INDUSTRY PROFILE

CAPITAL MARKET

A capital market is a market for securities , where business enterprises and governments can

raise long-term funds. It is defined as a market in which money is provided for periods longer

than a year, as the raising of short-term funds takes place on other markets. The capital market

includes the Equity market and the debt market . Financial regulators, such as the UK's Financial

Services Authority (FSA) or the U.S. Securities and Exchange Commission (SEC), oversee the

capital markets in their designated jurisdictions to ensure that investors are protected against

fraud, among other duties.

SEGMENTS OF INDIAN CAPITAL MARKET

Primary Market

The primary market is that part of the capital markets that deals with the issuance of new

securities. Companies, governments or public sector institutions can obtain funding through the

sale of a new stock or bond issue. This is typically done through a syndicate of securities dealers.

The process of selling new issues to investors is called underwriting. In the case of a new stock

issue, this sale is an initial public offering (IPO). Dealers earn a commission that is built into the

price of the security offering, though it can be found in the prospectus.

This is the market for new long term equity capital. The primary market is the market where the

securities are sold for the first time. Therefore it is also called the new issue market (NIM). In a

primary issue, the securities are issued by the company directly to investors. The company

receives the money and issues new security certificates to the investors. Primary issues are used

by companies for the purpose of setting up new business or for expanding or modernizing the

existing business. The primary market performs the crucial function of facilitating capital

formation in the economy. The new issue market does not include certain other sources of new

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long term external finance, such as loans from financial institutions. Borrowers in the new issue

market may be raising capital for converting private capital into public capital; this is known as

"going public." The financial assets sold can only be redeemed by the original holder.

Secondary Market

Secondary market refers to a market where securities are traded after being initially offered to

the public in the primary market and/or listed on the Stock Exchange. Majority of the trading is

done in the secondary market. Secondary market comprises of equity markets and the debt

markets.

The secondary market enables participants who hold securities to adjust their holdings in

response to changes in their assessment of risk and return. They also sell securities for cash to

meet their liquidity needs. The secondary market has further two components, namely the over-

the-counter (OTC) market and the exchange-traded market. OTC markets are essentially

informal markets where trades are negotiated. Most of the trades in government securities are in

the OTC market. All the spot trades where securities are traded for immediate delivery and

payment take place in the OTC market. The exchanges do not provide facility for spot trades in a

strict sense. Closest to spot market is the cash market where settlement takes place after some

time. Trading takes Place over a trading cycle, i.e. a day under rolling settlement, are settled

together after a certain time (currently 2 working days). Trades executed on the leading exchange

(National Stock Exchange of India Limited (NSE) are cleared and settled by a clearing

corporation which provides novation settlement guarantee. Nearly 100% of the trades settled by

delivery are settled in demat form. NSE also provides a formal trading platform for trading of a

wide range of debt securities including government securities.

BACKGROUND OF THE STOCK EXCHANGE

A stock exchange is an organized place or market where listed securities are

traded. The securities contracts Regulation Act. The Securities contract Regulation Act,1956

defines it as “An Association” organization or body of individuals, whether incorporated or not 2 | P a g e

established for the purpose of assisting, regulation and controlling business in buying, selling and

dealing in securities. The working of the stock exchange in India is regulated by the Securities

Contracts Rule 1957 and Exchange in India Act 1992(SEBI Act). The main objective of the act

is to establish unitary control over all the stock exchange by the central government with a view

to making them really helpful for the economic development of the country. A stock exchange,

organized market for the trading of stocks and bonds. Such markets were originally open to all,

but at present only members of the owing association may buy sell directly. Members or stock

brokers buy and sell for themselves or for others, charging commissions for their services. A

stock may be bought or sold only if it is listed on an exchange and it may not listed unless it

meets certain requirements act by the exchange’s board of governors. There are stock exchanges

in all important financial centers of the world; the New York Stock Exchange in continues

operations since 1792, had a trading volume of $7.3 trillion in 1998, is the largest in the world.

Tokyo, London and Frankfurt also have major facilities and euro next, an inter-European

exchange combining facilities in Amsterdam, Brussels, Paris and other cities, is also significant.

INDIAN STOCK MARKET

The Bombay Stock Exchange (BSE) and the National Stock Exchange of India Ltd

(NSE) are the two primary exchanges in India. In addition, there are 22 Regional Stock

Exchanges. However, the BSE and NSE have established themselves are the two leading

exchanges and account for about 80% of the equity volume traded in India.

The NSE and BSE are equal in size in terms of daily traded volume. The average daily

turnover at the exchanges has increased from Rs.2, 273 crores in 1990-2000. NSE has around

1500 shares listed with a total market capitalization of around Rs.9, 21,500 crores. The BSE has

over 6000 stocks listed and has a market capitalization of around Rs. 9, 68,000 crores. Most key

stocks are traded on the both the exchanges and hence the investor could buy them on either

exchange. Both exchanges have a different settlement cycle, which allows investors to shift their

positions on the courses.

The primary index of BSE is BSE Sensex comprising 30 stocks. NSE has the S&P NSE

50 Index (Nifty) which consists of 50 stocks. The BSE Sensex is the older and more widely

followed index. Both these indices are calculated on the basis of market capitalization and

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contain the heavily traded shares from key sectors. The markets are closed on Saturday and

Sundays. Both the exchanges have switched over from the open outcry trading system to a fully

automated computerized mode of trading known as BOLT(BSE online trading) and

NEAT( National Exchange Automated Trading) system. It facilitates more efficient

Processing, automatic order matching, faster execution of traders and transparency. The scripts

traded on the BSE classified into ‘A’, ‘B1’,’B2’, ‘C’, ‘F’, and ‘Z’ groups. The ‘A’ group shares

represent those, which are in the carry forward

System (Bald). The ‘F’ group represents the debt market (Fixed income securities) segment. The

‘Z’ group scripts are the blacklisted companies. The ‘C’ group scripts covers the odd lot

securities in ‘A’, ‘B1’ &’B2’ groups and rights renunciations. The key regulator governing stock

exchanges, brokers, depositor’s participants, mutual funds, FIIs etc.

LIST OF STOCK EXCHANGES IN INDIA

National Stock Exchange of India and Bombay Stock Exchange of India are the two main

stock exchanges in India. In order to spread its business operations many Regional Stock

exchanges established. The Regional Stock Exchanges are as follows:

Ahmedabad Stock Exchange

Bangalore Stock Exchange

Bhubaneswar Stock Exchange

Calcutta Stock Exchange

Cochin Stock Exchange

Coimbatore Stock Exchange

Delhi Stock Exchange

Guwahati Stock Exchange

Hyderabad Stock Exchange

Jaipur Stock Exchange

Ludhiana Stock Exchange

Madhya Pradesh Stock Exchange

Madras Stock Exchange

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Magadh Stock Exchange

Mangalore Stock Exchange

Meerut Stock Exchange

OTC Exchange of India

Pune Stock Exchange

Saurashtra Kutch Stock Exchange

Uttar Pradesh Stock Exchange

Vadodara Stock Exchange

INDIAN BROKERAGE INDUSTRY

While regulation and reforms have made major improvement in the quality of

equity market in India, its rapid growth and development are largely due to strong and efficient

market intermediation. The strength of the Indian market today is attribute healthy blend of

quality to the market structure and efficient intermediation. Even though several countries are

instituting procedures equity derivative markets, India ranks amongst the top five countries in the

segment. This shows a progressive nature of Indian brokerage industry.

In the last decade Indian brokerage industry has undergone a dramatic transformation. From

being made of close groups, the broking industry today is the one of the transparent oriented

businesses. Long settlement cycle is a thing of the past with the advent of T+2 settlement cycle

and dematerialization. Large and fixed commissions have been replaced by extremely thin

margins, with competition driving down the brokerage fee, in some cases, to a few basis points.

There have also been major changes in the way business is conducted. Technology has emerged

as the key driver of business and investment advice has become research based. At the same

time, adherence to regulation and compliance has vastly increased. The scope of services have

enhanced from being equity products to a wide range of financial services. Investor protection

has assumed significance and so has providing them with education and awareness. Greater need

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for capitalization has induced several firms to access the capital market. Presently, foreign firms

are showing increasing interest in taking equity stakes in domestic broking firms.

Major development in equity brokerage industry in India:

There is a growing surge of corporate memberships (92% in NSE and 75% in BSE).

Memberships range from cash derivatives to commodities and a few broking firms are making

forays into obtaining memberships in exchanges outside the country subject to their availability

and eligibility. A typical brokerage firm today offers trading in equities and derivatives, most

probably commodities futures, exchange traded funds, distributes mutual funds and insurance

and also offers personal loans for housing, consumptions and other related loans, offers portfolio

management services and some even go to the extent of creating niche services such as a

brokerage firm offering art advisory services.

Since the banking system is not fully integrated with the securities markets, brokerage

firms face limitations in raising financial resources for business and expansion. With buoyancy

of the stock markets and the rising prospects of several well organized broking firms, important

opportunity to access capital markets for resource mobilization has become available. Several

brokers are extending benefits of online trading through creation of separate windows. Some

others have dedicated online broking portals. Emergence of online broking enabled reduction in

transaction costs and costs of trading. Due to this, a wide range of incentives are being created

and offered by online brokerage firms to attract larger number of clients. Issues of investor

interest and protection will assume centre stage. Firms found not having suitable infrastructure

and processes to ensure investor safety and protection will encounter constraints from regulation

as also class action suits that investors might bring against emerging firms. The nature of

punitive damages would become severe. It is important for brokerage firms to establish strong

and streamlined systems and procedures for ensuring investor safety and protection.

The manner in which several brokerage industries pursued growth and development

attracted foreign financial institutions and investment banks to buy stocks in domestic brokerage

firms, which might lead to creating of greater interest in investing in brokerage firms by entities

in India and abroad. A fundamental change that has taken place in the equity brokerage industry,

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which is a global trend as well, is the transformation of broking from owners of the stock

exchange to traders of the stock market. Corporatization of stock exchange is bifurcated the

ownership and trading rights with brokers vested only with the later and ownership being widely

distributed. Demutualization is providing balanced welfare gains to both the stock exchanges and

the members with the former being able to run as corporations and latter being able to avoid

conflict of interests that sometimes came as a major deterrent for the long term growth of the

industry.

Company profile

Background and inception of the company

History of the company: Circa 1995.A group of professionals formed a company called ‘Probity

Research & Service Pvt. Ltd.’. The name was later changed to India Infoline Ltd. The objective

was to provide unbiased and independent information to market intermediaries and investors.

The quality of research soon caught the imagination of all major participants in the financial

market. In a span of 2 to 3 years the client list read like the who’s who of Indian financial

market. The list included consulting firms like Mckensey, companies like Hindustan unilever,

Banks like Citibank, Rating agencies like CRISIL,D&B, FIs, FIIs, foreign brokers as well as

leading Indian brokers. The going was smooth but not exciting!

One fine morning in early 1999, a colleague had a crazy idea that if the company made all

the research available free on the web, the number of users may well jump from 250 to 2.5

million! To make it true, the business required a reincarnation. And the pre-requisite was a death.

It meant that the company put up all the information free on the website and let go of all the

revenues and profits. Worse, if the new avatar failed, there would be ‘no comebacks’.

The idea was too compelling to worry about the consequences. Probity took a whole-

hearted plunge. The advertisement along side, said it all. The new avatar business model took

off. And it took off like a rocket! All employees, angel investors and well wishers were ecstatic.

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India infoline raised US $ 1Million in the first round and complete the second round at the peak

of dotcom euphoria around March 2000 and raised US $ 5 Million.

IIFL 2001, the internet bubble started bursting faster than anybody could have imagined.

The dot com suffix, which was the sexiest tail to any business name, suddenly became the worst

stigma to have. The key business lines that emerged were mutual funds, life insurance and e-

broking.

The company became heavily dependent on its e-broking business for survival. The odds were

against them. There was no money available from the private equity investors at any valuation.

All competitors were backed by institutions or had abundant capital. The core promoters of the

company had little experience of broking. To add to it, the market was hit by a scam. They also

had their share of price to pay the lessons to learn. It was difficult to retain people. Although

devastating for morale, but not surprising, most market observers had written them off.

There was a core group who never lost hope. They cut all possible costs and worked on a

bare bones structure. They survived against all odds and started capturing market share. Not

broking along but mutual funds and life insurance business also grew strongly. The company

rose for strength to strength to become the leading corporate agent in life insurance and among

the top retail players in mutual fund and broking space.

Then the story took an interesting turn. They raised capital by way of an IPO. In India,

investment advisory is a sunrise industry, with tremendous long term promise. The young

‘earning and saving’ class of population is growing rapidly. Falling interest rates are compelling

people to look around for advised investment. The industry is consolidating as smaller players

find it difficult to meet strict compliance standards and service customers with research and

technology. The landscape is changing everyday and the road ahead is less traveled by India

infoline Ltd. along with its subsidiaries is a unique one stop investment shop which offers

everything from information and advice to execution and service to the retail customers for the

entire gamut of investment products from risk free RBI Bonds to high-risk, high-reward equities

and also mutual funds and life insurance. They also forayed into portfolio management services

and commodities broking, again leveraging upon their core competencies in research and

technology. 8 | P a g e

India infoline fixes issue price at Rs. 76 a share

India Infoline Ltd. has fixed its issue price at Rs 76 per equity share. The 100% book-

building issue offering 1.19 Crore shares in a price band of Rs 70-80 closed on April 27, 2005

and was oversubscribed 7.22 times. While the QIB portion was oversubscribed 10.49 times, the

non-institutional investors segment was oversubscribed 5.64 times.

There a number of opportunities on the horizon and with availability of capital, temptation

abound. The management is fully conscious of the fact that with public money, it is in a fiduciary

relationship with heightened responsibilities to ensure optimum use of capital. There is no hurry

to take shortcuts. Being a listed company quarterly performance has to be reported; which is then

reviewed, analyzed and compared against expectation and competition. In the last 10 years, India

infoline ltd. has faced numerous ups and downs, but has never compromised on integrity. They

continue to ensure highest standards of corporate governance.

Nature of the business carried:

India Infoline is a wealth management company. It is a one stop shop for all investment

needs for the Indian retail investors, from advice to execution online as well as offline. India

infoline provides terminal for the investors for buying and selling of equities, bonds, mutual

funds, commodities trading, and portfolio management with the technical support. India infoline

also advices that in which financial instrument the investor should invest by which he/she can

maximize their returns. A customer who wants to do trade, Company provides the online trading

portal to them. Company also sells the life insurance policies that may be government (LIC) as

well as private (Metlife, Tata AIG, Birla sunlife, Bajaj Allianze etc.). India infoline ltd. advices

to the clients by purchasing which policy he/she will get maximum tax advantage. The experts of

India infoline regularly analyze the market i.e. Fundamental and technical analysis and forecast

the future of particular equity. India Infoline ltd. also involve in the merchant banking for any

IPO. By providing the service of portfolio management, company makes the ratios of total

investment to a investor between risky as well as risk free instrument for the risk lovers and risk

adverse investors. For the purpose of commodity trading investors trade with www.5paisa.com,

which has membership in both leading exchanges i.e. MCX and NCDEX.

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Vision, Mission and Quality Policy:

Vision:

To be the most respected company in the financial service space.

To be the leading investment intermediary for transaction through both online and

offline medium.

To be the premier provider of investment advisory and financial planning services in

India.

Mission: “One stop shop for all financial requirements”.

Quality policy:Excellence is all about the quality of work. We strive for delivery that is 100% error free

and yet at lightning speed. Excellence deals with the quality of work.

PRODUCT PROFILE

PRODUCTS AND SERVICES:

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

IndiaInfoline. IndiaInfoline leveraged technology to bring the convenience of trading to the

investor’s location of preference (residence or office) through computerized access.

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IndiaInfoline made it possible for clients to view transaction costs and ledger updates in real

time.

PMS-Portfolio Management Service

Portfolio Management Service is a product wherein an equity investment portfolio is created

to suit the investment objectives of a client. India Infoline invests the customer’s resources

into stocks from different sectors, depending on their 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 a stock selection

technique. IndiaInfoline Equity Research is proud of its reputation for, and wants the

customer to find the facts needed.

Commodities

IndiaInfoline 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 Service 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 acquisition was

present only in the cities of Mumbai and Pune. The Company brings on board expertise in

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the loans business coupled with existing relationships across a number of principles in the

mortgage and personal loans businesses.

Invest Online

IndiaInfoline has made investing in Mutual fund and primary market so effortless. No

paperwork, no queues and No registration charges.

Invest in MF

India Infoline offers 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.

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. The Company’s

entry into the insurance sector de-risked 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

The Company offers the customers a dedicated group for giving the most personal attention

at every level.

Newsletters

The India Infoline Weekly Newsletters is a flashback for the week gone by. A weekly

outlook coupled with the best of the web stories from India Infoline and links to important

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investment ideas, Leader Speak and features is delivered in the client’s inbox every Friday

evening.

Product sold by the intern during SIP is DEMAT ACCOUNT

DEMAT ACCOUNT: D-mat account allows us to buy, sell and transact shares without the

endless paperwork and delays. It is also safe, secure and convenient to hold shares in

electronic form.

Area of Operations

Global

The India Infoline ltd, which has entered into many countries. It as its branches in Dubai, New

York, Singapore in 2003 and now in Colombo, Sri Lanka in 2010.

National

With a presence in almost all major states of India. The network of 500 offices across 300 cities

and towns presently covers Andhra Pradesh, Bihar, Chhattisgarh, Goa, Gujarat, Haryana, Jammu

and Kashmir, Karnataka, Kerala, MadhyaPredesh, Maharastra, New Delhi, Orissa, Punjab,

Rajasthan, Tamilnadu, and Pondicherry, Uttar Pradesh, Uttarakhand and West Bengal.

Regional

Ankola, Bagalkot, Chikmangalur, Dharwad, Gulbarga, Hassan, Hannover, kadur, Mandya,

Mysore, Mangalore, Madkeri, Raichuru, Shimoga, Sirsi, Udupi, Bangalore-( queens road,

VijayaNagar, Jaya Nagar,

Kormangala, Malleshwaram,

Yelahanka, RajajiNagar)

13 | P a g eOwnership Pattern

PARTICULARS SHARES

(Mn)

%

HOLDINGS

Total Promoter Holdings 91.36 31.4

Total Govt Holdings 0.00 0.0

Total Domestic Institutions 46.52 16.0

Total Foreign Holdings 87.34 30.0

Total Non Promoter

Corporate Holdings

13.04 4.5

Total Public & Others 52.65 18.1

TOTAL 290.91 100.0

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COMPETITORS INFORMATION

INDIA BULLS SECURITIES LIMITED

MOTILAL OSWAL SECURITIES LIMITED

EDELWEISS CAPITAIL

RELIGARE SECURITIES LIMITED

GEOJIT BNP PARIBAS

FUTURE CAPITAL HOLDINGS

DELTA CORPARTION

HSBC INVEST DIRECT

ICICI DIRECT

KARVY SECURITIES

ANGEL BROKING

RELIANCE MONEY

KOTAK SECURUTIES

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INFRASTRUCTURE FACILITY

India Infoline ltd is located in Bangalore- Queen road. The company has rented

property. Total area rented and built in area of the company is 2,500 square feet.

All the member of the company employees is good in communication.

Cleanliness is given utmost importance in the company. Also good information

technology support is available. There are air- conditioners, proper lighting and ventilation and

Tele communication facilities. The India Infoline also provides Travel allowances, Medical

allowance and house rental allowance facilities to the employees.

Technology:-

With over 2500 sq ft of built infrastructure they have used technology to enable their business in

Bangalore and delivery services with cutting edge technology.

The various aspects with regards to infrastructure are described below.

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Network

The local area networks are deployed using best cables for data and voice with the facility to

create segregated virtual user and corporate LANS. More recently India Infoline ltd has also

started migrating to the MPLS network to connect with their branches and provide world class

infrastructure at each of our location.

Software Development

India Infoline has invested in state-of-the-art infrastructure for its data and server farms and has

tied up with leading technology companies for supply of class server hardware and high end

workstations. They provide continuous systems integration and support for the facilities at their

office. The server infrastructure support hybrid platforms and it has been designed for high

availability transaction volumes. The work desks are occupied with finest workstation at

operational levels.

ACHIEVEMENTS AND AWARDS

1995: Incorporated as an independent equity research and consulting firm with clients

comprising leading FIIs, banks, consulting firms and corporate.

1999: Restructured the business model to embrace the internet; launched

www.indiainfoline.com and mobilized capital from reputed private equity investors.

2000: Commenced the distribution of personal financial products; launched online

equity trading www.5paisa.com. Later it entered life insurance distribution as corporate

agent and was acknowledged by Forbes as ‘Best of the Web’ and ‘must read for

investors’.

2004: Acquired a commodities broking license and launched Portfolio Management

Service;

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2005: It was first listed on Indian stock markets.

2006: Acquired membership of DGCX and launched investment banking services.

2007: Launched a proprietary trading platform, the Trader Terminal and inducted an

institutional equity steam and raised over US$ 300 mn in the group. Later launched the

consumer finance business under the ‘Moneyline’ brand. IIFL’s US-based subsidiary

acquired registration as FII from SEBI and commenced global advisory business.

2008: Launched wealth management services under the ‘IIFL Wealth brand and received

the insurance broking license from IRDA. Later received ‘Best broker- India’ award from

Finance Asia; and ‘Most Improved Brokerage- India’ award from Asia money broker’s

poll.

2009: Received registration for a housing finance company from the National Housing

Bank. It was recognized as ‘Fastest growing Equity Broking House - Large firms’ in

India by Dun & Bradstreet and received in-principle approval to sponsor a mutual fund.

2010: IIFL Securities PTE. Ltd. (Singapore), received in-principle approval from the

Singapore Stock Exchange, IIFL Securities Ceylon (PVT) Ltd. (Sri Lanka), received in-

principle approval for membership of the Colombo Stock Exchange for stock broking.

Work flow model:

Work flow process of Equity shares Market

I.      India Infoline Internet Server

              It is main source to provide internet trading to its clients through the internet

cloud.

             

II.     Bank Interface

              The company will verify whether clients are having enough balance to place

orders, if there is balance then it goes to surveillance if not then it will request for margin.

III.   Surveillance

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              It is the position of clients who have the capacity to place orders. Each stock has

its own surveillance point.

IV.  Administrative Sever

              Once clients orders are executed it will goes through Administrative Server

where it buy stocks listed in NSE.

V.    NSE Terminal

              All stocks are listed under National Stock Exchange.

VI.  D P Interface

              After clients buy stocks from NSE it goes to DP interface where stocks are

deposited.

Process of Equity shares Market

                           

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ClientsIndia Infoline

Trade Code

Bank Interface

Surveillance

Administrative Server

NSE/BSE

FUTURE GROWTH AND PROSPECTS

The asset base will continue to grow at an annual rate of about 30 to 35% over the next few

years as investor’s shift their assets from banks and other traditional avenues. Some of the older

public and private sector players will either close shop or be taken over. Out of ten public sector

players five will sell out, close down or with stronger players in three to four years. In private

sector this trend has already started with two mergers and one takeover. Here too some of them

will down their shutters in the near future to come.

We want to be the most respected company in the financial services space.

They are at the edge to introduce mobile trading services.

They want to increase the market share in north India.

They are planning to penetrate European market.

To have more advance in research and development.

The ability to successfully implement our growth strategy and expansion plan.

MCKINSEY’S SEVEN S MODEL

The 7S Framework of Mc Kinsey is a management model that describes 7 factors to organize a

company in a holistic and effective way. Together these factors determine the way in which a

corporation operates. Managers should take into account all seven of these factors, to be sure of

successful implementation of a strategy. Large or small, they are all interdependent; proper

attention should be given to all otherwise it may affect all others. The relative importance of each

factory may vary over time.

ORIGIN OF THE 7-S FRAMEWORK HISTORY

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DP Interface

The 7-S framework was first mentioned in “The Art of Japanese Management” by Richard

Pascale and Anthony Athos in 1981. They had been investigating how Japanese industry had

been so successful. At around the same time that Tom Peters and Robert Waterman were

exploring what made a company excellent. The Seven S model was born at a meeting of these

four authors in 1978. It appeared also in “In Search of Excellence” by Peters and Waterman, and

was taken up as a basic tool by the global management consultancy company McKinsey. Since

then it is known as their 7-S model.

THE SEVEN ELEMENTS: The Mckinsey 7S model involves seven interdependent factors

which are categorized as either “hard” or “soft” elements

“Hard” elements are easier to define or identify and management can directly influence them:

These are strategy statements; organization charts and reporting lines; and formal processes and

IT systems.

“Soft” elements, on the other hand, can be more difficult to describe, and are less tangible and

more influenced by culture. However, these soft elements are as important as the hard elements

if the organization is going to be successful.

Hard Elements Soft Elements

Strategy Shared Values

Structure Skill

System Style

Staff

The way the model is presented in Figure below depicts the interdependency of the elements and

indicates how a change in one affects all the others.

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The constituent parts of the 7S Model are:

1. STRATEGY Plan or course of action leading to the allocation of an

organization’s finite resources to reach identified goals

2. SKILLS Distinctive capabilities of key personnel and the organization.

3. STRUCTURE Salient features of the organization chart (e.g. degree of hierarchy,

extent of centralization/decentralization) and interconnections

within the organization.

4. SYSTEM Procedures and routine processes, including how information

moves around the organization

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5. STAFF Personnel categories within the organization, e.g. academics,

administrators, technicians.

6. STYLE Characterization of how key managers behave in order to achieve

the organization’s goal.

7. SHARED

VALUES

The significant meanings or guiding concepts that an organization

imbibes in its members.

STRATEGY:

The concept of strategy includes purposes, missions, objectives, goals and major actions plans

and policies.

The business plan of India Infoline is to become the leading investment advisor and intermediary

for financial services in India. The key driver is to increase its customer base in all its products,

give them a platform of choice to transact and support them with quality research. The elements

of its strategy include:

“One Stop Shop” from advice to transactions

Multi channel delivery model

Expand our retail network

Continuous investments in technology platform

SKILL:

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Skills refer to the ‘distinctive competence’ which reflects the dominant skills of an organization

and may consist of competence in terms of decision skills. Skills are the dominant attributes or

capabilities that exist in the organization. It refers to the fact that the employees have which are

needed to carry out the companies strategies.

Interpersonal Skill

The skill is closely related to staff are the distinctive abilities and talents that a company

possesses. Skills may range from ability of a staff to speak Spanish to an understanding of the

statistics to computer literacy etc.

Their management team has hands on experience in financial services, especially targeted

at retail sales and relationship management. They have a strong technical team comprising of

qualified engineers and trained personnel. The in house team has been responsible for developing

several MIS software and requirements. They believe that they have put in place a working

environment that brings out their people's entrepreneurial energy.

STRUCTURE:

Business needs to be organized in a specific form of shape that is generally referred to as

organizational structure. The structure of the company often dictates the way it operates and

performs .Although this is still the most widely used organizational structure; the recent trend is

increasingly towards a flat structure where the work is done in teams of specialists rather than

fixed departments

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India Infoline has line and staff form of organization structure wherein the branch manager is

supported by a team leader and sales manager who in turn is supported by a team of specialists

like relationship manager, equity advisors.

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Chairman

Managing Director

President

VP Zonal Brokering

VP Distribution

zonal

VP DP Section VP Head COO (Finance)

Risk Corporate

HR Head

AVP Brokering

Risk-Zonal DP Section Zonal activation

HR-Zonal

Territory Manager

Area Manager

Sr. BM

Branch Manager-1

Branch Manager-2

Team Leader

Sales Manager

Equity Advisor

Relationship Manager

Asst. RM

Back Office

HR Function

HR adds considerable value when it creates a customer focused corporate culture.HR professional

must be highly knowledgeable about the market place for capital, products and services

HR must not only be knowledgeable of specific customer issues, but also of key aspects of the

macro-societal environment such as:

Changing values.

Major problems and the challenges, which are shared by the large segments of the

population.

Structures of inter-personal relationship that influence buying process.

Talent management

Operation department:

The role of operation department is to carry out the policies and underwriting works. The other functions

include performing the day to day activities as well as smooth functioning of enterprise business.

Following are the important functions of the operations department,

Issuing the policies.

Verification of the documents.

Settling down the claims.

Charges deduction.

Dispatching the policy documents.

Settling the customer’s problems.

Making records related with the customers.

Follow up.

Administration department:

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Administrators are basically facilitators of the company. They take care of all the facilitating activities of all

the departments. They help in coordinating different activities in an organization from selecting the location

of the outlet to providing necessary infrastructure and maintaining the same.

Main Activities of Administration Department:

Selecting the location.

Providing with the required infrastructures like computers, furniture, fittings & fixtures, air conditioners,

etc.,

Providing the storage facility.

Looking after Marketing, Branding, legal, Sales and Distribution, payment of salaries and other

payments required for the functioning of day to day activities.

Finance Department:

Finance is the life blood of the organization it is one of the main departments in the company. To run any

organization it should have sufficient fund and it should carry the cost as minimum as possible. The

company may arrange required finance by the way of the equity fund or by way of debt fund. Whatever it

may be the ultimate goal of the finance department is to maximize that value of the firm to its equity

shareholders. It means the goal of the firm is to maximize the market value of its equity shares. If finance is

to play general management ride in the organization, the financial department must be an excellent team

who are constructively involved in operations, marketing and company’s overall strategy.

Responsibilities of Finance Department:

To provide account and complete systematic information of financial activities

To maintain all the books of account and other financial documents

To prepare periodic financial statements have the company like Profit & Loss account and Balance

Sheet

SYSTEM:

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The systems are the routine processes and procedures followed within the organization, it

consists of formal and informal procedures including innovation systems, compensation systems

every organization has some systems or internal processes to support and implement the strategy

and run day-to-day affairs. These processes are normally strictly followed and are designed to

achieve maximum effectiveness.

Open System

The procedures both formal and informal, by which an organization operates and gathers

information constitutes the system of the company. This model is concerned with the systems

that allocate the control money and materials as well as gather information.

They manage the risk associated with their broking operations through use of internally

developed credit algorithms implemented through fully automated risk management software

and selective direct monitoring of certain operating parameters. Their automated risk

management procedures rely primarily on internally developed risk management system and

system provided by their vendors.

They have developed a team of customer Relationship Managers across India to handle

key customer account. These people are experienced in financial services and have undergone in-

house training. This allows them to offer unbiased advice on not only equities but also on other

investment products like mutual funds and insurance

STAFF:

Organizations are made up of humans and it's the people who make the real difference to

the success of the organization in the increasingly knowledge-based society. The importance of

human resources has thus got the central position in the strategy of the organization, away from

the traditional model of capital and land. The people human resource management – process

used to develop managers, socialization processes, ways of shaping basic values of management

cadre, ways of introducing young recruits to the company, ways of helping to manage the careers

of employees.

Staff in the INDIA INFOLINE limited has been classified as shown in below:

Duties of Human Resource Manager

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To maintain the relationship between the employee and employer

To maintain personnel files of all employees

To select right person for the right job

Duties of Finance Manager

To manage the funds of the organization

Proper planning of funds

Arranging for internal as well as External Audit

Duties of Marketing Manager

To know the current happenings in the market and make relative changes

To assist the middle and lower level staff

Responsibility is to increase the sale of the company

Duties of Technical employees

Ensuring discipline

Helping clients in buying and selling securities

To be loyal to the clients and to the company

STYLE:

Style of the organization is evident through the patterns of actions taken by the member of the

top management team over a period of time. The Culture or Style is the aggregate of behaviors,

thoughts, beliefs and symbols that is conveyed to the people throughout an organization over

time. Since it is very hard to change a company's ingrained culture, it is important to bear in

mind when developing a new strategy.

They have developed a team of Customer Relationship Managers across India to handle

key customer accounts. These people are experienced in financial services and have undergone

in-house training. This allows them to offer unbiased advice on not only equities but also on

other investment products like mutual funds ensure that the customer has a single point contact

with us

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SHARED VALUE:

All members of the organization share some common fundamental ideas or guiding

concepts around which the business is built. This may be to make money or to achieve

excellence in a particular field. These values and common goals keep the employees working

towards a common destination as a coherent team and are important to keep the team spirit alive.

The organizations with weak values and common goals often find their employees following

their own personal goals that may be different or even in conflict with those of the organization

or their fellow colleagues.

India Infoline believes in providing right guidance to the right customers at the right time.

The experts in different areas take care of the requirements of the customers to their utmost

satisfaction and prevent the Insider Trading.

India Infoline is committed to placing the Investor First, by continuously striving to

increase the efficiency of the operations as well as the systems and processes for use of corporate

resources in such a way so as to maximize the value to the stakeholders. The Group aims at

achieving not only the highest possible standards of legal and regulatory compliances, but also of

effective management.

SWOT ANALYSIS

The management is concerned with establishing the proper organization. It creates environment

fit for matching organizational factors with the environmental factors. Therefore, the

management involves an analysis of the organizational strengths and weakness and

environmental opportunities and threats. The management must clearly ascertain strategic fit

between external opportunities and internal strengths while working around external threats and

internal weakness. This process is called situation analysis. Situation analysis is also popularly

known as SWOT analysis- Strengths, Weaknesses, Opportunities, and Threats.

SWOT analysis helps an organization to match its strengths and weaknesses with

opportunities and threats operating in the environment. An appropriate strategy is one that

capitalizes on the opportunities by using organizational resources and capabilities to best

advantage and neutralizes the threats by minimizing the adverse influence of weakness.

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STRENGTH

i. It has a good research techniques

ii. Integrated technology platform

iii. Customer Relationship management

iv. Multiple product offers makes us “One Stop Shop”

v. Experienced management team

WEAKNESS

i. Lack of banking arm to complete the bank-broad depository chain

ii. Infoline presence in the institutional segment is insignificant

iii. Too much of competition in Indian capital market even from the bank entities

iv. Customers are not much aware about the brand value of the company

OPPORTUNITIES

i. Booming financial service sector

ii. Institutional Broking

iii. Increasing customer awareness and educate about benefits in the market

iv. Developed relationships of quality equity analyst

v. Leverage network for more products

THREATS

i. Large players entering into the space

ii. Replicable product offering

iii. Manpower retention

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iv. Competitors providing more value added services with less charges

ANALYSIS OF FINANCIAL STATEMENT

RATIO ANALYSIS

Ratio analysis is a tool to find out the liquidity and solvency position of the company so

as to determine the company’s solvency and liquidity position. The following ratios have been

calculated.

1) Current ratio (Ideal ratio-2:1) = Current Assets

Current Liabilities

= 37,976,654,925

15,918,580,173

= 2.38

2) Solvency Ratio = Shareholders fund *100

Total Assets

= 16,048,979,784 *100

31,408,055,634

= 51.04 %

3) Profitability Ratio:

Return on Investment = Net Profit after tax * 100

Shareholders fund

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= 2,340,473,296 *100

31,408,055,634

= 7.45%

Summary:

a. The current ratio is 2.38:1.it means for every one rupee of current liability, there should be 2

rupees 38 paisa current assets to ensure better solvency position. An organization which has

current ratio as 2 or more reflects the sufficient liquidity and enough working capital.

b. According to rule of thumb, a solvency ratio of greater than 20% is considered financially

healthy. Since, solvency ratio is 51.04% the company is financially sound.

c. Generally a return of 10% would be desirable to provide dividends to owners and have funds

for future growth of the company. Since the company is generating 7.45% return on the capital

invested, it is not desirable for the company to provide dividends to the owners.

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