A

Major Project Study Report

on

TITLED

“CORPORATE GOVERNANCE”

Submitted in partial fulfillment for the Award of degree of

Master of Business Administration

SESSION :-2008-2010

Supervised By: Submitted by:

DR. (Mrs) Meenu Maheshwari Monika Nagori ASSISTANT PROFESSOR Enrolment No.08/18791

“COMMERECE & MANAGEMENT DEPARTMENT”(University Of Kota,Kota)

PREFACE

As an essential and obligatory part of my course undergone

15 DAYS, complete training at India’s No.1 Private Broking Firm

“India Infoline”. This training helped me in getting practical knowledge

in to the business environment.

I got a practical knowledge about India infolines ltd.. how the

work is done in the company.. In this Project Report I gave all the

information about the corporate governance.

In this Project Report I gave all the information which not only

serve the comprehensive knowledge base but also helps the reader

in understanding the fundamentals related to the subject.

DECLARATION

I hearby declare that major project report entitled

“CORPORATE GOVERNANCE OF

INDIA INFOLINE”is based on my original & genuine work and indebtedness to other

work duplication have been duly acknowledgment at relevant place.

Date: Submitted by:

Place: Kota Monika Nagori

ACKNOWLEDGEMENT

I take the opportunity with great pleasure to plot the circle of

warm compliment deep sense of gratitude & profound thanks to all

those who have spared their valuable time and giving me their co-

operation to make this project complete.

I am greatly obliged to DIRECTOR MR.DEVENDRA, INDIA

INFOLINE, for providing me the right kind of opportunity and facilities

to complete this venture.

I would like to express my sincere thanks to RAHUL GUPTA, the

Cluster Manager in India Infoline for providing facilities & extending

full support to the training & project work and helped a lot during this

training for giving precious time, giving encouragement time to time.

Finally, I would also like to thank all my dear friends for their

kind cooperation, advice and encouragement during the long and

arduous task of preparing this report and carrying out the project.

I would be failing in my duty if I do not express my heartiest

thanks to Lecturer and coordinator Department for giving all possible

support, suggestion and is valuable time in preparing this project.

(Monika Nagori)

TABLE OF CONTENT

CHAPTER NO. NAME

1 Meaning of Corporate Governance

2 Introduction Of Company Profile

3 Basic Concepts & Principles

4 Control & Management

5 Research Methodology

6 Learnings

7 Finding overall inferences drawn from the survey

8 Swot analysis of India Infolines ltd.

9 Recommendations

10 Conclusion

11 Annexure

12 Questionaire

13 Bibliography

1.1 Introduction Of Corporate Governance

Corporate governance is the new buzzword or rather a concept in corporate

management that is yet to catch up in India but that has the potential to

significantly improve corporate performance. In the case of corporate governance

shareholders is considered as god. Corporate governance has assumed

significance in India because it has been given importance by institutions like,

World Bank.

The focus on improving corporate governance and enhancing shareholder wealth

is relatively new in India. Earlier, the managements were least concerned with

how the shareholders were benefited from the company’s performance. The role

of company was to pay dividends and hold annual general meeting. There was

minimum communication between company management and shareholders.

Investors had to depend on news reports to get information about their

companies. But all these have changed now.

Corporate governance has succeeded in attracting a good deal of public interest

because of its apparent importance for the economic health of corporations and

society in general. However, the concept of corporate governance is poorly

defined because it potentially covers a large number of distinct economic

phenomenon. As a result different people have come up with different definitions

that basically reflect their special interest in the field. It is hard to see that this

'disorder' will be any different in the future so the best way to define the concept

is perhaps to list a few of the different definitions rather than just mentioning one

definition.

1.2 The New Philosophy Of Business

Governance is that separate process or certain part of management or

leadership processes that make decisions that define expectations, grant power,

or verify performance.

Corporate Governance is the system, set of processes, customs, policies, and

laws by which business corporations are directed and controlled. The corporate

governance structure specifies the distribution of rights and responsibilities

among different participants in the corporation, such as, the board of directors,

management, shareholders and other stakeholders (include employees,

suppliers, customers, banks and other lenders, regulators, the environment and

the community at large) and spells out the rules and procedures for making

decisions on corporate affairs. By doing this, it also provides the structure

through which the company objectives are set and the means of attaining those

objectives and monitoring performance.

1.3 Attention To Corporate Governance

Corporate Governance issues are receiving greater attention in both developed

and developing countries as a result of the increasing recognition that a firm's

corporate governance affects both its economic performance and its ability to

access long-term, low-cost investment capital. Numerous high-profile cases of

corporate governance failure have focused the minds of governments,

companies and the general public on this issue.

Moreover, the whole issue of corporate governance became a matter of concern

especially because of major shifts in public opinion and societal change on an

international scale, together with the strategic requirements of newly emergent

forms of business structure, new technologies, globalization and new forms of

competition and particularly the investment by the foreign financial institutions in

the emerging markets. In other words, when investments take place across

national borders, the investors want to be sure that not only is their capital

handled effectively and adds to the creation of wealth, but the business decisions

are also taken in a manner which is not illegal or involving moral hazard.

Corporate governance therefore calls for four factors:

a) To build up an environment of trust and confidence amongst those having

competing and conflicting interest

b) Transparency in decision-making

c) Accountability which follows from transparency because responsibilities could

be fixed easily for actions taken or not taken, and

d) The accountability is for the safeguarding the interests of the stakeholders and

the investors in the organization.

Thus, Corporate Governance is a set of rules stipulated for according due

weight-age to foster ethical behavior which would help in enhancing the

reputation. Thus the code of Governance is as applicable to individuals; the

same is also applicable to Corporate.

1.4 Definition Of Corporate Governance

Corporate governance is the set of processes, customs, policies, laws and

institutions affecting the way a corporation is directed, administered or controlled.

Corporate governance also includes the relationships among the many

stakeholders involved and the goals for which the corporation is governed. The

principal stakeholders are the shareholders, management and the board of

directors. Other stakeholders include employees, suppliers, customers, banks

and other lenders, regulators, the environment and the community at large.

Corporate governance is a multi-faceted subject. An important theme of

corporate governance is to ensure the accountability of certain individuals in an

organization through mechanisms that try to reduce or eliminate the principal-

agent problem. A related but separate thread of discussions focus on the impact

of a corporate governance system in economic efficiency, with a strong emphasis

on shareholders welfare. There are yet other aspects to the corporate

governance subject, such as the stakeholder view and the corporate governance

models around the world

In A Board Culture of Corporate Governance business author Gabrielle

O'Donovan defines corporate governance as 'an internal system encompassing

policies, processes and people, which serves the needs of shareholders and

other stakeholders, by directing and controlling management activities with good

business savvy, objectivity and integrity. Sound corporate governance is reliant

on external marketplace commitment and legislation, plus a healthy board culture

which safeguards policies and processes'.

O'Donovan goes on to say that 'the perceived quality of a company's corporate

governance can influence its share price as well as the cost of raising capital.

Quality is determined by the financial markets, legislation and other external

market forces plus the international organizational environment; how policies and

processes are implemented and how people are led. External forces are, to a

large extent, outside the circle of control of any board. The internal environment

is quite a different matter, and offers companies the opportunity to differentiate

from competitors through their board culture. To date, too much of corporate

governance debate has centered on legislative policy, to deter fraudulent

activities and transparency policy which misleads executives to treat the

symptoms and not the cause.

It is a system of structuring, operating and controlling a company with a view to

achieve long term strategic goals to satisfy shareholders, creditors, employees,

customers and suppliers, and complying with the legal and regulatory

requirements, apart from meeting environmental and local community needs.

Report of SEBI committee (India) on Corporate Governance defines corporate

governance as the acceptance by management of the inalienable rights of

shareholders as the true owners of the corporation and of their own role as

trustees on behalf of the shareholders. It is about commitment to values, conduct

and about making a distinction between personal & corporate funds in the

management of a company.” The definition is drawn from the Gandhian principle

of trusteeship and the Directive Principles of the Indian Constitution. Corporate

Governance is viewed as ethics and a moral duty.

Some other definition :-

"Corporate governance is a field in economics that investigates how to

secure/motivate efficient management of corporations by the use of incentive

mechanisms, such as contracts, organizational designs and legislation. This is

often limited to the question of improving financial performance, for example, how

the corporate owners can secure/motivate that the corporate managers will

deliver a competitive rate of return", ,

Mathiesen

1. “Corporate governance deals with the ways in which suppliers of finance to

corporations assure themselves of getting a return on their investment”, The

Journal of Finance, Shleifer and Vishny "Corporate governance is the

system by which business corporations are directed and controlled. The

corporate governance structure specifies the distribution of rights and

responsibilities among different participants in the corporation, such as, the

board, managers, shareholders and other stakeholders, and spells out the

rules and procedures for making decisions on corporate affairs. By doing this,

it also provides the structure through which the company objectives are set,

and the means of attaining those objectives and monitoring performance",

OECD.

2. "Corporate governance - which can be defined narrowly as the relationship of

a company to its shareholders or, more broadly, as its relationship to society -

….", from an article in Financial Times

3. "Corporate governance is about promoting corporate fairness, transparency

and accountability" J. Wolfensohn, president of the Word bank, as quoted by

an article in Financial Times,.

4. “Some commentators take too narrow a view, and say it (corporate

governance) is the fancy term for the way in which directors and auditors

handle their responsibilities towards shareholders. Others use the expression

as if it were synonymous with shareholder democracy. Corporate governance

is a topic recently conceived, as yet ill-defined, and consequently blurred at

the edges…corporate governance as a subject, as an objective, or as a

regime to be followed for the good of shareholders, employees, customers,

bankers and indeed for the reputation and of our nation and its economy”

Maw et al.

1.5 History

In the 19th century, state corporation lawless enhanced the rights of corporate

boards to govern without unanimous consent of shareholders in exchange for

statutory benefits like appraisal rights, to make corporate governance more

efficient. Since that time, and because most large publicly traded corporations in

the US are incorporated under corporate administration friendly Delaware law,

and because the US's wealth has been increasingly securitized into various

corporate entities and institutions, the rights of individual owners and

shareholders have become increasingly derivative and dissipated. The concerns

of shareholders over administration pay and stock losses periodically has led to

more frequent calls for corporate governance reforms.

In the 20th century in the immediate aftermath of the Wall Street Crash of 1929

legal scholars such as Adolf Augustus Berle, Edwin Dodd, and Gardiner C.

Means pondered on the changing role of the modern corporation in society. Berle

and Means' monograph "The Modern Corporation and Private Property" (1932,

Macmillan) continues to have a profound influence on the conception of

corporate governance in scholarly debates today.

From the Chicago school of economics, Ronald Coase's "Nature of the Firm"

(1937) introduced the notion of transaction costs into the understanding of why

firms are founded and how they continue to behave. Fifty years later, Eugene

Fama and Michael Jensen's "The Separation of Ownership and Control" (1983,

Journal of Law and Economics) firmly established agency theory as a way of

understanding corporate governance: the firm is seen as a series of contracts.

Agency theory's dominance was highlighted in a 1989 article by Kathleen

Eisenhardt (Academy of Management Review).

US expansion after World War II through the emergence of multinational

corporations saw the establishment of the managerial class. Accordingly, the

following Harvard Business School management professors published influential

monographs studying their prominence: Myles Mace (entrepreneurship), Alfred

D. Chandler, Jr. (business history), Jay Lorsch (organizational behavior) and

Elizabeth MacIver (organizational behavior). According to Lorsch and MacIver

"many large corporations have dominant control over business affairs without

sufficient accountability or monitoring by their board of directors."

Since the late 1970’s, corporate governance has been the subject of significant

debate in the U.S. and around the globe. Bold, broad efforts to reform corporate

governance have been driven, in part, by the needs and desires of shareowners

to exercise their rights of corporate ownership and to increase the value of their

shares and, therefore, wealth. Over the past three decades, corporate directors’

duties have expanded greatly beyond their traditional legal responsibility of duty

of loyalty to the corporation and its shareowners.

In the first half of the 1990s, the issue of corporate governance in the U.S.

received considerable press attention due to the wave of CEO dismissals (e.g.:

IBM, Kodak, Honeywell) by their boards. CALPERS led a wave of institutional

shareholder activism (something only very rarely seen before), as a way of

ensuring that corporate value would not be destroyed by the now traditionally

cozy relationships between the CEO and the board of directors (e.g., by the

unrestrained issuance of stock options, not infrequently back dated).

In 1997, the East Asian Financial Crisis saw the economies of Thailand,

Indonesia, South Korea, Malaysia and The Philippines severely affected by the

exit of foreign capital after property assets collapsed. The lack of corporate

governance mechanisms in these countries highlighted the weaknesses of the

institutions in their economies.

In the early 2000s, the massive bankruptcies (and criminal

malfeasance) of Enron and WorldCom, as well as lesser

corporate debacles, such as Adelphia Communications, AOL,

Arthur Andersen, Global Crossing, Tyco, and, more recently,

Fannie Mae and Freddie Mac, led to increased shareholder and

governmental interest in corporate governance. This culminated

in the passage of the Sarbanes-Oxley Act of 2002. But, since

then, the stock market has greatly recovered, and shareholder

zeal has waned accordingly.

2.1 INTRODUCTION OF COMPANY

PROFILE

It’s not the Big that beats the SMALL …. It’s the FAST that beats the SLOW

That’s the title of Jason Jennings book that emphasizes the necessity to maintain

competitive advantage and talks about the need for speed while doing business.

E-broking is all about speed of execution, classy service and above all simplicity.

E-broking is offering broking services through the Internet. SEBI, the regulatory

authority for capital markets, has recently framed the guidelines pertaining to

Internet based trading. Brokers who offer trade services through the Internet are

called E-brokers. In this fast moving world you have run like rabbit and mot

move like a tortoise or else you will be left behind and the world will move

forward.

Overview

Internet scheme is successful because web proposals are built that influence

their offline brand value, customer lists and distribution channels. This involves

designing and evolving electronic value propositions.

In India, the guidelines for electronic trading were formed in January 2000. The

Securities and Exchange Board of India (SEBI) has framed the guidelines for

Internet trading in January 2000. SEBI registered brokers can introduce the

service after obtaining permission from respective Stock Exchanges and

clearance from SEBI. Exchanges while giving permission require to ensure

minimum conditions specified in the report that is available on the SEBI’s web

site (www.sebi.com) The two major stock exchanges in India (National Stock

Exchange of India Ltd. & The Bombay Stock Exchange) accounting for 90% of

the trading activity have already implemented the system for Internet trading.

With the successful implementation of depository system in India and larger

volume of securities getting converted to electronic form, e-broking is expected to

be successful e-commerce in India and is growing with a fast pace. It is growing

day after day and may reach the echelons of the capital markets.

2.2 COMPANY OVERVIEW

Vision

Our vision is to be the most respected company in the financial services space.

India Infoline Group

The India Infoline group, comprising the holding company, India Infoline Limited

and its wholly-owned subsidiaries, straddle the entire financial services space

with offerings ranging from Equity research, Equities and derivatives trading,

Commodities trading, Portfolio Management Services, Mutual Funds, Life

Insurance, Fixed deposits, GoIe bonds and other small savings instruments to

loan products and Investment banking. India Infoline also owns and manages the

websites www.indiainfoline.com and www.5paisa.com

The company has a network of 758 business locations (branches and sub-

brokers) spread across 346 cities and towns. It has more than 800,000

customers.

India Infoline Ltd .

India Infoline Limited is listed on both the leading stock exchanges in India, viz.

the Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE) and

is also a member of both the exchanges. It is engaged in the businesses of

Equities broking, Wealth Advisory Services and Portfolio Management Services.

It offers broking services in the Cash and Derivatives segments of the NSE as

well as the Cash segment of the BSE. It is registered with NSDL as well as CDSL

as a depository participant, providing a one-stop solution for clients trading in the

equities market. It has recently launched its Investment banking and Institutional

Broking business.

A SEBI authorized Portfolio Manager; it offers Portfolio Management Services to

clients. These services are offered to clients as different schemes, which are

based on differing investment strategies made to reflect the varied risk-return

preferences of clients.

India Infoline Media and Research Services Limited .

The content services represent a strong support that drives the broking,

commodities, mutual fund and portfolio management services businesses.

Revenue generation is through the sale of content to financial and media houses,

Indian as well as global.

It undertakes equities research which is acknowledged by none other than

Forbes as 'Best of the Web' and '…a must read for investors in Asia'. India

Infoline's research is available not just over the internet but also on international

wire services like Bloomberg (Code: IILL), Thomson First Call and Internet

Securities where India Infoline is amongst the most read Indian brokers.

India Infoline Commodities Limited .

India Infoline Commodities Pvt Limited is engaged in the business of

commodities broking. Our experience in securities broking empowered us with

the requisite skills and technologies to allow us offer commodities broking as a

contra-cyclical alternative to equities broking. We enjoy memberships with the

MCX and NCDEX, two leading Indian commodities exchanges, and recently

acquired membership of DGCX. We have a multi-channel delivery model, making

it among the select few to offer online as well as offline trading facilities.

India Infoline Marketing & Services

India Infoline Marketing and Services Limited is the holding company of India

Infoline Insurance Services Limited and India Infoline Insurance Brokers Limited.

(a) India Infoline Insurance Services Limited is a registered Corporate Agent with

the Insurance Regulatory and Development Authority (IRDA). It is the largest

Corporate Agent for ICICI Prudential Life Insurance Co Limited, which is India's

largest private Life Insurance Company. India Infoline was the first corporate

agent to get licensed by IRDA in early 2001.

(b) India Infoline Insurance Brokers Limited India Infoline Insurance Brokers

Limited is a newly formed subsidiary which will carry out the business of

Insurance broking. We have applied to IRDA for the insurance broking license

and the clearance for the same is awaited. Post the grant of license, we propose

to also commence the general insurance distribution business.

India Infoline Investment Services Limited

Consolidated shareholdings of all the subsidiary companies engaged in loans

and financing activities under one subsidiary. Recently, Orient Global, a

Singapore-based investment institution invested USD 76.7 million for a 22.5%

stake in India Infoline Investment Services. This will help focused expansion and

capital raising in the said subsidiaries for various lending businesses like loans

against securities, SME financing, distribution of retail loan products, consumer

finance business and housing finance business. India Infoline Investment

Services Private Limited consists of the following step-down subsidiaries.

(a) India Infoline Distribution Company Limited (Distribution of Retail Loan

Products)

(b) Money line Credit Limited (Consumer Finance)

(c) India Infoline Housing Finance Limited (Housing Finance)

IIFL (Asia) Pte Limited

IIFL (Asia) Pte Limited is wholly owned subsidiary which has been incorporated

in Singapore to pursue financial sector activities in other Asian markets. Further

to obtaining the necessary regulatory approvals, the company has been initially

capitalized at 1 million Singapore dollars.

Products and Services

We are a one-stop financial services shop, most respected for quality of its

advice, personalized service and cutting-edge technology.

Equities

India Infoline provided the prospect of researched investing to its clients, which

was hitherto restricted only to the institutions. Research for the retail investor did

not exist prior to India Infoline. India Infoline leveraged technology to bring the

convenience of trading to the investor’s location of preference (residence or

office) through computerized access. India Infoline made it possible for clients to

view transaction costs and ledger updates in real time.

PMS

Our Portfolio Management Service is a product wherein an equity investment

portfolio is created to suit the investment objectives of a client. We at India

Infoline invest your resources into stocks from different sectors, depending on

your risk-return profile. This service is particularly advisable for investors who

cannot afford to give time or don't have that expertise for day-to-day

management of their equity portfolio.

Research

Sound investment decisions depend upon reliable fundamental data and stock

selection techniques. India Infoline Equity Research is proud of its reputation for,

and we want you to find the facts that you need. Equity investment professionals

routinely use our research and models as integral tools in their work.

Commodities

India Infoline’s extension into commodities trading reconciles its strategic intent

to emerge as a one-stop solutions financial intermediary. Its experience in

securities broking has empowered it with requisite skills and technologies. The

Company’s commodities business provides a contra-cyclical alternative to

equities broking. The Company was among the first to offer the facility of

commodities trading in India’s young commodities market (the MCX commenced

operations only in 2003). Average monthly turnover on the commodity exchanges

increased from Rs. 0.34 bn to Rs 20.02 bn. The commodities market has several

products with different and non-correlated cycles. On the whole, the business is

fairly insulated against cyclical gyrations in the business.

Mortgages

During the year under review, India Infoline acquired a 75% stake in Money tree

Consultancy Services to mark its foray into the business of mortgages and other

loan products distribution. The business is still in the investing phase and at the

time of the acquisition was present only in the cities of Mumbai and Pune. The

Company brings on board expertise in the loans business coupled with existing

relationships across a number of principals in the mortgage and personal loans

businesses. India Infoline now has plans to roll the business out across its pan-

Indian network to provide it with a truly national scale in operations.

Home Loans

Get expert advice that suits

your needs

Loan against residential

and commercial property

Expert recommendations

Easy documentation

Quick processing and

disbursal

No guarantor requirement

Personal Loans

Freedom to choose from 4

flexible options to repay

Expert recommendations

Easy documentation

Quick processing and

disbursal

No guarantor requirement

Invest Online

India Infoline has made investing in Mutual funds and primary market so

effortless. All you have to do is register with us and that’s all. No paperwork no

queues and No registration charges.

INVEST IN MF

India Infoline offers you a host of mutual fund choices under one roof, backed by

in-depth research and advice from research house and tools configured as

investor friendly.

APPLY IN IPO’s

You could also invest in Initial Public Offers (IPO’s) online without going through

the hassles of filling ANY application form/ paperwork.

SMS

Stay connected to the market

The trader of today, you are constantly on the move. But how do you stay

connected to the market while on the move? Simple, subscribe to India Infoline's

Stock Messaging Service and get Market on your Mobile!

There are three products under SMS Service:

Market on the move.

Best of the lot.

VAS (Value Added Service

Insurance

An entry into this segment helped complete the client’s product basket;

concurrently, it graduated the Company into a one-stop retail financial solutions

provider. To ensure maximum reach to customers across India, we have

employed a multi pronged approach and reach out to customers via our Network,

Direct and Affiliate channels. Following the opening of the sector in 1999-2000, a

number of private sector insurance service providers commenced operations

aggressively and helped grow the market.

The Company’s entry into the insurance sector derisked the Company from a

predominant dependence on broking and equity-linked revenues. The annuity

based income generated from insurance intermediation result in solid core

revenues across the tenure of the policy.

Wealth Management Service

Imagine a financial firm with the heart and soul of a two-person organization. A

world-leading wealth management company that sits down with you to

understand your needs and goals. We offer you a dedicated group for giving you

the most personal attention at every level.

Newsletters

The Daily Market Strategy is your morning dose on the health of the markets.

Five intra-day ideas, unless the markets are really choppy coupled with a brief on

the global markets and any other cues, which could impact the market.

Occasionally an investment idea from the research team and a crisp round up of

the previous day's top stories. That's not all. As a subscriber to the Daily Market

Strategy, you even get research reports of India Infoline research team on a

priority basis.

The India Infoline Weekly Newsletter is your flashback for the week gone by. A

weekly outlook coupled with the best of the web stories from India Infoline and

links to important

Investment ideas, Leader Speak and features are delivered in your inbox every

Friday evening.

Equities

India Infoline provided the prospect of researched investing to its clients, which

was hitherto restricted only to the institutions. Research for the retail investor did

not exist prior to India Infoline leveraged technology to bring the convenience of

trading to the investor’s location of preference (residence or office) through

computerized access. India Infoline made it possible for clients to view

transaction costs and ledger updates in real time.

Over the last five years, India Infoline sharpened its competitive edge through the

following initiatives:

Multi-channel delivery model :

The Company is among the few financial intermediaries in India to offer a

complement of online and offline broking. The Company’s network of branches

also allows customers to place orders on phone or visit our branches for trading.

Integrated middle and back office:

The customer can trade on the BSE and NSE, in the cash as well as the

derivatives segment all through the available multiple options of Internet, phone

or branch presence.

Multiple-trading options:

The Company harnessed technology to offer services at among the lowest rates

in the business. Membership: The Company widened client reach in trading on

the domestic and international exchanges.

Technology:

The Company provides a prudent mix of proprietary and outsourced

technologies, which facilitate business growth without a corresponding increase

in costs.

Content:

The Company has leveraged its research capability to provide regular updates

and investment picks across the short and long-term.

Service:

Clients can access the customer service team through various media like toll-free

lines, emails and Internet- messenger chat for instant query resolution. The

Company’s customer service executives proactively contact customers to inform

them of key changes and initiatives taken by the Company. Business World rated

the Company’s customer service as ‘Best’ in their survey of online trading sites

carried out in December 2003.

*Key features

Membership on the Bombay Stock Exchange Limited and the National

Stock Exchange

Registered with the NSDL as well as CDSL as a depository participant,

providing a one-stop solution for clients trading in the equities market

Broking services in cash and derivative segments, online as well as

offline under the brand of 5paisa.com

Presence across 19 states through a 177 strong branch network, with

75,000 online registered users

Provision of free and world-class research to all clients.

Portfolio Management Services

You get recessions. You have stock market declines. If you don't understand

that's going to happen, then you're not ready; you won't do well in the markets.

No need to worry. We at India Infoline would take care of all issues related to

managing your hard earned money.

Our Portfolio Management Service is a product wherein an equity investment

portfolio is created to suit the investment objectives of a client. We at India

Infoline invest your resources into stocks from different sectors, depending on

your risk-return profile. This service is particularly advisable for investors who

cannot afford to give time or don't have that expertise for day-to-day

management of their equity portfolio.

It is all about your money, being managed by the experts, while you continue with

your routine life. Isn't it simple and totally hassle free.

What's more, you can keep track of your dividends / bonus / rights issues with

paperless tracking. So you always know how fast your investment is growing. It

basically means assigning the right job to the right person.

Salient Features of India Infoline PMS:

Expert team of Research Analysts

Stock Picking done by the Investment Committee

Dedicated Relationship Manager

Technology:

The Company has extended the trading terminal to the investor’s

home/workplace reinforced with real-time commodity information and ledger

position.

Rates:

The Company harnessed technology to offer services at among the lowest rates

in the business. Membership: The Company widened client reach in trading on

the domestic and international exchanges.

*Key Features

Enjoys memberships with the MCX and NCDEX, two leading Indian

commodities exchanges.

Recently acquired membership of the DGCX.

Multi-channel delivery model, making it among the select few to offer

online as well as offline trading facilities.

Extended commodity trading to retail investors, among the few Indian

financial intermediaries to do so.

Online business at 80% of revenues dominates commodities trading

revenues.

Provides regular commodity updates pertaining to the Indian and

international environment.

2.3 LITERATURE REVIEW

EBROKING –

The Answer to the fast changing world

To start with, we have to ask ourselves the question-Why Ecommerce?

Changing profile of customers:

-Today’s generation is more literate, more technology savvy.

-The ratio of earning members in each family is on the increase.

-The use of the internet for various needs is on the increase.

-New customer segments are evolving; those that were practically non- existent

some years back.

-Purchasing power/spending power of families have increase owing to better

salaries, booming Economy.

Above all, the factor that is revolutionizing all the rules of business is, one word-

The Internet.

E broking-Down Memory Lane

1494 - The origin of the stock market when the Amsterdam

Stock Exchange was set up.

18th Century-East India Company was a dominant Institution in

India. Stock Markets traces its infancy in India

1875-The Bombay Stock Exchange" (BSE) was founded

1992-The National Stock Exchange of India Ltd. was

incorporated

2000-Internet based trading commences at NSE in 2000

Why Does Internet Broking have a Future in India?

Top 20 Countries with Highest Number of

Users

INDIA

The Net Addiction

Internet User Base Increase over the Years

20021999 2000 2001 2003 2004 20051998

50.6

39.2

22.5

16.5

7.05.5

2.81.4

Year

No

Of u

sers

In M

illio

ns

Year

Users

The no of internet users has risen tremendously from 14 lakhs in 1998 to 5

crores in 2005.The Percentage penetration has increased from 0.1% in 1998 to

4.5% in 2006. This by itself is an indication that a huge population is just waiting

to be tapped.

Successful Internet Business Models

Post the 1999-2000 dotcom bust the first question that popped up was-Why

choose the Net? The answer lies in two words:

Internet negates two barriers namely 1) Time and 2) Distance

The key factors required to succeed in an Internet based model are:

Develop a unique website

Control the product line

Introduce new products on a regular basis

Ensure easy and reliable payment methods

Provide Customer Friendly service

On-time delivery

Develop a clever marketing strategy

Successful Internet Business Models I

Transformed the conventional auctions from garages and flea markets to

e-market places

Sells just about anything from antiques and jewelry to auto insurance.

Buy coffee from Brazil, Porcelain coffee cup from China and have a

simmering cup of coffee at your home in India. That’s Internet for you.

As of March 2007 registered user base is 157 million, up 40% from March

2005.

The first quarter earning in 2007 was 250+ million dollars

Successful Internet Business Models II

One of the greatest success stories of recent times, Google was started

by two Stanford graduates Larry Page and Sergey Brin in 1998 as

privately held company.

Its IPO in 2007 raised $1.87 billion making it a $35 billion company. Which

other company has grown that fast?

What started as a simple search engine company is today a mammoth in

the Internet space.

Today Google has companies like Orkut(Social networking), Blogger, You

tube etc in its fold

Ask yourself this question-Whom does Wal-Mart, the world’s largest

retailer think as its biggest competition in business?

The answer is Google since it has the power of information to let people

know about competitive prices

What is E-broking?

To put it very simply, it is the facility to place trades in the stock markets using

the internet, be it from your office, home or your flight back home.

Offline Vs Online Broking (E-broking)

E-broking is where a customer places orders to buy/sell using the internet as

a medium

In offline broking the client can either go the Broker’s office or physically

instruct him to execute orders for him or place a phone call to execute orders

E-broking is all about convenience. Login. Select the scrip. Place Orders.

That’s it.

Offline broking requires cheques to be signed, Delivery Instruction slips and

other forms to process transactions

E-broking requires no form fill ups after account has been opened. Everything

happens on the net. Money transfer happens through Payment Gateways.

Research calls in offline broking happens through phone calls and physical

reports

E-broking facilitates checking Research reports, calls, trade reports , portfolio

statements online

Contract notes are given out as physical certificates in conventional offline

broking.

Digital Contract notes are sent to the client in E-broking

E-broking In India

• E-broking is India is still in its early stages

• The E-broking space primarily has 4-5 major players with some big names

still slated to make their presence felt

• In India, around 12-15% of the total volumes in cash market are done

Online whereas in the West around 50% of the cash market trades are

done online

• Unlike Offline broking, online broking works on a more defined slab based

system based on type of account that a customer opts.

• The E commerce market is supposedly around Rs.23 billion of which E-

broking is a very small percentage

• The population trading in stock markets in India is just about 1%.

Online industry in India

Globally online trading volumes constitutes to 30-40%.

85% of the volume comes from top 5-6 players.

No. of online customer have reached to approx. 7 lakh.

Derivative volume has surpassed cash volume.

Considered the most scalable model

Perfect tool for Positional / Day trader.

Major players – ICICI Direct, SSKI, India Bulls & Kotak.

All these companies have entered the online ring and promises exciting times

ahead.

As E- Brokers the following issues are crucial in competition such as:

Brokerage: The starting point for individual investors examining the

various online trading schemes is obviously the brokerage rate. In a

competitive marketplace brokerage is a key differentiator among

different schemes offered by e-brokers. Evidence on brokerage rates

seems to suggest that this differentiator may be of limited value to most

investors. ICICIDirect.com, the first entrant into e-broking, charges the

highest brokerage. However, late entrants such as 5Paisa.com,

Sharekhan and Kotakstreet.com all charge comparatively less amount.

Icicidirect.com as the first entrant has made itself the first integrated e-

broking service provider in the market and is the biggest competitor of

Motilal Oswal Securities Limited.

Players such as SSKI's Sharekhan, which launched their scheme in July

2000, have tried to steal a march over icicidirect.com by introducing a

flat fee product of Rs.1000 per month. This trade-as-much-as-you-want

scheme was an innovation targeted mainly at frenzied day-traders.

But even this innovation gave Sharekhan only a small head start over its

peers. Kotakstreet.com, which launched its e-broking services in August,

not only halved the flat fee from Rs.1000 to Rs.500, but also allowed

short sales and offered clients the option of trading against securities up

to three times sales marked for delivery. Clearly, innovation offers limited

scope for it is a matter of time before almost all the schemes offer more

or less identical features.

The pedigree of the e-broker: The pedigree of the e-broker is important,

as that is likely to identify the serious players. Going forward,

consolidation is inevitable even in this industry and when that happens,

online trading sites such as icicidirect.com, Invest smart,

Kotakstreet.com as well as Motilal Oswal Securities Limited with a good

pedigree have a much better chance of survival than the stand-alone

sites such as 5paisa.com and Indiabulls.

Technology and back-.office infrastructure: In these early months, online

trading is likely to attract a host of entrants as India has already seen so

far. But the key differentiator will be the investment in technology and

back-office infrastructure. Even if small-time e-broking outfits make the

initial investments in technology, the recurring expenses, which would

also be high, may prove to a burden in the long run. For investors

looking at online trading from a medium-to-long-term perspective, sites

with deep pockets and a pedigree will be a good choice.

Quality of service and security: As the industry quickly consolidates and

technology gets standardized, the quality of service will be the key

differentiator. From an investor's perspective, in the initial stages holding

at least two online trading accounts with two different outfits will be

prudent in the long run. Basically, this will help the investor evaluate the

quality of service and ``security-related issues'' (say, in terms of 128-bit

encryption or privacy/confidentiality in access), between two outfits. In

the long run, depending on the service levels, the investor can switch to

the better player.

Integrated package: Currently, only icicidirect.com offers a seamless 3-

in-1 package of broking, banking and demat accounts. This effectively

means that through the click of a mouse, an investor can buy and sell

shares, and forget about the paperwork involved in settlements and

transfer of shares or money. The rest of the players are also putting such

an integrated package in place, but icicidirect.com has a head start, as

the others may be able to offer a seamless online trading experience

only after an independent payment gateway (which provides connectivity

between different banks for online banking) is firmly in place.

Understanding the Process I

Understanding the System II

Advantages of E-broking

Client Terminal

ORDER MANAGEMENT SERVER

INTERNET

AUTHENTICATIONSERVER

TRADING SITE

RISK MANAGEMENT SERVER

ORDER ROUTING SERVER

Client Terminal

EXCHANGES

• No necessity of paperwork once initial account Opening form is opened.

• Flexibility to invest from the convenience of home/office/cyber café-just

about any place with a net connection

• No waiting for cheques to get realized for you to start investing-Online

payment gateways make instant transfers possible

• Facility to avail of research through online reports, recommendations

during live market hours

• Viewing of portfolio performance made available online.

• Facility to get digital contract notes emailed at the end of day.

• Facility of seeing the Live market rates as streaming prices

• Security of transactions is very high considering SSL connections.

So how far is E-broking truly online?

Online is no more a pure click model, it’s a combination of both

click n brick.

Some call it Call & Trade, other calls it Dial & Trade. But in

essence, and it’s about the phone buzzing non stop in the

Customer care department.

The team consists of executers and not just an advisor, hence one

person can handle min 100 clients

No tension of RMS, everything is online on the basis of funds

Mostly customers have accounts with more than one online player,

hence calling helps in greater recall rate

What started as an additional service has now turned out to be a

revenue generator

Over-View Of E- broking Industry

Existing players are competing for a piece of the market share that seems to be

getting aggressive by the day

New players slated to make their presence felt in the near future are

R-Trade (Reliance Money), ABN (Amro Broking), SBI Cap, Citibank (Smith

Barney), Standard Chartered, etc are few others to start operations.

International brokerage houses like Charles Schwab will make an entry very

soon.

New customer segments have evolved-e.g. housewives, fresh management

graduates, first timers to stock market, etc.

Increasing trend of alliance tie ups between brokers and banks

This space is poised for a growth of 100% in volume YOY

There are some ten dotcom players, such as:

Icicidirect.com

Invest smart

5paisa.com / India Infoline.com

Indiabulls

Kotakstreet

Sharekhan Securities

Motilal Oswal Securities

Indiabulls-creating a world of smarter investors

The ad basically talks about how Indiabulls empowers customers with

Knowledge thereby making them smart investors. The ad has a Sardar ji asking

questions on the markets.

Kotaksecurities.com-online investing made simple

The ad takes about simplifying the stock markets for you without complicating

matters. General perception is that the markets are tough to understand and

choices are umpteen but with Kotak Securities, it’s about simplicity

Icicidirect.com - Strangely enough they don’t have a tvc for icicidirect.com

and HDFC securities. But owing to the fact that their banks, mutual funds and

insurance business have a name for themselves, people seldom notice since

brand awareness of ICICI/HDFC as a group is high.

Motilal Oswal-Solid Research. Solid Advice

As the tag line goes, the positioning is centered on Research and advice. The ad

shows a man who is very skeptical when it comes to making even the most

mundane decisions but when it comes to Motilal Oswal, he trusts them too well to

worry about investments

Sharekhan-Simplifying the stock market

The stock markets are like a jungle .And to be the king, you need simple and

understandable solutions which is what they claim to offer. Their first steps

program is aimed at educating the novice investor .The ad shows a man who

enters a mall and is looking for the Flush button. He doesn’t know what to do until

he tries to open the door and ultimately ends up clicking the flush button. The ad

says that stock markets can be like a jungle but with Sharekhan, you can rest

assured.

IDBI Paisa Builder tag line -Wealth is waiting

Tracking Competition/Focus

For I direct it has always been nos., every person is a prospect, now with

11 lakh accounts their focus is customer acquisition

For Indiabulls, every marketing guy is a revenue generator, target is to

achieve rev of 5 times salary in first three months else exit. (acquire and

retain)

For kotaksecurities.com its no of accounts and margin money, rest will be

taken care of by 100 customer service agents sitting at one place

For sharekhan its nos., clear differentiation between speed trade and

classic account and focus is only on acquiring customer.

5 paisa, Angel, and other players are also have dedicated team focusing

only on acquisition

Client Acquisition strategy

Keeping in mind, our twin fold objectives of providing quality service and

acquiring and retaining customers, the E-broking wing has been clearly divided

into the following streams:

Direct customers

• E-franchisee Customers

• Franchisee Customers

• Alliance customers

The Future of E-broking

After the Net, the Mobile revolution has already begun.

India is all set to become the world’s second largest Mobile phone Market by

2008 according to Data comm. Research Company

Customers will buy/sell/check their portfolio on mobile, just the way they check

messages

All you will have to do is enter the stock name and click on Quote

The client, after checking the price can choose to Buy Shares and also view his

portfolio

When client clicks on Buy shares, he will be asked to login and then in a matter

of minutes, he will be able to trade in the stock markets.

What does the Future Hold

Online Broking will witness a sea change in the way the business will

function. Newer products, stiff competition and improved trading

engines will characterize the industry

The industry will shift gradually to a fixed broking charge, following in

the foot steps of the West. One paisa campaign marked the beginning

of this phase in India along with Kotak Flat charge.

Alliances will hold a significant key to customer acquisition. The trend

has already begun with major Banks getting into the act. E-z trade@

SBI was again a trendsetter owing to the sheer size of the tie up.

Housewives and College students will emerge as new target segments

that will over a period of time become revenue earners.

Cross selling multiple products will be a key area of focus. The concept

of financial planners will gain immensely.

The Future looks Bright. It will happen at the click of a button. That will

in essence be Business @ the speed of thought

Basic Concept And Principle

3.1 Corporate Governance Framework

The Board of Directors is responsible for management oversight, supervising the

business execution functions of the Management Council, an executive organ

under its authority. The Management Council deliberates upon fundamental

policies and strategy regarding business management, as well as makes

decisions on important matters regarding operational execution. Issues

discussed by the Management Council and a summary of its discussions are

reported to the Board of Directors, which makes decisions on items of particular

importance. In principle, the Management Council meets three times a month,

but meetings may be convened whenever necessary. The auditing function is

carried out by statutory auditors (Board of Statutory Auditors), who review the

Board of Directors as well as operational execution functions, and attend

important meetings, including meetings of the Board of Directors as well as the

Management Council.

Figure 2-1 corporate governance framework

The auditing function is carried out by statutory auditors (Board of Statutory

Auditors), who review the Board of Directors as well as operational execution

functions, and attend important meetings, including meetings of the Board of

Directors as well as the Management Council. .

3.2 Requirement Of Good Corporate Governance

According to the Australian standard on corporate governance (AS8000, 2003),

it requires a structural component requiring identification of requirements,

requirements of laws, codes, best practice, links to risk-requirement, and

reporting, so as to create a functioning series of systems and a maintenance

component requiring education and training, communications monitoring,

assessment, review, liaison and accountability. But, note that corporate

governance has neither a static, nor a prescribed form. The Australian standard

says, "there is no single model of corporate governance" (AS8000, 2003). The

OECD principles of corporate governance (OECD, 2004) says "To remain

competitive in changing world, corporations must innovate and adapt their

corporate governance practices so that they can meet new demands and grasp

new opportunities.

The Nation Archives of Australia is a leader in developing records management

procedures, particularly in e-records. One that is of particular interest deals with

source records that have been copied converted or migrated. This policy allows

Commonwealth agencies to dispose of source records that have been copied or

converted if proper processes are in place. But the procedure also requires,

importantly, that the policy can be put in place only. If it has been implemented

with the "explicit agreement" of the head of the agency. This means that the

agency head must be satisfied of the integrity of the IT and administrative

systems in place for the copying of the source records before the policy is

adopted and source records are destroyed. Boards and other governing bodies

for records management throughout an organization should also undertake such

high –level sign –off on records management policies. So requirement of good

corporate governance may be summarized as follows:

due process – doing things in an agreed, documented, controlled and

appropriate way.

transparency- doing things in a way which is open to appropriate way.

Accountability- having to answer for the things one does.

compliance- having systems to ensure that things are done properly.

laws- meeting applicable legal obligations.

Security- having systems to ensure protection of information

3.3Purpose Of Corporate Governance

1. Protecting shareholders’ wealth.

2. Enhancing the wealth through proper utilization of assets.

3. Maintenance of that wealth and not frittering away in unconnected and

non profitable venture.

4. through expropriation, and above all safeguarding he interests of the

shareholders.

The main objective behind corporate governance is to protect long term share

holder value along with the other stakeholders. It is the foundation to build market

confidence and encouraging stable and long term investment flows. Corporate

institutions should have a sound frame work for their operation to achieve their

objective and creating wealth for the welfare of the society as a whole. Corporate

governance is very wide term, which covers a wide range of activities that relate

to the way business organization is directed and governed. It deals with the

policies and practices that directly impact on the organization’s performance,

stewardship sand its capacity to be accountable to its various stakeholders.

Over all objectives of corporate governance are as

follows :

1. Enhancement of shareholder value, keeping in view the interest of other

stakeholder.

2. follow provisions of the companies Act, FEMA factory Act and other statutes .

3. deloy the funds of the company in attaining institutional goal as enshrined in

the memorandum.

4. utilize funds taken from financial institutions and the capital market for the

purposes for which they were intended.

5. develop core competence to effectively manage its diversifications.

6. manage and check the diversification of funds by the way of loans, advances

or investment to subsidiary or investment companies.

7. control over the bad practices .

8. conduct ethical and fair practices towards its share holders, customers,

suppliers, employees and the public at large.

9. provide complete information to the directors on the working of the company.

10.motivate institutional and non executive directors to play active role in the

functioning of the company.

11.make internal control sound and powerful.

12. adopt transparent financial reporting and audit practices and the accounting

practices.

Business Goal & Corporate Governance

Corporate governance is also related to corporate financial goals. It is a naïve

assumption that such goals are culture free. Wimer (1995) interviewed Dutch,

German, and U.S business executives. Besides making profits, the Dutch talked

about assets, the German about independence from banks and the American

about shareholder value. This reflects the institutional differences among the

countries but also the prevailing ideologies.

Some people assume that globalization and acquisition of companies across

borders will wipe out such differences and thus business leaders will become like

the Americans. Others argue that these differences are rooted in national

cultures that have centuries old roots, which make such convergence unlikely.

The studies here were based on a comparison of institutions across countries.

Another approach is to focus on the persons of the business leaders and to

compare the goals they are seen to pursue.

Corporate governance practices have become an essential prerequisite for the

ability to acquire and retain financial resources necessary for restructuring long-

term investment and sustainable growth.

3.4 Principles Of Corporate Governance

Key elements of good corporate governance principles include honesty, trust and integrity, openness, performance orientation, responsibility and accountability, mutual respect, and commitment to the organization.

Of importance is how directors and management develop a model of governance that aligns the values of the corporate participants and then evaluate this model periodically for its effectiveness. In particular, senior executives should conduct themselves honestly and

ethically, especially concerning actual or apparent conflicts of interest, and disclosure in financial reports.

Commonly accepted principles of corporate governance

include

Rights and equitable treatment of shareholders: Organizations

should respect the rights of shareholders and help shareholders to

exercise those rights. They can help shareholders exercise their rights by

effectively communicating information that is understandable and

accessible and encouraging shareholders to participate in general

meetings.

Interests of other stakeholders: Organizations should recognize

that they have legal and other obligations to all legitimate stakeholders.

Role and responsibilities of the board: The board needs a range

of skills and understanding to be able to deal with various business issues

and have the ability to review and challenge management performance. It

needs to be of sufficient size and have an appropriate level of commitment

to fulfill its responsibilities and duties. There are issues about the

appropriate mix of executive and non-executive directors.

Integrity and ethical behavior: Ethical and responsible decision

making is not only important for public relations, but it is also a necessary

element in risk management and avoiding lawsuits. Organizations should

develop a code of conduct for their directors and executives that promotes

ethical and responsible decision making. It is important to understand,

though, that reliance by a company on the integrity and ethics of

individuals is bound to eventual failure. Because of this, many

organizations establish compliance and ethics programs to minimize the

risk that the firm steps outside of ethical and legal boundaries.

Disclosure and transparency: Organizations should clarify and

make publicly known the roles and responsibilities of board and

management to provide shareholders with a level of accountability. They

should also implement procedures to independently verify and safeguard

the integrity of the company's financial reporting. Disclosure of material

matters concerning the organization should be timely and balanced to

ensure that all investors have access to clear, factual information.

TRANSPARENCY-: This means accurate, adequate and timely

disclosure of relevant information to the stakeholders. It is not at all

possible to make any progress towards better governance without

transparency. But it is seen that information sharing is hindered under the

excuse of confidentiality. There is need to move towards international

standards in terms of disclosure of information by the corporate sector and

through this the companies develop a high level of public confidence in

business. The scenario at international level makes transparency and

disclosure the key pillars of corporate governance.

Issues involving corporate governance principles include

oversight of the preparation of the entity's financial statements

internal controls and the independence of the entity's auditors

review of the compensation arrangements for the chief executive officer

and other senior executives

the way in which individuals are nominated for positions on the board

the resources made available to directors in carrying out their duties

oversight and management of risk

dividend policy.

3.5 Importance Of Corporate Governance

* Corporate governance has succeeded in attracting a good deal of public

interest because of its apparent importance for the economic health of

corporations and society in general.

* Corporate governance provides the structure through which the objectives of

the company are set, and the means of attaining those objectives and monitoring

performance are determined.

* Corporate governance provides proper incentives for the board and

management to pursue objectives that are in the interests of the company and

shareholders and should facilitate effective monitoring, thereby encouraging firms

to use resources more efficiently

* Corporate governance is used to monitor whether outcomes are in accordance

with plans and to motivate the organization to be more fully informed in order to

maintain or alter organizational activity. Corporate governance is the mechanism

by which individuals are motivated to align their actual behaviors with the overall

participants.

* Corporate governance is a tool for competitive advantage. Normally when we

look at the issue of competitive advantage from a managerial point of view, we

can look at those factors, which are within the control of the enterprise. This

relates to the focus on quality, productivity as well as innovation, which are the

basic requirements, in a highly competitive environment. This is needed for

getting the competitive edge in a market where the customer is king.

* The corporate governance framework should ensure the equitable treatment of

all shareholders, including minority and foreign shareholders. All shareholders

should have the opportunity to obtain effective redress for violation of their rights.

* The corporate governance framework recognizes the rights of stakeholders as

established by law and encourage active co-operation between corporations and

stakeholders in creating wealth, jobs, and the sustainability of financially sound

enterprises.

* The corporate governance framework ensures the timely and accurate

disclosure of all material matters regarding the corporation, including the financial

situation, performance, ownership, and governance of the company. A strong

disclosure regime can help to attract capital and maintain confidence in the

capital markets. Disclosure also helps improve public understanding of the

structure and activities of enterprises, corporate policies and performance with

respect to environmental and ethical standards, and companies' relationships

with the communities in which they operate.

3.6 Corporate Values

In recent years, There is a explosion of interest in corporate values like share

holder value , stakeholder value customer value , business ethics Corporate

social responsibility by and large, new value systems have been marketed as

general solutions applicable to all kinds of business. These values are building

blocks of corporate image. Corporate values are based on high ethical standards

of managers and other employees. The firm values must ultimately be derived

from the preferences or values of its stakeholders. In other words, corporate

values are created when companies internalize the values of salient

stakeholders. Stakeholders can influence a company directly through market

transactions and contracts without imposing their values on the company, but

transactional costs and information problems set a limit to use of contractual

mechanisms. Internalization of stakeholder preference takes place in a

hypothetical three-stage process as follows:

1. Allocation of ownership rights.

2. Board of composition.

3. The influence of important stakeholders

3.7 Related Parties To Corporate Governance

Parties involved in corporate governance include the regulatory body (e.g. the

Chief Executive Officer, the board of directors, management and shareholders).

Other stakeholders who take part include suppliers, employees, creditors,

customers and the community at large.

A Board of Directors often plays a key role in corporate governance. It is their

responsibility to endorse the organization's strategy, develop directional policy,

appoint, supervise and remunerate senior executives and to ensure

accountability of the organization to its owners and authorities.

All parties to corporate governance have an interest, whether direct or indirect, in

the effective performance of the organization. Directors, workers and

management receive salaries, benefits and reputation, while shareholders

receive capital return. Customers receive goods and services; suppliers receive

compensation for their goods or services. In return these individuals provide

value in the form of natural, human, social and other forms of capital.

3.8 Players In Corporate Governance

Corporate governance systems vary across countries and these differences

directly affect both the process for developing global strategies that can be

adopted. Global strategic decision poses a very tough test for the effectiveness

of corporate governance system. They seek maximize profit and global

competitiveness.

There are five critical stakeholder players that affect the company's decision.

They are

(1) Employees (2) The management teams

(3) Shareholders (4) Board of directors (5) Government

Employees: The main variable differentiates employees as a collective group

across countries. The country's labour market will influence the flexibility and

mobility of employees. Country such as the U.S that have employment at will

where by a contract can be terminated at any time are likely to have flexible

labour market and short term labour commitment. In more rigid labour markets

such as Germany and Japan companies invest a great deal in bespoke in house

training that tends to result in more highly skilled labour forces and company

specific skills. These in turns are less transferable from one company to another.

For example in France, the union rights are extended to all employees regardless

of union affiliation. Here unionization will have greater influence on corporate

decision making than in U.S or U.K where only union members benefits from

collective bargaining agreements. Japanese companies tend to have enterprise

unionism, which leads to collective bargaining at company level, and grant a

strong voice to employees. In 2004 for example employee opposition to job

losses prevented the restructuring via. Merger with a foreign partner of France

who is financially troubled Alston, a major producer of ships and trains. In the

same year Volkswagen despite suffering from very high labour cost had to

promise its Western Germany employees job security until 2011 in exchange for

a wage freeze until 2007 and more flexible working hours. The company workers

wield considerable power partly through co-determination rights that require

employees to be consulted on corporate decision.

Top Management Teams: Managers in U.S and U.K tend to have

professional background and strong functional background in finance or

marketing. This is not the case in Germany where managers are more technical

oriented. There is also variation in the international experience and background

of managers. Managerial career mobility tends to be very fluid in U.S and U.K

due to open labour markets. In Japan and France managers tend to remain with

a company for a long period of time. There is also wide acceptance of leaders

from across boarders in the U.K

Shareholders: Countries vary in their mix types of shareholders. At one

extreme the U.S and U.K have mostly arms length, natural shareholders who are

focused on shareholder value maximization. Employee shareholders typically

use their ownership to block the global relocation of jobs. This applies even in the

U.S where united Airlines provide a rare example of a large public company with

majority ownership (55 percent owned by an employee stock ownership plan).

This employee stake and hence control have greatly constrained the ability of the

Airline to relocate job overseas.

Government: Government intervention is usually in the form of market regulation. A representative measure for government intervention in the economy is regulation around takeovers. In countries such as France, Germany, Italy and Japan government intervention often provide strong takeover barrier such as golden shares, which bestow on the holder veto power over changes to the company's charter. The variation hindrance to hostile takeovers in many continental European countries continues to make it difficult for foreign companies to make acquisition across border in Europe. In 2001 plans for a European takeover code, which would guarantee the right of shareholder to be consulted during bids were shelved following objection from German government. The previous year Vodafone, the U.K telecoms company made a successful hostile bid for Mannesmann, a German telecoms company and the German government was worried that other local companies might fall into foreign land. For example Volkswagen is protected from takeover by special law. Sweden, which fall in the continental governance model that use multiple voting rights to help and prevent its companies from becoming vulnerable to takeover. France is also particularly active in preserving national ownership of major companies. In 2004 the French government brokered the takeover of Aventis a French Germany pharmaceutical company by France's Sanofi-synth and Laboratories.

Control And Management

4.1 Mechanisms and controls

Corporate governance mechanisms and controls are designed to reduce the inefficiencies that arise from moral hazard and adverse selection. For example, to monitor managers' behavior, an independent third party attests the accuracy of information provided by management to investors. An ideal control system should regulate both motivation and ability.

Internal corporate governance controls

Internal corporate governance controls monitor activities and then take

corrective action to accomplish organizational goals. Examples include:

Monitoring by the board of directors : The board of directors, with

its legal authority to hire, fire and compensate top management,

safeguards invested capital. Regular board meetings allow potential

problems to be identified, discussed and avoided. Whilst non-executive

directors are thought to be more independent, they may not always result

in more effective corporate governance and may not increase

performance. Different board structures are optimal for different firms.

Moreover, the ability of the board to monitor the firm's executives is a

function of its access to information. Executive directors possess superior

knowledge of the decision-making process and therefore evaluate top

management on the basis of the quality of its decisions that lead to

financial performance outcomes, ex ante. It could be argued, therefore,

that executive directors look beyond the financial criteria.

Remuneration : Performance-based remuneration is designed to relate

some proportion of salary to individual performance. It may be in the form

of cash or non-cash payments such as shares and share options,

superannuation or other benefits. Such incentive schemes, however, are

reactive in the sense that they provide no mechanism for preventing

mistakes or opportunistic behaviour, and can elicit myopic behaviour.

External corporate governance controls

External corporate governance controls encompass the controls external

stakeholders exercise over the organization. Examples include:

demand for and assessment of performance information (especially

financial statements)

debt covenants

government regulations

media pressure

takeovers

competition

managerial labour market

telephone tapping

4.2 Role Of The Accountant

Financial reporting is a crucial element necessary for the corporate governance

system to function effectively. Accountants and auditors are the primary

providers of information to capital market participants. The directors of the

company should be entitled to expect that management prepare the financial

information in compliance with statutory and ethical obligations, and rely on

auditors' competence.

Current accounting practice allows a degree of choice of method in determining

the method of measurement, criteria for recognition, and even the definition of

the accounting entity. The exercise of this choice to improve apparent

performance imposes extra information costs on users. In the extreme, it can

involve non-disclosure of information.

One area of concern is whether the accounting firm acts as both the independent

auditor and management consultant to the firm they are auditing. This may result

in a conflict of interest which places the integrity of financial reports in doubt due

to client pressure to appease management. The power of the corporate client to

initiate and terminate management consulting services and, more fundamentally,

to select and dismiss accounting firms contradicts the concept of an independent

auditor. Changes enacted in the United States in the form of the Sarbanes-Oxley

Act (in response to the Enron situation as noted below) prohibit accounting firms

from providing both auditing and management consulting services. Similar

provisions are in place under clause 49 of SEBI Act in India.

The Enron collapse is an example of misleading financial reporting. Enron

concealed huge losses by creating illusions that a third party was contractually

obliged to pay the amount of any losses. However, the third party was an entity in

which Enron had a substantial economic stake. In discussions of accounting

practices with Arthur Andersen, the partner in charge of auditing, views inevitably

led to the client prevailing.

However, good financial reporting is not a sufficient condition for the

effectiveness of corporate governance if users don't process it, or if the informed

user is unable to exercise a monitoring role due to high costs.

4.3 Role Of Institutional Investors

Many years ago, worldwide, buyers and sellers of corporation stocks were

individual investors, such as wealthy businessmen or families, who often had a

vested, personal and emotional interest in the corporations whose shares they

owned. Over time, markets have become largely institutionalized buyers and

sellers are largely institutions

The rise of the institutional investor has brought with it some increase of

professional diligence which has tended to improve regulation of the stock

market (but not necessarily in the interest of the small investor or even of the

naïve institutions, of which there are many). Note that this process occurred

simultaneously with the direct growth of individuals investing indirectly in the

market (for example individuals have twice as much money in mutual funds as

they do in bank accounts). However this growth occurred primarily by way of

individuals turning over their funds to 'professionals' to manage, such as in

mutual funds. In this way, the majority of investment now is described as

"institutional investment" even though the vast majority of the funds are for the

benefit of individual investors.]

Unfortunately, there has been a concurrent lapse in the oversight of large

corporations, which are now almost all owned by large institutions. The Board of

Directors of large corporations used to be chosen by the principal shareholders,

who usually had an emotional as well as monetary investment in the company

(think Ford), and the Board diligently kept an eye on the company and its

principal executives (they usually hired and fired the President, or Chief

executive officer— CEO).

4.4 Management & Corporate Governance

Top managers need to recognize that they are not in sole charge. Global

strategy is an equilibrium game among corporate governance players. Managers

need to work on building coalition and aligning interest behind a common

approach.

In the continental system managers have to align trade off and meet other

stakeholders' interest halfway. They have to craft their language and rhetoric to

meet the other players' expectations. The main things here are consensus and

social cohesion.

In the extended (Japanese) system companies have generally capitalized in their

export oriented model and high innovation driven employees loyalty. But because

of rigid of their corporate governance system, they have not exploited as much

as they could different dimension of global strategy. So the system must be open

in term of the diversity of the top management team and more flexible in their

governance by introducing leaner boards as well as allowing greater levels of

shareholder activism. If government care to sustain national competitiveness and

to help their companies to

globalize, then they should assess the degree to which the players in their

corporate governance system are aligned with each other and with their intended

global strategy. Government policies should become less inimical to foreign

owners and use such capital to provide the much needed global knowledge. This

can only be accomplished if the right mechanisms are in place to give a voice to

these foreign owners. The government has the responsibility as well as the policy

tools to gear the country's corporate governance system so that it enhances

national competitiveness.

Functions of the Management

1. The management comprises the Chief Executive, Executive-directors and the

key managers of the company, involved in day-to-day activities of the company.

2. The Committee believes that the management should carry out the following

functions:

Assisting the board in its decision making process in respect of the

company’s strategy, policies, code of conduct and performance targets, by

providing necessary inputs.

Implementing the policies and code of conduct of the board.

Managing the day to day affairs of the company to best achieve the targets

and goals set by the board, to maximize the shareholder value.

Providing timely, accurate, substantive and material information, including

financial matters and exceptions, to the board, board-committees and the

shareholders.

Ensuring compliance of all regulations and laws.

Ensuring timely and efficient service to the shareholders and to protect

shareholder’s rights and interests.

Setting up and implementing an effective internal control systems,

commensurate with the business requirements.

Implementing and comply with the Code of Conduct as laid down by the

board.

Co-operating and facilitating efficient working of board committees.

3. As a part of the disclosure related to Management, the Committee

recommends that as part of the directors’ report or as an addition there to, a

Management Discussion and Analysis report should form part of the annual

report to the shareholders. This Management Discussion & Analysis should

include discussion on the following matters within the limits set by the company’s

competitive position:

Industry structure and developments.

Opportunities and Threats

Segment-wise or product-wise performance.

Outlook.

Risks and concerns

Internal control systems and their adequacy.

Discussion on financial performance with respect to operational performance.

Material developments in Human Resources /Industrial Relations front,

including number of people employed.

This is a mandatory recommendation

4. Good corporate governance casts an obligation on the management in respect

of disclosures. The Committee therefore recommends that disclosures must be

made by the management to the board relating to all material financial and

commercial transactions, where they have personal interest, that may have a

potential conflict with the interest of the company at large (for e.g. dealing in

company shares, commercial dealings with bodies, which have shareholding of

management and their relatives etc.)

Shareholders

The shareholders are the owners of the company and as such they have certain

rights and responsibilities. But in reality companies cannot be managed by

shareholder referendum. The shareholders are not expected to assume

responsibility for the management of corporate affairs. A company’s

management must be able to take business decisions rapidly. The shareholders

have therefore to necessarily delegate many of their responsibilities as owners of

the company to the directors who then become responsible for corporate strategy

and operations. The implementation of this strategy is done by a management

team. This relationship therefore brings in the accountability of the boards and

the management to the shareholders of the company. A good corporate

framework is one that provides adequate avenues to the shareholders for

effective contribution in the governance of the company while insisting on a high

standard of corporate behaviour without getting involved in the day to day

functioning of the company.

Responsibilities of shareholders

1. The Committee believes that the General Body Meetings provide an

opportunity to the shareholders to address their concerns to the board of

directors and comment on and demand any explanation on the annual report or

on the overall functioning of the company. It is important that the shareholders

use the forum of general body meetings for ensuring that the company is being

properly stewarded for maximizing the interests of the shareholders. This is

important especially in the Indian context. It follows from the above, that for

effective participation shareholders must maintain decorum during the General

Body Meetings.

2. The effectiveness of the board is determined by the quality of the directors and

the quality of the financial information is dependent to an extent on the efficiency

with which the auditors carry on their duties. The shareholders must therefore

show a greater degree of interest and involvement in the appointment of the

directors and the auditors. Indeed, they should demand complete information

about the directors before approving their directorship.

3. The Committee recommends that in case of the appointment of a new director

or re-appointment of a director the shareholders must be provided with the

following information:

A brief resume of the director;

Nature of his expertise in specific functional areas; and

Names of companies in which the person also holds the directorship and the

membership of Committees of the board.

Shareholders’ rights

1. The basic rights of the shareholders include right to transfer and registration

of shares, obtaining relevant information on the company on a timely and regular

basis, participating and voting in shareholder meetings, electing members of the

board and sharing in the residual profits of the corporation.

2. The Committee therefore recommends that as shareholders have a right to

participate in, and be sufficiently informed on decisions concerning fundamental

corporate changes, they should not only be provided information as under the

Companies Act, but also in respect of other decisions relating to material

changes such as takeovers, sale of assets or divisions of the company and

changes in capital structure which will lead to change in control or may result in

certain shareholders obtaining control disproportionate to the equity ownership.

3. The Committee recommends that information like quarterly results,

presentation made by companies to analysts may be put on company’s web-site

or may be sent in such a form so as to enable the stock exchange on which the

company is listed to put it on its own web-site.

4. The Committee recommends that the half-yearly declaration of financial

performance including summary of the significant events in last six-months,

should be sent to each household of shareholders.

5. A company must have appropriate systems in place which will enable the

shareholders to participate effectively and vote in the shareholders’ meetings.

The company should also keep the shareholders informed of the rules and voting

procedures, which govern the general shareholder meetings.

6. The annual general meetings of the company should not be deliberately held

at venues or the timing should not be such which makes it difficult for most of the

shareholders to attend. The company must also ensure that it is not inconvenient

or expensive for shareholders to cast their vote.

7. Currently, although the formality of holding the general meeting is gone

through,in actual practice only a small fraction of the shareholders of that

company do or can really participate therein. This virtually makes the concept of

corporate democracy illusory. It is imperative that this situation which has lasted

too long needs an early correction. In this context, for shareholders who are

unable to attend the meetings, there should be a requirement which will enable

them to vote by postal ballot for key decisions. This would require changes in the

Companies Act. The Committee was informed that SEBI has already made

recommendations in this regard to the Department of Company Affairs.

8. The Committee recommends that a board committee under the chairmanship

of a non-executive director should be formed to specifically look into the

redressing of shareholder complaints like transfer of shares, non-receipt of

balance sheet, non-receipt of declared dividends etc. The Committee believes

that the formation of such a committee will help focus the attention of the

company on shareholders’ grievances and sensitize the management to

redressed of their grievances.

9. The Committee further recommends that to expedite the process of share

transfers the board of the company should delegate the power of share transfer

to an officer, or a committee or to the registrar and share transfer agents. The

delegated authority should attend to share transfer formalities at least once in a

fortnight.

Institutional shareholders

1. Institutional shareholders have acquired large stakes in the equity share

capital of listed Indian companies. They have or are in the process of becoming

majority shareholders in many listed companies and own shares largely on

behalf of the retail investors. They thus have a special responsibility given the

weight age of their votes and have a bigger role to play in corporate governance

as retail investors look upon them for positive use of their voting rights.

2. Given the weight of their votes, the institutional shareholders can effectively

use their powers to influence the standards of corporate governance. Practices

elsewhere in the world have indicated that institutional shareholders can

sufficiently influence because of their collective stake, the policies of the

company so as to ensure that the company they have invested in, complies with

the corporate governance code in order to maximize shareholder value. What is

important in the view of the Committee is that, the institutional shareholders put

to good use their voting power

3. The Committee is of the view that the institutional shareholders

Take active interest in the composition of the Board of Directors

Be vigilant

Maintain regular and systematic contact at senior level for exchange of views

on management, strategy, performance and the quality of management.

Ensure that voting intentions are translated into practice

Evaluate the corporate governance performance of company.

5. RESEARCH METHODOLOGY

Objective:

To know more about E- Broking Services offered by the retail brokerage

firms.

A Competitive Analysis on the E-Broking services offered by the

companies in Jaipur.

Hypothesis:

All Portfolio Management firms provide very good services.

Sample:

The sample consists of the following: -

Sharekhan Securities

India Infoline

Kotak Securities

Unicorn Securities Pvt. Ltd.

ICICI Direct

India Bulls

Motilal Oswal Securities Limited

5.1. RESEARCH ANALYSIS

Company Synopsis

All companies target different customers depending on different

schemes that they offer some schemes target only HNI whereas

some target retail.

Almost all the companies provide margin funding to their

customers

Most of the schemes provide research and advice too.

Kotak provides the highest amount of schemes giving the

customers a much wider option to choose they scheme according

to their convince.

ICICI Direct has the highest market share when compared to

the others as they were the first ones to enter the market.

Even in terms of collecting brokerage per day ICICI Direct

exceeds when compared to the other firms.

IndiaBulls even though entered late in the market has still

acquired good amount of customer base.

Sales Activity

FIRM

ACTIVITY MOSL KOTAK ICICI

DIRECT

INDIA

INFOLINESHAREKHANINDIABULLS

Cold calls not so

often

not so

often

not so often yes not so often yes

Tele calling yes yes yes yes yes yes

Client

references

yes yes not so often yes yes yes

Company

Website

yes yes yes yes yes yes

Enquiry/ walk-in yes yes yes yes yes yes

Personal leads

of employees

not so

often

not so

often

not so often yes not so often yes

Account opening charges

India Infoline has only web which is more preferred and which

gives application and offline facility too.

ICICI Direct has the highest minimum brokerage per month as

compared to the others.

Kotak and Investsmart have the highest number of products

offered to the customers.

MOSL has the highest brokerage compared to the others but

very personalized service too.

6.LEARNINGS

1.Analyze the movement of market.

2. Designing questionnaire.

3. Taking feedback from existing franchises.

4. Converting other franchises, by negotiating over brokerage and commission.

5.Analyzing portfolio of HNI’s.

6. Regular presentation over topics assigned.

7. To find out the grey areas of the organization.

8. How to analyze equity.

9.How to analyze index value :- current market capitalization X base value. Base

market capitalization

10. How to calculate net asset value:-

Sum of market value of shares

+ Liquid assets

+ Dividends/interest accrued

- amount due on unpaid assets

- Expenses accrued but not paid

No. of shares outstanding

11. CLEARING MECHANISM OF STOCK EXCHANGE.

7.FACT&FINDINGS

1. According to the survey most of the customers of “Infoline Ltd” says that it is

pocket friendly.

2. Coming to faith 70% say IndiaInfoline Ltd is better than others stock brokers

due to customers satisfaction.

3. Lack of promotional activities undertaken by IndiaInfoline securities Ltd. in

Pune Region.

4. Main purposes of investments are returns & liquidity.

5. Investors take risk as well as returns into their mind while making the

investment.

6. Businessmen are more interested in the stock market than the others.

7. Commodity market is less preferred by the investors, might because of less

awareness about commodity market.

8. People want to invest their money in the security market but they have not the

proper knowledge.

9. People pay more emphasis on brokerage than service provided by brokerage

houses.

10. 3 elements affects the economy of any country:-

1) GOLD, 2) CRUDE OIL, 3) U.S DOLLAR

8.SWOT ANALYSIS

Strengths:

1.Price competitiveness ( E.g.: No brokerage is charged, Annual maintenance

charges are least)

2.India Infoline is able to respond very quickly as we have no red tape, no need

for higher management approval, etc.

3.India Infoline is able to give really good customer care, as the current small

amount of work means we have plenty of time to devote to customers

4.Their lead consultant has strong reputation within the market

5.They change direction quickly if our approach isn’t working

6.Management philosophy and commitment to maximize shareholders returns of

India Infoline.

7.Ongoing activities of the company to support up gradation of operational

Performance.

.

8.Team of talented and committed professionals available to improve company’s

performance.

Weaknesses

1. New entrant in the market which is dominated by big brand names like ICICI,

Reliance Money etc.

2.Company has a small staff with a shallow skills base in many areas.

Opportunities

1. The share trading sector is expanding, with many future opportunities for

success.

2. The competitors may be slow to adopt new technologies.

Threats

1. Developments in technology will change the share market beyond the ability to

adapt.

2.A small change in focus of a large competitor is a threat for the market

position.

3.Constant pressure to be cost competitive to meet customer expectations.

4.Relentless pressure to maintain profitability due to rising input/raw material

prices.

9. RECOMMENDATIONS

According to me all the companies are good in their own respective way. Some

are good at their brokerage whereas some are good at their services; some have

good products whereas some offer cheap products. All the companies are

fighting competition in different ways:

• For I direct it is the market share as they were the first ones to enter this

business. They had a plus point there as they were the first ones to start it

but again they don’t have a service where the can take orders on the

phone and book it. They don’t get a screen to watch.

• For Indiabulls it is their aggressive marketing which counts for them the

most and them customer acquisition and then retaining them. India bulls in

a very short time have got in a lot more than expected and the very less

brokerage that they offer attracts customers.

• For Kotak it’s their name and which counts and their services to their

customers which they have been providing since a very long time.

• For India Infoline it’s their terminal which is the best. They provide with

excellent features and a lot of options for their different type of customers.

• Angel, Religare and other players are also are also providing with

excellent features but still not in the bull run till now.

No one company can be recommended as they all are good in their own way and

all are competitive in their own way. All the companies are good at providing their

services in their own way. The companies are very competitive, if one company

takes a step the other company takes two steps and all the benefits go the

customer towards the end. Therefore the only benefit that someone achieves is

the customers who gain from these competitive firms in terms of service provided

by them as well as in cost terms.

10. CONCLUSION

“Competition today is at a mouse click.”

Today with the growing competition it is very important to be intact. E –Broking in India is going to flourish as today we have a large number of people using the internet, we have will flourished infrastructure, more and more people are getting educated due to which there will be a boom in the E – Broking service.

But then there are also factors which may have a negative effect on E- Broking

like the market conditions etc. ignoring the risks involved, one might be drowned

while sailing the in the ocean. But then it is more convenient for the people. The

customers are getting a lot of comfort level and their work gets much simpler and

online broking is much cheaper to than going to a broker to get your trades

booked. And the most important thing is the increase and penetration of online

use in the India which has increased the potential market size for online broking

on an annual basis. A large share of the expected growth in Internet can be

attributed to the increase in the online population and thus online trading too.

Internet-based stock trading, while still in its infancy in the country, has the

potential to really benefit the investor, with its ability to offer greater speed and

transparency at a much lower cost. The essential component of Internet-based

trading is the interface between broker, bank and depository participant, and as

Net-based trading becomes a reality this interface will develop.

The advent of Internet-based trading in the country will change the face of the

Indian capital market very soon in terms of the volume of transactions, the nature

and settlement of trade, and the profile of market participants. I personally don’t

think many of our colleagues in the business have really understood the impact

the Net can have on the broking business. The growth of Internet-based trading

as a mass trading technique in the country is unstoppable, going by the

indicators available and the signals for the future. When it ultimately gathers

momentum, the biggest beneficiary will be the investor, who will be able to trade

with greater speed and transparency, and at lower costs.

11. ANNEXURE

11.1 TRANSCRIPTS:

RESPONDENT 1:

Mr. Vikas Lodha

Company Name: Motilal Oswal Securities Limited

Email: vikaslodha@motilaloswal.com

Designation: Senior Manager

Phone no.: 9322985125

1. What is the market share the online broking of your company?

It is approximately 3.5% to 4%

2. What are the registration charges?

No charges

3. What are Demat account-opening charges?

Free for first Year

2nd Year onwards - Rs400 per annum

Zero Transaction Charges (if executed online)

4. What are the Interface provided by you?

Banking:

Demat:

5. Features of the accounts:

Live intra day /positional / and delivery calls on your terminal helps you

take informed decision.

Multiple market watch, with NSE/BSE cash and derivatives on single

screen.

Execution through Exe/Web based trading platform.

Online transfer of funds through multiple banks.

Technical Charts: Intra day/ Daily/ Weekly/ Monthly/ Quarterly/ Yearly

View live NSE cash / derivatives and BSE cash on the same screen.

Research reports, daily market diary, pivot points and Derivatives diary.

Advisor helps you evaluate & restructure your portfolio continuously. You

can get a detailed perspective on the markets, sectors & individual

companies from your advisor (Selected customers)

Dealer/advisor support during trading hours

6. What are the types of accounts and the brokerage that the company provides?

1. Freedom Account

Ideally for Intra day Traders/ Speculators.

No Access to Research, however the client will get intraday flash calls,

pop ups, positional calls, technical recommendation on trading screen.

Application Money: Rs.500000 (Cash or Scrip Margin)

Monthly Brokerage Commitment Rs.500

Brokerage:

Delivery Based = 0.02 %

Intra day = 0.15%

F&O = 0.02%

Brokerage is exclusive of Service Tax, STT.

2. Value Investing Account

Ideally for HNIs/ MNIs.

Access to world class Research & Advice.

Dedicated Relationship Manager for advice, client portfolio maintenance

and personalized services.

Application Money: Rs300000.00 (Scrip Margin Rs.600000)

Monthly Brokerage Commitment Rs.500

Brokerage:

Delivery Based = 0.02 %

Intra day = 0.15%

F&O = 0.02%

Brokerage is exclusive of Service Tax, STT.

3. Easy Account

Ideal for Retail Investor.

Monthly Brokerage Commitment Rs500.00

No Access to Research, however the client will get Intra day flash

calls, pop ups, positional calls, technical recommendation on trading

screen.

Application Money: Rs.5000.00

Brokerage:

Delivery Based = 0.20 %

Intra day = 0.15%

F&O = 0.02%

Brokerage is exclusive of Service Tax, STT.

RESPONDENT 2 :

Mr.Varun Singhal

Company Name: ShareKhan

Email: varunsinghal@sharekhan.com

Designation: Co – Head Advisory E-Broking

Phone no.: 9819200501

What is the market share of the company?

It is approximately 10-12%

What according to you is the USP of the company?

Franchisees all over (launched an all-out effort to spread their reach

across the country)

Timely and qualitative investment service through a combination of online

and offline facilities

Name of the company

What are the account opening charges and the brokerage?

The account opening charges are Rs.750/- for any of the two accounts and can

trade from both the two without paying anything extra.

Demat opening charges: Nil

Brokerage:

Equity

Delivery = 50p on every Rs.100

Intra day = 10p per Rs.100 (negotiable)

Derivatives

Delivery = 10p for buying and 10p for selling.

Intra day = 10p for buying and 2p for selling.

What is the Interface you have?

Banking – HDFC

Demat – SSKI

What are the types of accounts provided by you and their feature?

1. CLASSIC ACCOUNT “Invest effortlessly”

Features:

One can have an Online trading account for investing in Equities as

well as Derivatives

They have Integrated Banking, demat and digital contracts

There is an instant cash transfer facility for the purchase & sale of

shares

The clients can make IPO bookings

One can get Instant order and trade confirmations by e-mail

The client gets Personalized Market Scan with customized stock ticker

Single screen interface for cash and derivatives

Every client has a very own Portfolio Tracker

2. SPEED TRADE ACCOUNT “Trade effortlessly”

Features:

Instant order Execution & Confirmation

Single screen trading terminal

Real-time streaming quotes, tic-by-tic charts

Market summary (most traded scrip, highest value and lots of other

relevant statistics)

Hot keys similar to a brokers terminal

Alerts and reminders

Back-up facility to place trades on Direct Phone lines

Single screen interface for cash and derivatives

RESPONDENT 3 :

Mr. Jugal Maheshwari

Company Name: India Infoline

Email: jugal@indiainfoline.com

Designation: Relationship Manager

Phone no.: 9784842850

What is the USP of the company?

Paisa sense: Lowest Brokerage on the face of the earth

Personalized service: The highest level of personalized customer service

using call centers, dedicated staff and e-mail.

Protection: Investment in technology to ensure protection against fraud

and hacking. They use encryption, firewalls and two level password

protections to ensure this.

Pedigree: High research quality, investment ideas and news scoops

What is the brokerage offered by the company?

Product Brokerage Securities Handling Charges Finance Charges Total

Trading 0.05% NIL NIL 0.05%

Delivery 0.25% NIL NIL 0.25%

What are the margin norms provided by the company?

Delivery – 2 times, (if deposit Rs.2000, then can trade only for Rs.4000/-)

Trading – 10 times, (if Rs2000 is deposited as margin, you will be allowed

an exposure of up to Rs.20000).

\What are the Account opening charges: 555/-

Demat opening charges: Nil

What’s the company’s interface?

Banking – HDFC, AXIS BANK.CITY BANK & ICICI BANK

Demat – IIT Corporation

What are products offered by the company and their features and the brokerage

of the company?

1. 5Paisa Trader Terminal

Features:

Live streaming quotes and margin, position, marked to market profit &

loss report. Price watch on any number of scripts.

Intra day charts, updated live, tick-by-tick.

Live margin, position, marked to market profit & loss report.

Set any number of price alerts on any number of scripts.

Flexibility to customize screen layout and setting.

Market depth, i.e. Best 5 bids and offers, updated live for all scripts

Instant trade confirmation.

Online access to both accounts and DP.

Live updated Order and Trade Book.

Facility to place orders on the phone in all major cities.

Facility to place after market orders

Online fund transfer facility from leading Banks

Online intra-day technical calls.

Exhaustive database of over 5000 companies

Historical charts and technical analysis tools.

Brokerage

Intra day trading = 0.05%

Delivery = 0.25%

2. 5Paisa Investor Terminal

Investors, who invest quite often, churn their portfolios regularly and

keep a close watch on the market. They need to watch live quotes and

live charts.

Active stock market traders with medium volumes

Students and researchers who need live streaming quotes and intra

day charts

Corporate treasury people

Brokerage

Intra day trading = 0.05%

Delivery = 0.25%

Registration fees - NIL

Margin norms – maintain a margin of Rs.2555/-

RESPONDENT 4 :

Mr.Chintan Kotak

Company Name: Kotak Securities

Email: chintankotak@kotak.com

Designation: Marketing Manager Online Broking

Phone no.: 9920103588

What is the market share of the company?

The market share: 12-15%

What’s your company’s interface?

Banking – Citibank

Demat – Kotak Securities

What is the USP of the company?

Solid research team that gives good fundamental calls which mostly hit

the mark.

Site is very organized and has great links

Higher batting average

What are the types of products that the company offers and their features and

the brokerage offered by each?

1. Kotak Gateway Account

Features:

One can invest in IPO and earn higher returns.

They provide Research Reports on the economy.

Low brokerage rates

They even provide research advice via SMS

Free news and market updates.

Exposure of up to 15 times the initial margin on select stocks with

super multiple

Margin norms: any amount Rs.20000/-to Rs.500000/- has to be maintained

2. Kotak Value Account

The Kotak Securities Value Account is specially equipped to make investing simpler for the clients. The brokerage of this is similar to that of Kotak gateway account.

Margin norms: any amount between Rs.500000/- and Rs.1000000/-

3. Kotak Privilege Circle Account

In this the clients enjoy premier and top-line trading services. Brokerage same as kotak gateway account.

Features :

Independent market expertise and support through a dedicated

relationship manager.

In this they provide unlimited call & trade facility & SMS alert free of

cost.

They provide 6 times exposure on the margin and exposure up to 15

times the initial margin on select stocks with Super Multiple

Margin finance at attractive rates.

Lowest delayed payment interest.

Access to K.E.A.T Premium free of cost.

A discount of 50 % to 100% on the DP charges.

Margin norms: any amount more than Rs.1000000/-

4. Kotak High Trader Account

Features:

They provide 6 times exposure on the margin.

Brokerage charged is low as 0.023%*.

Access to K.E.A.T Desktop, KEAT Premium, research reports, intra

day calls (nominal charges), SMS alerts.

They even provide free news and market updates.

Brokerages and charges

Derivative = the minimum brokerage for Daily Square up is 0.07% negotiable to 0.023% depending on the size of the portfolio

Delivery and cash the brokerage is the same as other accounts.

Margin norms: any amount less than Rs500000/- as margin, by way of cash or stock.

5. Kotak Freeway Account

Kotak Securities Freeway enables the clients to trade as many times as they like - at a fixed brokerage. They just have to pay a fixed brokerage of Rs.999/-

Features

They provide 4 times exposure on the margin.

In this they provide access to K.E.A.T Desktop, intra day calls (nominal

fee), research reports, SMS alerts

Free news and market updates.

Brokerages and charges

Flat brokerage = 999 charged every month

Minimum brokerage

Cash segment = 0.4% and 0.1%

Derivative segment = 0.3%

Margin norms: Rs.125000/- by way of cash or stock.

6. NRI Account

Online delivery based trading through NRI- Trinity Account.

They provide top class research report.

They also have the facility to trade on both- NSE and BSE.

Account opening charge: Rs1500

Average Quarterly Maintenance: Rs25000/- in Savings account

Brokerage: - 1% on 10lakhs and decreases according to the value of trading

7. Assist Account:

Provides assistance to the clients to make the right decisions at the right time and also gives them assistance as to where to invest and when.

Features

India's finest Research Analysts - working towards the client’s

objectives

Complete account transparency and portfolio tracker with the facility to

view ledgers and reports online.

As an ASSIST client, they also get to enjoy the benefits of a dedicated

customer service which will address their queries on Account status,

transaction details, fund status and Order details.

Margin norms:

5-10lakhs margins in Cash component.

Margin to be above 10lakhs, a minimum of 5Lakhs or 25% margin (whichever is higher) would have to be in cash.

Brokerages:

Delivery = 0.50% which increases to 1.25% when the margin increases to

Rs5lakhs and for squaring off.

Derivatives = 0.07% on both sides.

Exposure is provided up to 4 times, which the amount has to be paid within T+2 days failing which they would charge an interest up to 20.24% in delivery.

RESPONDENT 5 :

Mr.Mihir Shah

Company Name: ICICI Direct

Email: mihirshah@icicidirect.com

Designation: Senior Relationship Manager

Phone no.: 9819616622

How many online clients do you have?

More than 300000 customers

What is the market share of the company?

The market share of the company is 25% approximately.

What is the USP of the company?

Brand name

Integrated products (banking, trading and demat) and therefore secure

and safe so there is no need to worry about credit/debit of shares or the

amount.

128-bit encryption enabled Secure Socket Layer (SSL) to ensure that the

information transmitted across the Internet is safe and cannot be

accessed by a third party

Invest online in IPOs, Mutual Funds, GOI Bonds, and Postal Savings

Schemes all from one place. One can also get insurance through ICICI

Lombard General Insurance.

Account opening fees – Rs.750/-

Annual Service Charges - Rs.300/- payable in the month of April each year

What the company’s Interface:

Banking – ICICI

Demat – ICICI

Transaction Charges:

a) Market Buy - 0.03% of the transaction value subject to a min. of Rs.25/-

per transaction

b) Market Sell - 0.04% of the transaction value subject to a min. of Rs.25/-

per transaction

c) Rejection/fails - Rs.25/- per entry (within 24 hours)

Extra late payment charge of 0.10% subject to a min. of Rs.50/- per

transaction.

Demat Charges –

a) No demats charges for ICICI and ICICI Bank shares.

b) For other securities, Rs.2/-per certificate subject to a minimum of Rs.35/-

per DRF.

Remat Charges –

0.10% of the value of the securities rematerialized subject to a minimum of

Rs.25/- per request

Pledge Creation - 0.02% of the transaction value subject to a minimum of

Rs.25/- per ISIN and per request.

Invocation/ Revocation - 0.03% of the transaction value subject to a minimum

of Rs.25/- per ISIN (International Securities Identifying Number) and per

request.

Minimum value of the trade - Rs.1000/-

Minimum commission - Rs25/- per trade inclusive of service taxes, postage of

contract note and demat market transaction charges.

RESPONDENT 6 :

Mr. Vicky Shroff

Company Name: IndiaBulls

Email: vickyshroff@indiabulls.com

Designation: Relationship Manager

Phone no.: 989203439

What is the market share of the company?

The market share of the company is 20% approximately

What are the opening Account and Demat Charges?

It is Rs.700/- with both the accounts

Terminal charges – Rs.750

Margin exposure: 4 times (which the clients have to pay within 5 days failing

which they are charged up to16% of interest)

Margin funding: 2 times, (which the clients have to pay in 3 days failing which

they are charged interest up to 16-20%)

What is the company’s interface?

Banking – HDFC

Demat – Indiabulls

What is the USP of the company?

Fast in implementation of orders and real time quotes.

Good rate of brokerage

Good Relationship Manager Responsiveness

What is the brokerage of the company?

Delivery - 0.30%

Intraday - 0.20%

Services:

Live news about economy, corporate, market reports, industry, board

meetings, market commentary’s etc.

Indiabulls equity analysis report – gives objective guidance to the clients to

buy or sell.

1. Indian Bulls Signature Account

Enjoy priority telephone access that gives the clients direct access to the

Relationship Manager.

Benefit from full access to India bulls Equity Analysis their objective, fact-

based approach to rating stocks.

Stay on the top of the investments with a snapshot of Account Statements.

Get access to Portfolio statement and access to digital contract notes.

2. Power India Bulls

Fast Order Entry

Tic by Tic Live Charts

Technical Analysis

Live News and Alerts

Extensive Reports for Real-time Accounting

3. Indiabulls NRI Trading Account

Provides access to comprehensive trading tools for independent NRI

investors

They have a seamlessly integrated with Indiabulls Depository Account

and with the HDFC NRE/NRO Bank Account.

RESPONDENT 7

: Mr.Piyush Pandey

Company Name: Unicorn Securities Pvt. Ltd.

Email: piyush_utsahi@yahoo.co.in

Designation: Team Leader

Phone no.: 988745096

What are the products that are provided by your company?

Products offered are:

UNI PLUS

UNI SWIFT

UNI FLEX

Insurance

Real State

What is the company’s interface?

The company’s interfaces are Axis Bank, ICICI Bank, HDFC Bank and IDBI Bank

so that they can build up on their clients

What is the brokerage of the company?

Delivery - 0.03%

Intraday - 0.30%

What is the USP of the company?

A single platform for trading/investments in multiple markets (equity,

commodity, etc.)

Aggressive pricing (transaction wise brokerage waived – only monthly fee

for security token)

Franchisees all over (launched an all-out effort to spread their reach across

the country)

Timely and qualitative investment service through a combination of online

and offline facilities

Name of the company

11.2 RESPONSE SHEETS

Response Sheet No : 1

1.1. Questionnaire:

Preparing a rough draft of the questionnaire to get a proper format

Type of questions, which should be asked.

The flow of the questions

1.2. Date when the Guide was consulted: 24th July 2008

1.3. The outcome of the discussion: Mr.Sanjay Bindal helped me change my

questionnaire. There still has to be some changes made and we are working on

this. This is not the copy of the final questionnaire. I have already appointments

fixed up for the next week and the following week. We even listed down all the

companies which we will be covering.

1.4. The Progress of the Thesis: I have started calling all the companies for

appointments. I have also started working on the literature part of my thesis.

Response Sheet No : 2

2.1. Questionnaire:

Questionnaire is prepared and approved.

2.2. Date when the Guide was consulted: 28th may 2010

2.3. The outcome of the discussion:

We have discussed how the format of the thesis should be and over and above

that he has given me some references, which will help me carry my thesis

further. We have discussed in brief the objective and the methodology of the

research. I have also got information from a few companies who render online e-

broking services.

2.4. The Progress of the Thesis:

I have a good idea now about how I am going to make the layout of my thesis

and I have already started the theory part of my thesis.

Response Sheet No : 3

3.1. Questionnaire:

With the interview pattern being qualitative, the basic questionnaire keeps getting

modified and customized for each interview.

3.2. Date when the Guide was consulted: 12th August 2008

3.3. The outcome of the discussion:

I have completed my entire survey expect for two to three more companies. The

theory part of the thesis is almost done. Only the interviews have to be put down

in the written format. I m still trying my best to get in few more companies if I can

3.4. The Progress of the Thesis:

Thesis is almost complete expect for a few things. A few companies’ interviews

are pending.

Response Sheet No : 4

4.1. Questionnaire:

With the interview pattern being qualitative, the basic questionnaire keeps getting

modified and customized for each interview.

4.2. Date when the Guide was consulted: 14th may 2010

4.3. The outcome of the discussion:

Discussed the outcome of the interviews taken and tried to analyze them, out of

which just one interview is remaining which will be taken by this week.

4.4. Progress of the thesis

Follow up with one company is left and then just their interviews have to be typed

and compared with the other firms.

Response Sheet No : 5

5.1. Questionnaire:

With the interview pattern being qualitative, the basic questionnaire keeps getting

modified and customized for each interview.

5.2. Date when the Guide was consulted: 18thAugust 2008

5.3. The outcome of the discussion:

How to go about finishing the remaining interview and the one’s we already

finished, we discussed how to analyze them and put in the report.

5.4. Progress of the thesis

As of now the thesis introduction and the annexure part is ready, just waiting for

the interviews to get over so that we can finalize the analysis and the conclusion

part. Discussed the outcome of the interviews taken and tried to analyze them,

out of which just one interview is remaining which will be taken by this week.

Follow up with one company is left and then just their interviews have to be typed

and compared with the other firms.

Response Sheet No : 6

6.1. Questionnaire:

Done with all the interviews

6.2. Date when the Guide was consulted: Very often since the last week

6.3. The outcome of the discussion: The final copy was read by the external

guide and he asked me to make a few corrections in the report.

6.4. Progress of the thesis

Almost complete except for a few things to be changed and the final touches are

left.

12.APPENDIX

Questionnaire

Dear Sir/Madam,

We are doing a survey on the different kinds of Internet Trading Services offered

by the Leading Brokerage companies of India

We would appreciate if you could participate in the same and contribute your

valuable insights

OFFICE - RECORD

Name of Respondent:

Designation:

Email-ID:

Phone No.:

=============================================================

====================================

1. Name of the Firm?

2. What are the different Segments in which your company operates or have

future plans?

Capital Market

Futures and Options

Commodities

Forex

Mutual Funds

IPO’s

Margin Financing

PMS

3. What are the types of online products your company offers?

4. Does your company have the following features?

Calls and trade

New alerts

Technical tools

Research report

SMS service –Trade Confirmations/Ledger Balances/Research Calls

Contract Notes-Physical/Digital

5. What extra features do the products have?

6. What Value Added Features make you different from the competitors?

One thing that sets you apart from the competition!

7 What are your account opening charges?

8. What are the different Brokerage rates charged by your company?

9. How are u handling the competition who charge flat fees viz; Reliance

Money

10.Margin funding offered by your company?

11. What’s the company’s interface?

Banking

Demat

Offline Interface

MOU Signed with bank etc

12. What is company’s market share?

Online

Offline

13. No Of Customers using your internet trading service

Thank you for your participation!

13. BIBLIOGRAPHY

Firms Contacted:

My colleagues at India Infoline Limited and my thesis guide and colleague Mr.

Jugal Maheshwari helped me out and used their contacts to get these Broking

firms to participate in the interview.

Books & magazines:

I have read & collected some matter from the books of my syllabus. I have got

some knowledge about the meaning of corporate governance from magazines of

Institute Of Charted Accountance which is provided by my supervisor & guide

Dr. (Mrs.) Meenu Maheshwari .

Websites:

www.indiainfoline.com

www.sharekhan.com

www.financialexpress.com/fe_full_story.php?content_id=147783

www.en.wikipedia.org/wiki/India

www.censusindia.net/results/provindia3.html

www.sify.com/sifyimagine/fullstory.php?id=13213758

www.sify.com/sifyimagine/fullstory.php?id=13213758

www.forbes.com/facesinthenews/2005/04/21/0421autofacescan02.html

www.thehindubusinessline.com/iw/2006/10/08/stories/2006100800591300.htm

www.kotaksecurities.com

www.moneypore.com

www.icicidirect.com

www.hinduonnet.com/businessline/iw/2000/09/03/stories/0703g051.htm

A

Major Project Study Report

of

TITLED

“CORPORATE GOVERNANCE”

Submitted in partial fulfillment for the Award of degree of

Master of Business Administration

SESSION :-2008-2010

Submitt ed By: Submitted To:

Monika Nagori DIRECTORDr. (Mr.) K.C. Goyal

M.B.A. Part 2, IV Sem.

“COMMERECE & MANAGEMENT DEPARTMENT”(University Of Kota,Kota)