A

PROJECT REPORT
ON

A study of factors impacting participation of retail investor in

India
A Project report Submitted in the partial fulfillment of the requirement
for the degree of
MASTERS OF BUSINSS ADMINISTRATION

OMKARANANDA INSTITUTE OF MANAGEMENT AND

TECHNOLOGY, RISHIKESH

Submitted to:-

Submitted by:-

Mr.Pramod UNIYAL

Anil Chamoli
MBA 3rd

Asst. Prof.
OIMT

CERTIFICATE

This is to certify that the project report A study of factors impacting participation of
retail investor in India has been prepared out by Anil Chamoli under supervision and
guidance. The project report is submitted towards the partial fulfillment of 2 years, full
time Masters of Business Administration.

Candidate declaration

I, Anil chamoli, student of MBA 3RD Semester, Omkarananda Institute of Management and
Technology, here by declare that the project report titled A study of factors impacting
participation of retail investor in India is completed & submitted under the valuable guidance
of MR. ALOK PRAKASH faculty of management. It is an original work. The imperial
finding in this report is based on the data collected by me. This project has not been submitted to
Omkarananda Institute of Management and Technology or any other university for the purpose
of compliance of any requirement of any examination or degree.

Director

Asst.Prof.

Dr.Aditya gautam

Pramod Uniyal

OIMT

OIMT

PREFACE

Summer training project is necessary part for fulfillment of M.B.A course. The emphasis in the
project is providing the study and an insight into Indian FMCG Business Scenario.
The summer training project is designed to provide participation of MBA program as on the job
experience. This has given a chance to try and apply the academic knowledge and gain insight
into corporate culture. This helps in developing decision-making abilities and emphasizes on
active participation by the student.
I undertook my project in MOTILAL OSWAL SECURITY LTD. a leading bottler and
marketing partner of the Pepsi Foods. During the training, I had worked on the project A study
of factors impacting participation of retail investor in India
I gained valuable experience & knowledge during the survey. The project consists of my findings
after tabulation of collected data, then analyzed conclusions were drawn and finally suggestions
were put forward.

EXECUTIVE SUMMARY

The increasing trend towards globalization and industrialization has increased the trend of
competition in the financial market, intensified by the coming of Non Banking Financial
Company (NBFC), like motilal oswal Securities, and so has the need for the marketing of
financial instruments has intensified.
NBFCs are financial institutions are ones which provide banking services without meeting the
legal definition of a bank, i.e. one which does not hold a license. They are not allowed to take
deposits from public. Nonetheless all the operations of these institutions are covered under
banking regulations.
This project is completely focused to identify some of the demand drivers, rather factors that
make people invest in such institutions and in this regard what are the various differentiating
factors that provide motilal oswal Securities a competitive edge over other players in the market.
There has been an emphasis on the various businesses and of motilal oswal Securities that make
it standout in this league, rather than being a me too product. In words of Al Ries and Jack
Trout, differentiate or die.

BACKGROUND AND LITERATURE REVIEW

The Securities Brokerage Industry is cyclical and comprised of two distinct types of businesses.
Brokerages, also known as financial services companies, strive to meet the investing needs of
their clients, and exchanges facilitate securities trading. Net profits correlate to the performance
of the broader equity market.
In this market with less differentiated products and many players, there exists an oligopoly
(saying in book terms), characterized by tough competition, entry and exit barriers and many
more.
1. Al Ries and Jack Trout, in his work said differentiate or die, too many less
differentiated products creates a kind of information overload, and in this clutter of too
much information, products which are not properly differentiated or advertised just end
up becoming a me too product. To avoid it every marketer needs to position his/ her
products in a way that makes a specific image in the minds of consumers.
2. Jack Miller, in his work published on June 03, 2010, talked about how investors make
investment decisions. He broke the process of decision making in pulling the buy or sell
trigger. According to him investors made the investment decisions in the ways like simple
screening, then lateral recommendation, followed by piggy bank investing.
3. According to U.S. Securities and Exchange Commissions, one of the articles: investors
first evaluate their current financial roadmap, and then they evaluate their comfort zone in
taking on risk. Consider an appropriate mix of investments, create and maintain an
emergency fund, consider dollar averaging, consider rebalancing portfolio occasionally,
and in the process also try to avoid the circumstances that can lead to fraud.
4. Peter Roger Eiving (1970) identified those factors which motivated and guided the
investment decisions of the common stock investors. The factors include (i) Income from
Dividends (ii) Rapid Growth(iii) Purposeful Investment as a protective outlet of savings
(iv) Professional Investment Management.
5. Shanmugam (1990) examined the factors affecting investment decision and found that the
investors are high risk takers. The investors possessed adequate knowledge of
Government regulations, monetary and fiscal policy.
6. Warren et al [13]. (1996) studied the lifestyle and demographic profiles of investors based
on the value and types of investment holding.
7.

Krishnan and Booker (2002) [8] analyzed the factors influencing the decisions of
investors who basically used analysts recommendations to arrive at short term decision
to hold or to sell a stock

OBJECTIVE OF THE PROJECT

An increasing trend has been observed in demand for the services of Non Banking Financial
Institutions nowadays. This project is aimed to find out factors affecting investment decisions in
these firms. There has also been emphasis to find out the plus points of Motilal Oswal Securities.
In short:

To find out the factors affecting investment decisions in a NBFC.

To analyze the scenario of retail investor in Haridwar.
What are the various factors that they consider before investing.

METHODOLOGY
This is a two dimensional project focusing on two aspects, as already mentioned (objectives). For
my project work I have focused on both primary and secondary data as well.
Basically any research work proceeds as:
2.

Hypothesis of the Study .

The study tested the following hypothesis.
H1 : The retail investors firmly believe that many factors do influence their future investment.
i.e Value of Equity Shares
IV.

Methodology of the Study

A. Sources of Data
The research design for the study is descriptive in nature. The
Researchers depended heavily on primary data. The required
data were collected from the retail investors living in Haridwar through
a Structured Questionnaire
B. Sampling Size and Procedure
The sample size covered 30 retail investors who were spread
through five different Investment Centers in . The
important Investment Centers, where large number of investors
is available, are identified for this study using Purposive
Sampling Method. In order to collect referred information from
the retail investors, the sampling design was carefully decided
and properly chosen for the study. Totally five important centers
in Haridwar were identified and those centers are Religare share broking, Shri financial
services,. From each identified
Investment Centre, five approved stock brokers were chosen
and eight investors were contacted with the help of stock
brokers. However, on a detailed scrutiny of the questionnaires,
it was found that 25 of them had given incomplete information
and hence those 25 responses could not be used for further
analysis. Thus, this study was based on the responses by 375
selected respondents from the retail investors.

For this project my challenge was to find out the factors and the scenario of individual
customer. For which I conducted a descriptive research.
I have collected primary data through questionnaire and survey.
For secondary data, company records, some reviews in economic times, data on
moneycontrol site, some online research works have been referred.
I have taken 11 factors in my survey so my population size is of 66. I have targeted only
investors, who were customers, general investors and company employees.
A factor analysis has been run on the data to find the most influential factor.
For rest my own analytical skill is used.

SCOPE OF THE PROJECT

This project has been a great insight for me as I came to know about stock market, demat
accounts, buying and selling of dematerialized securities, who are brokers, how to make
investment and how to track portfolio of investments.

The project is aimed to cover maximum factors affecting the demand drivers and
competitiveness.
Nowadays even the government is taking up steps to find such factors to give a boost to the
Indian financial system.

LIMITATIONS OF STUDY

The population size is limited to Haridwar area.

There may be interviewer bias or judgmental bias.
There may be redundancy of data or area surveyed.
Due to time and resource constraints some important segment of population might have
been missed out.

INDUSTRY OVERVIEW
The Financial Market
The financial industry or financial services industry includes a wide range of companies and
institutions involved with money management, lending, investing, insuring and securities
insurance and trading services. The following institutions are a part of the industry:

Banks
Credit card issuers
Investment companies
Investment bankers
Securities traders
Financial planners
Security exchanges

Products of the financial market:

The major crises that have shaped the modern financial industry are:

The Great Depression(1929)

Black Monday(1987)
Asian Financial Crisis(1990)
Stock Market Downturn(2002)
Sub-prime Crisis(2007)

The Classification of financial market in India

THE BROKERAGE INDUSTRY

The brokerage industry is currently characterized by a large number of companies (private or
unorganized). In effect it is a fragmented industry with a large number of participants. The
industry thus has monopolistic competition, i.e. a large number of firms selling a slightly
differentiated product.
Indian stock broking industry is the oldest trading industry that has been around even before
the establishment of BSE in 1875. Despite passing through a number of changes in post
liberalization period, the industry has found its way towards sustainable growth. With the
purpose of gaining deeper understanding about the role of Indian stock broking industry, in the
countrys economy, here are some data gleaned from analysis of secondary research.
On the basis of recent research:

On the basis of geographical concentration, Western region has maximum of 52%, around
24% are located in the North, 13% in South, and 10% in the East.
3% of firms started broking operations before 1950, 65% between 1950-1995, and 32%
post 1995.
On the basis of terminals 40% are located in Mumbai, 12% in Delhi, 8% in Ahmadabad,
7% in Kolkata, 4% in Chennai, and 29% in other cities.
From the study it was found that 36% of firms trade in cash, 27% in derivatives, and 20%
in cash, derivatives and commodities.
In the cash market, 34% trade in NSE, 14% in BSE, 45% in both. Whereas in debt
market, 31% trade in NSE, 26% trades in BSE, and 43% in both.
Majority branches are located in North, i.e. 40%, 31% in West, 24% in South, and 5% in
East.
In terms of sub-brokers, around 55% are located in South, 29% in West, 11% in North,
and 4% in East.
Trading, IPOs and Mutual Funds are the top three products offered by 90% of firms
offering trading, 67% IPOs, and 53% offering Mutual Fund transaction.

In terms of various areas of growth, 84% of firms have shown their interest in expanding
their institutional clients, 66% firms intend to increase FIIs, and 34% are interested in
setting up Joint Ventures in India and abroad.
In terms of IT penetration 62% firms provide their website, and 90% have email facility.

Brokerage terminals in various regions:

Almost 52% of the terminals in the sample are based in the Western region of India, followed by
25% in the North, 13% in the South and 10% in the East. Mumbai has got the maximum
representation from the West, Chennai from the South, New Delhi from the North and Kolkata
from the East.
Mumbai also has got the maximum representation in having the highest number of terminals.
40% terminals are located in Mumbai while 12% are from Delhi, 8% from Ahmadabad, 7% from
Kolkata, 4% from Chennai and 29% are from other cities in India.

Branches and sub-brokers in various regions:

The maximum concentration of branches is in the North, with as many as 40% of all branches
located there, followed by the Western region, with 31% branches. Around 24% branches are
located in the South and East constitutes for 5% of the total branches of the total sample.
In case of sub-brokers, almost 55% of them are based in the South. West and North follow, with
30% and 11% sub-brokers respectively, whereas East has around 4% of total sub-brokers.

Analysis of brokerage industry based on Michael Porters 5 factor model

Competition

The industry is now in a fairly high growth phase. However the brokerage industry is very
cyclical and is impacted by activity levels in the markets. During the downturns such as 20082009 periods, the smaller players were squeezed out of the business. As a result there is a
contrast consolidation happening in the industry.

Potential of new entrants

A new entrant in addition to the above also needs a reasonable level of capital to fund the
working requirements of the business (finance to customers, deposits with exchanges, etc).

The scale requirements are increasing constantly and as a result a new entrant will require higher
levels of investments in the future to enter the business. As pointed out, it is likely to see many
entrants in the industry. On the contrary, it is likely that the smaller players will exit by selling
out or closing.

Power of the supplier

Not much relevant in most segments except investment banking, where employees control client
relationships and hence have to be highly compensated.

Power of the buyers/customers

This is important in the institutional brokerage business which involves high volume and low
brokerage charges. The extent of buyer power is very low to non-existent in all kinds of retail
segments.

Threat of substitutes

The products offered by all firms in this industry are more or less differentiated. Investing rather
saving in the bank rather than investing in a brokerage firm can be one option; else this is not
applicable for this industry.

In a summary the industry has a moderate to low level of competitive advantage. There is low
level of customer lock-in and customer will move his or her business if the brokerage rates are
not competitive with rest of the industry. The only competitive advantage for companies in this
sector comes from size and scale which enables them to leverage their size to reduce average
costs and thus make a profit on low brokerage margins.
In addition to high fixed costs, the industry has very low margin cost. As a result the cost of
adding an additional customer is low and per transaction costs are limited. Due to this reason, we
are seeing a constant pressure on the brokerage rates has intensified the competition in the
industry and is resulting in consolidation with the top players.
The basic brokerage business is now sometimes a loss leader to enable the brokerage firm to
acquire customers and sell other products such as wealth management services, or third party
mutual funds. This segment will provide adequate returns in the future for a company with scale.

DEMAND AND SUPPLY DRIVERS OF THE INDUSTRY

Demands for financial products are driven by risk-reward

assessment, which considers:

Potential yield

The expectation of financial incentives or return on investment is a great demand driver

which tempts people to invest or engage into transactions of the financial markets.

Risk Rating

Higher risks assumes higher profits and vice versa. Risk ratings are a vital point when
making a decision to park ones resources into this industry.

Liquidity

To maintain strong and flexible liquidity position people tend to invest in financial markets,
in order to meet their contingencies.

Availability of information

The more disclosure, the more is information symmetry, and so will be visibility and access
to returns and so will be the expectation from this market increase along with investment.

Access to alternatives

More the disclosure in the market more will be the competition with more profits, so more
will be the choices and access to alternatives to park ones resources.

The major supply drivers are:

Money supply

The supply of money has a big role to play in this industry, the more the supply of money in
this industry; more will be the availability of financial services and products.

Interest rates

Interest rate determines the terms of trade, fluctuations in interest rates can entirely fluctuate
this industry. Higher interest rate= will give higher returns, with great supply no doubt but
borrowing or ascertaining the real market value may become difficult.

Inflation

Value of a currency appreciates and depreciates with the rates of inflation. Inflation thus
serves as a great supply driver in this market. As in high inflation with higher supply of
money there will be higher supply and vice versa.

Economic conditions

Rates of inflation, the upsurge or downturn in the domestic and global economy is another
supply driver which is beyond the control of any business firm.

Government Regulations

The attitude of the government towards the trade policies and various other financial firms
and industry matters a lot. Various restrictions or duties or taxes may restrict the supply and
may hinder the growth of this industry. And will flourish with the ease of trade.

GLOBAL AND DOMESTIC ECONOMIC ENVIRONMENT OF

The financial industry

According to global 2000 (annual report by Forbes), seven of the top 10 companies belonged
to the financial industry. These included the Citygroup, Bank of America, HSBC Holdings, and
JPMorgan Chase. Their combined revenue in 2007 was worth $647 billion, down from 2006
high of $785 billion.
According to Fortune 500 rankings, in 2006 financial services generated $257 billion in
profits, a third of total Fortune 500 profits. In 2008, however, they lost a staggering $213 billion,
a total swing of $470 billion. Big players on the list, such as Citygroup and Bank of America,
may only be alive today just because of government money.
The financial industry is an industry in itself as well as an ancillary that supports other industries.
Trade and commerce across the world would come to standstill if there was no means to fund,
pay and protect the transactions.

The Brokerage industry

Domestic Economic Environment
In 1991, Manmohan Singh, as Finance Minister in Narasimha Raos government, embarked on a
programme of liberalization prompted by an acute balance-of-payment crisis.

Indian economy growth factors

Indian Brokerage Industry-Pre 2000

Post liberalization period.

Business restricted to friends and relatives.
Settlement T+15 days.
Low trade volumes- No derivatives trading allowed.
Lack of investment in technology- No front or back office software.

Indian Brokerage Industry 2000-2008

Venture capital funding for brokerage businesses.

Investment in technology- Front end and back end.
National presence.
Integrated risk management system.
Significant increase in trade volumes- Derivatives trades play a major role.
Margin funding for the retail clients.

Indian Brokerage Industry 2009 onwards

Paradigm shift from transaction oriented to research/ portfolio based advisory.

Focus on franchisee based business model.
Dematerialized accounts access for international trade.
Access to international stock exchange.
Trading on hand held platform (mobile phones etc) allowed.

Current Global Economic Environment

The global economy is slowly recovering from a deep recession, with significant risks
remaining.
Countries are looking for ways to achieve sustainable economic growth and job creation.
Competitiveness has become more important than ever
-Globalization will continue and strong international competitors are emerging.
-Companies are re-examining everything in terms of how and where they operate.
India has achieved a long-term competitive transformation, but the next stage of
development will be more challenging.

Critical Success Factors of the Industry

Seeing the overall brokerage as a single unit, the key success factors or the winning strategy of
Indian Brokerage Industry is a mixture of:

People
Process
Technology

There are the three ingredients that together create value for both international and domestic
customers.
By people it indicates to the service providers or the employees of the various firms of this
industry, who day in and day out interact with the customers and provide them services and
satisfy them.
Transparency of the process followed and disclosure method is yet another success factor. The
settlement of transactions is generally done in a process of T+2 days. And the government
support even still plays a very vital role in forming the rules and norms of such processes.
Technology enables to stay competitive and on edge with the competitors; facilitating the ease of
processes and speed and to maintain and be up to date. This serves as a great success of the
brokerage industry.
All these factors together help create value to the customer.

VARIOUS MEASURES TAKEN BY INDIAN GOVERNMENT TO

IMPROVE THE SITUTATION OF INDIAN STOCK MARKET

MEASURES

OBJECTIVES

Allow foreign institutional investors to

invest in equity and debt markets.

Liberalization of stock market to attract foreign investment in

order to boost economic growth.

Expanding the product range offered

by the stock exchanges.

Bring Indian market at par with the international standards and

diversify product portfolio.

Allowing Indian companies to issues

ADRS and GDRS.

Facilitate market integration and give freedom to the

companies.

Allowing Indian companies to invest

abroad.

Access to more funds for investment.

Divestment of government ownership

Strengthening of institutional
framework in primary and secondary
markets Demutualization

Facilitate growth through privatization

To ensure transparency.
Investor protection.
Provide a standard framework for operations.
Deregulation.
Reduces the conflict of interest.

BSE and NSE to set up and maintain

corporate bond reporting platforms

To capture all information relating to trading. Investor

protection

Making PAN compulsory

Strengthening KYC (Know Your Client)

PESTEL ANALYSIS OF BROKERAGE INDUSTRY

PESTEL analysis stands for "Political, Economic, Social, Technological, Environmental and
Legal analysis" and describes a framework of macro-environmental factors used in the
environmental scanning component of strategic management. It is a part of the external analysis
when conducting a strategic analysis or doing market research, and gives an overview of the
different macro environmental factors that the company has to take into consideration. It is a
useful strategic tool for understanding market growth or decline, business position, potential and
direction for operations.

Political factors are how and to what degree a government intervenes in the economy.
Specifically, political factors include areas such as tax policy, labour law, environmental
law, trade restrictions, tariffs, and political stability.

Economic factors include economic growth, interest rates, exchange rates and the
inflation rate. These factors have major impacts on how businesses operate and make
decisions. For example, interest rates affect a firm's cost of capital and therefore to what
extent a business grows and expands.

Social factors include the cultural aspects and include health consciousness, population
growth rate, age distribution, career attitudes and emphasis on safety. Trends in social
factors affect the demand for a company's products and how that company operates.

Technological factors include technological aspects such as R&D activity, automation,

technology incentives and the rate of technological change. They can determine barriers
to entry, minimum efficient production level and influence outsourcing decisions.
Furthermore, technological shifts can affect costs, quality and lead to innovation.

Environmental factors include ecological and environmental aspects such as weather,

climate, and climate change, which may especially affect industries such as tourism,
farming, and insurance.

Legal factors include discrimination law, consumer law, antitrust law, employment law,
and health and safety law. These factors can affect how a company operates, its costs, and
the demand for its products.

LEGAL ISSUES WITH A BROKERAGE FIRM

Securities Exchange Act of 1934 (Exchange Act)

In contrast to the Securities Act, the Exchange Act primarily regulates transactions of securities
in the secondary market - that is, sales that take place after a security is initially offered by a
company (the issuer). These transactions often take place between parties other than the issuer,
such as trades that retail investors execute through brokerage firms. The Exchange Act operates
somewhat differently from the Securities Act. To protect investors, Congress crafted a
mandatory disclosure process that is designed to force companies to make public information
that investors would find pertinent to making investment decision. In addition, the Exchange Act
provides for direct regulation of the markets on which securities are sold (the securities (stock)
exchanges) and the participants in those markets (industry associations, brokers, and issuers).

Monetary and Fiscal Policies

In the securities industry there exist regulators who have established a set of rules and
regulations that administer the entire industry. Financial markets, depositors, clearing houses,
and vendors work together to regulate the investment in the industry.
The 3 major US government agencies that govern the securities industry and frame monetary and
fiscal policy, they are: the Federal Reserve System, the Securities Exchange Commission (SEC),
and the Office of Comptroller of the Currency.

Federal Reserve System

The Federal Reserve System is a government institution created to administer nations credit and
monetary policies and to oversee the banking industry as well as certain aspects of the broker
activity, such as credit.
The Fed is responsible for establishing and enforcing monetary policy and for regulating the
amount of credit outstanding. The fed does this by establishing the bank discount rates and the
rules for credit. The markets response to the Feds determination to control inflation by raising
and lowering the discount rate affects long term interest rates, which have a significant impact on
the securities market.

Securities Exchange Commission

The Securities Exchange Commission (SEC) is the primary regulatory agency that oversees the
securities industry. The SEC is an independent bipartisan, quasi-judicial agency of the
government. The laws administered by SEC deal with securities and finance and seek to provide
protection for investors in their securities transactions.

Office of the Comptroller of the Currency

The Office of the Comptroller of the Currencys (OCC) principal function is supervising the
national banking system. The OCC must approve the establishment of new national banks, bank
mergers involving national banks, and the liquidations of national banks.

COMPANY OVERVIEW
Motilal Oswal Securities Ltd.
Motilal Oswal Securities is a leading research and advisory based stock broking house of India,
with a dominant position in both institutional and retail broking. Asia money Brokers Poll 2005
has ranked us the best Indian brokerage firm. There are various other categories where we have
been rated number one most independent research, sales and service etc by the Brokers Poll.
In March 2006, AQ Research, a firm that analyses the accuracy of a brokers research call,
declared Motilal Oswal Securities the best research house for Indian stocks.
Motilal Oswal Securities has witnessed rapid organic growth due to favorable market conditions
as well as efforts put in by the company itself. FY05 and FY06 saw the company grow
inorganically through acquisition of three significant regional broking firms from Andhra
Pradesh, Karnataka and Kerala. Over a period of time many more regional broking firms may be
acquired to gain solid footing in various regions of India.
The company was founded in 1987 as a small sub-broking unit, with just two people running the
show. Focus on customer-first-attitude, ethical and transparent business practices, respect for
professionalism, research-based value investing and implementation of cutting-edge technology
have enabled us to blossom into an almost two thousand-member team.
Our institutional business unit has relationships with several leading foreign institutional
investors (FIIs) in the US, UK, Hong Kong and Singapore. In a recent media report we were
rated as one of the top-10 brokers in terms of business transacted for FIIs.
Our unique Wealth Creation Study, authored by Mr. Raamdeo Agrawal, Managing Director, is
now in its eleventh year. Investors keenly await this annual study for the wealth of information it
has on how companies created wealth during the preceding five years.
The organization finds its strength in its team of young, talented and confident individuals.
Qualified professionals carry out different functions under the able leadership of its promoters,
Mr.Motilal Oswal and Mr. Raamdeo Agrawal Stringent employee selection process, focus on
continuous training and adoption of best management practices drive the quest to achieving our
Vision.

Motilal Oswal Securities Ltd. was founded in 1987 as a small sub-broking unit, with just
two people running the show. Focus on customer-first-attitude, ethical and transparent business

practices, respect for professionalism, research-based value investing and implementation of

cutting-edge technology has enabled us to blossom into an almost 2000 member team.
Today we are a well diversified financial services firm offering a range of financial products and
services such as

Wealth Management

Broking & Distribution

Commodity Broking

Portfolio Management Services

Institutional Equities

Private Equity

Investment Banking Services and

Principal Strategies

We have a diversified client base that includes retail customers (including High Net worth
Individuals), mutual funds, foreign institutional investors, financial institutions and corporate
clients. We are headquartered in Mumbai and as of June 30, 2008, had a network spread over 450
cities and towns comprising 1,496 Business Locations operated by our Business Partners and us.
As at June 30, 2008, we had 486,648 registered customers.
In 2006, the Company placed 9.48% of its equity with two leading private equity investors based
out of the US New Vernon Private Equity Limited and Bessemer Venture Partners.

The company got listed on BSE and NSE on September 9, 2007. The issue which was priced at
Rs.825 per share (face value Rs.5 per share) got a overwhelming response and was subscribed
27.18 times in turbulent market conditions. The issue gave a return of 21% on the date of listing.
As of end of financial year 2008, the group networth was Rs.7 bn and market capitalization as of
March 31, 2008 was Rs.19 bn.
For year ended March 2008, the company showed a strong top line growth of 91% to Rs.7 bn as
compared to Rs.3.68 bn, last year. New businesses like investment banking, asset management
and fund based activities have contributed to this growth.
Rs. Crores

FY 2007- 08 Growth (YoY)

Total Revenues 701

91%

EBIDTA

270

97%

PAT

156

100%

Credit rating agency Crisil has assigned the highest rating of P1+ to the Companys short-term
debt program.

Awards

For his work and contribution to the capital markets, Oswal has received several awards
including

Special Contribution award to Indian Capital Markets Award by Zee Business.

The Hall of Fame for Excellence in Franchising by Franchising World Magazine

Champion of Arthshastra by the Rotary Club .

Motilal Oswal Securities won the Best Performing Equity Broker (National) Award at
CNBC TV18 Financial Advisor Awards 2013 held in Mumbai.

Motilal Oswal Financial Services Ltd's Analyst Mr. Jinesh Gandhi won the Best Market
Analyst Award for the categories Equity-Auto at India`s Best Market Analyst Awards
2013 organized by Zee Business.

Motilal Oswal Securities was declared "Best Equity Broker" at Bloomberg UTV
Financial Leadership Awards in April 2012.

Motilal Oswal Securities was awarded with Best Performing National Financial Advisor
Equity Broker Award in 2012, second time in succession.

Motilal Oswal Financial Services was honoured with an award for Best Use in PR in
Financial Services Category at India PR & Corporate Communications Awards 2012.

Motilal Oswal Securities received Best Equity Broking House Award by BSE IPF-D&B
Equity Broking Awards 2011

Motilal Oswal Mutual Fund's MOSt Shares M50 ETF was adjudged Most Innovative
Fund of the Year by CNBC TV18 CRISIL Mutual Fund Award 2011

CNBC TV18 awarded Motilal Oswal the Best Performing Equity Broker Award in 2010
at CNBC TV18 Financial Advisor Awards 2010

Best Capital Markets & Related NBFC Award for FY11 by CNBC TV18 India Best
Banks & Financial Institutions Awards 2011

Motilal Oswal IB team won the Asia Pacific Cross Border Deal of the year award in 2010
and the CEO Ashutosh Maheshvari got India M&A Investment Banker of the Year award

Motilal Oswal Securities Ltd. rated as No.1 Broker in ET Now Starmine Analyst
Awards 2009[10].

MOSL awarded 'The Best Franchisor in Financial Services' by Franchisee. World

Magazine 2008 for the second consecutive year.

Motilal Oswal Securities Ltd. wins the Best Research as Research Showcase Partner at
RESEARCHBYTES IC AWARDS 2014. The winners were selected from a poll of over
1500 Fund Managers/Analysts!.

Motilal Oswal Securities received two awards for its equity research in IT and
commodity (forex) segments at India's Best Market Analyst Awards 2014, India's biggest
Financial Market Awards also called as ZEE Business Awards 2014.

Achievements
Oswal has received the Rashtriya Samman Patra awarded by the Government of India for being
amongst the highest income taxpayers in the country for a period of 5 years from FY95FY99.
Oswal is associated with various social organisations. He is the President of the Jain International
Trade Organisation (JITO) and a Trustee of Agarwal-Oswal Chhatravas of the Rajasthan
Vidyarthi Griha; among others
He has authored two books of quotations on The Essence of Business & Management and The
Essence of Life.

MOSt Vision

MOSt Guiding Principles & Core Values

Customer interest is paramount
Ethical and transparent business practices
Respect for professionals,associates and business partners
Research based value investing
Cutting edge technology to ensure world-class customer service
Shareholding Pattern at on June 30, 2008
As of 30th June, 2008; the total shareholding of the Promoter and Promoter Group stood at

70.37%. The shareholding of institutions stood at 9.78% and non-institutions at 12.26%.

Our Business Streams
Our businesses and primary products and services are:
Wealth Management
Financial planning for individual, family and business wealth creation and management needs.
These are provided to customers through our Wealth Management service called Purple
Broking & Distribution services

Equity (cash and derivatives)

Commodity broking

Portfolio Management Services

Distribution of financial products

Financing

Depository Services

IPO distribution

We offer these services through our branches, Business Partner locations, the internet and mobile
channels. We also have strategic tie-ups with State Bank of India and IDBI Bank to offer our
online trading platform to its customers.

Commodity Broking
Through Motilal Oswal Commodities Broker (P) Ltd our fully owned subsidiary; we provide
commodity trading facilities and related products and services on MCX and NCDEX. Besides
access to the best of research in the form of Daily Fundamentals & Technical Reports on highly
traded commodities, our clients also get access to our exclusive Customized Trading Advice on
both the trading platforms. We offer these services through our branches, Business Partner
locations, the internet and mobile channels
Portfolio Management Services
Motilal Oswal Portfolio Management Services offer a range of investments solutions through

discretionary services. We at Motilal Oswal have helped create wealth for our customers through
our Portfolio Management Services. Our knowledge of the markets together with our
understanding of our customers and their risk profiles has helped us design a range of portfolio
offerings for our clients. These include the Value PMS, Bulls Eye PMS, Trillion Dollar
Opportunity and Focused Portfolio Series I. As of June 30th, 2008, the assets under management
of our various portfolio schemes stood at Rs.6.92 bn.
Motilal Oswal group has applied to the regulatory bodies for a license to operate as a Domestic
Asset Management Company (Mutual Fund) and we expect to begin operations soon.
Institutional Equities
We offer equity broking services in the cash and derivative segments to institutional clients in
India and overseas. These clients include companies, mutual funds, banks, financial institutions,
insurance companies, and FIIs. As at March 31, 2008, we were empanelled with over 300
institutional clients including 191 FIIs. We service these clients through dedicated sales teams
across different time zones.
Investment Banking
We offer financial advisory services relating to mergers and acquisitions (domestic and crossborder), divestitures, restructurings and spin-offs through Motilal Oswal Investment Advisors
Private Ltd. (MOIAPL)
We also offer capital raising and other investment banking services such as the management of
public offerings, private placements (including qualified institutional placements), rights issues,
share buybacks, open offers/delistings and syndication of debt and equity.
MOIAPL has closed 23 transactions in 2007-08 worth US$ 1.8 billion and had 18 mandates in
hand as at March 31, 2008.
Private Equity
In 2006, our private equity subsidiary, Motilal Oswal Venture Capital Advisors Private Ltd
(MOVCAPL) was appointed as the investment manager and advisor to a private equity fund,
India Business Excellence Fund, which was launched with a target of raising US$100 mn. The
fund is aimed at providing growth capital to small and medium enterprises in India, with
investments typically in the range of US$3 mn to US$7 mn.
MOVCAPL will manage and advise the fund and other private equity funds, which may be
raised in the future. In its final closing, in December 2007, the fund obtained commitments of
US$125 mn (Rs.4,875 mn) from investors in India and overseas. The Fund has deployed/
committed $ 58 mn across 8 deals.

MOVCAPL has recently launched an INR 750 crores domestic Real Estate Private Equity Fund
called India Realty Excellence Fund sponsored by Motilal Oswal Financial Services Ltd.
Principal Strategies Group
For effective management of treasury operations and to capitalize on market opportunities, the
Group has set up a 30 member team which would be responsible for effective deployment of
funds into different trading and arbitrage strategies.

People behind the organization

Mr. Motilal Oswal

Chairman and Managing Director

Mr. Motilal Oswal is the promoter of Motilal Oswal Securities Ltd. He is an member of Institute
of Chartered Accountants of India and started the business along with the co-promoter Mr.
Raamdeo Agarwal in 1987.
Business Administration is his forte, Honesty, transparency and client goodwill form the core of
his business practice.
Service is required in everything, in research, in execution and in settlement. It is going to be
the key to survival. If you give good service and value to your clients, it will translate into good
business.
This has been a strong belief of Mr. Motilal Oswal and he has not only practiced it himself but
also made efforts to inculcate similar values in the employees of the organization.
He had been elected as a Director of BSE and joined its governing board in 1998. He is currently
a member of various committees of CDSIL and SEBI.

Mr. Raamdeo Agrawal

Joint Managing Director

Mr. Raamdeo Agrawal is the co-promoter of Motilal Oswal Securities Ltd. A member of the
Institute of Chartered Accountants of India & an equity research stalwart, he is the man behind
the strong research capability at MOSt.
He is respected by all in the research and broking industry for his valuable insights on issues
related to equity research. His firm belief in Value-Investing, as practiced by the legendary
Warren Buffett and Charlie Munger, forms the core of MOSt investment philosophy.

Management Team
MOSt management team is regularly engaged in finding ways to improve operational
efficiencies and customer satisfaction.
You will find CAs, CFAs, ICWAs, CSs, MBAs and IT professionals managing crucial functions,
to bring you best products and services - from research & advice to trade execution & settlement.
At MOSt we practice meritocracy and each of the team members is provided extensive training.

Training & Manpower Development

MOSt conducts various training and development programs regularly to enhance the capabilities
of its team. As much as 5% of the salary bill is spent on such programs, which is amongst the
highest for a broking organization in India. MOSt is truly a learning organization with lead being
taken by the Directors, who regularly participate in top management learning programs like
Strategic Management Program at Indian School of Business, Hyderabad, Strategy Summits with
Management Gurus like Tom Peters and Dr. Lester Thurow, Dean, Sloan School of Management,
(MIT) and Brand Management Seminar by Al Ries etc.

SWOT Analysis of Motilal Oswal Securities Ltd.

Strength

Wide range of financial products and focus on premium traders

Emphasis is on efficient execution of trades
Strong private equity operations
Have over 1500 offices in India
Financial products and services such as Wealth Management, Broking & Distribution,
Commodity Broking, Portfolio Management Services, Institutional Equities, Private
Equity, Investment Banking Service.
Large and diverse distribution network
Strong research and sales teams
Brand recognition
Experienced top management
Strong financial results

Weakness

Less penetration in developing cities

Lack of advertising causes low awareness amongst investors
Charges are high compare to other companies in industry

Opportunity

Growing rural market

Earning Urban Youth looking for investments
Growing Financial Services industry's share of wallet for disposable income
Huge market opportunity for wealth management service providers as Indian
wealth management business is transforming from mere wealth safeguarding
growing wealth.
Regulatory reforms would aid greater participation by all class of investors
Leveraging technology to enable best practices and processes
Increased appetite (need) of Indian corporate for growth capital

to

Threats

Stringent Economic measures by Government and RBI

Entry of foreign finance firms in Indian Market
Execution risk
Slowdown in global liquidity flows
Increased intensity of competition from local and global players
Unfavorable economic conditions

FACTORS AFFECTING INVESTMENT DECISIONS

There are a numerous reasons that affect investment decisions here are some of them:

Risk Tolerance

Risk refers to the volatility of portfolios value. The amount of risk the investor is willing to take
on is an extremely important factor. While some people do become more risk averse as they get
older; a conservative investor remains risk averse over his life-cycle. An aggressive investor
generally dares to take risk throughout his life. If an investor is risk averse and he takes too much
risk, he usually panic when confronted with unexpected losses and abandon their investment
plans mid-stream and suffers huge losses.

Return Needs

This refers to whether the investor needs to emphasize growth or income. Younger investors who
are accumulating savings will want returns that tend to emphasize growth and higher total
returns, which primarily are provided by equity shares. Retirees who depend on their investment
portfolio for part of their annual income will want consistent annual payouts, such as those from
bonds and dividend-paying stocks. Of course, many individuals may want a blending of the two
some current income, but also some growth.

Investment Time Horizon

The time horizon starts when the investment portfolio is implemented and ends when the
investor will need to take the money out. The length of time you will be investing is important
because it can directly affect your ability to reduce risk. Longer time horizons allow you to take
on greater risks with a greater total return potential because some of that risk can be reduced by
investing across different market environments. If the time horizon is short, the investor
has greater liquidity needs some attractive opportunities of earning higher return has to be
sacrificed and the result is reduced in return.

Tax Exposure

Investors in higher tax brackets prefer such investments where the return is tax exempt, others
will have no such preference.

Management Outlook

lf the management is progressive and has an aggressively marketing and growth outlook, it will
encourage innovation and favor capital proposals which ensure better productivity on quality or
both. In some industries where the product being manufactured is a simple standardized one,
innovation is difficult and management would be extremely cost conscious. In contrast, in
industries such as chemicals and electronics, a firm cannot survive, if it follows a policy of

'make-do' with its existing equipment. The management has to be progressive and innovation
must be encouraged in such cases.

Competitors Strategy

Competitors' strategy regarding capital investment exerts significant influence on the investment
decision of a company. If competitors continue to install more equipment and succeed in turning
out better products, the existence of the company not following suit would be seriously
threatened. This reaction to a rival's policy regarding capital investment often forces decision on
a company'.

Opportunity created by technological change

Technological changes create new equipment which may represent a major change in process, so
that there emerges the need for re-evaluation of existing capital equipment in a company. Some
changes may justify new investments. Sometimes the old equipment which has to be replaced by
new equipment as a result of technical innovation may be downgraded to some other
applications, A proper evaluation of this aspect is necessary, but is often not given due
consideration. In this connection, we may note that the cost of new equipment is a major factor
in investment decisions.

Market Forecast

Both short and long run market forecasts are influential factors in capital investment decisions.
In order to participate in long-run forecast for market potential critical decisions on capital
investment have to be taken.

Fiscal Incentives

Tax concessions either on new investment incomes or investment allowance allowed on new
investment decisions, the method for allowing depreciation deduction allowance also influence
new investment decisions.

Cash Flow Budgets

The analysis of cash-flow budget which shows the flow of funds into and out of the company
may affect capital investment decision in two ways. 'First, the analysis may indicate that a
company may acquire necessary cash to purchase the equipment not immediately but after say,
one year, or it may show that the purchase of capital assets now may generate the demand for
major capital additions after two years and such expenditure might clash with anticipated other
expenditures which cannot be postponed. Secondly, the cash flow budget shows the timing of
cash flows for alternative investments and thus helps management in selecting the desired
investment project.

Non-economic Factors

New equipment may make the workshop a pleasant place and permit more socializing on the job.
The effect would be reduced absenteeism and increased productivity. It may be difficult to
evaluate the benefits in monetary terms and as such we call this as non-economic factor. Let us
take one more example. Suppose the installation of a new machine ensures greater safety in
operation. It is difficult to measure the resulting monetary saving through avoidance of an
unknown number of injuries. Even then, these factors give tangible results and do influence
investment decisions.

Social Economic Factors affecting investors and their

decision in Capital
Market Participation
There are many factors that affect investors participation in Capital market. Most of these
factors are social economic factors as explained below;
Education Level
It is very evident that education level has in impact on investors participation in Capital
Market. This is due to the fact that as you study further there is a deep knowledge on
Investment related information including Capital Market and Shares. From research results it
could be seen those who participate mostly are Degree, masters holders.
Level of income
Level of income highly influences investors participation in Investment related activities.
Level of income is related to savings and investment budget. Most people with low income
have no interest (or not aware) on Capital Market related activities hence their participation is
almost not there regardless of their level of education.
Awareness /Technology
Awareness on Capital Market activities has an impact on Capital Market Participation.
Awareness comes in different forms, level of technology/computer literate of an investor
(browsing), Capital Market advertisement (DSE) etc. From research results some investors
of reasonable income and education they are not aware of Dar Es Salaam Stock Exchange.
Other factors includes (but not limited);

 Risk Tolerance: Risk refers to the volatility of portfolios value. The amount of risk
the investor is willing to take on is an extremely important factor.
Return Needs: This refers to whether the investor needs to emphasize growth or
Income.
Investment Horizon: The time horizon starts when the investment portfolio is
implemented and ends when the investor will need to take the money out.
Tax Exposure: Investors in higher tax brackets prefer such investments where the
return is tax exempt, others will have no such preference.
Market Trends: Need to understand how various asset classes have performed in the
past before planning for finances.
Investment Needs: How much money an investor needs at the time of maturity?
Risk Coverage: A type of insurance coverage that can exclude only risks that have
been specifically outlined in the contract.
Dependents: People who relies on another person, especially a family member, for
financial support.