investment desision

8/12/2019 investment desision

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CHAPTER 2

INDUSTRY PROFILE

The working of stock exchanges in India started in 1875. BSE is the oldest stock market in

India. National Stock exchange comes second to BSE in terms of popularity; BSE and NSE

represent themselves as synonyms of Indian stock market.

Global investors now eagerly seek India as their preferred location for investment. Once

viewed with scepticism, stock market now appeals to middle class Indian also. Many Indians

working in foreign countries now divert their savings to stocks. This recent phenomenon is

the result of opening up of online trading. The stockbrokers based in India are opening offices

in different countries mainly to cater the needs of non-resident Indians.

In current FY14 Nifty has crossed 7000 levels and touched heights of 7500 levels, Sensex

also crossed 24000 levels and touched heights of 25000+ levels. And, it is expected to grow

in this current Bull Market.

Although India has one of highest household savings rate, the households channelize only a

small percentage of savings currently into the stock market. Instead, households prefer to

invest more in to bank fixed deposits, as equity they consider investments in equity

instruments comparatively riskier scheme. Survey findings revealed that, increased awareness

about equity market as the key factor that can channelize households savings into Stocks

with a share of almost 30% in factors that will channelize households savings into shares,

followed by improvement in economic scenario and superior performance of equity products

compared with other investment options.

Thus, a way forward for the Indian capital markets means that they need to be tuned in to

adjust to the constantly evolving developments in the financial services sector with focus on

product innovation, continued integration of technology, financial literacy and awareness,

regulatory reforms, flexible bond market and a favourable environment for the FIIs.

Emphasis on these necessities will strengthen the growth path, going forward.


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EQUITY BROKERAGE INDUSTRY

Indian Equity Markets

Vibrant equity and debt market have been currently growing at a steady pace, regardless of

the global economic downturn, as compared to some of its peers in the global market.

The domestic equity brokerage turnover (BSE and NSE combined) registered an increase of

16% (annualized) in 9MFY12-13 to Rs 309 trillion (Rs 356 trillion in FY11-12). This strong

increase continued to be fuelled mainly by equity derivative volumes with cash volumes

declining by 9% (annualized) in 9MFY12-13 when compared with FY 11-12 while equity

derivative volumes grew by 19% over the same period.

Gross brokerage yields remained largely stable in 9MFY11-12 when compared to FY 11-12.

However, the decline in cash volumes as well as the futures volume at the expense of options

volumes impacted overall gross blended yield which in ICRAs estimation has declined by

~15-20% when compared to FY 11-12.

The total client accounts increased by around 9% YoY during FY13, however, the number of

e-broking clients increased at a superior growth rate of around 13% YoY during the same

period. The e-broking clients accounted for nearly 63% of the total client accounts during

FY13, increasing from around 61% in FY12. The total income generated by e-broking

accounts of the overall sample companies stood at Rs 84.5bn during FY13, increasing around

20% YoY.

The slowdown in the domestic economy, higher competition, growing cost pressures, andfalling yields, have made it a tough time for the Indian broking industry. Amidst this volatile

market, Indian broking companies have increased their focus towards client retention and

acquisition. Survey findings revealed that majority of the respondents selected client retention

and acquisition as their key focus area, followed by scaling up across existing products and

services and technology up gradation as the next major focus areas. However, diversifying

into non-broking business and expanding into rural market was not currently on the cards.


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The equity broking companies expect the government to take investor friendly reforms that

will aid in launch of new products and services and boost the interest of market participants

involved. Offering more tax savings incentives to retail investors, emerged as top government

measure that will provide a thrust to the Indian broking industry, this will increase the

participation of these investors in the equity market. Launch of schemes such as Rajiv

Gandhi Equity Savings Scheme is expected to widen the retail investor base in the Indian

securities market.

Similarly, reduction or elimination of STT emerged as the second best government measure

that will provide a thrust to the Indian broking industry. Moreover, they expect other taxes

such as stamp duty, transaction, and turnover tax to be further rationalized, as they are higher

compared with other developed nations, which will aid in boosting volumes. Likewise,

increased focus on investor awareness programs revealed as the third top government

measure that will provide a thrust to the Indian broking industry.


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COMPANY PROFILE

KOTAK MAHINDRA GROUP

Kotak Mahindra is one of India's leading banking and financial services organizations,

offering a wide range of financial, from commercial banking, to stock broking, to mutual

funds, to life insurance, to investment banking; the group caters to the diverse financial needs

of individuals and corporate sector.

The Group has a net worth of over Rs. 12,900 crores and has a distribution network ofbranches, franchisees, representative offices and satellite offices across cities and towns in

India. It has offices in London, New York, California, Dubai, Abu Dhabi, Bahrain, Mauritius,

& Singapore and is servicing around 10 million customer accounts.

Kotak Group Products & Services:

Bank Life Insurance Mutual Fund Car Finance Securities Institutional Equities Investment Banking Kotak Mahindra International Kotak Private Equity Kotak Realty Fund


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KOTAK SECURITIES LTD.

Kotak Securities is a subsidiary of Kotak Mahindra Bank, which was established in 1994,

which services more than 14 lakh customer accounts. The firm has a wide network of more

than 1,255 branches, franchisees representative offices, and satellite offices across 386 cities

in India and offices in New York, London, Dubai, Mauritius and Singapore.

Kotak Securities process more than 400,000 trades a day which is much higher than some of

the renowned international brokers. The company is a corporate member of both The

Bombay Stock Exchange (BSE) and The National Stock Exchange of India (NSE). Its

operations include stock broking services for trading in stock markets through branches &

internet and distribution of various financial products including investments in IPOs, Mutual

Funds and Currency Derivatives.

Currently, Kotak Securities is one of the largest broking houses in India with substantial

geographical reach to Asia Pacific, Europe, Middle East and America.

Kotak Securities Limited has Rs 463 crores of Assets under Management (AUM) as of

31

st

Dec, 2013.

The company has Research Expertise specialize in Fundamental and Technical analysis

backed by a team of highly trained and qualified individuals. Full-fledged research division is

involved in Macro Economic studies, Sectorial research and Company Specific Equity

Research which publishes in-depth stock market analysis. This is combined with a strong and

well networked sales force which helps deliver current and up to date market information and

news.

It is also a depository participant with National Securities Depository Limited (NSDL) and

Central Depository Services Limited (CDSL).


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PROMOTERS AND DIRECTORS

Uday Kotak, Executive Vice Chairman and Managing Director Dipak Gupta, Joint Managing Director Prof. S. Mahendra Dev, Director N.P. Sarda, Director Amit Desai, Director C. Jayaram, Joint Managing Director Asim Ghosh, Director Prakash Apte, Director Dr. Shankar Acharya, Chairman

AWARDS

Overall best Equity Broking House by BSE IPF - D&B Equity Broking Awards forthe year 2013

Depository Participant of the year by BSE IPF - D&B Equity Broking Awards for theyear 2013

Top Performer in New Accounts Opened (Non-Bank Category) - NSDL StarPerformers Award 2013

Fastest growing Equity Broking House by BSE IPF - D&B Equity Broking Awardsfor the year 2012

The Best Equity House in India by Finance Asia for the year 2012

Best Broker in India by Finance Asia for 2012, 2010 & 2009


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UTI MF - CNBC TV18 Financial Advisor Awards - Best Performing Equity Broker(National) for the year 2009

Best Brokerage Firm in India by Asia money in 2009, 2008, 2007 & 2006 Best Performing Equity Broker in India by CNBC Financial Advisor Awards for 2008 Avaya Customer Responsiveness Awards for 2007 & 2006 in the Financial Services

Sector

The Leading Equity House in India in Thomson Extel Surveys Awards for the year2007

Best Provider of Portfolio Management: Equities by Euromoney for 2007 & 2006 Best Equities House In India by Euromoney Award for the year 2005 Best Broker in India by FinanceAsia for the year 2005 Best Equity House in India by Finance Asia for the year 2004

PRODUCTS / SERVICES PROFILE

Equities Derivatives Mutual Funds Currency Derivatives Fixed Deposits and Bonds Initial Public Offering (IPOs) Gold Exchange Traded Fund (ETF)

SERVICES


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Trading Platforms:

KEAT Pro X - Online Trading SoftwareA free, easy-to-use web based tool for all our online trading customers, KEAT

ProX is a high speed trading tool that allows you to monitor what is happening in

the market at real time speed.

Features :

Real time streaming data

Charting Tools

Live Account Information

Customizable

Speed

Stock Recommendation

Watchlists

Highly Integrated

FASTLANEFastlane is a Java based applet with live streaming, watchlists and more. If clients

office or computer doesn't support installation of an executable (.exe) file and still

want to experience of a trading application, then it is a best substitute.

Features:

Add own list of scrips and create watchlists of choice. Buy/Sell scrips. Check order status. Check available funds.


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View Company details in the research. Get recommendations on scrips. View open positions.

Stock Trader - Mobile Trading ApplicationStock Trader (ST) is a mobile based application which allows to trade from mobile

phone anywhere, anytime.

Call & TradeKotak Securities brings Call & Trade service for online stock trading account.

This facility allows capitalising on stock market opportunities even when

computer is inaccessible. Call & Trade essentially provides the convenience

of trading in Equities, Derivatives, IPOs and Mutual Funds over the phone.

VALUE ADDED TRADING SERVICES

Going above and beyond the basic need of transactions in equities, Kotak offer a surplus

of Value Added Services. Choose any of Kotak SecuritiesTrading accounts, the

combination of research, trading platforms and communication channels enable to deliver
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a higher value to customer.

Specialised services like Trade Smart, Research on SMS and E-mail subscription

constantly gives stock ideas that you can benefit from. The services ensure that clients

end-to-end trading needs are satisfied.

Various Value Added Services are:

Auto Invest - Start an SIP in EquitiesAuto Invest is now offered as a value added service from Kotak Securities,

through which investor can do Systematic Investment Planning in Stocks.

Through this product client can invest in stocks of choice at regular intervals -

daily, weekly, fortnightly or monthly. Choice your SIP type as either amount-

based or quantity based.

Benefits of Systematic Investment Planning

You decide how much you want and when you want to invest. Give Discipline to your investments. Minimize the risk of market volatility. Gives your investments the power of compounding. Take advantage of rupee cost averaging.

Benefits of Auto Invest :

See your wealth grow by investing our expert-backed stocks.

Invest in up to 5 stocks in one order.

Choose Amount based or Quantity based investments. Register once for your SIP, then your investments will happen

automatically.

Extensive selection of stocks to choose from.

MarginFinance
http://www.kotaksecurities.com/research/http://www.kotaksecurities.com/research/


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Margin financing Facility enables to finance customers stock purchase

in the cash segment. This ensures having sufficient funding to finance

the settlement of positions that have taken on the stock exchange.

Super MultipleSuper Multiple is especially designed for traders who wish to take the advantage

of intraday trading in huge volumes. It is an auto square off service. With Super

Multiple you can take a position on particular scrip(s) on a particular day and

avail up to 17 times exposure on the available margin.

a) Super Multiple in Futures Segment

Kotak Securities offers Super Multiple in Futures Segment, a service that

offers up to 15 times exposure in Future Index against available margin, and upto

10 times exposure on Future Stock of specified scrips.

b) Super Multiple in Cash Segment

Kotak Securities has launched Super Multiple, a service that offers clients up to

14 times exposure against margin, on specified scrips.

Twin AdvantageWith Twin Advantage, all online trading customers not only get exposure on

their margin as cash, but they will also benefit by obtaining margin on the stockshave in theirDemat account.

Portfolio TrackerPortfolio Tracker will help client to track investments in Equities, Derivatives

and Mutual funds. Client does not have to worry to compute the profit and loss

against holdings, can view the value of holdings online.
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Statement of Holding Transaction Statement Gain/Loss Statement Update DP Stock rates FY wise Realised P/L

SMS Alert SubscriptionGet insightful stock recommendations on expected price movements of top

scrips for the day, through the day, via SMS. Kotaksequity research analysts

monitor the markets constantly to gives real-time stock calls. Kotak give clients

advice not after it happens, but when it happens.

Types of services:

Fundamental Calls Technical/Intraday/Derivative Calls Account Transaction Alerts Trade Confirmation SMS

Trade SmartKotak Securities brings Trade Smart a service that helps to identify market

trends and patterns. Can spot bullish as well as bearish trends for stocks listed in

various exchanges.

This is made available automatically for all stocks in watchlists and portfolio.Donthave to search trends & patterns for stocks are in hold.

Security KeyIn order to keep the account of customers safe and secure, Kotak provide

Security Key to ensure that online trading at Kotak Securities remains highly

protected and risk free.


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The Security Key generates a dynamic and unique six-digit password every time

it is switched on. As a customer while login in to your trading you need to use

User ID, Password and this dynamic 6 digit code and access the account for

trading or accessing information.

ACCOUNTS OFFERED

Kotak Gateway - Stock Trading AccountKotak Securities Gateway Account, an Online Trading Account opens the gateway to

a world of investing opportunities. Client may be anywhere, anytime and still can

manage to place trades using the Internet or by Call and Trade Facility.

Kotak Privilege CircleUnderstanding individual investing needs, Kotak Securities make sure clientsget to

enjoy premium and top of the line trading services only with Kotak Private Client

Group.

Private Client Group offers:

Dedicated relationship manager with expertise in comprehensive suite of products. Advisory Desk equipped with professionals with formidable experience in advising

HNI Clients.

Customized & consultative approach to investment Making most of Idle cash : Investing Idle cash in liquid funds based on instructions

from the clients

Market views by Experienced Research Analysts with proven track record Stock recommendation reports on more than 110 stocks


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Trinity AccountTrinity Account is a unique integrated account that helps clientsenjoy the benefits of

an Online Trading Account, Bank Account,and Demat Accounton a single

platform for securities transaction. This account gives client a convenience of fund

transfer and online trading with multiple logins.

Benefits of Trinity Account:

Single application to open three different account i.e. Bank Account, DematA/c & Online Trading Account.

Get all the three different account with single entity.

2 in 1 Account 3 in 1 ( Trinity )

Account

Banks to Link Kotak , Axis , HDFC , Citi Kotak Mahindra Bank
http://www.kotaksecurities.com/whatweoffer/demat-account.htmlhttp://www.kotaksecurities.com/whatweoffer/demat-account.htmlhttp://www.kotaksecurities.com/whatweoffer/demat-account.html


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, ICICI , SBI

Fund transfer

facility

Manual transfer done via

payment gateway

No manual transfer

required

Payment

Gateway

Fund transfer through

payment gateway

Direct fund transfer

possible

Limits on fund

transfer

Limited transfer Unlimited transfer

Non Resident Account (NRI)Client can do online delivery based trading through Kotaks NRI- Trinity Account.

This account links clients Banking, Demat and Trading account, thus providing a

seamless platform to trade efficiently and conveniently.

Qualified Foreign Investor (QFI)If client reside outside India, who is resident in a country that is a member of the

Financial Action Task Force (FATF) or a country that is a member of a group which

is a member of FATF and Resident in a country that is a signatory to IOSCO's

MMOU - or a signatory of a bilateral MOU with Securities and Exchange Board of

India (SEBI) can invest in capital market through this account.

AREAS OF OPERATIONCorporate Office:

Kotak Securities Ltd.

3rd Floor, Nirlon House,

Dr. Annie Besant Road, Worli, Mumbai400030

Bangalore Offices:

Branches in other Cities:


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VISION, MISSION & QUALITY POLICY

Vision

Kotak works with the vision of being:

The Global Indian financial services brand The most Preferred Employer in financial services The most trusted financial services company


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A Value Creator

Quality Policy

EthicsKotak Securities believes that ethics of a company help to deliver value to all the

stake holders and leads to success.

Kotak Securities adheres tostrict ethical practices and compliance that comprise of

commitments towards customers, associates, stakes holders and employees.

Strong Internal Control team ensures that everyindividual deliversbased on policies

set by the company and there isno compromise on the quality.

CentralizedRisk Management division regularly monitors the position ofcustomers'

portfolios to reduce the loss at the time of market volatility.

INFRASTRUCTURAL FACILITIES

The company has offices across 386 cities in India and offices in New York, London, Dubai,

Mauritius and Singapore.

Well Furnished, proper lighting and ventilation, comfortable to employees.

Well equipped Network systems, Internet and Telecommunication Networks.


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Employees have been provided with better seating facility, along with the betterdesktop systems.

Well designed Trading Rooms, Discussion rooms, Office space.

Televisions are screened all around the office to facilitate their employees to haveReal time updates of financial markets.

COMPETITORS INFORMATION

Competitors for the company in the Broking Industry:

Angel Broking LimitedAngel is counted among top 3 broking firms in India. It was founded in the year

1987 and it offers various services like e-broking, commodity trading and other

wealth management services.Head Office:Mumbai, India

Sharekhan LimitedShareKhan is an online trading company of SSKI group. It has presence in over 170

cities of the country and Indias most trusted brokerage firms.

Head Office:Mumbai, India

SMC Global Securities LimitedSMC Global Securities is present all over the country. It has over 6 million

satisfied investors and over 3.5 million trades per day.

Head Office:New Delhi, India

India Infoline LimitedIndia Infoline was started in year 1996 and has over 2 million customers.


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Head Office:Andheri, Mumbai

SWOT ANALYSIS

STRENGTHS

Innovators in the industry: Mobile stock trading applicationand track portfolio. Facility of Margin Finance to the customers for online stock trading. Investing in IPOs and Mutual Funds on the phone. Provision of margin against securities automatically against shares in your

Demat account.

Auto Invest - A systematic investing plan in Equities and Mutual funds.

Stability: Kotak Securities is subsidiary of Kotak Mahindra Bank and one of theoldest and largest stock broking firms in the Industry.

Quality Service: Offers High standards of service to customers. Awarded The Mostcustomers responsive company award in the Financial Institution

sector by AVAYA Global Connect Award both in 2006 and 2007.

Robust Technology:Kotak Securities has developed its own proprietary tradingplatform which is robust and among the best in the industry. It

has 150 technology professionals constantly working on

upgrading and speeding up all our systems.


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Exceptional Research:Unlike most other competitors, Kotak Securities got its ownIn house research team. In house research team is among the

best in the industry and they have years of experience in the

financial markets.

Centralized RiskManagement System:Unlike many other players, Kotak Securities have a

centralized risk management system. This allows offering the

same levels of service to customers across all locations.

Brand Value:The Company enjoys a very high Brand loyalty and recall valueamong its customers.

Expertise Management:The Company has expertise in managing big business.

WEAKNESS

Some players providing Zero Charges for opening account and account maintenance. Not much of presence in rural and semi urban segment Lack of promotional activates

OPPORTUNITIES

People are getting interested in investments in share market than in savings bank,leading to more customer base opportunities.

THREATS


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Competition in the sector is increasing in the entry of lots of private giants with thecollaboration of foreign giants.

FUTURE GROWTH AND PROSPECTS

Launching Trading account designed for women, in a bid to encourage women to investdirectly in equities, Kotak Securities has Launching Kotak Pearl,' a special trading account


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designed for them. Investing trends indicates that, women not only trade for longer periods of

time but they also show larger activity as compared to men.

Kotak Pearl comes with 50% brokerage cash-back on cash market trades for the first three

months, brokerage of 0.01% on Kotak Gold ETF (exchange traded fund) transactions and a

guidebook--'Everything you wanted to know about stock market investing.

Financial Statement

Kotak Mahindra Bank - Consolidated Balance Sheet as on 31st March 2013


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Consolidated Balance Sheet

in Rs.

Cr.

Mar '13 Mar '12 Mar '11

12 mths 12 mths 12 mths

Capital and Liabilities:

Total Share Capital 373.3 370.34 368.44

Equity Share Capital 373.3 370.34 368.44

Share Application Money 0 0 0

Preference Share Capital 0 0 0

Init. Contribution Settler 0 0 0

Preference Share Application 0 0 0

Employee Stock Opiton 17.53 34.82 36.92

Reserves 14,876.49 12,530.70 10,594.51

Revaluation Reserves 0 0 0

Net Worth 15,267.32 12,935.86 10,999.87

Deposits 49,389.14 36,460.73 27,312.98

Borrowings 36,171.96 29,194.69 22,073.32

Total Debt 85,561.10 65,655.42 49,386.30

Minority Interest 208.72 160.06 107.21Policy Holders Funds 10,077.27 9,011.53 8,145.20

Group Share in Joint Venture 0 0 0

Other Liabilities &

Provisions 4,720.24 4,586.52 5,042.56

Total Liabilities 1,15,834.65 92,349.39 73,681.14

Assets

Cash & Balances with RBI 2,220.76 2,030.63 2,114.86Balance with Banks, Money

at Call 2,297.49 1,545.20 879.4

Advances 66,257.65 53,143.61 41,241.95

Investments 40,907.24 31,658.43 26,048.99

Gross Block 619.9 615.29 600.42

Accumulated Depreciation 0 0 0

Net Block 619.9 615.29 600.42

Capital Work In Progress 0 0 0

Other Assets 3,531.63 3,356.22 2,795.51

Minority Interest 0 0 0


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Group Share in Joint Venture 0 0 0

Total Assets 1,15,834.67 92,349.38 73,681.13

Contingent Liabilities 43,980.45 42,221.94 37,693.49Bills for collection 0 0 0

Book Value (Rs) 204.25 174.18 148.78

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