73627245 Demat Services of Karvy Stock Broking Ltd

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Transcript of 73627245 Demat Services of Karvy Stock Broking Ltd

Organization overview

A

Project Study Report

On

Training Undertaken at

KARVY STOCK BROKING LTD

DEMAT SERVICES OF KARVY STOCK BROKING LTD.Submitted in Partial Fulfillment for the

Award of Degree of

Master Of Business Administration

Submitted By:

Submitted To:

xxxxxxxxxxxxx

DR.

MBA 3rd Sem.

H.O.D.DEEPSHIKHA COLLEGE FOR TECHNICAL EDUCATION, JAIPUR2009-2011 Jitendra

Virahyas

[email protected]

PrefaceFor management student theoretical knowledge as well as practical knowledge is must. Management of modern business requires an appreciation of multidisciplinary concept and in depth knowledge of specific analytical tools, geared to the solution of real life problems. No doubt every situation is unique but a set of theoretical tool of knowledge, itself based on empirical foundation, can help in developing the mechanism for handling such situation. Therefore, the MBA curriculum has been designed to provide practical exposure to the future manager. The project study is necessary for the fulfillment of MBA curriculum, it provide an opportunity to the researcher to understand industry with special emphasis on the development of skills in analysis, interpretation of practical problem through application of management.

Acknowledgement

I express my sincere thanks to my project guide, Mr. Jitendra Virahyas, Regional Head(CAT) of Karvy, for guiding me right form the inception till the successful completion of the project. I sincerely acknowledge him for extending their valuable guidance, support for literature, critical reviews of project and the report and above all the moral support he had provided to me with all stages of this project.I would also like to thank the supporting staff Mr. Jitendra Virahyas Karvy Stock Broking Ltd. JAIPUR, for their help and cooperation throughout our project.

xxxxxxxxxxxExecutive summary:-

This project has been a great learning experience for me; at the same time it gave me enough scope to implement my analytical ability. This project as a whole can be divided into two parts:

The first part gives an insight about the DEMAT SERVICES and its various aspects. It is purely based on whatever I learned at karvy. One can have a brief knowledge about DEMAT SERVICES and all its basics through the project. Other than that the real servings come when one moves ahead. Some of the most interesting questions regarding DEMAT SERVICES have been covered. Some of them are: why has it become one of the largest financial intermediaries? How investors do chose between funds? Most popular stocks among fund managers, most lucrative sectors for fund managers, a special report on Systematic Investment Plan, does fund performance persists and the topping of all the servings in the form of portfolio analysis tool and its application.

All the topics have been covered in a very systematic way. The language has been kept simple so that even a layman could understand. All the datas have been well analyzed with the help of charts and graphs.

The second part consists of data and their analysis, collected through a survey done on 75 people. It covers the topic demat services of karvy stock broking ltd.. The data collected has been well organized and presented. Hope the research findings and conclusions will be of use. It has also covered why people dont want to go for financial advisors? The advisors can take further steps to approach more and more people and indulge them for taking their advices.

CONTENT1. Introduction to the Industry

7

2. Introduction to the Organization 14

3. Research Methodology 68 3.1 Title of the Study 69 3.2 Duration of the Project 69 3.3 Objective of Study

69 3.4 Type of Research

70 3.5 Sample Size and method of selecting sample 74 3.6 Scope of Study 75 3.7 Limitation of Study 784. Facts and Findings 795. Analysis and Interpretation 806. SWOT 877. Conclusion 888. Recommendation and Suggestions 899. Appendix 9010. Bibliography 92

Introduction to the industry

In most industrialized countries, a substantial part of financial wealth is not managed directly by savers, but through a financial intermediary, which implies the existence of an agency contract between the investor (the principal) and a broker or portfolio manager (the agent). Therefore, delegated brokerage management is arguably one of the most important agency relationships intervening in the economy, with a possible impact on financial market and economic developments at a macro level.

In most of the metros, people like to put their money in stock options instead of dumping it in the bank-lockers. Now, this trend pick pace in small but fast developing cities like Chandigarh, Gurgaon, Jaipur etc. My research is based on the residents of JAIPUR and its nearby areas.

As the per-capita-income of the city is on the higher side, so it is quite obvious that they want to invest their money in profitable ventures. On the other hand, a number of brokerage houses make sure the hassle free investment in stocks. Asset management firms allow investors to estimate both the expected risks and returns, as measured statistically. There are mainly two types of Portfolio management strategies.

1. Passive Portfolio Strategy

2. Active Portfolio Strategy

1. Passive Portfolio Strategy: A strategy that involves minimal expectation input, and instead relies on diversification to match the performance of some market index. A passive strategy assumes that the marketplace will reflect all available information in the price paid for securities

2. Active Portfolio Strategy: A strategy that uses available information and forecasting techniques to seek a better performance than a portfolio that is simply diversified broadly.

BACKGROUND OF STOCK EXCHANGE IN INDIA

The emergence of stock market can be traced back to 1830. In Bombay, business passed in the shares of banks like the commercial bank, the chartered mercantile bank, the chartered bank, the oriental bank and the old bank of Bombay and shares of cotton presses. In Calcutta, Englishman reported the quotations of 4%, 5%, and 6% loans of East India Company as well as the shares of the bank of Bengal in 1836. This list was a further broadened in 1839 when the Calcutta newspaper printed the quotations of banks like union bank and Agra bank. It also quoted the prices of business ventures like the Bengal bonded warehouse, the Docking Company and the storm tug company.

Between 1840 and 1850, only half a dozen brokers existed for the limited business. But during the share mania of 1860-65, the number of brokers increased considerably. By 1860, the number of brokers was about 60 and during the exciting period of the American Civil war, their number increased to about 200 to 250. The end of American Civil war brought disillusionment and many failures and the brokers decreased in number and prosperity. It was in those troublesome times between 1868 and 1875 that brokers organized an informal association and finally as recited in the Indenture constituting the Articles of Association of the Exchange. On or about 9th day of July,1875, a few native brokers doing brokerage business in shares and stocks resolved upon forming in Bombay an association for protecting the character, status and interest of native share and stock brokers and providing a hall or building for the use of the members of such association.

As a meeting held in the broker Hall on the 5th day of February, 1887, it was resolved to execute a formal deal of association and to constitute the first managing committee and to appoint the first trustees. Accordingly, the Articles of Association of the Exchange and the Stock Exchange was formally established in Bombay on 3rd day of December, 1887. The Association is now known as The Stock Exchange.

The entrance fee for new member was Re.1 and there were 318 members on the list, when the exchange was constituted. The numbers of members increased to 333 in 1896, 362 in 1916and 478 in 1920 and the entrance fee was raised to Rs.5 in 1877, Rs.1000 in 1896, Rs.2500 in 1916 and Rs. 48,000 in 1920. At present there are 23 recognized stock exchanges with about 6000 stock brokers. Organization structure of stock exchange varies.

14 stock exchanges are organized as public limited companies, 6 as companies limited by guarantee and 3 are non-profit voluntary organization. Of the total of 23, only 9 stock exchanges have been permanent recognition. Others have to seek recognition on annual basis.

These exchange do not work of its own, rather, these are run by some persons and with the help of some persons and institution. All these are down as functionaries on stock exchange. These are

1. Stockbrokers

2. sub-broker

3. market makers

4. Portfolio consultants etc.1.) Stockbrokers:- Stock brokers are the members of stock exchanges. These are the persons who buy, sell or deal in securities. A certificate of registration from SEBI is mandatory to act as a broker. SEBI can impose certain conditions while granting the certificate of registrations. It is obligatory for the person to abide by the rules, regulations and the buy-law. Stock brokers are commission broker, floor broker, arbitrageur etc.

Detail of registered brokers

Total no. of registered brokers as on 31.03.2008Total no. of sub-brokers as on 31.03.2008

900024,000

2.) Sub-broker:- A sub-broker acts as agent of stock broker. He is not a member of a stock exchange. He assists the investors in buying, selling or dealing in securities through stockbroker. The broker and sub-broker should enter into an agreement in which obligations of both should be specified. Sub-broker must be registered SEBI for a dealing in securities. For getting registered with SEBI, he must fulfill certain rules and regulation.3.) Market Makers:- Market maker is a designated specialist in the specified securities. They make both bid and offer at the same time. A market maker has to abide by bye-laws, rules regulations of the concerned stock exchange. He is exempt from the margin requirements. As per the listing requirements, a company where the paid-up capital is Rs. 3 crore but not more than Rs. 5 crore and having a commercial operation for less than 2 years should appoint a market maker at the time of issue of securities. 4.) Portfolio consultants:- A combination of securities such as stocks, bonds and money market instruments is collectively called as portfolio. Whereas the portfolio consultants are the persons, firms or companies who advise, direct or undertake the management or administration of securities or funds on behalf of their clients.Broking FirmsA transaction on a stock exchange must be made between two members of the exchange a typical person may not walk into the New York Stock Exchange (for example), and ask to trade stock. Such an exchange must be done through a broker.

There are three types of stock broking service.

Execution-only, which means that the broker will only carry out the client's instructions to buy or sell.

Advisory dealing, where the broker advises the client on which shares to buy and sell, but leaves the final decision to the investor.

Discretionary dealing, where the stockbroker ascertains the client's investment objectives and then makes all dealing decisions on the client's behalf.

In addition to actually trading stocks for their clients, stock brokers may also offer advice to their clients on which stocks, mutual funds, etc. to buy.

Definition of Stock Broker

All stock investors have one thing in common, whether they trade in penny shares or are long-term share investors; they all have to work through stock brokers.

When entering the world of the stock market, choosing a stock broker is your first priority and may be the most important choice you will make. There are many choices in stock brokers and you need to understand the key differences in each in order to better make your decision.

Traditionally, full-service stock brokers were the only type that was available. They charged very high commission fees but also gave a lot of help and guidance in choosing the right investments. In 1975, all of that changed and the discount stock brokers became the reigning champs of the investing world. In the last decade, the internet has permitted individual investors to research their own potential stocks for themselves, and even buy and sell stocks. There have been advantages to the arrival of the discount stock broker and online brokerage firm, but for some investors it has led to more mistakes in a smaller time. The key is doing your research and investing wisely.

On one end of the spectrum are the discount and online stock brokers. These brokerage firms act as order takers for their investors. The investor places an order on the telephone or online. The only help given is with the technical aspects of the website or the ordering process. There is no guidance given as to which stocks to buy, when to buy or when to sell. Many online brokerage firms offer their members access to stock market research, but this is provided by a third party. The account management tools help you understand how greatly you have invested and where it is going. These tools are generally online or downloadable. The discount and online stock brokers are for people either already familiar with the stock market, or those who do not have much money to invest. They do require that the investor spend some time researching and planning their investments. If you are interested in doing your own research or want to dodge hefty brokerage fees than discount and online brokers may be for you.

The next level in service is a discount or online brokerage with an assistance stock broker. The assistance stock broker will give a small amount of help. In online brokerage firms, the assistant stock broker takes the form of offering more research available and newsletters with investing tips. There is still a quantity of research that wants to be done by the individual investor, but these brokerages at least point their clients in the correct direction.

The traditional full service stock broker provides recommendations for specific shares that would be good for your portfolio. The stock broker analyzes your financial situation to figure out your needs. They put together an investing plan that is reviewed periodically and adjusted as needed. Full-service stock brokers are an admirable choice for those who dont have the time or the interest in staying on top of the newest economic news. The full service stockbroker does all the research for you and presents you with the best investments for your situation. Their clients are handled with awareness to special details and goals. This awareness does come with hefty commission fees, but considering the quantity of work and dedication that full service stock brokers give, these fees are understandable. Traditional full-service brokers make money based on the quantity of transactions they facilitate.

A money manager is one level up from a full-service stock broker in their level of economic services. Money managers (also called economic advisors) will work with clients to develop their total financial picture, which may or may not include investing in stocks. Money managers support stocks and bonds for clients. Each one has his or her own exclusive style and so it is important that you decide wisely to make sure your money manager has the same economic philosophy that you do. A professional money manager does not collect commissions on transactions. They are salaried from a percentage of the assets under their management. In that way, they are working for you and themselves at the same time. If your portfolio grows, their commission will grow as well.

Organization overview Introduction

Success is a journey, not a destination. If we look for examples to prove this quote then we can find many but there is none like that of karvy. Back in the year 1981, five people created history by establishing karvy and company which is today known as karvy, the largest financial service provider of India.

Success sutras of KARVY

The success story of karvy is driven by 8 success sutras adopted by it namely trust, integrity, dedication, commitment, enterprise, hard work and team play, learning and innovation, empathy and humility. These are the values that bind success with karvy.

Vision of KARVY

To achieve & sustain market leadership, Karvy shall aim for complete customer satisfaction, by combining its human and technological resources, to provide world class quality services. In the process Karvy shall strive to meet and exceed customer's satisfaction and set industry standards.

Mission statement

To be a leading, preferred service provider to our customer, and to achieve this leadership position by building an innovative, enterprising, and technology driven organization which will set the highest standards of service and business ethics.

The success ladder

COMPANY PROFILE

KARVY is founded by a group of Hyderabad based CHARTED ACCOUNTANTS in 1982 as a professional service firm. In the span of 25 years, KARVY has traveled the success route, towards building a reputation as an integrated financial services provider, offering a wide spectrum of services.

KARVY has 575 offices over 375 locations across India and overseas at Dubai and Newyork. Around 600000 active business associates are being attached with KARVY across the country. It also comprises of 9000 highly qualified employees and professionals.

Karvy was established as karvy and company by five chartered accountants during the year 1979-80, and then its work was confined to audit and taxation only. Later on it diversified into financial and accounting services during the year 1981-82 with a capital of rs.150000. It achieved its first milestone after its first investment in technology. Karvy became a known name during the year 1985-86 when it forayed into capital market as registrar.

Evolution of KARVY

It is well said that success is a journey not a destination and we can see it being proved by karvy. Under this section we will see that how this karvy and company of 1980 became karvy of 2008. Karvy blossomed with the setting up of its first branch at Mumbai during the year 1987-88. The turning point came in the year 1989 when it decided to enter into one of the not only emerging rather potential field too i.e; stock broking. It added the feather of stock broking into its cap. At the same time it became the member of Hyderabad Stock Exchange through associate firm karvy securities ltd and then karvy never looked back..it went on adding services one after another, it entered into retail stock broking in the year 1990. Karvy investor service centers were set up in the year 1992. Karvy which already enjoyed a wide network through its investor service centers, entered into financial product distribution services in the year 1993. One year more and karvy was now dealing into mutual fund services too in the year 1994 but it didnt stopped there, it stepped into corporate finance and investment banking in the year 1995.

Karvys strategy has always been being the first entrant in the market. Karvy again hit the limelight by becoming the first registrar in the country to be awarded ISO 9002 in the year 1997. Then it stepped into the other most happening sector i.e; IT enabled services by establishing its own BPO units and at a gap of just 1 year it took the path of

e-Business through its website www.karvy.com . Then it entered into insurance services in the year 2001 with the launch of its retail arm karvy- the finapolis: your personal finance advisor. Then in the year 2002 it launched its PCG(Private Client Group) which looks after its High Networth Individuals .and maintain their portfolio and provides them with other financial services. In the year 2003, it commenced secondary debt and WDM trading.

It was a decade which saw many Indian companies going global..so why the largest financial service provider of India should lag behind? Hence, karvy launched karvy global services limited after entering into a joint venture with Computershare, Australia in the year 2004.the year 2004 also saw karvy entering into commodities marketing through karvy comtrade.

Year 2005 saw karvy establishing a separate branch for its insurance services under the head karvy insurance broking ltd and in the same year, after being impressed with the rapid growth of karvy stock broking limited, PCG group of Hong Kong acquired 25% stake at KSBL. In the year 2006, karvy entered into one of the hottest sector of present time i.e real estate through Karvy realty& services (India) ltd. hence , we can see now karvy being established as the lagest financial service provider of the country. KARVY GROUP

KARVY group consists of 8 highly renowned entities which are as follow:

1. : The first securities registry to receive ISO 9002 certification in India. Registered with SEBI as Category I Registrar, is Number 1 Registrar in the Country. The award of being Most Admired Registrar is one among many of the acknowledgements we received for our customer friendly and competent services. 2. : karvy stock broking ltd. Consists of five units namely stock broking servics, depository participant, advisory services, distribution of financial products, advisory services and private client goups.

3. : it is registered with SEBI as a category 1 merchant banker. Its clientele includesinclude leading corporates, State Governments, foreign institutional investors, public and private sector companies and banks, in Indian and global markets.4. : karvy insurance broking ltd is also a part of karvy stock broking ltd. At Karvy Insurance Broking Limited both life and non-life insurance products are provided to retail individuals, high net-worth clients and corporates.

5. : The company provides investment, advisory and brokerage services in Indian Commodities Markets. And most importantly, it offer a wide reach through our branch network of over 225 branches located across 180 cities.

6. : Karvy Global is a leading business and knowledge process outsourcing Services Company offering creative business solutions to clients globally. It operates in banking and financial services, inurance, healthcare and pharmaceuticals, media , telecom and technology. It has its sales and business development office in New York, USA and the offshore global delivery center in Hyderabad, India

7. : Karvy Realty (India) Limited is engaged in the business of real estate and property services offering:

Buying/ selling/ renting of properties

Identifying valuable investments opportunities in the real estate sector

Facilitating financial support for real estate and investments in properties

Real estate portfolio advisory services

8. : it is a joint venture between Computershare, Australia and Karvy Consultants Limited, India in the registry management services industry.

In spite of all this KARVY has its RESERCH CENTER in Hyderabad and also a member of Hyderabad Stock exchange. It is also a member of National Stock Exchange and Bombay Stock Exchange.

Organization structure of karvy

Talking about the organization structure of karvy, we have the board of directors as the supreme governing body , the chairman being Mr. C parthasarthy, MR. M. YUGANDHAR as the managing director, MR. M.S. RAMAKRISHNA and MR. PRASAD V. POTLURI as directors. The board of diretors head the karvy group, karvy computershares limited, karvy investors services ltd., karvy comtrade, karvy stock broking ltd., and karvy global services ltd.

Karvy group being the flagship company looks after the functional departments such as corporate affairs, group human resources, finance & accounting, training & development, technology services and corporate quality.

Karvy computershare private limited facilitates mutual fund services, share registry and issue registry whereas merchant banking is looked after by karvy investor services ltd. Karvy stock broking ltd heads its another branch too ie. Karvy insurance broking ltd. The services offered by KSBL are: stock broking, depository, research, distribution, personal client group and institutional desk. And finally the BPO services are managed by karvy global services ltd.Summarizing it in a diagram, it can be presented as:

Spectrum of services offered by karvy

Karvy being the top registrar and transfer agent, functions as registrar in most of the issues in the country. Talking about the mutual fund services offered by karvy, we can get the products of 33 AMCs over here. it deals in both closed ended funds as well as open ended too. Now one must be thinking why to get the mutual funds from karvy instead of getting it directly from AMCs???we have great reasons for it: the first one being ; if we avail the services of karvy then we can get the information about all the AMCs and their products at a single place along with expert recommendations whereas at an AMC we can get information about the products of that specific AMC only. And the second being wide network of karvy.nowadays we can find karvy offices at remote areas too.

Along with these, karvy is very well handling the role of depository participant. Being registered with both the depositories i.e.; NSDL (national securities depository ltd) and CDSL (central depository services ltd), karvy can have access to both. Its wide network also facilitates it in distribution of retail financial products.

Karvy believes in being updated always. So it is always ready to use latest technologies so that its clients always be in touch with the latest happenings along with karvy. It offers e-business through internet through its website: www.karvy.com . Other than it, it also provides its various services through SMSes.

Karvys services are not limited to its investors only rather its offerings are for its corporate clients and distributors too. it is very well aware of the fact that in this era of neck to neck competition, we cant ignore any of the aspects of our business.so theres a offering for everybodyeveryones welcome at karvy.

Why should investors choose for karvy?

Excellence is next to nothing.and here at karvy everybody tries their best to offer excellent services to its clientele through its offerings maintaining the karvy culture which includes:

1. Controlled and low cost service culture: karvy is there to serve its client at the minimum possible cost. it controls cost by its various cost- cutting techniques and minimization of avoidable costs.

2. Large volume processing capability: being the largest financial service provider in the country, it has the unique distinction of operating its activities on a large scale which benefits all the parties cordially.

3. Adherence to strict time schedule: karvy knows that time is money and tries it best to finish the task within the stipulated time schedule.

4. Expertise in the queries and in responding to any situation.

5. Expertise in managing independent entities such as banks, post-office etc.: the work culture of karvy and the ethics followed inside karvy makes its workforce compatible with everybody, so the karvy people establishes good coordination with independent entities too.

6. Pooling of group resources: karvy group consists of eight subsidiaries, so it can easily pool up its resources for accomplishment of its goals, whenever needed. The groups can help each other whenever there are peaks and lows, and even in the case when they have huge targets just as we saw few years back, Tata group pooling its resources to acquire Corus.

How karvy achieved it?

The core competency of karvy lies in the following points due to which it enjoys a competitive edge over its competitors. The following culture adopted by karvy makes it all time favorite among its clientele:

1. Professionally managed by qualified and trained manpower.

2. Uniquely structured in-house software and hardware department

3. Query handling within 48 hrs.

4. Strong secretarial, accounting and audit systems.

5. Unique work culture of working 7 days a week in 3 shifts.

6. Unmatched network spreading all over India.

Achievements of the KARVY :-

The landmarks achieved by karvy very well define its success story. In the previous pages, we learnt how a company started by five chartered accountants, named as karvy and company turned into todays karvy group, the largest financial intermediary of India. But success didnt came to karvy at a flow, the hard work and dedication of its workforce made it what it is todaygradually it achieved the following landmarks and now it has became what we call the karvy group, now it is:

1. Largest independent distributor for financial products.

2. Amongst the top 5 stock broker.

3. Among the top 3 depository participants.

4 largest networks of branches & business associates.

5 . ISO 9002 certified operations by DNV.

6. Amongst top 10 investment bankers.

7. Adjudged as one of the top 50 IT users in India by MIS south Asia.

8. Full- fledged IT driven operation.

9. Indias no.1 registrar & securities transfer agent.Clientele of karvyKarvys culture has helped karvy in achieving such a distinct position in the market where it can boast of its huge client base. Be it a retail investor investing Rs. 500 in a SIP in Reliance mutual fund or be it the largest corporate house of the country: Reliance industries- everybody is heading towards karvy for their wealth maximization, lets have a look at the clientele of karvy:

According to the datas published in year 2007, karvy stock broking ltd. Operates through more than 12000 terminals, more than 290000 accounts are maintained and commands over 3.14% market share of NSE. The distribution services have access to more than Rs. 40 billion Assets under Management. Karvy being a depository participant with both NSDL and CDSL manages more than 700000 accounts from more than 380 locations. Talking about the registry services, it manages over 750 public/ right issues. at the same time, it is managing over 16 million portfolios as registars.

If we took a look at some of the top corporate houses availing the services of karvy then we have: Reliance, IOC, IDBI,LIC, Hindustan Unilever, Principal Mutual Fund, Duetsche Mutual Fund, Yogokawa, Marico Industries, Patni Computers, Morgan Stanley, Glenmark, CRISIL, 3M, Kotak Mahindra Bank, Bharti Televenture, Infosys Technologies, Wipro, InfoTech, IPCL,TATA consultancy services, UTI mutual fund etc. Thus in total karvy serves over 16 million investors and 300 corporate.

Hierarchical Structure in diagram

The above diagram shows the hierarchy of Karvy stock broking ltd. It can be easily depicted from the diagram that the regional head (presently Mr. Alok Chaturvedi) is the supreme in the eastern region, under whom the various zonal heads operate and under these zonal heads, the branch heads operate. Between each level o the hierarchy, there exists a coordinator, who acts as the facilitator between the different heads.

Structure according to the Products offered by Karvy

Karvy Investor Services Limited :-

Deepening of the Financial Markets and an ever-increasing sophistication in corporate transactions, has made the role of Investment Bankers indispensable to organizations seeking professional expertise and counselling, in raising financial resources through capital market apart from Capital and Corporate Restructuring, Mergers & Acquisitions, Project Advisory and the entire gamut of Financial Market activities.

Karvy Investor Services Limited (KISL), a SEBI registered Merchant Banker has emerged as a leading Investment Banking entity in the country with over a decade of experience. KISL has built its reputation by capitalizing on its qualified professionals, who have successfully executed a large number of complex and unique transactions.

Our quality professional team and our work-oriented dedication have propelled us to offer value-added corporate financial services and act as a professional navigator for long term growth of our clients, who include leading corporates, State Governments, Foreign Institutional Investors, public and private sector companies and banks, in Indian and global markets.

We have also emerged as a trailblazer in the arena of relationships, both at the customer and trade levels because of our unshakable integrity, seamless service and innovative solutions that are tuned to meet varied needs. Our team of committed industry specialists, having extensive experience in capital markets, further nurtures this relationship.

Credentials

Emerging as a leading Investment Banker with a strong support from its Group entities in Research, Stock Broking, Institutional Sales and Retail Distribution.

Strong team of more than 25 qualified professionals operating from six cities; Hyderabad, Mumbai, Delhi, Kolkata, Chennai, and Bangalore apart from two overseas offices at New York (USA) and Dubai.

One of the largest retail distribution networks with over 584 branches in over 389 cities/towns.

Functions of KISL (CMG):

1. Capital Markets Group

The Capital Markets Group (CMG) provides services in the areas of management of Public Issues/Rights Issues, Preferential Issues, Qualified Institutional Placements (QIPs) management of Buybacks, Takeovers, Delisting Offers, ESOPs certifications apart from Valuation of securities viz. FBT, Mergers & Acquisitions and for various Competent authorities like Revenue Department, FIPB, Stock Exchanges et al.

We have successfully managed public issues like Provogue India Ltd., Bank of Baroda, Prithvi Information Solutions Limited, Tulip IT Services Ltd. Opto Circuits (India) Ltd., Atlanta Ltd, Action Construction Equipment, Educomp Solutions Limited, Nitin Fire Protection Industries Ltd., Nitco Tiles Ltd. & ICICI Bank Bond Issue to name a few.

We have actively participated in marketing bond issues of corporations from the States of Andhra Pradesh, Maharashtra, Karnataka & Gujarat and debt issues of all the Financial Institutions like IDBI, ICICI, IFCI, REC, PFC, SIDBI, etc. and also acted as Arrangers for few of the mandates.

CAPITAL MARKET GROUP

Capital Issues:- CMG takes an integrated approach while providing services to its clients. We undertake management of public issues under the Book Building method and Fixed Price method. Our offerings include IPO, FPO, Rights Issue, Preferential Issues, (QIPs) and Debt placements. We focus on organizations growth and success in the long term by constantly advising them on various strategies for growth. Debt Private Placements:- The assistance provided by our team in Debt Private Placements helps the companies to get the most appropriate source of financing

Buybacks:- CMG advises its clients on the need for a buyback and the mode to be adopted given the prevailing market conditions. We help the companies to optimally price the buyback and carry out all the due diligence and regulatory activities involved.

TakeoversCMG provides advisory services on the following:

Need for a takeover and locating Target Company

Advise on various takeover strategies that should be adopted for strategic business plans of clients and carry out the regulatory procedures involved

Financial Analysis and Valuation of the Target Company

Our teams professional and analytical approach provides unique insights to our clients and ensures that synergy is created between organizations

Advises and ensures various compliances involved in takeover, specifically related to, SEBI Rules/ Regulation in case of listed entities Valuation

CMG provides valuation services with respect to the following:

Securities issued upon exercise of option under ESOPs/ESOS for calculation of Fringe Benefit Tax (`FBT`)

Securities issued upon scheme of arrangement for listing on Stock Exchanges

For re-instatement of listing

Securities issued upon acquisition of overseas companies for RBI/FIPB

DelistingCMG advises companies on the need for delisting, which is executed by our team of qualified professionals with highest service standards and adhering to all regulatory requirements. ESOPs/ESPSWe assist organizations in designing and structuring of ESOP scheme including Secretarial Compliance, pricing and related matters. We ensure that the schemes are in compliance with the relevant guidelines and certify Schedule V for obtaining in-principle approval from the Stock Exchanges.2. Corporate Finance Group

The Corporate Finance Group (CFG) has been carved out as a specialized activity group having four verticals Equity Placements, Debt Syndication, Mergers & Acquisitions, and Corporate Advisory. Banquet of Services

Equity Placement

Debt Syndication

Mergers & Acquisition

Corporate Advisory

Equity Placements:

Corporate Finance Group (CFG) assists companies in their equity fund raising activities and provides end-to-end advisory solutions to companies in high-growth markets on their capitalization/re-capitalization strategies. CFG leverages its network of relationships with various funds managers, Private Equity & Venture Capital Firms while raising equity funding for Corporates. The team is well equipped to understand and formulate business plans of companies, structure their fund raising programs, equity dilution etc and help them raise funds from the public markets as well as from the private markets by placing all forms of equity like

Private Placement of Equity

PIPE: Private investment in Public Equity

Venture Funding Debt Syndication:

CFG assists private and public companies in strengthening their balance sheets by delivering capital structure alternatives designed to provide a solid foundation for continued growth and the creation of long-term shareholder value. KISL acts as a placement intermediary to assist clients with both secured and unsecured debt syndications in various forms like-

Project Financing

Term Loan

External Commercial Borrowing (ECB)

Working Capital Loan

Mezzanine Financing

CFG has strong relationships with various Banks, NBFCs, and Financial Institutions Mergers & Acquisition:

CFG provides advisory services on a wide variety of merger and acquisition transactions and guides its clients through the entire Merger and Acquisition (M&A) process, be it business, brand or technology. It covers the entire spectrum of M&A activities starting from the initial step of identifying a target entity and taking it through the legal procedures, valuation, lenders, negotiation, due diligence, financing and closing of the transaction. Corporate Advisory:

CFG has a dedicated Corporate Advisory Team that offers complete corporate advisory services to Indian and overseas corporate bodies. The team has a wide sectorial experience and skillset in carrying out the project appraisals i.e. financial appraisals / business appraisals for various projects including greenfield projects.

The team specializes and provides the following services:

Formulating Business Plan

Public Private Partnership Advisory

Strategic Project Advisory

Business Valuation

Project Identification

Corporate RestructuringKarvys Corporate Finance Group couples extensive experience and expertise with an intense commitment to build meaningful long-term client relationships

Investment Banking and Corporate Finance team has collective experience of over 100 years with expertise in a variety of transaction across sectorsPast Transactions

Raised US$ 5 MnPrivate Equity

Sole AdvisorRaised US$ 10 MnPrivate Equity

Sole AdvisorBrand valuation and Private Placement of Equity for

Chandamama India Limited

Raised US$ 5 MnDebt Syndication

North East Region Financial ServicesSole ArrangerDisinvestment of SharesFor

Punjab Tourism Development CorporationCapital Restructuring Assignment for

Industrial Promotion and Investment Corporation of Orissa Limited

Demat Processing in India

INTRODUCTION:

A widely neither distributed nor such distress followed so quickly on the heels 1the equity brokerage industry in India is one of the oldest in the Asia region. India had an active stock market for about 150 years that played a significant role in developing risk markets as also promoting enterprise and supporting the growth of industry. The roots of a stock market in India began in the 1860s during the American Civil War that led to a sudden surge in the demand for cotton from India resulting in setting up of a number of joint stock companies that issued securities to raise finance. This trend was akin to the rapid growth of securities markets in Europe and the North America in the background of expansion of railroads and exploration of natural resources and land development.

Historical records show that as early as 1864, there were about 1,000 brokers with the stock markets functioning from three places in Mumbai; between 9 am to 7 pm at the junction of Meadows Street and Rampart Row, from day break till 9 am and from 7 pm to early hours of next morning at Bazargate. Share prices rose sharply even at that time. A share of Colaba Land Company during the boom period of the 1860s rose from Rs 10,000 at par to Rs 120,000 and that of Backbay Shares went up from Rs 2,000 to Rs 54,000. Bombay, at that time, was a major financial centre having housed 31 banks, 20 insurance companies and 62 joint stock companies.

Reports on stock markets around that time indicate that an ordinary broker in 1864 earned about Rs 200 per day, a huge sum in those days. The boom period came to an abrupt end in 1865. In Jul 1865, what was then used to be called the share mania ended with burst of the stock market bubble? Never had I witnessed in any place a run s of such prosperity thus wrote Richard Temple, who served as the Governor of Bombay at that time. An interesting aspect is that despite the collapse of the stock market, most of the brokers met their payment commitments. In the aftermath of the crash, banks, on whose building steps share brokers used to gather to seek stock tips and share news, disallowed them to gather there, thus forcing them to find a place of their own, which later turned into the Dalal Street. A group of about 300 brokers formed the stock exchange in Jul 1875, which led to the formation of a trust in 1887 known as the Native Share and Stock Brokers Association. A unique feature of the stock market development in India was that that it was entirely driven by local enterprise, unlike the banks which during the pre-independence period were owned and run by the British. Following the establishment of the first stock exchange in Mumbai, other stock exchanges came into being in major cities in India, namely Ahmedabad (1894), Calcutta (1908), Madras (1937), Uttar Pradesh and Nagpur (1940) and Hyderabad (1944). The stock markets gained from surge and boom in several industries such as jute (1870s), tea (1880s and 1890s), coal (1904 and 1908) etc, at different points of time.

DEMATERIALISATION:-

Dematerialisation is a process in which you can convert physical share certificates into electronic shares. Shares should have been transferred in your name / joint names before sending it for dematerialisation. You have the option to hold shares either in the physical OR in the dematerialized form. This is as per the Depositories Act, 1996.However, when you buy shares you may receive delivery in the demat form as per the option of the seller.REMETRIALISATION:-

It is the process by which a client can get his electronic holdings converted into physical certificates. The client has to submit the rematerialisation request to the DP with whom he has an account. The DP enters the request in its system which blocks the clients holdings to that extent automatically. The Issuer / R& T agent then prints the certificates, dispatches the same to the client and simultaneously electronically confirms the acceptance of the request to NSDL. Thereafter, the clients blocked balances are debited.

PLEDGETo deposit personal property as security for a personal loan of money. If the loan is not repaid when due, the personal property pledged shall be forfeit to the lender. A client (pledged) having a beneficiary account with a Depository Participant can pledge securities in electronic form against loan / credit facilities extended by a pledge, which too has a beneficiary account with a Depository Participant.

Beginning of a new equity culture

A new phase in the Indian stock markets began in the 1970s, with the introduction of Foreign Exchange Regulation Act (FERA) that led to divestment of foreign equity by the multinational companies, which created a surge in retail investing. The early 1980s witnessed another surge in stock markets when major companies such as Reliance accessed equity markets for resource mobilisation that evinced huge interest from retail investors. A new set of economic and financial sector reforms that began in the early 1990s gave further impetus to the growth of the stock markets in India. As a part of the reform process, it became imperative to strengthen the role of the capital markets that could play an important role in efficient mobilisation and allocation of financial resources to the real economy. Towards this end, several measures were taken to streamline the processes and systems including setting up an efficient market infrastructure to enable Indian finance to grow further and mature. The importance of an efficient micro market infrastructure came into focus following the incidence of market abuses in securities and banking markets in 1991 and 2001 that led to extensive investigations by two respective Joint Parliamentary Committees. The Securities and Exchange Board of India (SEBI), which was set up in 1988 as an administrative arrangement, was given statutory powers with the enactment of the SEBI Act, 1992. The broad objectives of the SEBI include

to protect the interests of the investors in securities

to promote the development of securities markets and to regulate the securities markets

The scope and functioning of the SEBI has greatly expanded with the rapid growth of securities markets in India in the last fifteen years. Following the recommendations of the High Powered Study Group on Establishment of New Stock Exchanges, the National Stock Exchange of India (NSE) was promoted by financial institutions with an aim to provide access to investors all over the country. NSE was incorporated in Nov 1992 as a tax paying company, the first of such stock exchanges in India, since stock exchanges earlier were trusts, being run on no-profit basis. NSE was recognized as a stock exchange under the Securities Contracts (Regulations) Act 1956 in Apr 1993.

It commenced operations in wholesale debt segment in Jun 1994 and capital market segment (equities) in Nov 1994. The setting up of the National Stock Exchange brought to Indian capital markets several innovations and modern practices and procedures such as nationwide trading network, electronic trading, greater transparency in price discovery and process driven operations that had significant bearing on further growth of the stock markets in India. Faster and efficient securities settlement system is an important ingredient of a successful stock market. To speed the securities settlement process, The Depositories Act 1996 was passed that allowed for dematerialisation (and rematerialisation) of securities in depositories and the transfer of securities through electronic book entry. The National Securities Depository Limited (NSDL) set up by leading financial institutions, commenced operations in Oct 1996. Regulations governing selection of various types of market intermediaries as depository participations were made. Subsequently, Central Depository Services (India) Limited promoted by Bombay Stock Exchange and other financial institutions came into being.

Rapid Growth

The last decade has been exceptionally good for the stock markets in India. In the back of wide ranging reforms in regulation and market practice as also the growing participation of foreign institutional investment, stock markets in India have showed phenomenal growth in the early 1990s. The stock market capitalization in mid-2007 is nearly the same size as that of the gross domestic product as compared to about 25 percent of the latter in the early 2000s. Investor base continued to grow from domestic and international markets. The value of share trading witnessed a sharp jump too. Foreign institutional investment in Indian stock markets showed continuous rise reaching about USD10 bn in each of these years between FY04 to FY06. Stock markets became intensely technology and process driven, giving little scope for manual intervention that has been the source of market abuse in the past. Electronic trading, digital certification, straight through processing, electronic contract notes, online broking have emerged as major trends in technology. Risk management became robust reducing the recurrence of payment defaults. Product expansion took place in a speedy manner. Indian equity markets now offer, in addition to trading in equities, opportunities in trading of derivatives in futures and options in index and stocks. ETFs are showing gradual growth. Within five years of introduction of derivatives, Indian stock markets now are ranked first in stock futures and fourth in index futures. Indian stock markets are transaction intensive and thus rank among the top five markets in this regard. Stock exchange reforms brought in professional management separating conflicts of interest between brokers as owners of the exchanges and traders/dealers. The demutualization and corporatisation of all stock exchanges is nearing completion and the boards of the stock exchanges now have majority of independent directors. Foreign institutions took stake in Indias two leading domestic stock exchanges. While NYSE Group led consortium took stake in the National Stock Exchange, Deutsche Borse and Singapore Stock Exchange bought equity in the Bombay Stock Exchange Ltd. The smooth functioning of all these activities facilitates economic growth in that lower costs and enterprise risks promote the production of goods and services as well as employment.

STOCK BROKING SERVICES:-It is an undisputed fact that the stock market is unpredictable and yet enjoys a high success rate as a wealth management and wealth accumulation option. The difference between unpredictability and a safety anchor in the market is provided by in-depth knowledge of market functioning and changing trends, planning with foresight and choosing ones options with care. This is what it provides in their Stock Broking services. Karvy Stock Broking Ltd. offer services that are beyond just a medium for buying and selling stocks and shares. Instead it provides services which are multi dimensional and multi-focused in their scope. There are several advantages in utilizing our Stock Broking services, which are the reasons why it is one of the best in the country. .

Karvy offers trading on a vast platform; National Stock Exchange, Bombay Stock Exchange and Hyderabad Stock Exchange. More importantly, it make trading safe to the maximum possible extent, by accounting for several risk factors and planning accordingly. It is assisted in this task by our in-depth research, constant feedback and sound advisory facilities. Their highly skilled research team, comprising of technical analysts as well as fundamental specialists, secure result-oriented information on market trends, market analysis and market predictions. .

DEPOSITORY PARTICIPANT SERVICES:- .

The onset of the technology revolution in financial services Industry saw the emergence of KARVY as an electronic custodian registered with National Securities Depository Ltd (NSDL) and Central Securities Depository Ltd (CSDL) in 1998. KARVY set standards enabling further comfort to the investor by promoting paperless trading across the country and emerged as the top 3 Depository Participants in the country in terms of customer serviced. Offering a wide trading platform with a dual membership at both NSDL and CDSL, it is a powerful medium for trading and settlement of dematerialized shares. Karvy has established live DPMs, Internet access to accounts and an easier transaction process in order to offer more convenience to individual and corporate investors. A team of professional and the latest technological expertise allocated exclusively to their Demat division including technological enhancements like SPEED-e; make their response time quick and their delivery impeccable. A wide national network makes their efficiencies accessible to all.

FINANCIAL PRODUCTS DISTRIBUTION SERVICES:- .

The paradigm shift from pure selling to knowledge based selling drives the business today. With our wide portfolio offerings, Karvy occupy all segments in the retail financial services industry. A team of highly qualified and dedicated professionals drawn from the best of academic and professional backgrounds are committed to maintaining high levels of client service delivery. This has propelled them to a position among the top distributors for equity and debt issues with an estimated market share of 15% in terms of applications mobilized, besides being established as the leading procurer in all public issues.

ADVISORY SERVICES:- .

Under their retail brand KARVY the Finapolis, it delivers advisory services to a cross-section of customers. The service is backed by a team of dedicated and expert professionals with varied experience and background in handling investment portfolios. They are continually engaged in designing the right investment portfolio for each customer according to individual needs and budget considerations with a comprehensive support system that focuses on trading customers portfolios and providing valuable inputs, monitoring and managing the portfolio through varied technological initiatives. This is made possible by the expertise it has gained in the business over the years. Another venture towards being investor-friendly is the circulation of a monthly magazine called KARVY the Finapolis covering thlatest of market news, trends, investment schemes and research-based opinions from experts in various financial fields.

DEPOSITORY SYSTEM:-

A Depository is a facility for holding securities, which enables securities transactions to be processed by book entry. To achieve this purpose, the depository may immobilize the securities or dematerialise them (so that they exist only as electronic records). India has chosen the dematerialisation route. In India, a depository is an organisation, which holds the beneficial owners securities in electronic form, through a registered Depository Participant (DP). A depository functions somewhat similar to a commercial bank. To avail of the services offered by a depository, the investor has to open an account with a registered DP Dematerialisation is a process by which physical certificates are converted into electronic form. Dematerialisation of securities occurs when securities issued in physical form are destroyed and an equivalent number of securities are credited into the beneficiary owners account. India has adopted dematerialisation route to depository. In a depository system, the investors stand to gain by way of efficient settlements, lower costs and lower risks of theft or forgery, etc. But the implementation of the system has to be secure and well governed. All the players have to be conversant with the rules and regulations as well as with the technology for processing. The intermediaries in this system have to play strictly by the rules. In the depository system, securities are held in depository accounts, which is more or less similar to holding funds in bank accounts. Transfer of ownership of securities is done through simple account transfers. This method does away with all the risks and hassles normally associated with paperwork. Consequently, the cost of transacting in a depository environment is considerably lower as compared to transacting in certificates.

DEPOSITORY PARTICIPANT:-

The depositories can provide their services to investors through their agents called depository participants. These agents are appointed subject to the conditions prescribed under Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996 and other applicable conditions. It may be organisations involved in the business of providing financial services like banks, brokers, custodians, financial institutions, etc.

1. NATIONAL SECURITIES DEPOSITORY LIMITED (NSDL)

The enactment of Depositories Act in August 1996 paved the way for establishment of NSDL, the first depository in India. This depository promoted by institutions of national stature responsible for economic development of the country has since established a national infrastructure of international standards that handles most of the securities held and settled in dematerialised form in the Indian capital market.

Using innovative and flexible technology systems, NSDL works to support the investors and brokers in the capital market of the country. NSDL aims at ensuring the safety and soundness of Indian marketplaces by developing settlement solutions that increase efficiency, minimise risk and reduce costs. At NSDL, we play a quiet but central role in developing products and services that will continue to nurture the growing needs of the financial services industry. .

2. CENTRAL DEPOSITORY SECURITIES (INDIA) LIMITED (CDSL)

Each and every activity of CDSL stem from the essential reason behind forming this depository, i.e. to encourage Indias individual investors to benefit from actively participating in a depository. A Depository facilitates holding of securities in the electronic form and enables securities transactions to be processed by book entry by a Depository Participant (DP), who as an agent of the depository, offers depository services to investors. According to SEBI guidelines, financial institutions, banks, custodians, stockbrokers, etc. are eligible to act as DPs. The investor who is known as beneficial owner (BO) has to open a demat account through any DP for dematerialisation of his holdings and transferring securities. The balances in the investors account recorded and maintained with CDSL can be obtained through the DP. The DP is required to provide the investor, at regular intervals, a statement of account which gives the details of the securities holdings and transactions. The depository system has effectively eliminated paper-based certificates which were prone to be fake, forged, counterfeit resulting in bad deliveries. CDSL offers an efficient and instantaneous transfer of securities. CDSL was promoted by Bombay Stock Exchange Limited (BSE) jointly with leading banks such as State Bank of India, Bank of India, Bank of Baroda, HDFC Bank, Standard Chartered Bank, Union Bank of India and Centurion Bank.

SERVICES OF DEPOSITORY :-

A depository established under the Depositories Act can provide any service connected with recording of allotment of securities or transfer of ownership of securities in the record of a depository. Any person willing to avail the services of the depository can do so by entering into an agreement with the depository through any of its participants. A depository can provide depository services only through a DP. A depository cannot directly open accounts and provide services to clients. Every depository in its Bye-Laws must state which securities are eligible for Demat holding. Generally, the following securities are eligible for Dematerialisation:

Shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporate. Units of Mutual Funds, rights under collective investment schemes and venture capital funds, Commercial paper, Certificates of Deposit, Securitised debt, money market instruments, government securities, National Saving Certificates, Kisan Vikas Patra and unlisted securities.

DEPOSITORY SERVICE CHARGES FOR RESIDENTS RETAIL CUSTOMERS AND CORPORATE: 1. A/c opening. Rs. 100 Rs.100

2. Annual service charge. Rs.300 RS.1250

3. Custody Fee( an A/c with ISINs will Rs.2.25 per ISINs be assume to have one ISIN) per quarter per quarter

4. Agreement stamp paper As per respective As per state Act respective state Act 5. Buy- Market and Off-market (%of 0.02 %( Min. Rs. Nil transaction value of each ISIN)- 20) maximum rs. 500/- for debt instrument. Sell market and off market (%of ..0. ...0.0 transaction value of each IsIN)-Max 04%( Min Rs.10 ) 2% (Min Rs. 5 ) Rs. 500 for debt instrument for each instruction for each instruction

6. Rejection / fails. Rs. 20 Rs 10

7. Extra charges for processing of Rs.10per IsIN / R. 10 per ISIN TIFDs Submitted late (%of transaction value ) * On the execution date (accepted at clients risk )

8. For each request form. Rs. 35 9. Extra for each certificate. Rs. 2

10. Dematerialization. Rs.20

11. Closure of account. Nil

12. Pledge creation / closure/ o.o2 % ( Min 0.02% (Min Rs. confirmation/ invocation (%Of value Rs.20) 20) for each ISIN in each request).

13. Addition account statement. Rs.20

NSDL CHARGES ARE CHARGEABLE EXTRA AT ACTUAL .PRESENT NSDL CHARGES ARE: Sell-Market and Of - Market Rs. 8/-per debit instruction nil for commercial paper and short term debt instruments. Remat Rs. 10/-per certificate Pledge Creation Rs.25/-per instruction Custody Fee( on the basis of ISINs Rs. The value of(1/-per ISINs in the account on the last Saturday of each month) There will be(shares and charges and calculated as per NSDL formula and rates. Charge of Rs.100/-for dishonor of any cheque . The depository services are liable to discontinuation if Karvy is unable to recover charges from the customer, for any reason whatsoever. There will be a charge of Rs. 100/- Any service, which is not mentioned(resumption of services in such cases. above, will be charge separately as per the rates applicable from time to time. Karvy reserves the right to revise the tariff structure from time to time with( a notice of 30 days. The notice may be given by ordinary post or by an advertisement in a national daily.

FUNCTIONS OF DEPOSITORY:-

1. Dematerialisation:- One of the primary functions of depository is to eliminate or minimise the movement of physical securities in the market. This is achieved through Dematerialisation of securities. Dematerialisation is the process of converting securities held in physical form into holdings in book entry form.

2. Account Transfer: The depository gives effects to all transfers resulting from the settlement of trades and other transactions between various beneficial owners by recording entries in the accounts of such beneficial owners.

3. Transfer and Registration: A transfer is the legal change of ownership of a security in the records of the issuer. For effecting a transfer, certain legal steps have to be taken like endorsement, execution of a transfer instrument and payment of stamp duty. The depository accelerates the transfer process by registering the ownership of shares in the name of the depository. Under a depository system, transfer of security occurs merely by passing book entries in the records of the depositories, on the instructions of the beneficial owners.

4. Corporate Actions: A depository may handle corporate actions in two ways. In the first case, it merely provides information to the issuer about the persons entitled to receive corporate benefits. In the other case, depository itself takes the responsibility of distribution of corporate benefits.

5. Pledge and Hypothecation: The securities held with NSDL may be used as collateral to secure loans and other credits by the clients. In a manual environment, borrowers are required to deliver pledged securities in physical form to the lender or its custodian. These securities are verified for authenticity and often need to be transferred in the name of lender. This has a time and money cost by way of transfer fees or stamp duty. If the borrower wants to substitute the pledged securities, these steps have to be repeated. Use of depository services for pledging/ hypothecating the securities makes the process very simple and cost effective. The securities pledged/hypothecated are transferred to a segregated or collateral account through book entries in the records of the depository

6. Linkages with Clearing System: Whether it is a separate clearing corporation attached to a stock exchange or a clearing house (department) of a stock exchange, the clearing system performs the functions of ascertaining the pay-in (sell) or pay-out (buy) of brokers who have traded on the stock exchange. Actual delivery of securities to the clearing system from the selling brokers and delivery of securities from the clearing system to the buying broker is done by the depository. To achieve this, depositories and the clearing system should be electronically linked.

BENEFITS:-

The direct and indirect benefits of the depository system are described in detail below. In the depository system, the ownership and transfer of securities takes place by means of electronic book entries. At the outset, this system rids the capital market of the dangers related to handling of paper.

Elimination of bad deliveries:- In the depository environment, once the holdings of an investor are dematerialised, the question of bad delivery does not arise, i.e., their transfer cannot be rejected due to defect in the quality of the security. All possible reasons for objecting transfer of title due to deficiencies associated with transfer deed and share certificates are completely eliminated since both transfer deed and share certificates are eliminated in depository system. Elimination of all risks associated with physical certificates:- Dealing in physical securities has associated security risks of theft of stocks, mutilation or loss of certificates during movements to and from the registrars. These expose the investor to the cost of obtaining duplicate certificates, advertisements, etc. Such problems do not arise in the depository environment. No stamp duty:- There is no stamp duty for transfer of equity instruments and units of mutual funds in the depository system. In the case of physical shares, stamp duty of 0.5% is payable on transfer of shares. Immediate transfer and registration of securities:- In the depository environment, once the securities are credited to the investors account on pay out, he becomes the legal owner of the securities. There is no further need to send it to the companys registrar for transfer of ownership or registration which is necessary in the case of physical securities. This process normally takes longer than the statutory prescribed period of two months thus exposing the investor to opportunity cost of delay in transfer and to risk of loss in transit. To overcome this, the normally accepted practice is to hold the securities in street names, i.e., not to register the change of ownership. However, if the investors miss a book closure, the securities are not good for delivery and the investor would also stand to loose his corporate entitlements. Faster settlement cycle:- With the introduction of electronic form of settlement, Indian Capital markets have moved from 15 day long settlement cycle to T+2 settlement cycle where the settlement takes place on 2nd day from the day of trading. This enables faster turnover of stock and enhances liquidity with the investor. Buyer is secured:- In the physical environment, seller was secured since the sale proceeds were always fully realisable but the buyer was not, since it was not certain whether shares purchased will get transferred or not. The market principle that buyer is king did not apply to the capital market. This situation has now been corrected. Faster disbursement of non-cash corporate benefits:- NSDL provides for direct credit of non-cash corporate entitlements like rights, bonus, etc., to an investors account, thereby ensuring faster disbursement and avoiding the risk of certificates getting lost in transit. Reduction in rate of interest on loans:- Some banks provide this benefit against pledge of Dematerialised securities. Dematerialised securities eliminate hassles/risks like getting securities registered in their name at the time of book closure if the pledgee defaults in repayment. Also eliminated is the risk of stocks coming under objections when they are sent to the companys registrar for registration, if the pledge has to be invoked.

Increase in maximum limit of advances:- This has increased from Rs. 10 lakh to Rs. 20 lakh per borrower. There is also a reduction in minimum margin from 50% to 25% by banks for advances against.Dematerialised securities as per the Monetary and Credit Policy of Reserve Bank of India for the first half of 1998-99. Reduction in brokerage:- Since introduction of electronic settlement of securities there has been a significant fall in the brokerage charged for brokers for effecting and settling trades of investors at the stock exchanges. This benefit is given to investors as dealing in Dematerialised securities reduces their back office cost of handling paper. It also eliminates the risk of being the introducing broker. Reduction in handling of huge volumes of paper:- In the physical environment, every entity involved in purchase or sale of securities was to handle papers and pass on papers to the next entity. Number of papers to handle increased with the volume of transactions. However, in the depository environment, except the delivery instruction to be given by the client/broker, there is no other paper movement. NSDL has permitted use of floppies to give debit instructions for large volumes of transactions. NSDL has recently introduced a common internet based platform, SPEED-e, for Clients of all DPs so that Clients can issue instructions to their DPs through Internet. Using SPEED-e the client need not write delivery instructions or visit its DP for issuing instructions. Clients can monitor the status of instructions given by them on SPEED-e on Internet. Periodic status reports:- DPs need to provide periodic reports to investors on their holdings and transactions. This leads to better management control on the part of the servicing agency and better information for the investors. Elimination of problems related to nomination:- An account holder can get securities in all companies transmitted/transferred to his account by completing formalities with a single entity i.e. DP. He need not deal with all companies individually. Dematerialised securities can be delivered in the physical segment:-Securities forming a part of the SEBI specified compulsory list (wherein delivery in demat form is mandatory for all categories of investors) can be delivered in physical form in the stock exchanges connected to NSDL & CDSL. This requirement is applicable to physical deliveries wherein the number of securities is less than 500. Elimination of problems related to change of address of investors, transmission, etc.:- In case of change of address or transmission of Demat shares, investors are saved from undergoing the entire change procedure with each company or registrar. Investors have to only inform their DP about the change along with all relevant documents. The required changes are effected in the database of all the companies where the investor is a registered holder of securities. The investor will receive all cash corporate benefit like dividends, interest warrants, redemption money, etc. at the new address with immediate effect. Elimination of problems related to selling securities on behalf of a minor:- NSDL system provides facility for opening demat accounts in the name of minor and holding their securities in their own name. Since, under the Contract Act, 1872, the minor is not eligible to enter into contracts at their own, the account in the name of minor is required to be operated by their guardian. The guardian may be the natural guardian, guardian appointed by will or the guardian appointed by an order of the court. The minors guardian will be eligible to open, operate and close the account on behalf of the minor. The guardian(s) would be signing the instruction slips to be given to the depository participant, on behalf of the minor. A minor however cannot be a joint account holder. Non cash corporate benefits arising out of bonus/rights allotment of shares are credited to the account of the minor. Cash corporate benefits will be issued by the concerned issuer of securities in the name of the minor. Convenient consolidation of accounts:- If multiple accounts were opened by investors, all accounts can be consolidated into one account by giving instructions to DP. In case of physical certificates, consolidation of folios required correspondence with all the companies individually. Convenient portfolio monitoring:- Client can monitor portfolio by checking a single statement of holding/transaction. Newer services:- Opportunities like pledge/hypothecation and stock lending are given specifically by the depository system. Increased volumes:- Due to ease in transaction and reduced costs, many players have entered/ increased their transactions. This helps in improving liquidity.DEMAT PROCESSING IN KARVY STOCK BROKING LTD:-

Karvy Stcok Broking Ltd. is one of the leading Depository Participant (DP) in the country. Karvy Demat services offers the investors a secure and convenient way to keep track of their securities and investments, over a period of time, without the hassle of handling physical documents that get mutilated or lost in transit. Karvy Stcok Broking Ltd. is Depository particpant both with -National Securities Depositories Limited (NSDL) and Central Depository Services Limited (CDSL). Karvy Demat services are accessable any of its network over 575 branches / investor service centre located in over 375 cities and towns across the country. Karvy Demat services business has a distinction of having all its operations ISO 9001:2000 certified with the state of the art-technology and operations capabilites. Its Demat services have innovated over time and it provides online access to the account statements and transaction alerts through SMS to its clients.

DEMAT ACCOUNT:-

Demat refers to a dematerialised account. Just as open an account with a bank if public want to save thier money, make cheque payments etc, the investor need to open a demat account if he want to buy or sell stocks. So it is just like a bank account where actual money is replaced by shares. The investors have to approach the DPs (remember, they are like bank branches), to open their demat account. Lets say the investor Mr. Xs portfolio has 100 of Satyam, 200 of Reliance and 120 of TCS shares. All these will show in his demat account. So, his doent has to possess any physical certificates showing that he own these shares. They are all held electronically in his account. As he buy and sell the shares, they are adjusted in his account. Just like a bank passbook or statement, the DP will provide the investor with periodic statements of holdings and transactions.

NEED OF DEMAT ACCOUNT:-

Nowadays, practically all trades have to be settled in dematerialised form. Although the market regulator, the Securities and Exchange Board of India (SEBI), has allowed trades of upto 500 shares to be settled in physical form, nobody wants physical shares any more. So a demat account is a must for trading and investing. The demat account reduces brokerage charges, makes pledging / hypothecation of shares easier, enables quick ownership of securities on settlement resulting in increased liquidity, avoids confusion in the ownership title of securities, and provides easy receipt of public issue allotments.

It also helps you avoid bad deliveries caused by signature mismatch, postal delays and loss of certificates in transit. Further, it eliminates risks associated with forgery, counterfeiting and loss due to fire, theft or mutilation. Demat account holders can also avoid stamp duty (as against 0.5 per cent payable on physical shares), avoid filling up of transfer deeds, and obtain quick receipt of such benefits as stock splits and bonuses.

STEPS INVOLVED IN OPENING A DEMAT ACCOUNT:-

First, an investor who wants to open a Demat Account to dematerialise their holdings has to approach a Karvy and fill up an account opening form. The account opening form must be supported by copies of any one of the approved documents to serve as proof of identity (POI) and proof of address (POA) as specified by SEBI. Besides, production of PAN card in original at the time of opening of account has been made mandatory.

All applicants should carry original documents for verification. Further, the investor has to sign an agreement with Karvy in a depository prescribed standard format, which details rights and duties of investor and DP (Karvy). Karvy provides the investor with a copy of the agreement and schedule of charges for their future reference. After verification of the entire certificate, Karvy opens the account in the system and gives an account number, which is also called BOID (Beneficiary Owner Identification number). SEBI has rationalised the cost structure for processing of Demat account account opening charges, transaction charges for credit of securities, and custody charges. The Karvy may revise the charges by giving 30 days notice in advance.

No charges shall be levied by Karvy for transfer of the securities lying in his account to another branch or to another DP of the same depository or another depository.

In case the BO Account at transferor DP is a joint account, the BO Account at transferee DP should also be a joint account in the same sequence of ownership.

PROCEDURE:-

1. Filling account opening form (available with Karvy).

2. Submitting the duly filled account opening form with introduction documents as may be required.

3. Signing in the agreement with Karvy (agreement will state rights & obligations of both parties). The agreement will contain the fee structure of Karvy. Karvy would give the client a copy of this signed agreement for his record.

4. Karvy would give him Client Id no. (Account No.) once his depository account is opened. This Client Id Number along with Karvy Id Number forms a unique combination. Both of these should be quoted in the future correspondence with Karvy/NSDL/ Issuing Company/their registrar & transfer (R&T) agent.

5. Karvy would give to his clients pre-printed instruction slips for depository services viz., dematerialisation, delivery instruction for trades, etc.. It should be preserved carefully.

6. Karvy would give a list of deadlines for giving instructions for various depository activities viz., transfer for effecting sale, purchase, etc.

TYPES OF ACCOUNTS:-

Type of depository account depends on the operations to be performed. There are three types of Demat accounts which can be opened with Karvy.

Beneficiary Account

Clearing Member Account and

Intermediary Account.1. Beneficiary Account:- A Beneficiary Account is an ownership account. The holder/s of securities in this type of account own those securities

2. Clearing Member Account:- The Clearing Member Account and Intermediary Account are transitory accounts. The securities in these accounts are held for a commercial purpose only. A Clearing Member Account is opened by a broker or a Clearing Member for the purpose of settlement of trades.

3. Intermediary Account:- An Intermediary Account can opened by a SEBI registered intermediary for the purpose of stock lending and borrowing.

DOCUMENTS REQUIRED FOR VERIFICATION:-

For the purpose of verification, the investors have to submit the following documents, as prescribed by SEBI, along with the stipulated account opening form. A beneficiary account must be opened only after obtaining a proof of identity and address of the applicant. An authorised official of the Karvy would verify the photocopies of any of following documents submitted with their corresponding originals and put his/her signature on them with remarks verified with original before proceeding to open the account.

DOCUMENT REQUIRED

S.NO.

PROOF OF IDENTITY

( ANY ONE)PROOF OF ADDRESS

( ANY ONE)

1. PASSPORTRation card

2. VOTER ID CARDPassport

3. Driving licenseVOTER ID CARD

4. PAN card with photographDriving license

Credit cards/Debit cards issued by Banks.Bank passbook

5. Identity card/Document with

applicants Photo ISSUED BY:- Central/State Government and its Departments,

Statutory/Regulatory Authorities,

Public Sector Undertakings,

Scheduled Commercial Banks,

Public Financial Institutions,

Identity card/document with address, issued by:- Central/State Government and its Departments,

Statutory/Regulatory Authorities,

Public Sector Undertakings,

Scheduled Commercial Banks,

Public Financial Institutions,

6. Verified copies oF Electricity bills (not more than two months old),

Telephone bills (not more than two months old) pertaining to only Landline telephones (other than Fixed Wireless Phone)

Colleges affiliated to Universities (this can be treated as valid only till the time the applicant is a student),

Professional Bodies such as ICAI, ICWAI, ICSI, Bar Council etc., to their Members; and

Self-declaration by High Court & Supreme Court judges, giving the new address in respect of their own accounts.

The aforesaid documents are the minimum requirement for opening a Beneficial Owner Account. After verifying the all the documents submitted by the applicant, Karvy would open account in the name of applicant. While they only ask for photocopies of the documents, they will need the originals for verification. The applicant should have to submit a passport size photograph on which he sign across.

FEE STRUCTURE OF KARVY

NOW to the crux the cost of opening and holding a Demat account. There are four major charges usually levied on a Demat account. i.e. Account opening fee, annual maintenance fee, custodian fee and transaction fee. All the charges vary from DP to DP. Karvy charges the following fees for Demat Account and Trading Account from their clients for the services rendered by the Karvy.

Sl.No.RequirementsDemat A/cTrading A/cExplanation1 Agreement Cost 65.00

Stamp Paper Cost. 100.00

2 AMC 422.00

Broking Clients Only

3 Refundable Deposit 5000.00

Non-Interest Bearing

Total Payable 487.00 5100.00

1. Account-Opening Fee:- It is levied when the applicant opens the Demat account with Depository Participant. Karvy does not charge account opening fee from their clients.

2. Annual maintenance fee:- This is also known as folio maintenance charges, and is generally levied in advance.

3. Custodian fee:- This fee is charged monthly and depends on the number of securities (international securities identification numbers ISIN) held in the account. It generally ranges between Rs.0.5 to Rs.1 per ISIN per month. Karvy will not charge custody fee for ISIN on which the companies have paid one-time custody charges to the depository.

4. Transaction fee:- The transaction fee is charged for crediting/debiting securities to and from the account on a monthly basis. Karvy is charging upto Rs.50/- per debit transaction of the account. In addition, service tax is also charged by the Karvy.PLEDGING:-Dematerialised shares could be pledged. In fact, this is more advantageous as compared to pledging share certificate. The following procedures are adopted while pledging the dematerialized shares.

Both (Pledgor) as well as the lender (Pledgee) must have Demat Account.

One must initiate the pledge by submitting the details of the securities to be pledged in a standard format which is available in Karvy.

The pledge should confirm the request through Karvy.

Once this is done, securities are pledged.

All the commercial documentation between the pledgor and pledge are handled outside the depository system.

After receiving the repayment, the pledgee would instruct the Karvy for requesting closure of pledge through standard format.

TRADING OF SHARES:-

Karvy provides the following options to his clients regarding trading of the dematerialized shares.

Cash Trading:-This is delivery based trading system which is generally done with the intention of taking delivery of shares or money. In Cash trading, the clients can buy or sell only when he satisfies some conditions.

If the client places an order to buy 100 shares of Reliance Industries, he has to have 100% of the order value in his available li

RESEARCH METHODOLOGY;-The main objective of a research is to find out the truth which is hidden and which has not been discovered. According to advance learners dictionary of current English the definition of research is:- A careful investigation or enquiry especially through search for new facts in any branch of knowledge Marketing research:-Marketing managers often commission formal marketing studies of specific problems and opportunities. They may request a market survey, a product preference test, or an advertising evaluation. Marketing research is the function which links the consumers, customers and public to the marketer though information- used to identified and define marketing opportunities and problems, generate ad evaluate marketing actions :- monitor marketing performance and improve understanding of marketing as a process. Effective marketing research includes five steps, which should be kept in mind to conduct a marketing research in a perfect manner.

a. Define the problem and research objective.

b. Develop the research plan.

c. Collect the information.

d. Present the findings.

Title of the Study

DEMAT SERVICES OF KARVY STOCK BROKING LTD.Duration of the Project