CHAPTER III

COMPANY AND INDUSTRY PROFILE

Company profile

Capstocks is a professionally managed stock broking company having an unblemished and unparalleled service history of more than 23 years and a vibrant tradition of trust, loyalty and reliability. Capstocks was started by Rajendran.V, the present Managing Director of the company, in the year 1989. Capstocks is having both online and offline trading facilities. It is the first ISO 9001:2008 certified stock broking firm in India for all services in stock broking and allied activities.

Capstocks has about 180 outlets in various states of India and an international office in Sharjah,UAE . Capstocks is a member of the National Stock Exchange of India (NSE), Bombay Stock Exchange (BSE), MCX Stock Exchange (MCX-SX), Depository Participant with the Central Depository Services (CDSL) and a SEBI-registered Portfolio Manager. Capstocks also offers commodity services through its subsidiary company Capstocks Finanacial Services Ltd which is a member of the Multi-Commodity Exchange of India (MCX) and National Commodity Derivative Exchange (NCDEX).

Management

The Company's Management rests on: Rajendran. V. (Chairman & Managing Director) Engineer by profession, with in-depth knowledge and experience in market analysis. Leela Jeyakumar (Director) Post Graduate with over 18 years experience in stock broking and the in charge of company's Tamil Nadu operation since 1992. Meera Sahib. B (Director) Post Graduate with LLB & CAIIB and 28 years of experience in officer / executive cadre in a major Public Sector Bank Amjad Hydari (Assistant Vice President) Post Graduate with more than 12 years experience in various functions of the equity market brokerage.

Other Directors

Srinivasan S.IAS. (Director) Former Labor Commissioner and District Collector. Presently, Chairman and Managing Director, ODEPEC. Prema Rajendran (Director) Graduate in Commerce with more than 12 years experience. Rajeev Pillai (Executive Director) Engineer By Profession with wide exposure to International business organisations and consulting firms. Currently heading the North & West India Operations of Capstocks with head quarter at Mumbai. ISO Certification Capstocks has become the first ISO 9001:2008 brokerage in India to get certification for all stock broking and related financial service activities including Cash Markets, Derivatives, Internet Trading, Depository Services, Portfolio Management Services, Equity Research and Analysis, NRI Client Cell and Mutual Funds. The certification was obtained from the renowned United Kingdom Accreditation Services (UKAS), based on the Assessment by Moody International Certification Group through ICL Certifications Ltd.

The certificate was handed over at a function held in Trivandrum. Mr. Ashok Kumar Rout, Chief Operating Officer of the Bombay Stock Exchange Ltd., was the Guest of Honour on the occasion. Mr. Rajendran V, our Managing Director, received the certificate from Mr. Uwe Saelzle, Director of Moody International Certification Group, Germany, in the presence of Mr. Sanjeev Chadha, CEO, ICL Certifications Ltd., handling the Indian operations of the Moody International Certification Group.

Mr. Dilip Jacob Mathew, our Vice President, handled ISO 9001:2008 implementation as the Management Representative with assistance from Ms. Sangeetha, Sr. Executuve (QMS), and Mr. M. Pradeep Kumar, Management Systems Consultant and Trainer. A dedicated team of Managers and Executives, trained as Internal Quality Auditors in Capstocks, was involved in the Internal Assessments and improvement processes.

Commenting on the certification, Rajendran V, our Managing Director said We spent nearly 15 months to complete the ISO 9001:2008 certification process. There is a sea change in the organizational efficiency and day-to-day operations in our Company. The process flow and our organizational structure from top to bottom have been totally streamlined and the benefits will definitely be reflected in offering better services with the utmost satisfaction to our clients. As a result of ISO 9001:2008 implementation programme, Capstocks - having 75 branches covering India and else where - has been able to improve continually its systems, processes and procedures at the Head Office and its Branches with better review mechanisms.

With the ISO 9001:2008 recognition under our belt, Quality of Documentation and Communication has improved. Capstocks will maintain the Quality Management System and also continually improve the quality of service through regular Management Reviews and Internal Quality Audits. As part of this project, emphasis is being given to imparting effective training and retraining for Capstocks Team Members and systematic analysis of activities.

Quality policy CAPSTOCKS is committed to render the best knowledge-based personalized services in stock broking and related financial services, complying with all relevant requirements, by continually improving the competence of manpower and effectiveness of quality management systems, optimizing technology and infrastructure, thereby enhancing customer satisfaction.

Services
1. Online trading Capstocks has a network of branches with online terminals of NSE and BSE in the Capital market and Derivative segments. Our clients are assured of prompt order execution through dedicated phones and expert dealers at our offices.

2. Internet trading

Capstocks offers Internet trading through this site. You can trade through the Internet from the comforts of your office or home, anywhere in the world. Our dedicated IT systems ensure service up time and speed, making Internet broking through Capstocks hassle-free. Using the 'easiest' facility provided by CDSL, our clients can transfer the shares sold by them online without delivery instruction slips. Additionally, digitally signed contract notes can be sent to clients through E-mail. 3. Depository Services Capstocks is a member of the Central Depository Services Limited (CDSL), offer depository services with minimum Annual Maintenance Charges and transaction charges. Account holders can view their holding position through the Internet. We also offer the " e asi est " facility provided by CDSL (electronic access to securities information and execution of secured transaction ) through which clients can give delivery instructions via the Internet. 4. Derivative Trading We offer trading in the futures and options segment of the National Stock Exchange(NSE). Through the present derivative trading an investor can take a short-term view on the market for upto a three months perspective by paying a small margin on the futures segment and a small premium in the options segment. In the case of options, if the trade goes in the opposite direction the maximum loss will be limited to the premium paid.

5. Knowledge Centre Knowledge Centre activities are intended to provide systematic and structured services mainly to new investors and also to young aspirant aiming for a career in financial markets. The centre has three functional areas: the publication Division, the Training centre, and wealth management advisory service which provide complete investment solutions to investors through knowledge based personalized service. 6. Equity Research Department We have a full-fledged Investment Research & Analysis Department to help our clients to make investment decisions. Our clients can get information on any share they hold or plan to purchase. We publish a monthly newsletter' CAPSTOCKS INFOLINE ' , which contains our views on the latest trends in the markets, scrip recommendation, tutorials, news items etc. We also issue a daily newsletter, ' CAPS TREND ', which is available in our site . Besides we give intraday calls by SMS, chat, etc. You can avail yourself of this service by calling :+91471-2468160, 4013887 7. Portfolio Management services Capstocks is a SEBI-approved portfolio manager offering discretionary and non-discretionary schemes to its clients. Capstocks portfolio management team keeps track of the markets on a daily basis and is exposed to a lot of information and analytic tools which an investor would not normally have access to. Other technicalities pertaining to shares like dividends, rights, bonus, buy-back, Mergers and Acquisitions are also taken care of by us. Maximize your returns by opting for our PMS scheme. Please Call +91-471- 4013887,4013882 8. Commodity Trading * You can trade in commodity futures like gold , silver, crude oil , rubber etc. and take advantage of the extended trading hours (10 am to 11 pm ) in commodities trading. Do, please Call +91-471- 4013891,9847917187. 9. Mutual Funds, Bonds etc. We also offer Mutual Funds and Bonds. You can select from a wide range of Mutual Funds and Bonds available in the markets today. You can get the service by Calling : +91-4714013885,4013886,98473 19187.

10. NRI CELL We have a well-organized NRI Cell functioning exclusively to meet the requirements of our clients residing outside India. We are committed to provide them timely assistance by placing their orders, giving them valuable suggestions concerning their investments etc. Also we help those NRIs who desire to open accounts on repatriation basis. Facilities are offered to those clients who are interested in Internet trading by activating it, in co-ordination with the etrading department. 11. Currency Trading Capstocks is a member of currency derivatives segment of National Stock Exchange (NSE) and MCX Stock Exchange (MCX-SX). Currency Derivatives are a new asset class which was earlier not permitted for trading to all Indian residents. Currently the trading is based on four underlying currencies viz., US Dollar, Euro, Pound sterling, Japanese Yen. Please Call +91471-4093343, 09961886876. 12. Pan Service Agent of UTI Capstocks & Securities (India) Pvt. Ltd. has become authorized PAN card service agent (PSA) of UTI. Now pan applications can be submitted to any of the following offices, in addition to Head office.( Sasthamangalam, Sreekaryam, Technopark, and Pattom, in Trivandrum) Kollam, Alappuzha, Thiruvalla, Ernakulam, Thrissur, Irinjalakkuda,

Thodupuzha, Calicut, Chennai RO, Mangalore, Navi Mumbai, and Nagercoil RO. Capstocks offers this value added service to our privileged customers, existing as well as new customers at nominal processing charges.

INDUSTRY PROFILE
The trading on stock exchanges in India used to take place through open outcry without use of information technology for immediate matching or recording of trades. This was time consuming and inefficient. This imposed limits on trading volumes and efficiency. In order to provide efficiency, liquidity and transparency, NSE introduced a nation-wide online fully-automated screen based trading system (SBTS) where a member can punch into the computer quantities of securities and the prices at which he likes to transact and the transaction is executed as soon as it finds a matching sale or buy order from a counter party. SBTS electronically matches orders on a strict price/time priority and hence cuts down on time, cost and risk of error, as well as on fraud resulting in improved operational efficiency. It allows faster incorporation of price sensitive information into prevailing prices, thus increasing the informational efficiency of markets. It enables market participants, irrespective of their geographical locations, to trade with one another simultaneously, improving the depth and liquidity of the market. It provides full anonymity by accepting orders, big or small, from members without revealing their identity, thus providing equal access to everybody. It also provides a perfect audit trail, which helps to resolve disputes by logging in the trade execution process in entirety. This sucked liquidity from other exchanges and in the very first year of its operation, NSE became the leading stock exchange in the country, impacting the fortunes of other exchanges and forcing them to adopt SBTS also. Today India can boast that almost 100% trading take place through electronic order matching. Technology was used to carry the trading platform from the trading hall of stock exchanges to the premises of brokers. NSE carried the trading platform further to the PCs at the residence of investors through the Internet and to handheld devices through WAP for convenience of mobile investors. This made a huge difference in terms of equal access to investors in a geographically vast country like India. NSE has main computer which is connected through Very Small Aperture Terminal (VSAT) installed at its office. The main computer runs on a fault tolerant STRATUS mainframe computer at the Exchange. Brokers have terminals (identified as the PCs in the Figure 1) installed at their premises which are connected through VSATs/leased lines/modems. An investor informs a broker to place an order on his behalf. The broker enters the order through his PC, which runs under Windows NT and sends signal to the Satellite via VSAT/leased line/modem.

Indian stock market marks to be one of the oldest stock market in Asia. It dates back to the close of 18th century when the East India Company used to transact loan securities. In the 1830s, trading on corporate stocks and shares in Bank and Cotton presses took place in Bombay. Though the trading was broad but the brokers were hardly half dozen during 1840and 1850.In 1860, the exchange flourished with 60 brokers. In fact the 'Share Mania' in India began with the American Civil War broke and the cotton supply from the US to Europe stopped. Further, the brokers increased to 250. At the end of the war in 1874, the market found a place in a street (now called Dalal Street). In 1887, "Native Share and Stock Brokers' Association" was established. In 1895, the exchange acquired a premise in the street, which was inaugurated in 1899.

National Stock Exchange (NSE) The National Stock Exchange of India (NSE) was incorporated in November 1992 as a taxpaying company. It is recognized under Securities Contracts (Regulation) Act, 1956 in 1993 as a stock exchange. In June 1994, it commenced operations in the Wholesale Debt Market (WDM). In November, the same year, the Capital Market (Equities) segment commenced operations and the Derivatives segment in June 2000. Bombay Stock Exchange (BSE) A very common name for all traders in the stock market, BSE, stands for Bombay Stock Exchange. The oldest market not only in the country, but also in Asia. The early days of BSE was known as "The Native Share & Stock Brokers Association." It was established in the year 1875 and became the first stock exchange in the country to be recognized by the government. In 1956, BSE obtained a permanent recognition from the Government of India under the Securities Contracts (Regulation) Act, 1956.

THE MAIN PLAYERS IN THE INDUSTRY

The financials and investment industry is a highly competitive in nature with almost well established firms diversifying and entering into this industry. As of today there are Over 2000 brokers, 10000 sub brokers and 1 crore investors. It is highly competitive with entry of new aggressive players. Retail broking is highly fragmented industry with falling brokerages Value added services and Online trading, the new fad. INDIABULLS FINANCIAL SERVICES LTD. Indiabulls is Indias leading Financial Services and Real Estate Company having presence over 414 locations in more than 124 cities. Indiabulls serves the financial needs of more than 3,00,000 customers with its wide range of financial services and products from securities, derivatives trading, depositary services, research & advisory services, insurance, consumer secured & unsecured credit, loan against shares and mortgage & housing finance. The market capitalization of Indiabulls is around USD 800 million, and the consolidated net worth of the company is around USD 500 million. KARVY SECURITIES LTD KARVY, is a premier integrated financial services provider, and ranked among the top five in the country in all its business segments, services over 16 million individual investors in various capacities, and provides investor services to over 300 corporates, comprising the who is who of Corporate India. The birth of Karvy was on a modest scale in 1981. Karvy Consultants Limited. Thus over the last 20 years Karvy has traveled the success route, towards building a reputation as an integrated financial services provider, offering a wide spectrum of services. INDIAINFOLINE IndiaInfoline was founded by a group of professionals in 1995, a seemingly distant past in the Internet age. Their meticulous research was published and distributed in printed form to a client base comprising the who's who of Indian business including leading MNCs, investment banks and consulting firms. The quality of research was highly acclaimed and soon became the industry benchmark. Over the last few years, their research coverage has grown to cover practically all companies, sectors, economy and financial markets. The

breadth and depth of their content is unmatched - stock markets, mutual funds, personal finance, taxation and economy. SHARE KHAN Share khan is a pioneer in equity market. Share khan is among the top 3 branded retail service providers. Largest network of branded broking outlets in the country servicing 100,000 clients. Sharekhan not only has a strong offline presence but also provides automated online trading services. To sum up, Sharekhan brings to you a user- friendly online trading facility, coupled with a wealth of content that will help you stalk the right shares. In fact Sharekhan runs India's largest chain of share shops with around 250 outlets in 113 cities!

GEOJIT FINANCIAL SERVICES LTD

Today Geojit Financial Services Ltd is one of the largest and most respected retail brokerage companies from India where Kerala state Industrial Development Corporation (KSIDC) has taken equity participation making it the only brokerage company in India where a state financial corporation has taken equity participation. Geojit serves more than 250,000 clients who are serviced through 350 branch offices and handles trading turnover of more than US$ 3000 million per year. It is also the first company to offer Internet based broking service in India.

SHAREWEALTH SECURITIES LTD

Share wealth Securities Ltd is the first corporate member of National Stock Exchange of India Ltd, Bombay Stock Exchange Ltd and MCX Stock Exchange Ltd (MCX-SX) from THRISSUR, the Cultural Capital of Kerala. Share wealth is also a Depository Participant with CDSL (Central Depository Services (India) Ltd). Share wealth Securities Ltd has two group companies, Share wealth Commodities Pvt Ltd (Member: MCX, NCDEX, NMCE, ICEX & NSEL) and Share wealth Financial Services Ltd (AMFI Registered Mutual Fund Distributor). Share wealth has a group (Overseas Joint Venture) company at Abu Dhabi, Share wealth Financial Consultancy LLC. Registered & Corporate offices of Share wealth Group of companies are at Thrissur.