INDUSTRY PROFILE

1.1 INDUSTRY PROFILE Origin of stock broking in India The origin of stock broking in India goes back to a time, when shares, debentures and bonds representing title to property were first issued on the condition of transfer from one person to another. The earliest record of dealings in securities in India is the East India Companys loan securities. The advent of the companies Act !"# and subse$uent introduction of the principle of limited liability, made investments in stocks and shares popular. Though stock broking was practiced in Calcutta as early as !%&, the members of the broking profession had neither any code of conduct for their guidance, nor any permanent place for congregation. The stock brokers obviously, significant role in the stock market. 'tock broker means a member of a recogni(ed stock e)change who deals in securities. *ntil +!!, stock e)changes were more or less self,regulatory organi(ations. Their regulations covered the entire gamut of operations of stockbrokers. -owever, they had not been discharging their self,regulatory role well, resulting into malpractices in trading, settlement and transfer of securities. Ever since the 'ecurities and E)change .oard of India /'E.I0 assumed the monitoring function of brokers, stock broking is emerging as a professional service in tune with the re$uirements of mature and sophisticated stock e)changes in the country, replacing its traditional closed character as inherited family business. To act as a broker, certificate of registration from the 'E.I is mandatory. It is empowered to impose conditions while granting the certificate that as a member of a stock e)change he has to abide its rules, regulations and bye,laws, pay the prescribed fee and take ade$uate steps for the redressal of investors grievances within one month of the receipt of the complaint and keep the 'E.I informed about the number, nature and other particular of such complaints.

DEPOSITORY PARTICIPANT

A 1epository 2articipant /120 is described as an agent of the depository. They are the intermediaries between the depository and the investors. The relationship between the 12s and the depository is governed by an agreement made between the two under the 1epositories Act. In a strictly legal sense, a 12 is an entity who is registered as such with 'E.I under the provisions of the 'E.I Act. As per the provisions of this Act, a 12 can offer depository,related services only after obtaining a certificate of registration from 'E.I. 'E.I /1320 4egulations, ++& prescribe a minimum net worth of 4s. "# lakh for

stockbrokers, 43T agents and non,banking finance companies /5.6C0, for granting them a certificate of registration to act as 12s. If a stockbroker seeks to act as a 12 in more than one depository, he should comply with the specified net worth criterion separately for each such depository. 5o minimum net worth criterion has been prescribed for other categories of 12s. -owever, depositories can fi) a higher net worth criterion for their 12s. 5'17 re$uires a minimum net worth of 4s. ## lakh to be eligible to become a 12 as against 4s. "# lakh prescribed by 'E.I /1320 4egulations. ACTIN AS A PRINCIPAL 'tockbrokers also sometimes or e)clusively trade on their own behalf, as a principal, speculating that a share or other financial instrument will increase or decline in price. In such cases the term broker makes little sense and the individuals or firms trading in principal capacity sometimes call themselves dealers, stock traders or simply traders. 8A stock broker is 9ust the main part of being a City Trader. :ther types of City Trading include working in the 6oreign E)change.

STOC! "RO!ER

;Investor re$uires a 'tock .roker to buy and sell shares in stock e)changes /.'E, 5'E etc.0. 'tock .roker is registered member of stock e)change. A stock broker can register to one or more stock e)changes. :nly stock brokers can directly buy and sell shares in 'tock <arket. An investor must contact a stock broker to trade stocks. .roker charge commissions /brokerages0 for their service. .rokerage is usually a percent of total amount of trade and varies from broker to broker. A stock brok#r is a person or a firm that trades on its clients behalf, the customer tell the broker what they want to invest in and they will issue the buy or sell order. 'ome stock brokers also give out financial advice. It wasnt too long ago and investing was very e)pensive because the customer had to go through a full service broker which would give them advice on what to do and would charge them a hefty fee for it. 5ow there are a plethora of discount stock brokers. STOC! "RO!IN SER$ICES A transaction on a stock e)change must be made between two members of the e)change = an ordinary person may not walk into the .ombay 'tock E)change /for e)ample0, and ask to trade stock. 'uch an e)change must be done through a broker. There are three types of stock broking service. E)ecution,only, which means that the broker will only carry out the client>s instructions to buy or sell. Advisory dealing, where the broker advises the client on which shares to buy and sell, but leaves the final decision to the investor. 1iscretionary dealing, where the stockbroker ascertains the client>s investment ob9ectives and then makes all dealing decisions on the client>s behalf. In addition to actually trading stocks for their clients, stock brokers may also offer advice to their clients on which stocks, mutual funds, etc. to buy. $ARIOUS STOC! "RO!IN CO%PANIES IN INDIA

. ICICI1irect ?. 'hare@han %. Indiabulls A. "2aisa ". <otilal :swal 'ecurities &. -16C 'ecurities B. 4eliance <oney !. I1.I2aisa.uilder +. 4eligare #. Ceo9it

CO%PANY PROFILE

1.& CO%PANY PROFILE S'ARE!'AN LTD 'harekhan is leading India,based financial services group, part of Citi Financia( Ltd that offers Institutional E$uities and Investment .anking services. 'harekhan deals online trading with products like e$uities, derivatives, mutual funds and portfolio management. 'harekhans online trading and investment site www.sharekhan.com was launched in ?###. 'harekhans ground network includes over 'harekhan has over &B+ branches in ?%A cities and about si) lakh trading members. 'harekhan has won the prestigious Consumer Dote Awards ?##" for the <ost 2referred 'tock .roking .rand in India, in the Investment Advisors category. 5ame of the company was changed from ''@I Investor 'ervices 2rivate 7imited to 'harekhan 2rivate 7imited on Ath :ctober ?##". 'harekhan has won the prestigious A)aa* Cons+,#r $ot# A)ards &--. for the <ost 2referred 'tock .roking .rand in India, in the Investment Advisors category. 'harekhan 7imited was promoted by <r. 'hripal ' <orakhia and <r. 'hreyas ' <orakhia. It was established in +++,?###. It is currently amongst India>s largest broking house. It is a member of the 'tock E)change, <umbai. It is a depository participant of the 5ational 'ecurities 1epository 7imited and Central 1epository 'ervices /India0 7imited. Its business includes stock broking, depository services, portfolio management and derivatives. The Company>s core specialty lies in its retail distribution with a large network of branches and sub,brokersE authori(ed persons. Its strength lies in its investment research capabilities. Its research division has several analysts continuously monitoring global, national and regional political, economic and social situations so as to assess their impact on the economy in general, the sectors and companies they research which helps them in offering $uality research and advice to clients. Pr#s#nt(/ Citigro+0 is 1o(ding 2.3 and IDFC 1&3 of the paid up e$uity capital of the

Company and t1# E,0(o/##s o)n t1# r#st i.#. 143. FEATURES OF S'ARE!'AN LTD5 <ultiple e)changes on a single screen Intra,day calls and flash news -istorical charts with technical tools 'treaming $uotes ?A)B web enabled back F office Auto pay,in of shares :nline transfer of funds

E,broking facility is one such effort, which gives you access to state,of,the,art trading platform with multiple e)changes, order and trade confirmations, research reports, e, contracts and a ?A)B on,line web enabled centrali(ed back,office system at the click of a button. Portfo(io %anag#,#nt S#r6ic#s5 'harekhan offers discretionary 2<' to investors in order to assist them in managing their funds amidst continuous changing market dynamics and increase comple)ities of investing. Investing in e$uity, markets re$uire in,depth knowledge and thorough analysis coupled with clear understanding of domestic and international economies. Investors need the services of an e)pert to manage their funds and deliver good returns in diverse market conditions. Continuous wealth creation with an emphasis on capital preservation in todays comple) markets. In order to systematically diversify the holdings of clients across varied sectors and with an intention to give them handsome returns.

%+t+a( F+nd Distrib+tion 7 Ad6isor/5

To enable clients to diversify their investments in their direction, 'harekhan 7td has added another product in its range with mutual fundsG Customi(ed investments solutions based individual financial goals aligned with your risk appetite Access to in,depth research 3 proper selection from diversified funds based on your preferred criteria Customi(ed reports at desired fre$uency 4atings and rankings of all <6 from our in,house e)pert analysts Current and historical performance of different funds enabling comparisons 5ews and alerts for concern 2ortfolio and performance tracking with watch lists :nline <6 applicationsE online order status trackingE online updating of unit holdings at latest 5ADE online dividend payout 3 reinvestment facility. "rok#rag#5 'ome stock trading companies charge direct percentage while others charge a fi)ed amount per 4s ##. 'harekhan charges #."H for delivery trading and #. H for intra day or one could say 'harekhan charges "# paisa per 4s ##. To sum up, 'harekhan brings to the customer, a user, friendly online trading facility, coupled with a wealth of content that will help them stalk the right shares. 'harekhan>s e$uity related services include trade e)ecution on .'E, 5'E, 1erivatives, commodities, depository services, online trading and investment advice. Trading is available in .'E and 5'E. Along with 'harekhan.com website, 'hare@han has around &B+ offices /share shops0 in ?%A cities around the country.

SER$ICES OF S'ARE!'AN5

PRODUCTS OF S'ARE!'AN 1. S1ar#!1an C(assic acco+nt

Allow investor to buy and sell stocks online along with the following features like multiple watch lists, Integrated .anking, demat and digital contracts, 4eal,time portfolio tracking with price alerts and Instant credit 3 transfer. a. :nline trading account for investing in E$uities and 1erivatives b. 6ree trading through 2hone /1ial,n,Trade0 Two dedicated numbers for placing your orders with your cell phone or landline. Automatic funds transfer with phone banking /for Citibank and -16C bank customers0 'imple and 'ecure Interactive Doice 4esponse based system for authentication get the trusted, professional advice of our telebrokers After hours order placement facility between !.## am and +.%# am

c. Integration ofG :nline trading I .ank I 1emat account d. Instant cash transfer facility against purchase 3 sale of shares e. I2: investments f. Instant order and trade confirmations by e,mail g. 'ingle screen interface for cash and derivatives &. S1ar#!1an S0##d Trad# acco+nt This accounts for active traders who trade fre$uently during the day>s trading session. 6ollowing are few popular features of 'peed Trade account. h. 'ingle screen interface for cash and derivatives i. 4eal,time streaming $uotes with Instant order E)ecution 3 Confirmation 9. -ot keys similar to a traditional broker terminal k. Alerts and reminders l. .ack,up facility to place trades on 1irect 2hone lines 8'Y YOU S'OULD C'OOSE S'ARE!'AN

E90#ri#nc#5 <ore than Eight decades of trust and credibility in the Indian 'tock <arket. T#c1no(og/5 .uy and sell of shares through :nline services. Acc#ssibi(it/5 ro+nd N#t)ork of &4: s1ar# s1o0s. !no)(#dg#5 In a business where the right information at the right time can translate into direct profits, you can access to a wide range of information on our content,rich portal www.'harekhan.Com Jou will also get a useful set of knowledge based tools that will empower you to take informed decisions. Con6#ni#nc#5 Jou can call our 1ial,n,trade number to get Investment advice and e)ecute your transactions /.uy 3 'ell :rders0.Ke have a dedicated call center to provide this service via a to free number from any where in India. C+sto,#r s#r6ic#5 :ur customer service team will assist you for any help that you need relating to transactions, billing, 1e,mat and other $ueries. :ur customer services can be contacted via a toll,free number, email or live chat on sharekhan.com In6#st,#nt Ad6ic#5 'harekhan has dedicated research teams for fundamental and technical research /like 2re,<arket report, 2ost market reports0 :ur analyst constantly track the pulse of the market and provide timely investment advice to you in the form of daily research emails ,online chat, printed reports and '<' on your phone.

Ad6antag#s of S1ar#k1an5 . :nline trading is very user friendly and one doesn>t need any software to access. ?. They provide good $uality of services like daily '<' alerts, mail alerts, stock recommendations etc.

%. 'harekhan has ability to transfer funds from most banks. *nlike ICICI 1irect, -16C 'ec, etc., so investor not really needs to open an account with a particular bank as it can establish link with most modern banks. A. 'harekhan has provided every customer with software called LT4A1E TICE4M, which enables the user to know various things about the market such as market depth, the live market screen need not be refreshed, comparative charts are available for every share etc. ". :ne another feature of the trade tiger is the visibility of the commodity market along with the share market. &. All accounts in share khan will be opened within three working days, once the customer duly completed the registration procedure. Disad6antag#s of S1ar#k1an5 . They charge minimum brokerage of # paisa per stock would not let you trade stocks below 4s.?#. ?. Classic account holders cannot trade commodities. %. The number of branches should increase to cast a wider net.

INTRODUCTION FINANCIAL SYSTE% The financial is one of the most important inventions of the modern society. The phenomenon of imbalance in the distribution of capital or funds e)isted in every economic system. There are areas or people with surplus funds and there are those with a deficit. A financial system functions as an intermediary and facilitates the flow of funds from the areas of surplus to the areas of deficit. A financial system is a composition of

various institutions, markets, regulations and laws, practices, money managers, analysts, transactions and claims and liabilities. The functions performed by a financial system areG T-E 'ADI5C' 6*5CTI:5G 7IN*I1ITJ 6*5CTI:5G 2AJ<E5T 6*5CTI:5G 4I'@ 6*5CTI:5G 2:7ICJ 6*5CTI:5G CO%PANY PROFILE S'ARE!'AN LI%ITED 'harekhan is one of the top retail brokerage houses in India with a strong online trading platform. The company provides e$uity based products /research, e$uities, derivatives, depository, margin funding, etc.0. It has one of the largest networks in the country with B#A share shops in ?!# cities and Indias premier online trading portal ))).s1ar#k1an.co,. Kith their research e)pertise, customer commitment and superior technology, they provide investors with end,to,end solutions in investments. They provide trade e)ecution services through multiple channels , an Internet platform, telephone and retail outlets. 'harekhan was established by <orakhia family in +++,?### and <orakhia family, continues to remain the largest shareholder. It is the retail broking arm of the <umbai, based ''@I 8'-A5TI7A7 '-EKA5TI7A7 @A5TI7A7 I'KA45AT- 7I<ITE1O Croup. ''@I which is established in +%# is the parent company of 'harekhan ltd. Kith a legacy of more than !# years in the stock markets, the ''@I group ventured into institutional broking and corporate finance over a decade ago. 2resently ''@I is one of the leading players in institutional broking and corporate finance activities. 'harekhan offers its customers a wide range of e$uity related services including trade e)ecution on .'E, 5'E, and 1erivatives. 1epository services, online trading, Investment advice, Commodities, etc. 'harekhan 7td. is a brokerage firm which is established on !th 6ebruary ?### and now it is having all the rights of ''@I. The company was awarded the ?##" <ost 2referred 'tock .roking .rand by Awwa( Consumer Dote. It is first brokerage Company to go online. The Company>s online trading and investment site , www.'harekhan.com , was also launched on 6eb !, ?###. This site gives access to superior content and transaction facility to retail customers across the country. @nown for its 9argon,free, investor friendly language and high $uality research, the content,rich and research oriented portal has stood out among its contemporaries because of its steadfast dedication to offering customers best,of,breed technology and superior market information. 'hare khan has one of the best states of art web portal providing fundamental and statistical information across e$uity, mutual funds and I2:s. :ne can surf across ","## companies for in,depth information, details about more than ,"## mutual fund schemes and I2: data. :ne can also access other market related details such as board meetings, result announcements, 6II transactions, buyingEselling by mutual funds and much more.

'harekhan>s management team is one of the strongest in the sector and has positioned 'harekhan to take advantage of the growing consumer demand for financial services products in India through investments in research, pan,Indian branch network and an outstanding technology platform. 6urther, 'harekhan>s lineage and relationship with ''@I Croup provide it a uni$ue position to understand and leverage the growth of the financial services sector. Ke look forward to providing strategic counsel to 'harekhan>s management as they continue their e)pansion for the benefit of all shareholders.P ''@I Corporate 6inance 2rivate 7imited /''@I0 is a leading India,based investment bank with strong research,driven focus. Their team members are widely respected for their commitment to transactions and their speciali(ed knowledge in their areas of strength. The team has completed over *'Q" billion worth of deals in the last " years , making it among the most significant players raising e$uity in the Indian market. ''@I; a veteran e$uities solutions company has over ! decades of e)perience in the Indian stock markets. If we e)perience their language, presentation style, content or for that matter the online trading facility, we>ll find a common threadR one that helps us make informed decisions and simplifies investing in stocks. The common thread of empowerment is what 'harekhan>s all aboutS P'harekhan has always believed in collaborating with like,minded Corporate into forming strategic associations for mutual benefit relationshipsP says Taideep Arora, 1irector , 'harekhan 7imited. 'harekhan is also about focus. 'harekhan does not claim e)pertise in too many things. 'harekhan>s e)pertise lies in stocks and that>s what he talks about with authority. 'o when he says that investing in stocks should not be confused with trading in stocks or a portfolio,based strategy is better than betting on a single horse, it is something that is spoken with years of focused learning and e)perience in the stock markets. And these beliefs are reflected in everything 'harekhan does for usS 'harekhan is a part of the ''@I group, an Indian financial services power house, with strong presence in 4etail e$uities Institutional e$uities Investment banking. In 5agpur it is having the branches at C.A. road, near telephone e)change s$uare and @hare town, 1harampeth and ?, % franchisees in 5agpur. Ke have been given the centre at C.A. road. 'harekhan provides A in - 1emat aEc account.

Trading aEcG for cash calculation .ank aEcG for fund transfer 1ial and TradeG for $uery relating trading

Prod+cts5 <utual fund schemes Insurance

2ortfolio <anagement 'ystem 'hares F online and offline .onds 6i)ed 1eposits Commodities

:ut of these we have to mostly sell demat accounts and <utual 6unds.

1emat accountG 'harekhan is a depository participant. This means that we can keep the shares in demateriali(ed form in 'harekhan. .ut for this one has to the demat account in 'harekhan. 1emateriali(ation is the process by which a client can get physical certificates converted into electronic balances maintained in his account with the 12.

In 'harekhan, under demat account there are two types of terminals. TJ2E :6 1E<AT ACC:*5T TE4<I5A7 C7A''IC 1E2:'IT /4efundable0 4s."### 4s. #### T4A1ETICE4 4s."### 4s. ####E?"### C-A4CE' /nonrefundable0 4s.B"# 5il 4s. ### 5il

Its cor# s#r6ic#s ar#5 E$uities, and 1erivatives trading on the 5ational 'tock E)change of India 7td. /5'E0, and .ombay 'tock E)change 7td. /.'E0, Commodities trading on 5ational Commodity and 1erivatives E)change India /5C1EU0 and <ulti Commodity E)change of India 7td. /<CU0, 1epository services, :nline trading services, I2: 'ervices,

1ial,n,Trade 2ortfolio management services, 6undamental and Technical 4esearch services, In addition to this they also provide advisory services and distributions for mutual funds. 'harekhan Dalue7ine /a monthly publication with reviews of recommendations, stocks to watch out for etc.0 1aily research reports and market review /-igh 5oon 3 Eagle Eye0 2re,market 4eport 1aily trading calls based on Technical Analysis Cool trading products /1aring 1erivatives and <arket 'trategy0 2ersonali(ed Advice 7ive <arket Information 'harekhan 6irst 'tep

S1ar#k1an First St#0 The 'harekhan 6irst'tep is a brand new program designed especially for those who are new to investing in shares. All one have to do is o0#n a S1ar#k1an FirstSt#0 acco+nt and they guide us through the investing process. %ark#t S1ar# 'harekhan en9oyed about ?# per cent market share in Keb business /Internet trading0 in stock markets. Three years ago, Keb trading showed lot of promise but with the market witnessing a downturn, there was not much interest among retail customers. Profits The share of Keb trading constituted ?? per cent of the revenue. As 'harekhan>s daily trading volume was over 4s ?## crore, the share of Keb trading at about 4s A# crore a day was substantial and a larger part of the volume was coming from day traders.

F#at+r#s of Trading 8it1 S1ar#k1an5 1. 6reedom from paperwork 2. Instant credit and money transfer 3. Trade from any net enabled 2C 4. After hour orders 5. :nline orders on the phone 6. Timely advice and,research reports 7. 4eal,time 2ortfolio tracking 8. Information and 2rice alerts.

FINANCIAL CAPA"ILITY Taking in to consideration all its assets and liabilities company is valued at around 4s. B"#,!"# crores. 'IERARC'Y IN S1ar#k1an There are A main hierarchical levels in 'harekhanG 0 Trainees ?0 'uper trainees %0 'ales e)ecutives A0 Assistant sales manager "0 Area sales manager G <r. Chirag Toshi &0 City sales manager B0 Assistant branch manager !0 .ranch manager +0 4egional head #0 Cluster head 0 .usiness head ?0 Country head %0 1irectors A0 CE:

S8OT ANALYSIS OF S'ARE!'AN STREN T'S 8EA!NESSES

6irst brokerage firm to go online. 2roducts 2<' 'ervices. Technology

-igh brokerage charges but now they have overcome this by a new prepaid scheme in which brokerage is reduced to half.

:nline fund transfer. 4esearch reports. Clients /average of ",### accounts per year0 4ecommendations from clients. 6ree 1emat aEc opening. 7ow annual maintenance charge

OPPORTUNITIES

T'REATS

-uge market.

Dolatility of the share market. Competitors.

Acco+nt o0#ning5 O0#ning a DP acco+nt )it1 S1ar#k1an :ne can open a 1epository 2articipant /120 account, either through a 'harekhan branch or through a 'harekhan 6ranchisee center. There is no fee for opening 12 accounts with 'harekhan. -owever a nominal deposit /refundable0 is charged towards services which will be ad9usted against all future billings. All investors have to submit their proof of identity and proof of address along with the prescribed account opening form. List of Doc+,#nts r#<+ir#d to o0#n an acco+nt )it1 S1ar#k1an5 0 Proof of Id#ntit/ Jou can submit a photo copy of any of the following o Doter I1 o 2assport o 2A5 Card o <A2I5 *I1 Card o 1riving 7icense

o 2hoto I card issued by Employer registered under <A2I5 &= Co0/ of Ration Card 4= Addr#ss Proof Jou can submit a photo copy of any of the following o Doter I1 Card o 1riving 7icense o 2assport o 4ation Card o Telephone .ill o Electricity .ill o 7eave,7icense o .ank 2assbook o 7atest .ank 'tatement o Insurance 2olicy o 6lat <aintenance .ill := A co0/ of canc#((#d c1#<+# .= No,in## 01otogra01; if fi((#d >= Sign#d P1otogra01 of a(( 1o(d#rs

"RO!ERA E STRUCTURE OF S'ARE!'AN "RO!ERA E5 INTRADAY CAS'? E@UITIES FnO PREPAID SC'E%E 'DFC #.#"H #.#"H #.#?"H #.?"H S1ar#k1an 1as ti# +0 )it1 t1# fo((o)ing banks5 DELI$ERY #."H

A9is "ank ID"I Citi "ank Ind+sInd "ank Union "ank ICICI Ori#nta( "ank Of Co,,#rc# %INI%U% IN$EST%ENT IN %UTUAL FUND5 IN$EST%ENT %INI%U% A%OUNT %+t+a( F+nd AAn/ Co,0an/= .--S/st#,atic In6#st,#nt P(an AAn/ .-Co,0an/= AD$ANTA ES OF S'ARE!'AN5 . :nline trading is very user friendly and one doesn>t need any software to access.

?. They provide good $uality of services like daily '<' alerts, mail alerts, stock recommendations etc. %. 'harekhan has ability to transfer funds from most banks. *nlike ICICI 1irect, -16C 'ec, etc., so investor not really needs to open an account with a particular bank as it can establish link with most modern banks.

CUSTO%ER .usiness class people /high class0 -igh 5et worth Individuals 'ervice class people Covernment Employees Joung Adults / +,%# yrs.0 Adults /%","# yrs.0

-*6 /-indu *ndivided 6amily0 Komen /literate and working0

CO%PETITORS 1. India "+((s &. %oti(a( Os)a( 4. R#(igar# :. !otak S#c+riti#s .. ICICI Dir#ct >. Anand Rat1i 2. India Info(in# B. R#(ianc# %on#/ C. Ang#( "roking 10. 5 paisa.co m