CHAPTER 2

INDUSTRY PROFILE
The working of stock exchanges in India started in 1875. BSE is the oldest stock market in
India. National Stock exchange comes second to BSE in terms of popularity; BSE and NSE
represent themselves as synonyms of Indian stock market.

Global investors now eagerly seek India as their preferred location for investment. Once
viewed with scepticism, stock market now appeals to middle class Indian also. Many Indians
working in foreign countries now divert their savings to stocks. This recent phenomenon is
the result of opening up of online trading. The stockbrokers based in India are opening offices
in different countries mainly to cater the needs of non-resident Indians.

In current FY14 Nifty has crossed 7000 levels and touched heights of 7500 levels, Sensex
also crossed 24000 levels and touched heights of 25000+ levels. And, it is expected to grow
in this current Bull Market.

Although India has one of highest household savings rate, the households channelize only a
small percentage of savings currently into the stock market. Instead, households prefer to
invest more in to bank fixed deposits, as equity they consider investments in equity
instruments comparatively riskier scheme. Survey findings revealed that, increased awareness
about equity market as the key factor that can channelize households savings into Stocks
with a share of almost 30% in factors that will channelize households savings into shares,
followed by improvement in economic scenario and superior performance of equity products
compared with other investment options.


Thus, a way forward for the Indian capital markets means that they need to be tuned in to
adjust to the constantly evolving developments in the financial services sector with focus on
product innovation, continued integration of technology, financial literacy and awareness,
regulatory reforms, flexible bond market and a favourable environment for the FIIs.
Emphasis on these necessities will strengthen the growth path, going forward.


EQUITY BROKERAGE INDUSTRY
Indian Equity Markets

Vibrant equity and debt market have been currently growing at a steady pace, regardless of
the global economic downturn, as compared to some of its peers in the global market.

The domestic equity brokerage turnover (BSE and NSE combined) registered an increase of
16% (annualized) in 9MFY12-13 to Rs 309 trillion (Rs 356 trillion in FY11-12). This strong
increase continued to be fuelled mainly by equity derivative volumes with cash volumes
declining by 9% (annualized) in 9MFY12-13 when compared with FY 11-12 while equity
derivative volumes grew by 19% over the same period.

Gross brokerage yields remained largely stable in 9MFY11-12 when compared to FY 11-12.
However, the decline in cash volumes as well as the futures volume at the expense of options
volumes impacted overall gross blended yield which in ICRAs estimation has declined by
~15-20% when compared to FY 11-12.

The total client accounts increased by around 9% YoY during FY13, however, the number of
e-broking clients increased at a superior growth rate of around 13% YoY during the same
period. The e-broking clients accounted for nearly 63% of the total client accounts during
FY13, increasing from around 61% in FY12. The total income generated by e-broking
accounts of the overall sample companies stood at Rs 84.5bn during FY13, increasing around
20% YoY.

The slowdown in the domestic economy, higher competition, growing cost pressures, and
falling yields, have made it a tough time for the Indian broking industry. Amidst this volatile
market, Indian broking companies have increased their focus towards client retention and
acquisition. Survey findings revealed that majority of the respondents selected client retention
and acquisition as their key focus area, followed by scaling up across existing products and
services and technology up gradation as the next major focus areas. However, diversifying
into non-broking business and expanding into rural market was not currently on the cards.



The equity broking companies expect the government to take investor friendly reforms that
will aid in launch of new products and services and boost the interest of market participants
involved. Offering more tax savings incentives to retail investors, emerged as top government
measure that will provide a thrust to the Indian broking industry, this will increase the
participation of these investors in the equity market. Launch of schemes such as Rajiv
Gandhi Equity Savings Scheme is expected to widen the retail investor base in the Indian
securities market.

Similarly, reduction or elimination of STT emerged as the second best government measure
that will provide a thrust to the Indian broking industry. Moreover, they expect other taxes
such as stamp duty, transaction, and turnover tax to be further rationalized, as they are higher
compared with other developed nations, which will aid in boosting volumes. Likewise,
increased focus on investor awareness programs revealed as the third top government
measure that will provide a thrust to the Indian broking industry.















COMPANY PROFILE

KOTAK MAHINDRA GROUP
Kotak Mahindra is one of India's leading banking and financial services organizations,
offering a wide range of financial, from commercial banking, to stock broking, to mutual
funds, to life insurance, to investment banking; the group caters to the diverse financial needs
of individuals and corporate sector.

The Group has a net worth of over Rs. 12,900 crores and has a distribution network of
branches, franchisees, representative offices and satellite offices across cities and towns in
India. It has offices in London, New York, California, Dubai, Abu Dhabi, Bahrain, Mauritius,
& Singapore and is servicing around 10 million customer accounts.

Kotak Group Products & Services:

Bank
Life Insurance
Mutual Fund
Car Finance
Securities
Institutional Equities
Investment Banking
Kotak Mahindra International
Kotak Private Equity
Kotak Realty Fund






KOTAK SECURITIES LTD.
Kotak Securities is a subsidiary of Kotak Mahindra Bank, which was established in 1994,
which services more than 14 lakh customer accounts. The firm has a wide network of more
than 1,255 branches, franchisees representative offices, and satellite offices across 386 cities
in India and offices in New York, London, Dubai, Mauritius and Singapore.

Kotak Securities process more than 400,000 trades a day which is much higher than some of
the renowned international brokers. The company is a corporate member of both The
Bombay Stock Exchange (BSE) and The National Stock Exchange of India (NSE). Its
operations include stock broking services for trading in stock markets through branches &
internet and distribution of various financial products including investments in IPOs, Mutual
Funds and Currency Derivatives.

Currently, Kotak Securities is one of the largest broking houses in India with substantial
geographical reach to Asia Pacific, Europe, Middle East and America.
Kotak Securities Limited has Rs 463 crores of Assets under Management (AUM) as of
31
st
Dec, 2013.

The company has Research Expertise specialize in Fundamental and Technical analysis
backed by a team of highly trained and qualified individuals. Full-fledged research division is
involved in Macro Economic studies, Sectorial research and Company Specific Equity
Research which publishes in-depth stock market analysis. This is combined with a strong and
well networked sales force which helps deliver current and up to date market information and
news.

It is also a depository participant with National Securities Depository Limited (NSDL) and
Central Depository Services Limited (CDSL).








PROMOTERS AND DIRECTORS

Uday Kotak, Executive Vice Chairman and Managing Director
Dipak Gupta, Joint Managing Director
Prof. S. Mahendra Dev, Director
N.P. Sarda, Director
Amit Desai, Director
C. Jayaram, Joint Managing Director
Asim Ghosh, Director
Prakash Apte, Director
Dr. Shankar Acharya, Chairman





AWARDS

Overall best Equity Broking House by BSE IPF - D&B Equity Broking Awards for
the year 2013
Depository Participant of the year by BSE IPF - D&B Equity Broking Awards for the
year 2013
Top Performer in New Accounts Opened (Non-Bank Category) - NSDL Star
Performers Award 2013
Fastest growing Equity Broking House by BSE IPF - D&B Equity Broking Awards
for the year 2012
The Best Equity House in India by Finance Asia for the year 2012
Best Broker in India by Finance Asia for 2012, 2010 & 2009
UTI MF - CNBC TV18 Financial Advisor Awards - Best Performing Equity Broker
(National) for the year 2009
Best Brokerage Firm in India by Asia money in 2009, 2008, 2007 & 2006
Best Performing Equity Broker in India by CNBC Financial Advisor Awards for 2008
Avaya Customer Responsiveness Awards for 2007 & 2006 in the Financial Services
Sector
The Leading Equity House in India in Thomson Extel Surveys Awards for the year
2007
Best Provider of Portfolio Management: Equities by Euromoney for 2007 & 2006
Best Equities House In India by Euromoney Award for the year 2005
Best Broker in India by FinanceAsia for the year 2005
Best Equity House in India by Finance Asia for the year 2004











PRODUCTS / SERVICES PROFILE

Equities
Derivatives
Mutual Funds
Currency Derivatives
Fixed Deposits and Bonds
Initial Public Offering (IPOs)
Gold Exchange Traded Fund (ETF)


SERVICES





Trading Platforms:
KEAT Pro X - Online Trading Software
A free, easy-to-use web based tool for all our online trading customers, KEAT
ProX is a high speed trading tool that allows you to monitor what is happening in
the market at real time speed.
Features :

Real time streaming data


Charting Tools


Live Account Information


Customizable


Speed


Stock Recommendation

Watchlists


Highly Integrated




FASTLANE
Fastlane is a Java based applet with live streaming, watchlists and more. If clients
office or computer doesn't support installation of an executable (.exe) file and still
want to experience of a trading application, then it is a best substitute.

Features:
Add own list of scrips and create watchlists of choice.
Buy/Sell scrips.
Check order status.
Check available funds.
View Company details in the research.
Get recommendations on scrips.
View open positions.


Stock Trader - Mobile Trading Application

Stock Trader (ST) is a mobile based application which allows to trade from mobile
phone anywhere, anytime.





Call & Trade

Kotak Securities brings Call & Trade service for online stock trading account.
This facility allows capitalising on stock market opportunities even when
computer is inaccessible. Call & Trade essentially provides the convenience
of trading in Equities, Derivatives, IPOs and Mutual Funds over the phone.

VALUE ADDED TRADING SERVICES

Going above and beyond the basic need of transactions in equities, Kotak offer a surplus
of Value Added Services. Choose any of Kotak Securities Trading accounts, the
combination of research, trading platforms and communication channels enable to deliver
a higher value to customer.
Specialised services like Trade Smart, Research on SMS and E-mail subscription
constantly gives stock ideas that you can benefit from. The services ensure that clients
end-to-end trading needs are satisfied.
Various Value Added Services are:

Auto Invest - Start an SIP in Equities
Auto Invest is now offered as a value added service from Kotak Securities,
through which investor can do Systematic Investment Planning in Stocks.
Through this product client can invest in stocks of choice at regular intervals -
daily, weekly, fortnightly or monthly. Choice your SIP type as either amount-
based or quantity based.

Benefits of Systematic Investment Planning
You decide how much you want and when you want to invest.
Give Discipline to your investments.
Minimize the risk of market volatility.
Gives your investments the power of compounding.
Take advantage of rupee cost averaging.

Benefits of Auto Invest :

See your wealth grow by investing our expert-backed stocks.

Invest in up to 5 stocks in one order.

Choose Amount based or Quantity based investments.

Register once for your SIP, then your investments will happen
automatically.

Extensive selection of stocks to choose from.


Margin Finance

Margin financing Facility enables to finance customers stock purchase
in the cash segment. This ensures having sufficient funding to finance
the settlement of positions that have taken on the stock exchange.



Super Multiple
Super Multiple is especially designed for traders who wish to take the advantage
of intraday trading in huge volumes. It is an auto square off service. With Super
Multiple you can take a position on particular scrip(s) on a particular day and
avail up to 17 times exposure on the available margin.
a) Super Multiple in Futures Segment
Kotak Securities offers Super Multiple in Futures Segment, a service that
offers up to 15 times exposure in Future Index against available margin, and upto
10 times exposure on Future Stock of specified scrips.

b) Super Multiple in Cash Segment
Kotak Securities has launched Super Multiple, a service that offers clients up to
14 times exposure against margin, on specified scrips.





Twin Advantage
With Twin Advantage, all online trading customers not only get exposure on
their margin as cash, but they will also benefit by obtaining margin on the stocks
have in their Demat account.



Portfolio Tracker
Portfolio Tracker will help client to track investments in Equities, Derivatives
and Mutual funds. Client does not have to worry to compute the profit and loss
against holdings, can view the value of holdings online.
Statement of Holding
Transaction Statement
Gain/Loss Statement
Update DP Stock rates
FY wise Realised P/L



SMS Alert Subscription
Get insightful stock recommendations on expected price movements of top
scrips for the day, through the day, via SMS. Kotaks equity research analysts
monitor the markets constantly to gives real-time stock calls. Kotak give clients
advice not after it happens, but when it happens.

Types of services:
Fundamental Calls
Technical/Intraday/Derivative Calls
Account Transaction Alerts
Trade Confirmation SMS



Trade Smart
Kotak Securities brings Trade Smart a service that helps to identify market
trends and patterns. Can spot bullish as well as bearish trends for stocks listed in
various exchanges.
This is made available automatically for all stocks in watchlists and portfolio.
Dont have to search trends & patterns for stocks are in hold.


Security Key
In order to keep the account of customers safe and secure, Kotak provide
Security Key to ensure that online trading at Kotak Securities remains highly
protected and risk free.

The Security Key generates a dynamic and unique six-digit password every time
it is switched on. As a customer while login in to your trading you need to use
User ID, Password and this dynamic 6 digit code and access the account for
trading or accessing information.



ACCOUNTS OFFERED

Kotak Gateway - Stock Trading Account
Kotak Securities Gateway Account, an Online Trading Account opens the gateway to
a world of investing opportunities. Client may be anywhere, anytime and still can
manage to place trades using the Internet or by Call and Trade Facility.
Kotak Privilege Circle
Understanding individual investing needs, Kotak Securities make sure clients get to
enjoy premium and top of the line trading services only with Kotak Private Client
Group.




Private Client Group offers:

Dedicated relationship manager with expertise in comprehensive suite of products.
Advisory Desk equipped with professionals with formidable experience in advising
HNI Clients.
Customized & consultative approach to investment
Making most of Idle cash : Investing Idle cash in liquid funds based on instructions
from the clients
Market views by Experienced Research Analysts with proven track record
Stock recommendation reports on more than 110 stocks

Trinity Account

Trinity Account is a unique integrated account that helps clients enjoy the benefits of
an Online Trading Account, Bank Account, and Demat Account on a single
platform for securities transaction. This account gives client a convenience of fund
transfer and online trading with multiple logins.











Benefits of Trinity Account:
Single application to open three different account i.e. Bank Account, Demat
A/c & Online Trading Account.
Get all the three different account with single entity.


2 in 1 Account 3 in 1 ( Trinity )
Account
Banks to Link Kotak , Axis , HDFC , Citi Kotak Mahindra Bank


, ICICI , SBI
Fund transfer
facility
Manual transfer done via
payment gateway
No manual transfer
required
Payment
Gateway
Fund transfer through
payment gateway
Direct fund transfer
possible
Limits on fund
transfer
Limited transfer Unlimited transfer


Non Resident Account (NRI)
Client can do online delivery based trading through Kotaks NRI- Trinity Account.
This account links clients Banking, Demat and Trading account, thus providing a
seamless platform to trade efficiently and conveniently.

Qualified Foreign Investor (QFI)
If client reside outside India, who is resident in a country that is a member of the
Financial Action Task Force (FATF) or a country that is a member of a group which
is a member of FATF and Resident in a country that is a signatory to IOSCO's
MMOU - or a signatory of a bilateral MOU with Securities and Exchange Board of
India (SEBI) can invest in capital market through this account.

AREAS OF OPERATION
Corporate Office:
Kotak Securities Ltd.
3rd Floor, Nirlon House,
Dr. Annie Besant Road, Worli, Mumbai 400030

Bangalore Offices:

Branches in other Cities:




VISION, MISSION & QUALITY POLICY

Vision

Kotak works with the vision of being:

The Global Indian financial services brand
The most Preferred Employer in financial services
The most trusted financial services company
A Value Creator


Quality Policy

Ethics
Kotak Securities believes that ethics of a company help to deliver value to all the
stake holders and leads to success.
Kotak Securities adheres to strict ethical practices and compliance that comprise of
commitments towards customers, associates, stakes holders and employees.
Strong Internal Control team ensures that every individual delivers based on policies
set by the company and there is no compromise on the quality.
Centralized Risk Management division regularly monitors the position of customers'
portfolios to reduce the loss at the time of market volatility.










INFRASTRUCTURAL FACILITIES
The company has offices across 386 cities in India and offices in New York, London, Dubai,
Mauritius and Singapore.

Well Furnished, proper lighting and ventilation, comfortable to employees.

Well equipped Network systems, Internet and Telecommunication Networks.

Employees have been provided with better seating facility, along with the better
desktop systems.
Well designed Trading Rooms, Discussion rooms, Office space.

Televisions are screened all around the office to facilitate their employees to have
Real time updates of financial markets.






COMPETITORS INFORMATION
Competitors for the company in the Broking Industry:
Angel Broking Limited
Angel is counted among top 3 broking firms in India. It was founded in the year
1987 and it offers various services like e-broking, commodity trading and other
wealth management services.
Head Office: Mumbai, India


Sharekhan Limited
ShareKhan is an online trading company of SSKI group. It has presence in over 170
cities of the country and Indias most trusted brokerage firms.
Head Office: Mumbai, India

SMC Global Securities Limited
SMC Global Securities is present all over the country. It has over 6 million
satisfied investors and over 3.5 million trades per day.
Head Office: New Delhi, India

India Infoline Limited
India Infoline was started in year 1996 and has over 2 million customers.
Head Office: Andheri, Mumbai












SWOT ANALYSIS

STRENGTHS
Innovators in the industry:
Mobile stock trading application and track portfolio.
Facility of Margin Finance to the customers for online stock trading.
Investing in IPOs and Mutual Funds on the phone.
Provision of margin against securities automatically against shares in your
Demat account.
Auto Invest - A systematic investing plan in Equities and Mutual funds.

Stability: Kotak Securities is subsidiary of Kotak Mahindra Bank and one of the
oldest and largest stock broking firms in the Industry.

Quality Service: Offers High standards of service to customers. Awarded The Most
customers responsive company award in the Financial Institution
sector by AVAYA Global Connect Award both in 2006 and 2007.

Robust Technology: Kotak Securities has developed its own proprietary trading
platform which is robust and among the best in the industry. It
has 150 technology professionals constantly working on
upgrading and speeding up all our systems.

Exceptional Research: Unlike most other competitors, Kotak Securities got its own
In house research team. In house research team is among the
best in the industry and they have years of experience in the
financial markets.

Centralized Risk
Management System: Unlike many other players, Kotak Securities have a
centralized risk management system. This allows offering the
same levels of service to customers across all locations.

Brand Value: The Company enjoys a very high Brand loyalty and recall value
among its customers.

Expertise Management: The Company has expertise in managing big business.


WEAKNESS

Some players providing Zero Charges for opening account and account maintenance.
Not much of presence in rural and semi urban segment
Lack of promotional activates


OPPORTUNITIES
People are getting interested in investments in share market than in savings bank,
leading to more customer base opportunities.




THREATS

Competition in the sector is increasing in the entry of lots of private giants with the
collaboration of foreign giants.























FUTURE GROWTH AND PROSPECTS

Launching Trading account designed for women, in a bid to encourage women to invest
directly in equities, Kotak Securities has Launching Kotak Pearl,' a special trading account
designed for them. Investing trends indicates that, women not only trade for longer periods of
time but they also show larger activity as compared to men.

Kotak Pearl comes with 50% brokerage cash-back on cash market trades for the first three
months, brokerage of 0.01% on Kotak Gold ETF (exchange traded fund) transactions and a
guidebook--'Everything you wanted to know about stock market investing.


















Financial Statement
Kotak Mahindra Bank - Consolidated Balance Sheet as on 31st March 2013
Consolidated Balance Sheet
in Rs.
Cr.



Mar '13 Mar '12 Mar '11
12 mths 12 mths 12 mths

Capital and Liabilities:
Total Share Capital 373.3 370.34 368.44
Equity Share Capital 373.3 370.34 368.44
Share Application Money 0 0 0
Preference Share Capital 0 0 0
Init. Contribution Settler 0 0 0
Preference Share Application 0 0 0
Employee Stock Opiton 17.53 34.82 36.92
Reserves 14,876.49 12,530.70 10,594.51
Revaluation Reserves 0 0 0
Net Worth 15,267.32 12,935.86 10,999.87
Deposits 49,389.14 36,460.73 27,312.98
Borrowings 36,171.96 29,194.69 22,073.32
Total Debt 85,561.10 65,655.42 49,386.30
Minority Interest 208.72 160.06 107.21
Policy Holders Funds 10,077.27 9,011.53 8,145.20
Group Share in Joint Venture 0 0 0
Other Liabilities &
Provisions 4,720.24 4,586.52 5,042.56
Total Liabilities
1,15,834.65 92,349.39 73,681.14


Assets
Cash & Balances with RBI 2,220.76 2,030.63 2,114.86
Balance with Banks, Money
at Call 2,297.49 1,545.20 879.4
Advances 66,257.65 53,143.61 41,241.95
Investments 40,907.24 31,658.43 26,048.99
Gross Block 619.9 615.29 600.42
Accumulated Depreciation 0 0 0
Net Block 619.9 615.29 600.42
Capital Work In Progress 0 0 0
Other Assets 3,531.63 3,356.22 2,795.51
Minority Interest 0 0 0




Group Share in Joint Venture 0 0 0

Total Assets 1,15,834.67 92,349.38 73,681.13

Contingent Liabilities 43,980.45 42,221.94 37,693.49
Bills for collection 0 0 0
Book Value (Rs) 204.25 174.18 148.78