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A
REPORT
On
The problems faced by Demat account
holders and their expectations towards
Depository participants.
MBA(2009-2011)
Under the Supervision of-
Ms Jyoti Sharma (Faculty, PCTE)
Mr. Sarbjit pal (ASM, HSBC Investdirect)
Submitted by-
Neelam Monga

Punjab College of Technical Education
Ludhiana
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Acknowledgement

Gratitude is not a thing of expression, it is more a matter of feeling.

In this present world of competition there is a race of existence in which those who are having
will to come forward will succeed. Project is a bridge between practical and theoretical working,
with this will I have joined the project. I really wish to express my gratitude towards all those
people who have helped me.
I am really indebted to Mr. Sarbjit pal (ASM, HSBC Investdirect) Ludhiana, for his kind
hearted support and expert advice in the completion of the project.
I am also very thankful to Ms. Jyoti Sharma (Faculty, PCTE) for her timely guidance,
supervision & encouragement that have helped me to get this golden opportunity and who
provided me her expert advice, inspiration & moral support in spite of her busy schedule &
assignments, has mainly provided my understanding of this project.
Last , but not the least, I say only this much that all are not to be mentioned but none is forgotten
and I will like to extend my special thanks and gratitude to my parents who always encourage me
in pursuit of excellence.




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Abstract

Earlier Investors used to hold shares in the paper format. Nowadays they are stored electronically
in the Demat account. The document of shares that is in paper form is demated and is kept
electronically in an account. A Demat account can be opened with no balance of shares and there
is no minimum balance to be maintained either. One can have a Zero cash balance even in ones
Trading Account.
The Depository is the custodians of securities. It helps for shorter settlement cycles and
immediate transfer of title of securities. Depository Participant is an agent of the depository
through which it interfaces with the investor and provides depository services to the investors.
This research project is basically to analyze the problems faced by the Demat Account holders
and their expectations towards Depository Participants. The research design that has been used is
Descriptive and the Sample Size is 100. The convenience Sampling technique has been used.
The research data is collected with the help of Questionnaire.
This Research project has helped to ascertain the problems faced by the demat account holders
and the customers expectations from the depository participants in Ludhiana city. The
Customers expectations are identified which will help in improving the quality of working of
various DPs in Ludhiana city. The customers satisfaction level from their share brokers was
also revealed.

Ms. Jyoti Sharma Neelam Monga
(Faculty PCTE) (MBA 2C)





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Certificate 1
This is to certify that report entitled Study on the problems faced by dmat account holder and
their expectation from their DP services submitted for the degree of MBA in subject of summer
training report, is a bonifide research report carried out by Neelam Monga, PCTE student under
my supervision & no part of this has been submitted for any other degree.
The assistance and help received for the course of investigation have been fully acknowledged




Ms. Jyoti Sharma
(Faculty Advisor)








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CONTENTS Page No.
Introduction 1-15
Company Profile 16-33
SWOT Analysis 34-36
Ratio Analysis 37-47
Demat Account 48-59
Need for the study 60
Review of Literature 61-66
Objectives 67-68
Research Methodology 69-71
Data Analysis and Interpretation 72-85
Observation and Findings 86-87
Suggestion 88
Conclusion and Limitation 89
Bibliography 90
ANNEXURE 91-94





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List of Tables
Sr.No Tables Name Page No.
1
Number of Demat Account holder
73
2
Demat Account in Different companies
74
3
Source of information about the above company
75
4
The occupation of investors
76
5
Preference of Mode of Trade
77
6
The frequency of trading
78
7
Rank the preferrance while opening a demat
account
79
8
The problem faced after opening an Account
80
9
The Problems faced by you while holding the
Demat
81
10
The satisfaction level with services provided by
your DPs
82
11
The loan availed against your DP
84
12
Factor considered by investors while selecting a
particular DP
85

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List of Figures
Sr.No Figure Page No.
1
Number of Demat Account holder
73
2
Demat Account in Different companies
74
3
Source of information about the above company
75
4
The occupation of investors
76
5
Preference of Mode of Trade
77
6
The frequency of trading
78
7
Rank the preferrance while opening a demat account
79
8
The problem faced after opening an Account
80
9
The Problems faced by you while holding the Demat
81
10
The satisfaction level with services provided by your
DPs
83
11
The loan availed against your DP
84
12
Factor considered by investors while selecting a
particular DP
85

8



Part A


Introduction to Corporate and briefing
about group companies














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Historical background of the group :
The HSBC Group is named after its founding member, The Hongkong and Shanghai Banking
Corporation Limited, which was established in 1865 to finance the growing trade between
Europe, India and China.
The inspiration behind the founding of the bank was Thomas Sutherland, a Scot who was then
working for the Peninsular and Oriental Steam Navigation Company. He realized that there
was considerable demand for local banking facilities in Hong Kong and on the China coast
and he helped to establish the bank, which opened in Hong Kong in March 1865 and in
Shanghai a month later.
Soon after its formation the bank opened agencies and branches around the world. Although that
network reached as far as Europe and North America, the emphasis was on building up
representation in China and the rest of the Asia-Pacific region. HSBC was a pioneer of modern
banking practices in a number of countries. In Japan, where a branch was established in 1866, the
bank acted as adviser to the government on banking and currency. In 1888, it was the first bank
to be established in Thailand, where it printed the countrys first banknotes.
From the outset trade finance was a strong feature of the local and international
business of the bank, an expertise that has been recognized throughout its history. Bullion,
exchange, merchant banking and note issuing also played an important part. By the 1880s, the
bank was acting as banker to the Hong Kong government and also participated in the management
of British government accounts in China, Japan, Penang and Singapore. In1874 the bank
handled Chinas first public loan and thereafter issued most of Chinas public loans.
What is HSBC?
We are the worlds local bank.
Headquarters in London, HSBC is one of the largest banking & financial services organization in
the world. HSBCs international network comprises over 9500 offices in 76 countries & territories
in Europe, the Asia-Pacific region, the Americas, the Middle East & Africa. With listings on the
London, Hongkong, New York, Paris & Bermuda stock exchange shares in HSBC holdings
places are held by nearly 200,000 shareholders in some 100 countries & territories. The shares
are traded on the New York stock exchange in the form of American Depository Receipts.
Through an international network linked by advertisement techniques, including a
rapidly growing e-commerce capability, HSBC provides a comprehensive range of financial
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services like-
1. Personal financial services
2. Commercial Banking
3. Corporate Banking
4. Investment Banking

Vision Statement
To become the preferred long term financial partner to a wide base of customers whilst
optimizing stakeholders value!
Mission Statement
To establish a base of 1 million satisfied customers by 2010. We will create this by being a
responsible and trustworthy partner!
Names and Location of group companies :

Latin America
HSBC Mexico SA
HSBC Bank Brazil SA, Banco Multiplo
HSBC Bank Argentina SA
Asia Pacific
The Hongkong and Shanghai Banking Corporation Ltd
Hang Seng Bank Ltd
HSBC Bank (China) Company Ltd
HSBC Bank Malaysia Berhad
Middle East
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HSBC Bank Middle East Ltd
HSBC Bank Egypt SAE
The Saudi British Bank
North America
HSBC Bank USA Inc
HSBC Finance Corporation
HSBC Bank Canada
Europe
HSBC Bank plc
HSBC France
HSBC Trinkaus und Burkhardt AG
HSBC Private Bank (UK) Ltd

Products/Services and brands :

Through an international network linked by advertisement techniques, rapidly growing
e-commerce capability, HSBC provides a comprehensive range of financial services like-
1. Personal financial services
2. Commercial Banking
3. Corporate Banking
4. Investment Banking

Personal Financial Services(PFS)

HSBC India offers a wide range of competitively priced services & products to over 1.75 million
individual resident Indians as well a Non-resident Indian customers across India, USA, UK,
Middle East & South East Asia. HSBCs 150 year presence in India allows it to enjoy the
advantage of deep rooted knowledge of local markets & customs. This has lead to development of
products & services, which are attuned to the financial needs of Indians in the cities where HSBC
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operatives. The HSBC brand is associated with core values such as transparency, trust & honesty.
These factors enable HSBC India to remain highly competitive & at the leading edge of the retail
& commercial banking market in the country.
The distribution network in India consists of 47 branches in 26 cities supported by 170 ATMs at
142 locations. In addition, self service banking channels, such as Internet Banking & a 24 hour
centralized all India Call Centre provide a strong backbone to the distribution capabilities. A
second load balancing Call Centre became operational in January 2005 at HSBC Operations &
Processing Enterprise (India) Private Limited, Chennai Customers can apply for all products
& services online at www.hsbc.co.in.
The bank offers a complete suite of products & services including HSBC Premier International,
HSBC Premier, Power Vantage, Savings & Current Accounts, International Debit Cards &
Term Deposits in addition to consumer loan products like International Credit Cards,
Mortgage, Personal Loans, Educational loans & Overdrafts. HSBC is the 6
th
largest credit card
issuer in India with over 1.3 million cards in force.
Premier & mid market customers have access to comprehensive Financial Planning & HSBC
is a market leader in the provision of Wealth Management services. In 2005, HSBC was
the largest distributor of Retail Mutual Funds in India, & the biggest sales channel for Banc
assurance partner TATA AIG.
Non-Resident Indians (NRIs) constitute 56% of the Banks deposit base. The banking needs of
NRIs are fulfilled from branches in India & 11 NRI centers abroad. We have over 84,000 NRI
Customers, & have started referring customers to Financial Planning Managers & the Private
Bank in the host countries, to address their needs for investment products. A free remittance
service is offered between accounts held by NRIs with HSBC overseas & onshore. In 2006,
an International Banking Centre was established facilitate cross border business referrals.
In October 2005, HSBC launched an onshore Private Banking proposition branded HSBC
Private Banking. The proposition targets clients with minimum assets of INR 25 M &
encompasses asset classes such as Real Estate, Equity Derivatives & Commodities. This is an
addition to Fixed Income & Equities, which are already being offered. The proposition uses
Active Advisory as its cornerstone & key differentiator.
The Bank has sought RBI approval to establish a separate consumer finance branch network
under a non banking financial institution, which will distribute personal loans & ancillary
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products to a broader segment of the Indian consumer base than is currently served by the Banks
existing product portfolio. The personal loan product is being piloted through the bank
branch network & initial results are promising.
Wealth Management & Branch Banking
HSBC has 47 branches Pan-India across 26 locations wealth Management services are
delivered to customers through qualified Wealth Management across each of these branches.
Wealth Management helps customers develop & execute a realistic & practical long
term savings, investments & protection plans by investing in mutual funds, bonds & purchase of
insurance products manufactured by TATA AIG.
Qualified, trained & accredited Wealth Management assist customers in charting a road map
to achieve their individual financial goals & protect their family from unforeseen eventualities
keeping in mind their available resources & based on each customers independent risk
profile. Wealth Management services is currently offered to HSBC Premier & Power
Vantage customers.

Commercial Banking
HSBC is a leading provider of financial services to small, medium-sized and middle-market
enterprises. The Group has over 43,000 such customers in proprietors India, including sole,
clubs and associations, incorporated businesses companies. Commercial and publicly quoted
Banking provides a full range of banking services to these customers including multi-currency
business accounts, payment and cash management, trade services, factoring and a range of
borrowing solutions.
In India, Commercial Banking has a presence in 47 branches covering 26 key cities and for the
convenience of our customers, a multi channel service including Internet and Phone banking. For
SME customers, HSBC offers the complete range of transaction baking services as well as
unsecured loans and loans for and against property. The services are supported by a large Sales
and Relationship Management team in key locations across the country India is the first country
in the HSBC Group where Commercial Banking lends to Microfinance Institutions, thus
providing indirect funding to hundreds of small business owned and run by members of
underprivileged sections of society. A dedicated unit has been formed to focus on
Microfinance and other Priority Sector institutions, with a view to further reach out to the
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marginalized and under banked.

Factoring

HSBC India offers a comprehensive range of Factoring and Supply Chain Finance Solutions,
which include the following products:

For Vendors/Suppliers/Purchase Channel of our corporate customers
Payables Financing
Purchase Order Financing
For the Sales Channel of our corporate customers
Factoring (With or Without Credit Protection)
Export Factoring (With or Without Credit Protection)
Portfolio Invoice Discounting (With partial credit protection)
Distributor Finance.

Payables Financing :-HSBC Indias Payable Financing product enables companies to
finance their payables to vendors. This helps companies to provide immediate liquidity to vendors
against their supplies at competitive rates and will enable the company to negotiate better pricing
terms with vendors.
It also enables the vendors to improve their cash flow by providing continuous
liquidity against their receivables. Our payables financing products can be structured either
against Bills of Exchange or Accepted Invoices.

Purchase Order Financing is a facility to suppliers of our Corporate Banking Clients to finance
their pre shipment working capital requirements Pre shipment working capital lines are sanctioned
to the suppliers against Purchase Orders issued to the suppler

Factoring: -This is a service that covers the financing and collection of account receivables in
domestic trade. Receivables are factored, by HSBC with added service of credit protection,
collection and sales ledges administration. Thus the management of the company may
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concentrate on production and sales and need not concern itself with non-core activities like
collection and sales ledger administration.

Export Factoring enables companies to finance their open account export sales at competitive
rates either in Rupees or Foreign Currency. Through a network of overseas based correspondent
factors, HSBC provides credit protection against buyer default and collection services.

Portfolio Invoice Discounting Essentially covers purchase of receivables with partial credit
protection based on a First Loss Deficiency Guarantee. The portfolio should be well spread with
acceptable levels of concentration and the debtors must have had a satisfactory track record with
the company. A field audit will be conducted to determine portfolio quality based on which a
First Loss Deficiency Guarantee percentage will be agreed Collection remains the
responsibility of the Corporate with repayments either on a pre-agreed schedule or based on
actual collections.

Distributor Finance is currently offered to the distribution channel of Large Corporate Banking
Clients and can be structured to suit the specific requirements of each corporate and its
distribution channel. Through the Distribute Finance Program, HSBC finances companys
dealers, which will assist the company in providing steady, assured credit to its distribution
chain.

Payments and cash management
Integrated domestic and regional cash management solutions are provided to corporate and
institutional customers in India. The suite of offerings under the cash management umbrella
includes comprehensive Receivables Management solutions, with an endeavor to completely
integrate with the customers back-end operating systems and processes. HSBC is the leading
foreign bank in India in providing capital market solutions, which include Bankers to Issue,
Escrow account Services and Dividend payments solutions. Six Sigma measurement
practices are followed for our operational capabilities. HSBC net, the HSBC Groups online real
time web-enabled corporate banking platform, allows customers to execute financial
transactions, obtain international financial market information and review details of their domestic
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and international accounts form anywhere in the world, 24 hours a day.

Trade (international and domestic) service
HSBC offers a wide range of international and domestic Trade products. In India, we offer one of
the largest trade processing capabilities among peer banks, spread across 5 cities. Each of our
Trade processing centers is ISO 9001-2000 certified. We work closely with Group Offices
overseas and leverage our extensive global network to offer structured, tailor made
solutions to a wide range of customers. Our clients in India include large India and
multinational companies, Mid Market companies as well as customers in the Small and
Medium Enterprises segment.

Corporate And Institutional Banking
Corporate Banking (CB) is an integral part of the Global Banking structure which focuses on
offering a full range of service to multinationals, large domestic corporate and institutional clients
a wide range of banking and financial services provided to domestic and international
operations of large local corporate and local operations of multinationals corporations.
Services include access to commercial banking products, including working capital facilities
such as domestic and international trade operations and funding, channel/distributor financing,
and overdrafts, as well as domestic and international collections and payments, INR and Foreign
currency term loans (external commercial borrowing in foreign currency), letters of guarantee etc.
Institutional Banking drives the Groups relationship with banks, financial institutions, securities
houses, insurance companies, and asset management companies and other non-banking
companies, non-government and development organizations operating in India. Market
leadership position based on strong relationships with major financial institutions.
Investment Banking and Markets brings together the advisory and financing, equity Securities,
equity linked transactions, asset management, treasury and capital markets, and private
equity activities of the Groups to complete the Global Banking structure and provide a complete
range of financial products to our clients.
Clients are serviced by sector based client service teams that combine relationship managers,
product specialists and industry specialists to develop customized financial solutions. These form
the relationship team along with the Investment Banking structure and provide a complete range
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of financial products to our clients.

The Corporate Bank (CB) in India was top ranked (1
st
overall) in the 2005 Greenwich Survey
with a Greenwich Quality Index (GQI) of 647. Currently CB manages approx. 470 CB
relationships with total advances of approx USD 1.08Bn as at end of Dec05 and total deposits of
USD .98Bn.
Sectoral account management- Improved industry knowledge andsector4 expertise. The CB
portfolio is largely spread within the following sectors divided as under.
CORPORATES INSTITUTES
Consumer Brands Banks
Industrials &Technology Financial Institutions
Energy and Utilities Securities
Telecommunications MutualFunds/AssetManagement Companies
Automotive Insurance
Healthcare Financial Sponsors
Transport and Logistics Business Process Outsourcing (BPOs)
Media Broker and Dealers

Investment Banking
1. HSBC FIXED DEPOSITS
When it comes to assured returns, choosing the right type of savings scheme makes all the
difference. HSBC Fixed Deposits let you make the most of value-added benefits as you create
wealth at low risk.
Features & Benefits
The superior Fixed Deposit to invest in, for a secure future
You can now open a Fixed Deposit with Rs. 10,000 only
Enjoy high rate of returns on your HSBC Fixed Deposits
Choose from a wide range of tenors as per your Convenience
Avail of our special rates for select tenors
Certificate of Deposit
Earn interest for funds invested from 15 days to one year, with HSBCs Certificate of Deposit
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(CDs). CDs can be availed by individuals (other than minors), corporations banks, companies,
trusts, funds, associations etc. Non-Resident Indians (NRIs) may also subscribe to CDs on a non-
repatriable basis only.
Advantage
Tenure A Certificate of Deposit is issued for a period not less than 15 days & not exceeding 1
year from the date of issue .
Transfer Mechanism Certificate of Deposit held in a physical form are freely
transferable by endorsement & delivery. Those in demat form can be transferred as per the
procedure applicable to other demat securities.
Markets (Domestic & Export):
Group Service Centres
The HSBC Global Technology Centre in Pune, India develops software for the entire HSBC
group.As a cost saving measure HSBC is off shoring processing work to lower cost economies in
order to reduce the cost of providing services in developed countries. These locations take on
work such as data and customer service, but also internal software
engineering at Pune, Hyderabad(India), Vishakhapatnam (India), Kolkata (India), Guangzhou (C
hina), and Curitiba (Brazil).Chief Operating Officer Alan Jebson said in March 2005 that he
would be very surprised if fewer than 25,000 people were working in the centres over the next
three years: I dont have a precise target but I would be surprised if we had less than 15 (global
service centres) in three years time. He went on to say that each centre cost the bank from
$20m to $30m to set up, but that for every job moved the bank saves about $20,000 (10,400).
Trade unions, particularly in the US and UK, blame these centres for job losses in developed
countries, and also for the effective imposition of wage caps on their members.

HSBC Building, Shanghai
Currently, HSBC operates centres out of eight countries, including Brazil (Curitiba), The Czech
Republic (Ostrava), India (Kolkata, Hyderabad, Bangalore, Visakhapatnam, Mumbai, Gurgaon a
ndPune), China (Shanghai, Guangzhou and Shenzhen), Malaysia (Kuala
Lumpur), Poland (Krakow),Sri Lanka (Rajagiriya) and Philippines (Manila). The Malta trial for
a UK high value call centre has resulted in a growing operation that country. An option under
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consideration is reported to be a processing centre in Vietnam to access the French skills of the
population and therefore cut costs in the banks French operations.
On June 27, 2006, HSBC reported that a "small number" of customers had suffered from fraud
totaling 233,000 after an employee at the Bangalore call centre supplied confidential customer
information to fraudsters.
HSBC Private Bank
HSBC Private Bank is the group's private banking operation, providing private banking and
trustee services to wealthy individuals and their families worldwide. The Private Bank has in
excess of 60 offices worldwide, with the major centres being Miami, New York, London,
Geneva and Hong Kong.
HSBC Premier
HSBC Premier is the group's premium financial services product. The exact benefits and
qualification criteria vary depending on country, but typically require deposits and investments
of at least $100,000, 50,000, or 100,000. Alternatively those who have an individual annual
income of at least 100,000 paid into their HSBC Premier Bank Account and are a customer of
the bank's Independent Financial Advisory Service. Customers have a dedicated Premier
Relationship Manager, global 24 hour access to call centres,free banking services and
preferential rates. A HSBC Premier customer receives the HSBC Premier services in all
countries that offer HSBC Premier, without having to meet that country's qualifying criteria.
HSBC Bank International
HSBC Bank International is the offshore banking arm of the HSBC Group, focusing on
providing offshore solutions and cross border services to expatriates andmigrants. It provides a
full range of multi-currency personal banking services to a range of customer segments,
including a full internet banking and telephone banking service. Sometimes referred to as
"HSBC Offshore", the business also offers independent financial planning, and has
representative offices all over the world, often working alongside local HSBC operations in those
regions.
HSBC Bank International originated from the business started by Midland Bank and is based in
the Channel Islands with further operations on the Isle of Man. Its operations in the Channel
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Islands are centered around its registered headquarters on the seafront in St Helier, Jersey.
Named 'HSBC House', the building comprises departments such as Premier, Global Funds &
Investments, e-Business and a 24 hour 'Direct Banking Centre'.
HSBCnet
HSBCnet is a global service that caters to local business needs by offering specialised
functionality for different regions worldwide.
The system provides access to transaction banking functionality - ranging from payments and
cash management to trade services features - as well as to research and analytical content from
HSBC. It also includes foreign exchange and money markets trading functionality.
The system is used widely by HSBC's high-end corporate and institutional clients served
variously by the bank's global banking and markets, commercial banking and global transaction
banking divisions. HSBCnet is also the brand under which HSBC markets its global e-commerce
proposition to its corporate and institutional clients.
HFC Bank (UK Operation) is a wholly owned subsidiary, with 135 High Street branches in the
UK selling loans to the "sub-prime" market. During 2007 and 2008, has been trying to fend off a
union recognition campaign by the Trade Union Unite.
HSBC Direct
HSBC Direct is a telephone/online direct banking operation which attracts customers through
mortgages, accounts and savings. It was first launched in the USA in November 2005 and is now
available in Britain, Canada,Taiwan, South Korea and France. Poland is launching business
direct in September 2009.
Other relevant information :
Type Public
LSE: HSBA
SEHK: 005
NYSE: HBC
Euronext: HSB
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BSX: 1077223879
Industry Banking
Financial services
Investment services
Founded Hong Kong (1865)
Founder(s) Thomas Sutherland
Headquarters London, United Kingdom[1]
Number of
locations
9,500 offices in 88 countries &
territories
Area served Worldwide
Key people Stephen Green
(Group Chairman)
Michael Geoghegan
(Group CEO)
Products Finance and insurance
Consumer Banking
Corporate Banking
Investment Banking
Investment Management
Global Wealth Management
Private Equity
Mortgages
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Credit Cards
Revenue $103.74 billion (2009)
Operating income $7.079 billion (2009)
Profit $5.834 billion (2009)
Total assets $2.364 trillion (2009)
Total equity $128.299 billion (2009)
Employees 302,000 (2009)
Subsidiaries HSBC Bank plc
HSBC GLT India
The Hongkong and Shanghai
Banking Corporation
HSBC Bank USA
HSBC Bank Middle East
HSBC Mexico
HSBC Bank Brazil
HSBC Finance
Website HSBC.com


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Introduction to particular firm /division








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PROFILE OF THE IL&FS INVESTSMART LTD.
Infrastructure Leasing & Financial Services Limited (IL&FS) is one of India's leading
infrastructure development and finance companies IL&FS has a distinct mandate catalyzing the
development of infrastructure in the country. The organization has focused on the
commercialization and development of infrastructure projects and creation of value added
financial services. From concept to execution, IL&FS houses the expertise to provide the
complete array of services necessary for successful project completion: visioning,
documentation, finance, development, management, technology and execution. This company
was started in 1980 with a major objective of financing major infrastructure and leasing services.
Over the years, IL&FS has broad-based its shareholding, which today includes Life Insurance
Corporation of India, ORIX Corporation Japan, Housing Development Corporation of India,
Abu Dhabi Investment Authority, State Bank of India, and Central Bank of India.
IL&FS Investsmart Securities Ltd (IISL) is one of Indias leading financial services
organizations. IISL, through its subsidiaries in India and Singapore, (Shown in Figure 1.1)
provides a wide range of investment products to its retail and institutional banking, insurance
broking & distribution, mutual funds distribution and related financing services. IISLs 2,000
employees provide a complete range of investment solutions to over 138,000 customers in India
through its 88 branches and 19 franchised outlets from 133 cities and has been recognized as
National Best Performing Financial Advisor Retail for two years in a row (06-07 & 07-08)
BY CNBC TV 18.

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Fig.1(a) Subsidiaries of IL&FS Ltd.
IL&FS Investsmart Securities Limited
IL&FS Investsmart Securities Limited (IISL) is one of Indias leading financial services
organizations providing individuals and corporate with customized financial management
solutions.
At IISL, they believe in "Realizing customer goals together". One will find in them - a trusted
investment partner to help customer work towards achieving investors financial goals. IL&FS
institutional expertise, combined with a thorough understanding of the financial markets results
IL&FS Ltd
Infrastructure Services
IL&FS Infrastructrure
Development Corp Ltd
IL&FS Transportation
Networks Ltd
IL&FS Ecosmart Ltd
IL&FS Education
&Technology Services
Ltd
IL&FS Tripura Area
Development Corp
Ltd
Noida Toll Bridge
Company Ltd
Financial Services
IL&FS Investment
Managers Ltd
IL&FS Investsmart Ltd
IL&FS Trust Company
Ltd
ORIX Auto
Infrastructure Services
Ltd
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in appropriate investment solutions for investors. The strong team of Relationship Managers,
Customer Service Executives, Advisory Managers and Research Analysts, offers efficient
execution backed by in-depth research, knowledge and expertise to customers across the country.
With a pan-India presence of over 300 offices, IIL is geared to meet all the investment needs
through its branches.
IL&FS Investsmarts Limited is an initiative in the field of Financial Services started by
Infrastructure Leasing & Financial Services (IL&FS), an institution known for its innovative and
pioneering initiatives in the areas of Infrastructure, Corporate Finance and Investment Banking.
IISL was set up in October 1997 and began retail operations in September1998.
IL&FS Investsmart Securities Limited (IISL) was set up with the objective of becoming one of
the leading full service brokerage houses in the country with a strong expertise in web-based
technology as well as strengths in physical distribution. Today with a presence in more than 90
cities across India through more than 300 outlets, IISL has become one of the most prominent
players in the Financial Services Industry with service offerings across different categories. In
the year 2008 investsmarts securities received the Best Performing National Financial Advisor
Retail Segment at the CNBC TV 18 National Financial Advisor Award.
The Retail Business Division at IISL is involved in dealing with a range of financial products
offered to customers across India through multiple locations. The retail business is further
categorized into various business divisions catering to varied needs of our customers. These
include divisions catering to customers for Investment options such as Equity Trading,
Derivatives Trading, IPO Investments, Fixed Income products, Mutual Fund Investments as well
as Insurance and Home Loans Advisory services.
In particular, IL&FS have always felt the need for a successful brokerage Group to have an
international capability. IL&FS believe that the strength of the HSBC Group provides a unique
opportunity for Investsmart to execute its strategic vision. It is IL&FS intention to retain a close
association with Investsmart through co-operation on a number of areas that will be mutually
beneficial and on an arm's length basis
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Mr.Ravi Parthasarathy added, I believe that HSBC Group will provide Investsmart employees
significant opportunities to enhance the value proposition for their customers. Investsmart
employees will also benefit from the training and development infrastructure that arises from
being a part of one of the worlds leading banking organizations.
Corporate Action
An approach to business that reflects responsibility, transparency and ethical behaviour. Respect
for employees, clients & stakeholder groups.ILLs strong team of Relationship Managers,
Customer Service Executives, Advisory Managers and Research Analysts, offers efficient
execution backed by in-depth research, knowledge and expertise to customers across the country.
With a pan-India presence of over 300 offices, IIL is geared to meet all the customers
investment needs through an office nearby. All the interested investors need to do is drop in at
the nearest branch or call and ILL will be happy to do the rest!
ILL says about its Customer
At IIL, we believe in "Realizing your goals together". Customer will find in IL&FS a trusted
investment partner to help work towards achieving financial goals of clients. IL&FS institutional
expertise, combined with a thorough understanding of the financial markets results in appropriate
investment solutions for clients.
Advantages Of IL&FS
Today, IL&FS Investsmart Limited is one of Indias leading financial services organization
delivering value and innovation to over 100,000 customers through more than 300 offices across
the India.
7 Reasons for investing with IL&FS Investsmart Limited is smarter.
Customization: They formulate investment plans based on investors individual
requirements.
Expertise: They bring within customer reach, IL&FS institutional expertise and their
valuable understanding of the financial markets.
One-stop-shop: They cater to all investors investment needs under one roof.
28

Trust: They enjoy the pedigree of IL&FS and share its expertise in financial
services.
Personalised Service: They help customer through the entire investment process,
step by step, with innovative and efficient services.
Unbiased & Objective Advise: They partner you in your investment process, with
our team of expert investment advisors.
Extensive Reach: Through a host of mediums:
- offline through more than 300 offices across India.
- Online through our website.
Retail Business: Retail offerings of IIL seek to cover all financial planning
requirements of individuals, which include providing personalised investment
management services including planning, advisory and execution and monitoring of
the full range of investment services. Broadly the retail services are divided into two
broad categories.
HSBC in India
The HSBC Group in India is represented by several entities including The Hong Kong and
Shanghai Banking Corporation Limited which offers a full range of banking and financial
services to its over 2 million customers in India through its 47 branches and 170 ATMs across 26
cities. HSBC is one of Indias leading financial services groups, with over 33,000 employees in
its banking, investment banking and capital markets, asset management, insurance broking, two
global IT development centres and six global resourcing operations in the country. The Bank is
the founding and a principal member of the HSBC Group which, with over 10,000 offices in 83
countries and territories and assets of US$2,354 billion at 31 December 2007, is one of the
worlds largest banking and financial services organisations.
Sale of Stake in Investsmart to HSBC
IL&FS agrees to sell its stake in Investsmart to HSBC. Infrastructure Leasing and Financial
Services Limited (IL&FS), is to sell its 29.36 percent stake in IL&FS Investsmart Limited
(Investsmart), a leading retail brokerage house in India, to HSBC. Under the terms of the
agreements, HSBC, through Group subsidiaries, proposes to acquire IL&FSs 29.36 per cent
29

stake of Investsmart for a consideration of INR 410 crores (approximately US$ 96.9 million). In
addition, IL&FS will be paid INR 82 crores (approximately US$ 19.4 million) as part of a three
year non-compete agreement. HSBC also proposes to acquire an additional 43.85 per cent stake
in Investsmart from E*TRADE Mauritius Limited, an indirectly wholly-owned subsidiary of
E*TRADE Financial Corporation.
Both IL&FS and E*TRADE Mauritius Limited will receive a price of INR200 per share for their
respective stakes. HSBC will also make an open offer to acquire up to 20 per cent of the
remaining shares in Investsmart. Details of the open offer to Investsmart shareholders will be
published in the Indian press and distributed to shareholders in accordance with local regulations.
Established in 1997 by IL&FS, Investsmart is a financial services firm with a strong presence in
retail broking. It has a national distribution network comprising 88 branches, 190 franchise
outlets and more than 660 terminals in 133 cities throughout India. Its 2,000 staff serves over
138,000 clients. While strong in retail broking, it also has businesses in Institutional broking,
investment banking, wealth management, insurance distribution and margin financing. Ravi
Parthasarathy, Chairman of IL&FS, said IL&FSs goal is to position IIL as a leader in the
brokerage sector.
In particular, IL&FS have always felt the need for a successful brokerage Group to have an
international capability. And believe that the strength of the HSBC Group provides a unique
opportunity for Investsmart to execute its strategic vision. It is IL&FS intention to retain a close
association with Investsmart through co-operation on a number of areas that will be mutually
beneficial and on an arm's length basis Mr. Parthasarathy added, I believe that HSBC Group
will provide Investsmart employees significant opportunities to enhance the value proposition for
their customers. Investsmart employees will also benefit from the training and development
infrastructure that arises from being a part of one of the worlds leading banking organizations.
HSBC will be making the acquisition through Group subsidiaries, including HSBC Securities
and Capital Markets (India) Private Limited, the Groups broking arm in India. The agreement
and open offer are subject to regulatory and other approvals. With a market capitalization of
approximately US$300 million, Investsmart is listed on the National Stock Exchange and the
Bombay Stock Exchange and its Global Depository Shares are listed on the Luxembourg Stock
Exchange ends/more.
30

PRODUCT PROFILE
All the products of ILFS can be broadly divided into the following two categories:
1. Online Trading Products
2. Advisory Services
3. Other services.
1. Online Trading Product of IL&FS Investsmart
Basically IL&FS Investsmart offers three types of products to its retail customers. They are:
a. SmartStart
b. SmartInvest
c. SmartTrade

a. SmartSTART:
SmartStart is a powerful browser based trading system for those who are relatively new to online
investing. A unique integrated account, which integrates customer banking, broking, and demat
accounts of the clients. A comprehensive trading service, which allows customer to invest in
equities and derivatives.
SmartStart trading platform allows customer the flexibility of trading on any internet capable
system, with access to both the NSE and BSE
System Requirement
Browser Type: Microsoft Internet Explorer 6.0 or higher (Java enabled)
31

Internet Connection: Broadband/Dial-Up connection (Modem at a minimum of
28.8/33.6 Kbps)
System: Pentium 3 or 4 GHz or best available at market RAM (Physical) 128 MB
or better
Operating System: Windows 98/2000 or Windows XP.
Features of SmartStart
Freedom of information.
Control of investors money.
Access to market.
Ensure the best price for investors.
Offers greater transparency.
Live financial news and analysis.
Access to NSE and BSE

b. SmartINVEST
SmartInvest is a browser-based system designed for customers who transact occasionally. It is
ideal for investors who believe in the Buy and Hold Approach towards investment in equities.
SmartInvest's capability as a browser-based trading platform gives customer the benefit of real-
time streaming data with the flexibility of trading on any Internet capable system. With access to
both the NSE and BSE, customers are in the driver's seat when routing their order to the best
price on either of the exchanges. SmartInvest sophisticated yet easy to use point and click order
entry interface allows customer to react more quickly to the markets and make better decisions.
System Requirement

Browser Type: Microsoft Internet Explorer 6.0 or higher (Java enabled)
Internet Connection: Broadband/Dial-Up connection (Modem at a minimum of
28.8/33.6 Kbps)
32

System: Pentium 3 or 4 Ghz or best available at market RAM (Physical) 128 MB
or better
Operating System: Windows 98/2000 or Windows XP
Features of SmartInvest
Instant Loading: The browser- based applet system allows customer to instant access to
clients account with no wait time, unlike other system that takes a few minutes to load.

Works behind a proxy: This platform can be accessed on any internet-enabled network.
They can be accessed even from costumer work place.

Live streaming quotes: Keeps an eye on the stocks of customers choice with streaming
real time quotes and customizable market data. Color-coded price changes help them to
spot trends and in turn help the customer to react faster.

Multiple watch lists: The new watch list option allows the customer to create up to 10
groups of watch list with each group accommodating 15 scripts. Each watch list can be
personalized by the customers according to their choice of scripts.

NSE and BSE Access: Flexibility of trading on both NSE and BSE via a single screen.

Single order form for Cash and F & O: Single order form offers the customers the
convenience of transacting in various segments of the market without having to switch
between multiple windows.

Point and click order entry: Makes order entry quick and simple with a click on the
security, the same is inserted on the order form in the trade screen.

Hot key functions: Using a single keystroke (hotkey) function the customer can achieve
important task very similar to a brokers terminal. Accessing important reports is also one
keystroke away.

33

Market depth window: It gives an immediate at a glance information about the stock
they are following. The view provides the best 5 bids and offers quotes and the
outstanding order quantities.
Back office access: View segment wise ledger bills and contract notes, trades, positions,
account balance, realized/unrealized profit and loss, and buying power all in real time.

c. SmartTRADE:
SmartTrade is an EXE based desktop software designed for active traders who transact
frequently to capture favourable short-term price movements. The platform offers active traders
the tools they need to make critical decisions with confidence.
SmartTrade is designed and built from the ground up to address the needs of active traders.
SmartTrade makes the most of state-of the-art technology to deliver power, speed and reliability.
Through an easy-to-use interface, users are provided with the same tools and advantages that the
professionals enjoy.
System Requirement

Browser Type: Microsoft Internet Explorer 6.0 or higher (Java enabled)
Internet Connection: Broadband/Dial-Up connection (Modem at a minimum of
28.8/33.6 Kbps)
System: Pentium 3 or 4 GHz or best available at market RAM (Physical) 128
MB or better
Operating System: Windows 98/2000 or Windows XP.
This account is an EXE based desktop software designed for active traders who transact
frequently to capture favourable short-term price movements. The platform offers active traders
the tools they need to make critical decisions with confidence.
Smart Trade is designed and built from the ground up to address the needs of active traders.
Smart Trade makes the most of state of the art technology to deliver power, speed and reliability.
Through an easy to use interface, users are provided with the same tools and advantages that the
professionals enjoy.
34

Features of SmartTrade
Fully customizable display: The save desktop option allows the clients to save their
created trade screen layout, so the next time they access the application the created layout
is not lost.

Dynamic charts with Indicators: Provides the clients a wealth of charting capabilities
and timing indicators, which allow them to go right into the action with real time daily
charts, and intra-day charts. Watch price movements by minutes, days or weeks.

EOD Charts: Smart Trade puts up to 5 years of in depth history at their command with
the power to instantly back-test any trading strategy they design, before risking one rupee
of their trading capital.

Real- Time market data: Get real time market data from both NSE and BSE, similar to
what a professional broker gets.

Advanced alert capabilities: Alert window allows the customer to be free from
watching every tick. Users can be notified once a security has reached the set parameters.
Multiple securities can be monitored using the set parameters. These alerts can be
triggered both visually and audibly.

Live order status: Tracking all their orders are made easy through the order status
screen. Further drill down into all details pertaining to an order is available in the order
detail sub report.

Track your orders real time: Track customer stock orders and trades in real time.

Real time position updates: All their positions are updated automatically and instantly.
The need of refresh button is avoided.

Dynamic buying power: It reflects their credits and debits instantly on every trade
execution. No need to refresh each statement to know their latest buying limits.

35

Derivative chain: This feature provides with a list of all derivative contracts available
for the selected security. To view derivative prices of a security just right click on the
symbol and click on derivative chain.

Lock terminal option: If the system is unattended, this function locks the trading
platform for the customers and can be accessed again only on providing the proper login
details.

Message window docking: This feature enables the customers to receive trading
messages, intraday trading calls and messages from both the exchanges flashed real time
onto their screens.

2. Advisory Services
Basically IL&FS Investsmart offers following types of services to its retail customers. They are:
a. Mutual fund advisory services.
b. Portfolio management services.
c. IPO Advisory and Distribution Services.
d. Insurance Advisory Services.
e. Investment Advisory services.

a. Mutual Fund Advisory Services
As a part of Mutual Fund Advisory Services, their team of experts across India helps investors in
selecting the right scheme from over 500 offerings, matching customer needs, goals and risks. In
addition to this, we also help you constantly monitor their MF portfolio, making changes
according to the changing needs as per the market scenario, in order to make customers money
work for investors.
At IL&FS Investsmart (IIL), their expert teams of relationship managers interact with investors
on a regular basis to discern customer changing needs, in tune with the changing environment.
Most of investors require some assistance in making selections appropriate to their individual
needs. Investors need sound advice from people who have expertise to decipher the financial
36

jargon of investment options available today. Their Investment Advisory Team helps customer
customize and execute plans, based on their individual needs towards wealth maximization.
b. Portfolio Management Services (PMS)
Financial markets today offer enormous growth potential. But managing investors own
investments can be an extremely challenging task. Anticipating market trends, assessing the
impact of socio-economic changes on customer investments, keeping abreast of latest corporate
developments and financial analysis all adds up. Managing ones investments has become nearly
a full-time affair that requires considerable time and expertise.
At IL&FS Investsmart, they offer customer just the solution that allows clients to relax as IL&FS
put their money to work through the IIL-PMS, a Discretionary Portfolio Management Service.
c. IPO Advisory and Distribution Services
IL&FS Investsmart (IIL) is one of India's leading companies engaged in the activity IPO
Advisory and Distribution. IL&FS primary markets division does a comprehensive research
before recommending issues to clients. IL&FS pan India reach helps us in mobilising large
number of applications across India during public offerings, this has ensured that constantly
figure amongst the top ranking performers in the primary market distribution space.
As a part of their online offering, customers can invest in IPO's not only through IL&FS
branches but also through our website, which also provides customer with regular updates on the
IPO scenario, Open IPO's as well as all the forthcoming IPO's at any given point of time.
The primary markets distribution division works in conjunction with the retail and wholesale
distribution networks, as well as IL&FS private client group. In case there are not IL&FS
customers, but still want to invest in any particular IPO, IL&FS suggest client to visit any of
branch locations near clients or else call us for an application form and IL&FS would courier it to
customer.



37

d. Insurance Advisory Services
IL&FS Investsmart (IIL) is customer one stop shop for all Insurance & Retirement needs. They
have also been recognized as Indias Best Retail Financial Advisors at the CNBC TV18
Financial Advisory Awards 2006-07, 2007-08.
Their key service features include the following:
Risk management solutions for all
Comprehensive research for all policies available on a regular basis
Recommendations on a comprehensive insurance cover based on clients needs
Maintain proper records of client policies

e. Investment Advisory Services
The investment advisory team in the company helps customize plans, base on customer
individual needs.
3. Other services
Basically IL&FS Investsmart offers following types of other services to its retail customers.
They are:
a. Online services.
b. Research and Financial Analysis.
c. Value added services.
a. Online Services
The website offers unique features such as real time news and analysis, a personal portfolio
manager, research tools, corporate profiles, mutual fund and product options, IPO centres, stock
alerts, investment advisory services, query solving and much more.
b. Research and Financial Analysis
38

The research team in the company thoroughly studies each asset class-equity, mutual funds,
commodities and fixed income products. The qualified financial analysts in the company study
the market trends and make objective recommendations, so that customers can make well-
informed decisions.
c. Value Added Service
Smart update Extensively researched monthly reports detailing the market performance
of various investment options.
Mutual fund Weekly updates Analysis of the Mutual Fund industry, offering an
overview of Mutual Fund Schemes.
Flavour of Equity Monthly reports on the change in exposure in the top 10 stocks,
churning of portfolios and the entry and exit of stocks by the respective fund managers of
select Mutual Fund companies.
Bond Fund Snapshot Monthly reports on analysis of bond funds of select mutual fund
companies.
Rolling returns Monthly reports on the fundamental and technical call for equities and
derivatives for short term.
Market wrap Daily post market analysis.
Smart trader Daily reports on the fundamental and technical call for equities and
derivatives for short term.
Equity Research reports Sector and company wise reports on the fundamentals, along
with a recommendation of the stock.
Strategy note Quarterly note on the broad equity market views, macro fundamentals and
top stock picks.
Result preview Pre result quarterly reports on select companies.
39

Result update Post result quarterly reports on select companies.
Event notes Implications and analysis of major corporate events like mergers and
takeovers.
Visit notes Notes on the companys outlook and discussion during a corporate visit.
Deri Watch Weekly, sock specific technical and derivatives statistics reports.
Deri Strat Daily derivatives market strategy.
IPO Updates Analysis on the current IPO with support for and against it.
Policy Updates Updates and analysis of important announcements and policies like the
budget and monetary.
Morning coffee Daily update on the Indian and International financial markets.
Morning Track Monthly research reports on the debt and money markets.
Commodity reports Daily and weekly commodity reports.
Depository & Custodial services - Company also offers dematerialization services as the
company is Depository Participant of NSDL.

Top Management
A committed and formidable management team anchors the company towards its goal and
provides direction in diverse areas of business strategy, operating management, regulatory
reporting, human resources development, product development etc. Equipped with excellent
domain knowledge and extensive experience, they drive IILs vision.
Mr. Manasije Mishra MD & CEO
Mr. Avdhoot Deshpande Head - Equity and Capital Markets
Mr. Vipul Shah Head - NBFC
40

Mr. Dharmen shah Vice President - Institutional Equity
Mr. B.S. Shashidhar Head - IAIFL and General Insurance
Mr. Jaideep Anand Senior Vice President - Institutional Sales & Dealing
Mr. C. Diwakar Chief Information Officer (CIO)
Mr. Bhuvnesh Khanna Head - Alternate Channels
Mr. K. Venkatesh Head Distribution

Fig 2(a)Organization Chart of HSBC InvestDirect Ludhiana Branch



Branch Manager
Mr. Saurabh
Talwar
Offline
Opeartions (3
Persons)
Relationship
Manager(3
Persons)
Dealers (4
Persons)
Supporting Staff (3
Persons)
Online
Acquisitions
ASM
Mr. Sarbjit Pal
ASM
Mr. Abhishek
Aggarwal
ASM
Mr. Rahul Sood
41

SWOT ANALYSIS
INTRODUCTION
SWOT Analysis is a strategic planning tool used to evaluate the strengths, weaknesses,
opportunities, and threats for a business entity. It involves specifying the objective of the
business venture or project and identifying the internal and external factors that are favourable
and unfavourable to achieving that objective. The technique is credited to Albert Humphrey, who
led a research project at Stanford University in the 1960s and 1970s using data from fortune
500companies
Strengths: Attributes of the organisation which are helpful to achieving the objective.

Weaknesses: Attributes of the organisation which are harmful to achieving the
objective.

Opportunities: External conditions which are helpful to achieving the objective.

Threats: External conditions which could damage the businesss performance.
SWOT ANALYSIS OF IL&FS INVESTSMART LTD.
Strengths
Customization: It understands the dreams, needs, aspirations, concerns and resources
are unique and this is reflected in every move they do for the sake of individual
customer. This is the greatest value it provide online trading products like Smart
Invest and Smart Trade.

Expertise: IIL brings within the customers reach their institutional expertise and the
ability to effectively combine an invaluable understanding of the financial markets,
with an intention of building a long-term partnership.

One-stop-shop for all the investment needs: IIL gives all the types of services and
products an individual investor can dream and think off. All the financial products
and services are under one-roof.
42

Unbiased and objective advice: The teams of expert investment advisors customize
plans to suit the needs of investors.
Extensive reach: IIL make sure that they are always accessible to customers through
a host of mediums. A customer can contact them either through website or through
their branches and channel partners of more than 300 offices across India.
Brand image: IIL as such is a well known brand in industry.
Competitive pricing: It charges less brokerage compared to its competitors.
Weaknesses
Expensive products: Some of the products like SmartTrade are quite expensive. An
annual charge for SmartTrade is Rs. 3000.

Tedious procedures: Tedious procedures and delays in processing the data and
documents of new customers.

Fund transfer: It has tie-ups with only 5 banks for online fund transfer, where as
other competitors have more tie-ups.

Attrition: High attrition rates in trainees category.

Unattractive offers: Some offers of the company like Advance Subscription Plan
with a deposit of Rs.50,000 to avail low brokerage charges. The low brokerage
charges will be effective for the clients for a minimum turnover of Rs. 50 Crore p.a.

Opportunities
Indian economy seems to be out of recession. This is the right time for inventers to re-
enter the market. The company should adopt some strategies to increase the business
through existing clients.
The increasing number of management graduates helps to get sales force at trainee levels
at less salaries or commission basis. It reduces the salaries and commissions expenses of
the company. The company can tie up with reputed B Schools for trainees.
43

Huge untapped market in rural areas, Tier2 and Tier 3 cities and towns of India can be
concentrated to increase the business.
Many a banks are offering fund transfer services. The company can increase the tie-ups
for fund transfers at attract customers of different banks.
Threats
Stiff competition from existing players in the market and there is also a threat of new
entrants. It has lead to cut throat competition in terms of brokerage charges and exposure.
Increasing awareness of mutual funds and ULIPs created by Domestic Institutional
Investors has reduced the direct investment in to stock market to some extent. This
automatically reduces the business of stock brokers.
Changing economic scenario in India and changes in government policies will have great
impact on the revenue of this company
Many a investors burnt their figures during the bearish market conditions. It has turned
many a trading accounts inoperative.








44

FINANCIAL STATEMENT ANALYSIS
Ratio Analysis: -
A Ratio is a simple arithmetical expression of the relationship of one number to another. The
Ratio Analysis is one of the most powerful tools of financial analysis. It is with the help of ratios
that the financial statements can be analyse more clearly and decisions made from such analysis.
Ratio Analysis is the process of establishing & interpreting various ratios for helping in making
certain decisions.
Liquidity Ratio: -
Liquidity refers to the ability of a concern to meet its current obligations as and when these
become due. The short-term obligations are met by realising amounts from current, floating or
circulating assets. The current assets should either be liquid or near liquidity. These should be
convertible into cash for paying obligations of short-term nature.
1) Current Ratio: - The current ratio is the ratio of total current assets to current liabilities.
The current ratio indicates the firms ability to pay its current liabilities. By using this ratio
the extent of the soundness of current financial position of an undertaking and the degree
of safety provided to the creditors. Greater the current ratio the larger amount of rupee
available to the firm per rupee of current liabilities.

Current Ratio = Current Assets
Current Liabilities
Table 2(a) Current Ratio
2009 2008 2007
Current Ratio 1.90 2.30 2.20





45




Fig 3(a) Current Ratio
Interpretation: - From the above data it can be clearly interpreted that the current ratio for
the march 2009 is less as compared to previous year. For the last year it was good and it was
depicting that the short term financial position of the company was very good and for this year
current ratio is good but not as per the previous standards.
Quick Ratio: -
Quick ratio also called as Acid test ratio. The quick ratio is a fairly stringent measure of liquidity. It is
based on those current assets, which are highly liquid inventories are excluded from the numerator of
this ratio because inventories are deemed to be the least liquid component of current assets. Quick ratio
can be calculated by dividing the quick assets by current liabilities. Quick ratio is a liquidity ratio or 1:1
ratio this ratio indicates liquid financial position of an enterprise.

Quick Ratio = Quick Assets
Current liabilities
Table 3 (a):- Quick Ratio
2009 2008 2007
Quick Ratio 1.10 1.10 1.00
2007 2008 2009
Current Ratio 2.2 2.3 1.9
0
0.5
1
1.5
2
2.5
Current Ratio
46



Fig 4(a):- Quick Ratio
Interpretation: - From the above data we can see that the quick ratio of the bank is good and
satisfying the thumb rule of 1:1 also. For the last two years it is same i.e. 1.10:1 that means bank
is well enough to pay off its creditors.
Return on Total Assets: -
It refers to a ratio that measures a company's earnings before interest and taxes (EBIT) against its
total net assets. The ratio is considered an indicator of how effectively a company is using its
assets to generate earnings before contractual obligations must be paid.


To calculate ROTA:
= EBIT
Total Net Assets
Table 4(a):- Return on total asset
2009 2008 2007
Return on Total
Assets
9.90 12.00 12.50
2007 2008 2009
Quick Ratio 1 1.1 1.1
0.94
0.96
0.98
1
1.02
1.04
1.06
1.08
1.1
1.12
Quick Ratio
47



Fig 5(a) :- Return on total asset
Interpretation: - It can be observed from the above data that return on total assets is
decreasing from the previous years. However it doesnt mean that net profit of the bank has been
decreased it is basically due to increase in total assets which is much higher than the net profit.
Gross Profit Ratio: -
Gross profit ratio is defined as the difference between net sales and cost of good sold. This ratio
shows the margin left after the meeting manufacturing costs. It measures the efficiency of
production as well as pricing. To analyze the factors underlying the variation in gross profit
margin the proportion of various element of cost to sales is studied. The gross profit ratio is
computed by dividing gross profit by sales


Gross profit

Gross Profit Ratio = *100
Sales
Table 5(a):- Gross profit Ratio
2009 2008 2007
Gross Profit Ratio 30.20 30.80 31.50

2007 2008 2009
Return on Total Assets 12.5 12 9.9
0
2
4
6
8
10
12
14
Return on Total Assets
48


Fig 6(a):- Gross profit Ratio
Interpretation: -
G/p ratio of the company is ranging from 30-31 for the last three years and there is
however a little bit change in the ratio for the last years. There is not any standard
thumb rule to compare this ratio but as per market trend this percentage is good.
Net Profit Ratio: -
This ratio indicates the earning left for shareholder as a percentage of net sales. It
measures the overall efficiency of production, administration, selling, financing
pricing, and tax management. Jointly considered, the gross and net profit margin
ratios provide a valuable understanding of the cost and profit structure of the firm
and enable the analyst to identify the sources of business efficiency. Net profit ratio
is computed by dividing net profit by sales.
Net Profit Ratio = Net profit
Sales
Table 6(a):- Net profit Ratio
2009 2008 2007
2007 2008 2009
Gross Profit Ratio 31.5 30.8 30.2
29.5
30
30.5
31
31.5
32
Gross Profit Ratio
49

Net Profit Ratio 6.60 5.50 6.10


Fig 7(a):- Net profit Ratio
Interpretation: - Net profit ratio of the company has increased from the
previous year and this shows the company is performing well and the main reason
for increase in the net profit is increase in sales which is more than the increase in
expenses of the company.
Debt Equity Ratio: -
It is calculated to measure the relative claims of outsiders and the owners against the firms
assets. This ratio indicates the relationship between the external equities or the outsiders funds
and the internal equities or the shareholders funds.
Debt-Equity Ratio = Outsiders Funds
Shareholders Funds
Table 7(a) Debt Equity Ratio
2009 2008 2007
2007 2008 2009
Net Profit Ratio 6.1 5.5 6.6
4.8
5
5.2
5.4
5.6
5.8
6
6.2
6.4
6.6
6.8
Net Profit Ratio
50

Debt-Equity Ratio 2.59 1.42 1.44

Graph 8(a) Debt Equity Ratio
Interpretation: - Debt equity ratio of the company has been improved from the last year and
this shows that the company has increased its debts but however more increase in debt will
increase the risk from the equity shareholders point of view.
Total Debt to Total Assets Ratio: -
The ratio indicates the relationship between the total liabilities to outsiders to total assets of a
firm and can be calculated as follows:-
= Total Liabilities to Outsiders
Total Assets
Table 8(a):- Total debt to total asset
2009 2008 2007
Total Debt to Total
Assets ratio
0.69 0.55 0.54
2007 2008 2009
Debt-Equity Ratio 1.44 1.42 2.59
0
0.5
1
1.5
2
2.5
3
Debt-Equity Ratio
51


Fig 9(a):- Total debt to total asset
Interpretation: - In above data we can see that the total debt to total assets for last three years
is continuously increasing that Shows Company is now increasing the share of debts in assets.
But on the other hand it is also enlarging the risk profile for the creditors.
Trend Analysis: -
An aspect of technical analysis that tries to predict the future movement of a stock based on past
data. Trend analysis is based on the idea that what has happened in the past gives traders an idea
of what will happen in the future. Trend analysis tries to predict a trend like a bull market run
and ride that trend until data suggests a trend reversal (e.g. bull to bear market). Trend analysis is
helpful because moving with trends, and not against them, will lead to profit for an investor.
Table 9(a):-Trend Analysis of Net Sales: -




0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
2007 2008 2009
Total Debt to Total Assets Ratio
Total Debt to Total Assets Ratio
Years Sales Percentage
2006-2007 4777.64 100
2007-2008 5208.38 109.02
2008-2009 6106.43 127.81
52


Fig 10(a):-Trend Analysis of Net Sales
Interpretation : -From the above data we can observe that the net sales of the company is
increasing which may tends to increase in the net profit of the company and also will lead to
increase in the net-worth.
Table 10(a):- Trend Analysis of Expenses (Administrative Selling & Distribution): -






2006-07 2007-08 2008-09
Series 1 100 109.02 127.81
0
20
40
60
80
100
120
140
P
e
r
c
e
n
t
a
g
e

(
%
)

Trend Analysis of Net Sales
Years Expenses Percentage
2006-2007 720.32 100
2007-2008 792.62 110.04
2008-2009 809.66 112.40
53


Fig 11(a):- Trend Analysis of Expenses (Administrative Selling & Distribution):

Interpretation: - From the above data we can observe that the expenses from the last years are
increasing but their percentage change is not as much as in the sales which will tend to increase
in the Net profit. But increase in expenses from 2006-07 to 2007-08 is more than the net sales
which may tend to decreases in profit.

Table 11(a):-Trend Analysis of Net Profit






2006-2007 2007-2008 2008-2009
Series1 100 110.04 112.4
92
94
96
98
100
102
104
106
108
110
112
114
P
e
r
c
e
n
t
a
g
e

(
%
)

Trend analysis of Expenses
Years Net Profit Percentage
2006-2007 291.12 100
2007-2008 286.50 98.41
2008-2009 401.52 137.92
54


Fig 12(a):- Trends analysis of Net Profit
Interpretation: - As from the above trend it can be analyzed that Net profit for the company is
continuously increasing. But however increase N/P from 2006-07 to 2007-08 was decreased due
to increase in expenses as compared to previous years.










2006-2007 2007-2008 2008-2009
Series1 100 98.41 137.92
0
20
40
60
80
100
120
140
160
P
e
r
c
e
n
t
a
g
e

(
%
)

Trend analysis of Net Profit
55


PART B


Chapter 1
DEMAT ACCOUNT

56

Meaning Demat Account
Demat is the abbreviation of Demateriazation .A Demat account which is needed for buying or
selling shares of a company or stocks and other equities in electronic form. Just as bank accounts
hold money, Demat accounts hold equities. Earlier investors used to hold shares in paper format.
Nowadays they are stored electronically in the Demat account. The document of shares that is in
paper form is demated and is kept electronically in an account. Demat Account dematerializes
paper-based physical stock shares. The dematerialized account is used to avoid holding physical
shares The market regulator, the Securities and Exchange Board of India (SEBI), has allowed
trades of upto 500 shares to be settled in physical for m, nobody wants physical shares any more
as it is time taking procedure. So a Demat account is a must for trading and investing. As it is
more convenient to trade electronically.
Number of shares needed to open a Demat Account
When one opens a Bank Account, one needs to have a minimum balance. But not so with a Demat
account. A Demat account can be opened with no balance of shares And there is no minimum
balance to be maintained either. One can have a zero cash balance even in one's Trading
Account.
Depository Participant (DP):
Depository
They are the custodians of securities. It helps for shorter settlement cycles and immediate transfer
of title of securities.
The main work of Depositor y is of keeping stocks of investors in electronics form. A depository
is an organisation which holds securities like shares, debentures, bonds, government securities,
mutual fund units etc. of the investors in electronic form at the request of the investors through a
registered Depository Participant Services related to transactions in securities are also provided by
the Depository There are two main depositories in India namely:
1. NSDL (National Securities Depository Ltd) and
2. CDSL (Central Depository Services Ltd).
57


Depository Participant (DP) is an agent of the depository through which it interfaces with the
investor and provides depository services to the investors. As per the requirements prescribed by
SEBI the following can also be registered as DP; Public financial institutions, scheduled
commercial banks, foreign banks operating in India with the approval of the Reserve Bank of
India, state financial corporations, custodians, stock-brokers, clearing corporations /clearing
houses, NBFCs and Registrar to an Issue or Share Transfer Agent.
Online Trading Account
When a share trader opens a De-mat Account in any Company an Online Trading Account is also
opened at the same time, as Demat Account contains all the Shares of a customer similarly a
Trading Account is maintained to keep cash which assist in buying of shares and other charges.
The online mode of investing largely eliminates all the major difficulties of investing:
It provides relevant of information, analysis and tools that enables the investors to take more
informed decisions, virtually no paperwork involved as all transaction records are online and
statements available in digital for m, as such an investor can invest anytime and from anywhere at
his time and convenience.
To begin investing online one needs to register as a member for an integrated 3-in-1 online
trading account with any of the service providers.
Annual Maintenance Charges are taken from the customers for maintaining their Demat Account,
Trading Account and for providing other services. Every Broking Firm now specifies for opening
of three accounts by their investor or the Share Trader. These are
Trading account
, which enables the trader to transact online.
bank account
, which is Internet enabled, for online money transfers through Internet and
58

demat account
where the shares are to be deposited.
There are certain factors which are to be considered while opening an Online Trading
Account, these are:
Credibility and credentials:
There should be the backing of a reputed bank or financial institution, which provides that
additional safety
Which investments can be made online:
The investor has to find out whether he is allowed to invest in equity shares, mutual funds and
IPOs fully through the online route or in only one of them?
Quality of information and content:
Ensure that one is getting the best of information, research support and tools, which is provided
to investor or trader in an easy and reader friendly manner.
Speed of order execution
Are the share traders able to place their equity orders and receive quick order confirmations
during peak hours?
Choice of products to choose from:
Some service providers provide a choice of products - from the basic (classic) account to more
advanced trading platforms with live and streaming market information on equity markets.
Safety:
Check for the security features inbuilt into the system to ensure
security in transaction.
Customer care:
59

to ensure whether the service provider have a dedicated customer care cell to take care of the
queries and problem of the customers.
Besides the above, many additional features offered may be looked into, like
_ Ability to sell shares next day before receiving delivery,
_ SMS alerts,
_ Intraday trading in equities, etc based on the investing needs
Types of Trading Account






There are to things one can do with the shares or stock or equities that one buys:
Intraday Trading:
The trader can sell the shares on the same day itself such buying and selling
Of shares on the same days is called intraday trading.
The brokerage of the intraday trading is always lower than the delivery trading
Intraday trading is typically completed within a day that means you have sell the stocks that you
have purchased that day before the even if you do not sell the stocks yourself, they will
automatically square off before the closing of the exchange.
One of the disadvantages of Intraday Trading is that the trader has to sell the shares within a day
even when the share price is down.

INTRADAY


TRADING
DELIVERY


FUTURES
OPTIONS


MARGINS

60

Delivery Trading:
The trader can choose to keep some shares in their Demat account to be sold at
a later date in their discretion. Such a trade would be called " Delivery Trading
The brokerage charged for delivery trades is usually more than that charged for
Intraday trades.
With Delivery Trading the trader can hold Shares till it reaches its expected price, as long term
investment can always reap good dividend. The trader can also benefit from Split Shares, Bonus
Shares and other benefits that the company announces for the share holders.
T+2 rule
It is a rule in Delivery Trading that once a delivery order is placed for shares with the broker or on
one is Online Trading Account they are not immediately deposited in the Demat account of the
trader. They will only be deposited on the 3rd business day. T in T+2 refers to trade or the day on
which trade has taken place.
But in HSBC, T+4 rule is applied.
Futures
Futures on individual stock were launched in November 2001. They are transferable specific
delivery forward contracts .They are agreement between two counterparties to fix the terms of
exchange or lock-in the price today of an exchange that will take place between them at some
fixed future date. The future trading has effective safeguards against defaults in the form of
clearing corporation guarantees for trades and the daily cash adjustment to the accounts of trading
members, based on daily price change.
Options
Options are the contract that gives the holder the right to buy or sell securities at a predetermined
price within or at the end of specific period. There can be options on commodities, currencies,
securities, stock index, and individual stocks and even on futures. In order to acquire the right of
option, the option buyer pays the option seller an option premium, which is the price paid for the
right.
61


CONSIDERATIONS FOR OPENING A DEMAT ACCOUNT:
The following are the points that one should consider before choosing or opening a DEMAT
Accounts are:
Price:
One may incur the following costs while operating a Demat Account. Though there are many
charges but these matter the most:
Demat Account Opening Charges
Demat Account Maintenance Charges
Charges for Buy/Sell Trades.
Quality
Ease of Access of the Demat Account: It means to access Demat Account
Information online.
Customer Service: This would play a role if one decides to buy/sell shares directly
through the Depository Participant/DP or if one likes to keep shares in paper form.
Benefits of Demat Account:
It is safe and convenient way to hold securities or shares.
It reduces paperwork that is involved in transfer of securities.
Reduction in transaction cost while trading
Nomination facility is also available.
The transmission of securities/ shares is done by DP (Depository Participant) eliminating
correspondence with companies.
It enables holding investments in equity and debt instruments in a single account.
ACCOUNT OPENING
To avail the services of a depository an investor is required to open an account with a
depository participant of any depository.
PROCEDURE FOR OPENING AN ACCOUNT
A demat account are opened on the same lines as that of a Bank Account. Prescribed Account
62

opening forms are available with the DP, needs to be filled in. Standard Agreements are to be
signed by the Client and the DP which details the rights and obligations of both parties
The DP officials will make available the relevant account opening form (depending on
whether the client is a retail investor or corporate client/clearing member) and
specify the list of documents regarding references that should be submitted along
with the form. It will also give a copy of the relevant agreement to be entered with the
client, in duplicate.
The client will submit the duly filled in account opening form and client has to visit
personally for opening the account in DP. The DP officials have to do in person
verification and affix the IN PERSON VERIFICATION stamp on the account opening
form. It should also furnish such documents regarding references, as specified by the DP,
along with the account opening form. After executing the agreement the client has to
forward it to the DP.
DP officials will verify that the account opening form is duly filled in. It will also verify
the enclosed documents, if any. Incomplete forms will be forwarded to the client for
rectification.
For Corporate Clients, the DP officials will verify if the board resolution for the
authorized signatories is enclosed
In case the documents are not proper, the DP officials will reject the form and intimate the
client of the same, stating the reasons for doing so.
If the form is in order; the DP officials will accept the same and affix the stamp verified
with original on each and every proof after seeing the original proofs
After completion of all documentation, the DP officials will verify the pan from income
tax website. And affix the stamp PAN VERIFIED with date and sign on the stamp.
The DP officials will enter the client details as mentioned in the account opening form in
the DPM (software provided by NSDL & CDSL to the Participant) screen provided for the
purpose. In case of NSDL A/c opening the SR. Assist will capture all the details in the
DPM and record the clients signature (on the form) as specimen for
authorizations in the future. After entering client details in the system, a client account
number will be generated by the DPM. The DP officials will enter this in details in the
63

DPM captured by the SR. Assist and activate the account.
The DP officials are not allowed to give the demat a/c no to the clients until the a/c is
activate, this is applicable for both NSDL & CDSL.
When the demat a/c is activated the DP officials have to send the client master and the
copy of agreement between DP and client at the clients address
The account holder is called 'beneficial owner' in a depository system and the account is known as
'beneficiary account'
DOCUMENTS SHOULD BE REQUIRED FOR DEMAT ACCOUNT
Proof of Identity (POI):
Passport
Voter ID card
Driving license
PAN card with photograph
Proof of Address (POA):
Ration card
Passport
Voter ID card
Driving License
Bank passbook
Verified copies of :
its department Electricity bills (not 2 months old)
Residence landline telephone bill (not more than 2 months old)
64

Leave & license agreement/agreement to sell (duly attested)
Self declaration by supreme court/high court judges, giving the new address in respect of
their own accounts.
Passport-size photograph
Copy of PAN card along with original PAN card for verification
In case of NRI
Foreign address and RBI approval date attested copy of RBi approval
NRO-Indian address alonwith proofs
Bank account details
In case of joint holdings
In case of joint holdings, POI and POA documents alongwith PAN card must be submitted in
respect of all account holders. Original documents must be taken to the DP for verification.
The DP will also provide a copy of the DP-Client agreement.
Account opening form require the applicants to give the following
details:
(a) Name(s) of account holder(s) -
The investor should ensure that the name is identical to that which appears on the certificate(s) to
be dematerialized. In case of joint holdings, account may be opened in any one combination,
irrespective of the sequence in which names are appearing on share certificates. Investors are
advised to open their account in their fully expanded name, i.e., to spell to the first name as well
as the middle name. This would obviate any doubts about the veracity of the information.
(b) Mailing and communication address(es) -
The veracity of the applicant's address is determined through the documents submitted for
verification like ration card, passport, voter ID, PAN card driving license, bank passbook, etc.
65

For NRI accounts, proof is required for both addresses - that of the account holder as well as the
constituted attorney. For corporate accounts, a copy of Memorandum of Association, Articles
of Association, Board resolution permitting opening of account, the registered address of the
company have to be furnished.
(c) Details of guardian in case account holder is a minor
Only a guardian can open a depository account for a minor. The guardian is required to sign the
application form, and details of his name and address need to be given in addition to the details of
the minor.
(d) Details of bank account
Details of bank account of the account holder, including the nine digit code number of the
bank and branch appearing on the MICR cheques issued by the bank have to be filled in the
application form. Companies use this information for printing them on dividend/interest warrants
etc.
(e) Nomination declaration -
A beneficial owner can make a nomination of his account in favour of any person by filing the
nomination form with his DP. Such nomination is considered to be conclusive evidence of the
account holder'(s) disposition in respect of all the securities in the account for which the
nomination is made.
The demat account cannot be operated on "either or survivor" basis like the bank account. In case
of the joint account for the beneficial owners, all the joint holders have to sign the account
opening form.
The investor will submit to his DP the duly filled in account opening form & DP-client agreement
along with the documents.
On successful opening of the account, the DP will give:
Client Id - an eight digit number to be used along with DP Id for any future transactions.
Delivery Instruction slip book
66

A copy of the report listing the client details captured in the DPM database to the client.
The report will be generated by the DPM.
Services provided by Depository system
Dematerialization (usually known as demat) is converting physical certificates to
electronic form
Rematerialisation, known as remat, is reverse of demat, i.e. getting physical certificates
from the electronic securities
Transfer of securities, change of beneficial ownership
Settlement of trades done on exchange connected to the Depository
Pledge / Hypothecation of demat shares, viz. Loan against shares
Electronic credit in public offering of the Companies
Non - Cash corporate benefits, viz. Bonus / Rights direct into electronic form
Depository restrict the risk of fraud
Buying and Selling of Dematerialization
INTRODUCTION
The procedure for buying and selling dematerialized securities is similar to the procedure for
buying and selling physical securities. The difference lies in the process of delivery (in case of
sale) and receipt (in case of purchase) of securities.
In case of purchase:-
The broker will receive the securities in his account on the payout day.The broker will give
instruction to its DP to debit his account and credit investors account.Investor will give Receipt
Instruction to DP for receiving credit by filling appropriate form. However one can give standing
instruction for credit in to ones accounts that will obviate the need of giving Receipt Instruction
every time.
In case of sale:-
The investor will give delivery instruction to DP to debit his account and credit the brokers
account. Such instruction should reach the DPs office at least 24 hours before the pay-in as
otherwise DP will accept the instruction only at the investorsrisk.

67

NEED OF THE STUDY
The need of the study arises because of the reason that a trainee must understand the company,
its achievements and tasks, products and services and also to collect information about its
competitors, its products and services offered. So that, after understanding and collecting
information about the organization and its competitors, a trainee will be able to work well for the
organization.
From the study I have learned very much, about the company as well as the strategy of the
customers, which helps me a lot at my working days.







68


Chapter2
Review
Of
Literature
69

Review of Literature
This chapter deals with the empirical work done at National and international level by various
management scholars in the area. A literature review is a body of text that aim to review the
critical point of current knowledge on a particular topic .Its ultimate goal is to bring the reader
up to date with current literature on the topic and forms the basis for another goal such as the
justification for future area of research.
Shah (2009) examined in his book emergence of securities depositories in India.
Acc. to him Dematerialization of securities has ended the days of bad deliveries, payment
delays, paper movement and slower settlement.
Sofat and Hiro (2009) revealed that the customers satisfaction level from their share
brokers. It was identify the customers expectations and to improve the quality of working
of various DPs.It was found from the study that LSE securities is a new star in DP
market.
Arora, Singh & jain(2009) in their research Exploring customer preference for
mutual fund has remarked that Past performance, core product features, expense ratio,
risk-return trade off and liquidity are the five most important factors in a mutual fund.
Hence investor prefer benefit for the cost given, flexible return, additional facilities,
proper performance delivery, service quality and focus of service provided beside the
core product facilities offered. A prudent product design, by adding the features expected
by the investors that are spelt out in this research will make the mutual fund scheme more
attractive to the investors.
Manjunatha (2009) in his study titled Risk-Return Analysis of BSE Sensex
Companies analyzed that the study of the relationship between risks & returns is
required for the investment in securities.There is direct relationship between returns &
Beta.It shows Investment in Equity market presupposes the existence of risk for which
higher returns are expected. Further, investors in equities & market Index expect higher
returns than risk-free returns in the long-run.

Kumar (2009) in his study titled Do Investors Behave Rationally in Stock Markets-
A Behavioral Finance Perspective remarked that A new perspective came into
70

existence which is referred to Behavioral Finance that is an explanation of the various
Puzzles of Finance and these Puzzles are : Stock Price, Under- & Overreactions,
Excessive trading & the gender puzzle, financial hypes & panic, the Equity premium
Puzzle & the winner/loser Puzzle. This perspective based on the alternative notion that
Investors, or at least significant majority of them are subject to Behavioral biases that
mean their financial decisions can be less than fully rational.Confidence amongst
Investors as a whole is the key factor in determining how market behaves.
Aggarwal & Nayak (2009) in their study titled A Study of Investors expected
rate of return on their Investment analyzed that In particular, this study aims at
understanding & interpreting the behavior of working employees of Private & Public
sector on their Investment decisions. The study shows how an Investment is chosen on
the basis of expected rate of return gets affected by demographic variables, which helps
to advise the clients better. The result shows that 68% of the Investors reveal that
maximum Investors are likely to invest in Stock market & Mutual fund. The data
suggests people those mostly invest in the market are Service class Investors who dont
have enough time to keep continuous watch on the market Fluctuation; they need regular
assistance from their relationship manager who is assigned to them.
Prasad (2009) in his study on ULIP- The Tasters Perception on the Mixed Bag of
Fruits concluded that Majority of investors prefer insurance as an investment for
mitigating the future risk. They are interested in ULIPs as they offer fund o options and
flexibility. The variables affecting the choice for ULIP products are correlated and they
are fund management charges, reliability of insurer, insurance coverage charges.
Demographic factors also have significant impact over the level of investment in ULIPs.
Also, agents are the most preferred channels of distribution of insurance policies.
Jha (2009) in his article ELSS Save tax and create wealth has remarked that
Insurance scheme seeks to build a diversified portfolio comprising of stocks of
companies with strong fundamental that is available. It tries to develop a portfolio
wherein stock is selected on the basis of intrinsic value of the company. The best way to
select the ELSS is through systematic investment plan.

71

Choudhary (2008) in his study titled The Components of Investments
Performance of Fund Managers: Evidences from Indian Capital Market remarked
that The Investment Performance of the Investment Managers can be judged on the
various components such as Market Timing, Stock Selection, Risk Bearing &
Diversification.This shows that Investment managers stock selection, risk bearing &
diversification performance was not affected by choice of Benchmark Indices but market
timing performance was quite sensitive to choice of market proxies.
Sinha (2008) in his study titled Human Behavior & Investments found that
Peoples emotions, biases and misadjustments affect their Investment decisions most
even if it is assumed that human beings are rational.Most Financial theories are based on
the idea that everyone takes careful account of all available information before making
Investment decisions.
Kumar (2008) in his article Bancassurance in India: Issues & Implications has
remarked that With the opening up of insurance sector and so many players entering in the
insurance industry it is required by the insurance company to come up with well established
infrastructure facilities with good call centre service to attract and provide information to
customers regarding different good policies and their premium pay scheme.The size of country,
a diverse set of people combined with problems of connectivity in the rural areas, Makes
insurance selling in India is a very difficult task. Life insurance companies require good
distribution strength and tremendous man power to reach out such a huge customer base.
Dala (2008) gives overview on the Dematerialization costs, insurance and other
issues. She has founded that although high dematerialization costs may have retarded the
growth of India investor population, things are beginning to change. Acc. to her opinion
it is now p to Govt. to encourage the investors and DP's the market manipulators.
Fischer (2007) in his study titled Do Investors in Structured products act
rationally analyzed the strategies Individual Investors pursue when purchasing
structured products. However, a considerable part shows Inconsistent strategies.Higher
Risk attitude & Investment activity are connected with this Irrational Behaviour.
Financial advice has a positive effect on Investment strategies of Individual Investors.
Gupta (2006) the requirement of having a PAN has been made mandatory by the
Securities and Exchange Board of India .In accordance with SEBI guidelines,
72

Depositories NSDL and CSDL requirements state that PAN card is now compulsory
documents for all categories of demat account holders.If the account holders fails to
produce the PAN Card within the stipulated period of six months DPs will freeze the
account.
Oommen (2004) this article has discussed about NSDLs success in depository
services.Today all custodian operating in India .Major stock
exchanges,brokers,institutional and retail investors are extensively using the infrasture
and more than 99% of settlements are taking place in dematerialized form.
Gupta and jain (2003) in a paper on India Securities Depository System:What has
gone wrong? stated that unknowingly and unintentionly,the share depository system is
adversely affecting millions of small Investors and also hurting the equity markets growth
by causing such investors to gradually withdraw from the market. This paper attempts to
explain how this has come about and what corrective action is needed.
Dash (2001), his paper titled Basics Of investment he discusses The basic of
investment and need for investment. Investment benefits both economy and the society. It
is an outgrowth of economic development and the maturation of modern capitalism. For
the economy as a whole, aggregate investment sanctioned in the current period is a major
factor in determining aggregate demand and, hence, the level of employment. In the
long term, current investment determines theeconomys futureproductive
capacity and, ultimately, a growth in the standard of living. By increasing personal
wealth, investing can contribute to higher overall economic growth and prosperity.
Nagpal (2000) in his paper titled Psychology of Investments and Investors
Preferences founded that Every individual investor must follow three principles of
investing.Using a long-term investing approach, following the right strategy to maximize
the return on investment and proper allocation of investible funds. While
applying these three principles, an individual investor has to confront his/her
demographics, lifestyle and investment psychology. The knowledge of all these
aspects is imperative for all progressive investors, researchers, financial consultants,
academicians, students and the marketer of the financial products.
Rao(2000) in his white paper on Dematerialization defined that Dematerialization as a
process by which company through the depository takes share certificates of shareholders
73

participants credits equal number of share to account holder as electronic holding. The
article explains the step by step process involved in depository systems with particular
reference to Dematerialization process. Depository in an organization where the
securities of an investor are held in electronic form through the medium of DPs.It
enables surrender and withdrawal of securities to and from the depository through the
process of dematerialization.
Sung & Hanna (1996) in their study titled Factors Related to Risk Tolerance,
analyzed that Education is also a factor that is thought to increase a persons capacity to
evaluate risks inherent to the Investment Process & therefore endow them with a higher
financial risk tolerance.However, he derives a model that suggests an element of
circularity in this argument, as the relative risk aversion of an Individual is shown to
determine the rate of human capital acquisition.
Yoo (1994) in his study titled Behavioral factors affecting Investment Decisions
found that The change in the risky asset holdings were not uniform. He found individuals
to increase their investments in risky assets throughout their working life time, and
decrease their risk exposure once they retire. While identifying the systematic patterns of
investment behavior exhibited by individuals found age and expressed risk taking
propensities to be inversely related with major shifts taking place at age 55 and beyond.

Gap in the Research: -
These all studies that have been used as a review of literature are showing some Gap in the
researches.
1) The very first Gap is that none of the research had been done with the problems faced by
Demat Account holders.
2) No research has studied their Expectations towards their DPs.
3) PAN is mandatory for the opening of Demat Account.
4) Loans are availed on DPs.
So, these all are the gaps for which this research study has been conducted by me.


74






Objectives












75

Objectives

1. To find out the most preferred broking firm among the firms.
2. To understand the customers expectations from depository participants.
3. To understand the satisfaction level of the customers.
4. To find the choice of customer for improvement in DP services.


76



Chapter 3
Research Methodology



77


Research can be defined as logical and systematized application of the fundamental science to
the general and overall question of study and scientific techniques which provide precise tools,
specific procedures and technical, rather than philosophical means for getting and ordering
the data prior to their logical and manipulations.
Research methodology is a way to systematically solve the research problem .It may be
understood as a science of studying how research is done scientifically. In it we study the
various steps that are generally adopted by a researcher in studying his research problem
along with the logic behind them
Descriptive Research Design:- Descriptive Research studies are those, which are concerned
with describing the characteristics of a particular individual, or of a group. In descriptive studies
the researcher must be able to define clearly, what he wants to measure and must find adequate
methods for measuring it along with a clear cut definition of population he wants to study.
Size of sample-100
Area of research study-Ludhiana (Ferozegandhi market)
Sampling procedure- Convenience sampling
Convenience sampling (sometimes known as grab or opportunity sampling) is a type of non-
probability sampling which involves the sample being drawn from that part of the population
which is close to hand. That is, a sample population selected because it is readily available and
convenient. The researcher using such a sample cannot scientifically make generalizations about
the total population from this sample because it would not be representative enough.






RESEARCH METHODOLOGY

78

METHOD FOR DATA COLLECTION

Primary Data - The primary data are those, which are collected a fresh and for the first time,
and thus happened to be original in character. We can obtain primary data either through
observation or through direct communication with respondent in one form or another or through
personal interview
Procedure of data collection- Survey
Tools for data collection- Questionnaires
Secondary Data- The secondary data on the other hand, are those which have already been
collected by someone else and which have already been passed through the statistical processes.
When the researcher utilizes secondary data then he has to look into various sources from where
he can obtain them. For e.g. Books, magazine, newspaper, Internet, publications and reports. In
the present study I have made use of secondary data collected from their website and from their
records.Data has been collected from secondary source. The secondary data as it has always been
important for the completion of any report provides a reliable, suitable, adequate and specific
knowledge.


79





Chapter 4
DATA ANALYSIS
AND
INTERPRETATION
80


Table4.1
Number of Demat Account holder
Option No. of responses Percentage
Yes 100 100
No 0 0



Fig.4.1 Number of Demat Account holder
Analysis and Interpretation: Almost all the peoples are having demat account so
we can say that demat account are quite popular now a days. The another reason
may be is that because of the population which is chosen for the research.

100
0
Yes
NO

81

Table 4.2 Demat Account in Different companies
Opinion Number of Responses Percentage
HSBC 28 28%
LSE 32 32%
KRAVY 13 13%
Others 27 27%
Total 100 100%


Fig.4.2 Demat Account in Different companies
Analysis and Interpretation:
As shown in the above graph that LSE is more popular in Ludhiana. The reason may behind that
it is older Stock Exchange in Ludhiana. HSBC is providing more facilities and competitive
charges. But it is not very popular to market because as it is new to the market.

28
32
13
27
0
5
10
15
20
25
30
35
HSBC LSE KRAVY OTHERS
82

Table4.3
Source of information about the above company
OPTION NO.OF RESPONSES PECENTAGE
T.V. 7 7%
NEWSPAPER 28 28%
PERSONAL CONTACT 35 35%
BROKER/AGENT 30 30%
Total 100 100%
.

Fig 4.3 Source of information about the above company
Analysis and Interpretation:
As it clear from the above table that most of the people preferring the personal contact because
of the convenience and friendly advice. Therefore personal contact scoring 35% for the source of
information. After personal contact people prefer broker and agents which constitute 30%for the
source of information.
0
5
10
15
20
25
30
35
40
Television Newspaper Personal Contact Broker/Agent
83

Table 4.4
The occupation of investors
OPTION No of Responses Percentage
BUSINESS 44 44%
GOVT 31 31%
STUDENT 14 14%
HOME MAKER 11 11%
Total 100 100%


Fig.4.4 The occupation of investors
Analysis and Interpretation: It is interpreted from the graph that most of the
investors are from the business class as it is 44%are belong to business class.About
31%investors are the govt. employee. And about 11% are the homemaker, It may
because of less knowledge of trading.
44
31
14
11
0
5
10
15
20
25
30
35
40
45
50
Businesman Govt. Student Home maker
84

Table4.5
Preference of Mode of Trade
Option No of Responses Percentage
Online 44 44%
Offline 56 56%
Total 100 100%


Fig.4.5 Preference of Mode of Trade
Analysis and Interpretation:
As we know that the online trading is more convenient and it provide more facility and less
brokerage charges. After that more of the people prefer offline trading.The reason behind that
may be lack of knowledge or we can say that most of the traders are less techno-free.



44
56
online
offline
85

Table4.6.The frequency of trading
Option No of Responses Percentage
Daily 29 29%
Weekly 41 41%
Monthly 25 25%
Yearly 5 5%
Total 100 100%


Fig.4.6.The frequency of trading
Analysis and Interpretation:
From the above it is shown that most of the individual who are investing in the market in weekly
basis. It is clear from the graph that 41% are trading on the weekly basis. And a few are investing
on the yearly basis, it may be because of they have extra money to invest or they want high risk
and high profit.



0
5
10
15
20
25
30
35
40
45
Daily weekly Monthly Yearly
86

Table4.7 Rank the preference while opening a demat account
Option No of responses Mean
Brokerage 375 3.75
Opening Charges 390 3.90
Customer service 150 1.50
Security 315 3.15
Convenient 255 2.55


Fig.4.7 Rank the preference while opening a demat account
Anaysis and Interpretation:
Above graph and table shows the factor that is most considered by the investors while
opening the demat account is opening charges and after that another factor which is
considered by the investors is the brokerage charges.



3.75
3.9
1.5
3.15
2.55
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
Opening charges brokerage Customer Service security Convenience
Preferance while opening a demat account
87

Table4.8.
The problem faced after opening an Account
Opinion Number of responses Percentage
Yes 72 72%
No 18 18%
Total 100 100%


Fig.4.8 The problem faced after opening an Account
Analysis and Interpretation:
It is clear from the above table that most of the demat account holders are facing the different
types of problems. Therefore, 72% people are facing the problem of different type after opening
the demat account. Only 18% demat account holders are said that they are not facing any
problem, they may not be an active traders.


72
18
yes
no
88

Table4.9
The Problems faced by you while holding the Demat
Options No of responses Percentage
Log in problem 45 30%
Difficulty in Operating account 34 23%
Delay in order execution 32 22%
Incorrect Entry of trade orders 23 16%
Lack of proper customer Service 13 9%


Fig.4.9 The Problems faced by you while holding the Demat
Interpretation:As seen in above maximum respondents are facing the log in
problem followed by difficulty in operating and delay in order.

0
5
10
15
20
25
30
LOG IN
PROBLEM
DIFF.IN
OPERATING
DELAY IN
ORDER
INCORRECT
ENTRY
LACK OF
CUSTOMER
CARE
30
23
22
16
9
89

Table 4.10.
The satisfaction level with services provided by your DPs








Highly
satisfied
+2
satisfied
+1
Neutral
0
Dissatisfied
-1

Highly
Dissatisfied
-2
Total Mean
Online
Facility
15


30
19


19
9


0
11


-11
14


-28
10 0.10

Brokerage

29

58
11

11
49

0
7

-14

4

-8
47 0.47
Customer
care

25

50
19

19
44

0
7

-7
5

-10
52 0.52

Research
Analyst
31

62
16

16
45

0
5

-5
3

-6
67 0.67
90

Fig.4.10 The satisfaction level with services provided by your DPs

Analysis and Interpretation:
It is analyzed that most of respondents satisfied by the research facility provided to them.After
that the second factor on which the respondents are satisfied is the customer care and most of the
respondents are not satisfied with online facilities due to lack of knowledge regarding online
trading.






0.1
0.47
0.52
0.67
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
online facility brokerage Research Analsts customer care
mean
91

Table 11
The loan availed against your DP
Option No of responses Percentage
Yes 86 86%
No 14 14%



Fig 4.11 The loan availed against your DP

Interpretation:
It can be easily analysed from the graph that almost all investors are getting the facility of loan
against their DPs. So we can say that almost every firm is providing this loan facility.



YES
NO
92

Table4.12
Factor considered by investors while selecting a particular DP
Option No of responses Percentage
Convenience 26 26%
Safety 18 18%
min.processing time 14 14%
Better analysts 29 29%
Less maintenance 23 23%
Total 100 100


Fig.4.12 Factor considered by investors while selecting a particular DP
Analysis and Interpretation:As shown in above graph, most of the respondents
prefer better Analystic factor is first parameter for selecting their depository
participant and then they consider convenience factor more while others get
minimum percentage.







26
18
14
29
23
0
5
10
15
20
25
30
35
Convenience Safety min.processing
time
Better analysts less maintenance
93



Chapter 5

Findings
And
Suggestions
94

Findings

LSE securities have done the wonders in just 5 years and they have a very good
customer base. Actually it is only because of LSESL, which created a shock wave
among the others players and customers are satisfied with DP services.
HSBC is new to market and it is also growing with great speed.
It is found from the analysis that dematerialization of the securities is the most favorable
among respondents.
It is found from the analysis that almost all respondents have rated their DP services as
either good or average.
It is found from the analysis that 70% of the respondents want to remain with their
existing DP and only very few want to shift to a new DP.
It is found from the the analysis that 29% of the respondents prefer better analyst and
convenience as the first parameter for selecting their depository participant. Processing
time and safety factors have minimum criteria of all.
Almost all of Companies availed loan on their DPs.









95

Suggestions
It is being recommended that DP Should increase the manpower so that the quality of
services can be improved.
All the DP should have a uniform price structure. Some of the DP are charging very
high rates and they should reduce their charges so that more number of customers can be
attracted.
The time taken for confirmation in trades is very long and it should be reduced.
The DP should provide the facility of online checking of the account.
The DP should send the statement of holdings to their clients on time.
DP should try to open their branches in every city so that volume of trade should
increase.












96


Conclusion
The project has helped to ascertain the problems faced by the demat account holders and the
customers expectations from the depository participants in Ludhiana city. In particular, the
survey is conducted to identify the customers expectations and to improve the quality of
working of various DPs in Ludhiana city. The customers satisfaction level from their share
brokers was also revealed. It was found from the study that LSE securities is a new star in the DP
market and will emerge as an undisputed leader in the coming year.

Limitations of the Study: -
1) For doing this research, the sample size of 100 was small. A sample size cannot always
represent the whole population.
2) The data collected consisted of survey of Investors opinions in Ludhiana only. Hence,
the study is geographically limited to Ludhiana only.
3) Most of the respondents were not interested to provide their responses.
4) There is also a Time Constraint because it is only of 6weeks training so I was unable to
cover the other companies in my research.







97

Bibliography
Shah,Ravi(2009),book on Emergence of Securities Depositories in India
Sofat and Hiro,Rajni and Preeti(2009) article in Indian Journal of Finance,Nov.2009.
Kumar (2009), Do Investors behave rationally in Stock Market: A Behavioural Finance
Perspective, Investors India, Oct.2009, Pg.16-20.
Aggarwal & Nayak (2009), A Study of Investors expected rate of return on their
Investment, Journal of Management & IT, Vol.7, No.2, May-August 2009, Pg.103-
107.
Choudhary (2008), The components of Investments Performance of Fund Managers:
Evidence from Indian Capital Market, The Global Journal of Finance & Economics,
Vol.5, No.1 (2008), Pg.1-17.
Sinha (2008), Human Behaviour & Investments, Indian Journal of Finance, Vol.4,
Nov. (2008), Pg.13-19.
Kumar Amit, Bancassurance in India: Issues & Implications(2008)
Dala,Sucheta (2008),article on Costs, insurance and other issues.
Gupta,Ashish(2006),Indian journal of Finance, article on PAN has made mandatory by
SEBI.
Ninan, Oommen A.(2004),article on NSDLs success in Depository Services.
Gupta and jain, L.C and Naveen (2003),paper on India Securities Depository System
:What has Gone Wrong?
Rao, P. Mohana(2000),white paper on Dematerialization.
Rao Hanumantha & Mishra Vijay Mutual fund: A resource mobilizer in financial
market Vidya sagar journal of commerce March 2007 vol 12 page 109-115.
Sung & Hanna (1996), Factors related to Risk Tolerance, Global Journal of Finance &
Management, Vol.3, June (1996), Pg.11-17.
www.hsbcinvestdirect.com
www.sebi.com
www.economictimes.com
www.investorsguide.com
www.nseindia.com
98







ANNEXURE









99

Questionnaire
Ques1. Do you have Demat Account?

Yes No
Ques2. Which of following do you have your Demat Account in?
a) HSBC
b) LSE
c) KARVY
d) Others
Please Specify --------------
Ques3. How did you come to know about above company?
a) Television
b) Newspaper
c) Personal Contact
d) Broker/Agents
Ques4. What is your occupation?
a) Businessman
b) Govt.
c) Student
d) Home maker
Ques5. Which type of Demat mode are you dealing with?
a) Online b) Offline
Ques6. How frequently do you trade?
a) Daily b) Weekly
c) Monthly d) Yearly
100

Ques7. From the following, Please rank the most preferred while opening a demat account?
a) Brokerage
b) Opening Charges
c) Customer service
d) Security
e) Convenient
Ques8. Are you facing any problem after opening an Account?
Yes No
Ques9. Which are the Problems faced by you while holding the Demat?(checklist)
a) Log in problem
b) Difficulty in Operating account
c) Delay in order execution
d) Incorrect Entry of trade orders
e) Lack of proper customer Service
Ques10. How much are you satisfied with services provided by your DPs?
a)Online facility

Highly Dissatisfied Neutral Satisfied Highly
Dissatisfied Satisfied

b)brokerage

Highly Dissatisfied Neutral Satisfied Highly
Dissatisfied Satisfied

101

c)Research Analyst

Highly Dissatisfied Neutral Satisfied Highly
Dissatisfied Satisfied
d) Customer Care

Highly Dissatisfied Neutral Satisfied Highly
Dissatisfied Satisfied
Ques11. Have you availed loan against your DPs?
Yes No
If Yes from where and at what rate of interest----------------
Ques12. What are your opinion regarding selecting a particular DP?
a) Convenience
b) Safety
c) Min.processing time
d) Better analysts
e) Less maintance
Ques14. What suggestions will you like to give to improve the existing system?
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Name-------------------------------------
Contact No.------------------------------

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