthly Income: Less than Rs 10,000

Rs 11,000 – Rs 20,000

Rs 31,000 – Rs 40,000

above Rs 41,000

Rs 21,000 – Rs

30,000

Answer the Following Questions:5. How do you find Company Interaction via Email and Telephone Calls? Poor

Fair

Good

Very Good

6. Do you find company’s investment tips useful and beneficial? Yes

Can’t Say

7. Where do you rate Kotak Securities Ltd on the scale of 10 in terms of Services? 4

8. Where do you invest/ trade mostly? Equity

Commodity

Currency

9. Where do you trade mostly? Intraday trading

Delivery Trading

10. Do you trade in any other broking firm?

Both

Yes

Can’t say

If yes, name of the broking firm______________________________________________________________________ _

11. Are you satisfied with the services provided by Kotak Securities ltd? Strongly Yes Slightly yes No Slightly No Strongly NO 12. What improvement do you want be done in company’s services? …………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………… ……………………………………………………………… 13. Which service do you like most in Kotak Securities Ltd? …………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………… ………………………………………………………………