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A Comprehensive Study of the process and working of Edelweiss Broking Ltd.
Submitted to St. Francis Institute of Management and Research in partial fulfillment of the requirement for the award of the degree in...
MASTERS OF MANAGEMENT STUDIES
Submitted By Ryan Leo D’Souza
Under the guidance of Prof. Shilpa Peswani
St Francis Institute Of Management And Research, Mt.
Poinsur, S.V.P Road, Borivali (W) Mumbai.
This is to certify that I, Ryan Leo D’Souza student of St. Francis Institute of Management & Research declare that the project Titled ‘A Comprehensive Study of the Process and working at Edelweiss Broking Ltd.’; submitted by me in fulfilment of the requirement for the degree of Masters of Management Studies to the St. Francis Institute of Management & Research under Mumbai University, is true and original to the best of knowledge.
Ryan D’Souza (Student)
Prof. Shilpa Peswani
As I sum up the draft of my study, I deeply appreciate the contribution of all those people without whose support and help this project would never have taken its present form. I would like to thank the college St. Francis Institute of Management & Research for giving me an opportunity to work on such a project in order to enhance my learning skills. I would also wish to thank my project guide Prof. Shilpa Peswani who directed me and gave me the right guidance in my project research. Its my pleasure to thank Mr. Rahul Gandhi (Branch Manager) Edelweiss Broking Ltd and all the senior executives of Edelweiss Broking ltd who provided me with useful inputs and tips to do my project well. I would also wish to thank my family and friends who sincerely helped me complete my project.
As a part of my MBA curriculum I have done my Internship training at Edelweiss Broking Ltd. In this report I am sharing my experience in the company for a period of 2 months. At “Edelweiss” we gave advisory services i.e. educating the potential investors about stock market as an alternative source for investment to the traditional investment baskets. This also includes answering the queries of the investors about the stock market, the various options that an investor can invest his money into and fund management services.
In this project, I have identified the strategies of Edelweiss for Business development. While interacting with the clients, I have incorporated their recommendations and expectations and conveyed the same to the company. As major part of the business that Edelweiss gets is through references, incorporating the suggestions of the existing clients would lead
to a satisfied clientele base that would definitely help the growth of ‘Edelweiss’ business.
Table of Contents
01 02 03 04 05 06 07 08 09 10 11 12 Industry Profile Company Profile SWOT Analysis What does the Company offer Review Literature Need and objective of study Research Methodology Method of Data Collection Study of Strategy of EBL for Business Development Findings & Recommendations Conclusion Bibliography 43 47 48
07 09 15 16 17 22 23 24 25
List of Diagrams and Charts
01 02 03 04 05
Organisational Chart Screenshot of Online Portal Screenshot Investment Baskets Screenshot of the procedure of Basket The LMS system
14 27 33 34 39
Share broking has been an extremely profitable business in India in recent years. “The last four-five years have been fantastic for the retail broking business with 60 to 70 per cent growth annually,” “Right now only one per cent of the Indian population is investing in equities and, if in the next five years even if 5 percent of the population invests, then 25 to 30 per cent growth is guaranteed.”But it’s a difficult and challenging business as it is tough to live up to the expectations of low net worth individuals. In the last decade, the Indian brokerage industry has undergone a dramatic transformation. From being made of close groups, the broking industry today is one of the most transparent and compliance oriented businesses. There have also been major changes in the way business is conducted. Technology has emerged as the key driver of business and investment advice has become research based. At the same time, adherence to regulation and compliance has vastly increased. The scope of services have enhanced from being equity products to a wide range of financial services. Investor protection has assumed significance, and so has providing them with education and awareness. Brokerage firms are giving importance and significance to aspects such as training on skill sets that could prove to be beneficial in the long run. With the nature of markets and products becoming more complex, it becomes imperative for the broking firms to keep their staff continuously updated with latest development in practices and procedures. Moreover, it is mandated for certain types of dealers/brokers to seek specific certification and examinations that will make them eligible to carry business or trade. Greater emphasis on aspects such as research and analysis is giving scope for in-depth training and skills sets on topics such as trading programs, valuations, economic and financial forecasting and company research.
In India, the two major broking indexes are: BSE – The BSE Index, SENSEX, is India's first stock market index that enjoys an iconic stature, and is tracked worldwide. It is an index of 30 stocks representing 12 major sectors. The SENSEX is constructed on a 'free-float' methodology, and is sensitive to market sentiments and market realities. Apart from the SENSEX, BSE offers 21 indices including 12 sectored indices.
NSE –On its recognition as a stock exchange under the Securities Contracts (Regulation) Act, 1956 in April 1993, NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. The Capital Market (Equities) segment commenced operations in November 1994 and operations in Derivatives segment commenced in June 2000.
About the Company
The EDELWEISS GROUP started its journey in Mumbai in the year 1995, by two IIM graduates, Mr. Rashesh Shah and Mr. Venkat Ramaswami. “Ideas create, values protect” is the slogan and depict the mission statement of Edelweiss group. “Our Reputation and Image is more important than any financial reward. Reputation is hard to build and even harder to rebuild. Reputation will be impacted by our ability to think for our clients, maintain confidentiality and by our adherence to our value system.” Mr. Rashesh Shah
The Logo: Edelweiss, a rare flower found in Switzerland. A graphic flower that represents ideas! Around it, the protective arms of the letter ‘E’: Edelweiss believes ideas create wealth, but values protect it. It is the practice of this core thought that has led to Edelweiss becoming one of the leading financial services company in India.
Its current businesses include: • • • Investment Banking, Securities Broking, and Investment Management.
Edelweiss provides wide range of services to: • • • Corporations, Institutional Investors and High Net-Worth Individuals.
Headquarter based in Mumbai, India. KEY PEOPLE: Chairman & Founder: Mr. Rashesh Shah (IIM Graduate 1995 batch) and Venkat Ramaswami. Designated director: Mr. Naresh Kothari. Directors: Rashesh Shah, Venkat Ramaswami and Hiralal Chopra.
Type of industry: investment banking, brokerage and asset management firm. Total market capitalization: About Rs. 13,000 cr. Total number of employees: 645
Edelweiss was previously into niche marketing only, dealing with the High Net worth Individuals (HNWI) clients only. Looking at the current market scenario, company is targeting the Retail Segment with its new Online Trading Portal. The company sights the need for entering into the retail segment by seeing the saturation of the niche market and the exploration of the areas which was left untouched by the organization. The idea behind this is to Reposition the company from niche marketer to mass marketer. The brand repositioning of the company is done in order to withstand the current market scenario (Global Economic Crisis). The product or the service that the company has come up with is the Prepaid Broking Plan for both the retail as well as HNI customers. Basically every broking firm offers dematerialization and the trading account with some charges associated to it and the main source of income is the brokerage that is collected on every transaction made by the customer, which is a continues source of income. The prepaid account is like mobile cash card which has to be recharge first and then can be used for a year. The client has to pay the brokerage in advance which will be deducted on every
transaction. The client can recharge the account as the balance gets over before the validity expires. Products and Services: • • • • • Investment Banking Institutional investment Asset management Wealth management Private client brokerage
Investment Banking: An Investment Bank is a financial institution that deals with raising capital, trading in securities and managing corporate mergers and acquisitions. Investment banks profit from companies and governments by raising money through issuing and selling securities in the capital markets (both equity, bond) and insuring bonds (selling credit default swaps), as well as providing advice on transactions such as mergers and acquisitions. At Edelweiss Securities Ltd, Investment Banking business is dedicated to providing corporations, entrepreneurs and investors, the highest quality independent financial advice and transaction execution.
Institutional investors are organizations which pool large sums of money and invest those sums in companies. They include banks, insurance companies, retirement or pension funds, hedge funds and mutual funds. Their role in the economy is to act as highly specialized investors on behalf of others.
Asset Management or Investment management: Investment management is the professional management of various securities (shares, bonds etc.) and assets (e.g., real estate), to meet specified investment goals for the benefit of the investors. Investors may be institutions (insurance companies, pension funds, corporations etc.) or private investors (both directly via investment contracts and more commonly via collective investment schemes e.g. mutual funds or Exchange Traded Funds)
Private client brokerage: Edelweiss is focused on providing products, strategies and services to High Net worth Individuals and Corporate Clients. It has geographic reach through Branches, Channel Partners & Investment Consultants in over 19 locations in India. The PCG team has highly trained equity professionals, who act as clients Equity Advisor. Its ESL Equity Advisor proactively helps
you take informed investment decisions and build a healthy portfolio.
Rashesh shah C.M Insurance Deepak Mital (CFO) AMC Piyush Chadddha & Rujan panjani ECL Finance Ravi Bubna Institutional equity Naresh Kothari & Vikas Khemani Private client group Nitin Jain Retail Broking Kedar Deshpande
Retail Broking Kedar Deshpande
Sales Rahul Jain North
Service Team Satya murthy South
Product & oprations Riyaz ladiwala East
Dealing Krishna Kachela West Nobel Masshil
A SWOT analysis is done in order to examine strengths and weaknesses within the organisational environment and to be aware of the various opportunities and threats that could harm the organisation. STRENGTH o Co-operative and Experienced Branch Managers o Good Client Database o Excellent Customer Service o A Solid Distribution Network o Wide Range of Product WEAKNESS
Lower market penetration- lesser advertising. o Inadequate training to sales personnel
o Competition from banks
OPPORTUNITIES o Untapped Market o Changing Mindset of Customers o Unpredictable Sensex THREATS Reach o Stiff competition from existing players in the market o Better products
WHAT DOES EDELWEISS BROKING LTD. OFFERS
Company believes in providing personalized service and individual attention to each client to ensure that we understand their goals and help them achieve it.
Company offers expert advice on equity and debt portfolios with an objective to provide consistent longterm return while taking calculated market risks.
Companies approach helps clients build a proper mix of products, and not concentrate on just one individual product. Hence they serve the long-term objectives in the best way.
Company believes that long-term vision is the only means to steady wealth creation. However to achieve this one also needs to take advantage of short-term market opportunities while not losing sight of long-term objectives. Hence it partners all its clients in realizing their long-term vision.
4.Access to Research Reports
Company provides the clients with access to the expert opinion of economists and analysts.
5.Transparency and Confidentiality
Company’s clients receive regular portfolio statements from relationship managers via email.
If we want to save our money, then we have to open a savings account with a Bank. In the similar manner if we want to buy and sell shares, then we need to open a Demat account with a depositary participant registered with SEBI, NSE, and BSE. Demat denotes the dematerialization of shares. Demat account along with a trading account from a DP facilitate us to buy and
sell shares online and to store the shares online without any bonded paper stuffs. Demat account facilitates faster transaction when compared with the older traditional trading method, (i.e) the share buyer have to inform to the broker regarding his purchase decision and then the broker forward it to the stock exchange, then they allot the shares to the respective buyer and send him a registered share certificate via postal department. The investor has to wait for 5 days for his transaction. But now due to the entry of Demat account and online share trading platforms, the investor can buy and sell any volume of shares online with a click of a mouse making trading easier and more comfortable and convenient to the investor.
Online Share Trading
Online trading in India is the internet based investment activity that involves no direct involvement of the broker. There are many leading online trading portals in India along with the online trading platforms of the biggest stock houses like the National stock exchange and the Bombay stock exchange. The
total portion of online share trading India has been found to have grown from just 3 per cent of the total turnover in 200304 to 16 per cent in 2006-07.
Advantages Of Online Trading: • The first major advantage of trading online is the ability to
have total control over ones investments. Before the advent of online trading, investors had to go through a stockbroker in order to buy and sell their stocks. This process is tedious, can take up value able time and is costly. In addition to that, brokers can sometimes persuade investors to buy and sell certain stocks because of personal reasons.
When investors trades online they have total control of have the luxury of
their money. In addition to that, investors
speed. They can buy and sell stocks quickly, which can help them save money. An example of this is if investors want to buy certain stocks at low price, by the time they call their broker and eventually buy the stock the price could have increased during that time period. This same example applies to when investors want to sell a stock at a certain time. While the investors are calling their broker and the stock is being sold, the price could have dropped. This could sometimes cost investors thousands of dollars.
With online trading, people can buy and sell at the exact
time they choose to do so because it is just a mouse click
away. Online trading is also beneficial because it reduces the cost of transaction. Instead of paying broker , which can be very costly , investors can trade online and pay a small fee to their company. this saves the customers from having to pay commission to the stockbroker. Furthermore, since” the explosion of online brokerages has driven the cost of transactions way down, trading online is cheaper than ever. This is because all the companied are competing for business continue reducing their costs to attract customers.
The last major advantage of trading stocks online is that
more information is available then ever before. Investors can get the most up to date stock quotes and can reach any company they plan on buying stock for. This information was previously only available to stockbrokers. With the new technology the internet offers, it is available to everyone. With this information the investors can become more educated and make good decision on the stocks they want to buy and sell. One such website that allows users to gather information is Quote.com. Quote.com has graphic charts that updates the investors’ portfolio throughout the day and also lets investors create “watch lists” or mock portfolios that monitor alternative investment options”. This means that customers can plan out different investing stratifies and see how those compare to the ones they are already invested in. These advantages have contributed greatly to the increase of trading online.
Disadvantages of online training • One major disadvantage with online trading is that there
are many security risks. The internet is a wonderful but dangerous place to do business. Hackers have the ability to access personal information on anyone who has ever searched the internet, which includes credit card information. This was the main reason a company like Charles Schwab was reluctant to start trading online. Although the percentage is small, there is still a small chance that hackers can access ones account (price 2) companies are taking the most serious precautions on this matter.
companies offer trades that are quick and on the spot, in actuality it can take up to several hours to complete or even not to be completed at all. According to the Securities and Exchange Commission, “E-traders registered more than 3,300 complaints in the 12 months ended in September 1999, a 197 percent increase over 1998 and nearly 2,000 percent higher than in 1997”. This means that here was an increase in problems that the web sites were having. This could have serious effects on investors because they could think they bought a stock or sold a stock at a certain time but in actuality the transaction registered late or not at all costing that investor money.
The internet is unpredictable and stable. One can never
know when a web site will fail. In situations where there is a problem like this, investors can usually call their brokerage firm and the problem is fixed right away. However, the problem with online trading companies is that they are too large and are not “easily reached by e-mail or phone”. This is the main concern for online brokerage firms and they are trying their best to alleviate these problems.
Finally the most important problem with online trading is
that it is so quick and easy to make transaction, that money can be lost just as quick and just as easily. Some people that invest online do not know how the stock market words and think they can just invest in anything and it will make them money. According into foresters search, “two types of traders have already moved online ‘the aggressive affluent’ and those who want to ‘get rich quick.”. These two groups make up 70 percent of the people that want investors trading online today. These people can make rash decisions and lose a lot of their money. People like this generally think that investing in the stock market is like gambling in Las Vegas. This is a dangerous attitude and could make people lose money they cannot afford to lose.
Need For the Study
In today’s busy life schedule a large amount of people are unaware of investing in the stock market. Hence an awareness needs to be created for the same. The project finds ways and means to tap the untapped investors and to study the inter-functional process of Edelweiss Broking Ltd.
To study the working of edelweiss broking ltd. To find out the various strategies that can be used to create
an awareness to tap the untapped investors and motivate them to invest in the stock market.
Objectives of the Study
Acquiring new Client Base To find out the expectations of the investor so as to have a To study the importance of Lead Management System
Research Methodology refers to search of knowledge .one can also define research methodology as a scientific and systematic search for required information on a specific topic. The word research methodology comes from the word as a
“advance learner ‘s dictionary meaning of research
careful investigation or inquiry especially through research for new facts in my branch of knowledge for example some author have define research methodology gain new knowledge. as systematized effort to
TYPES OF RESEARCH
The Research is an Exploratory research. I have used facts or information already available with the company which has helped me gain a proper insight and understanding of the business of Edelweiss.
METHODS OF DATA COLLECTION
Primary data Collection:In the project work primary sources of data has been collected using Observatory method.
Secondary data Collection:Some of the articles are taken from:- Eldeweiss website - LMS website
Study of the Strategy of Edelweiss for Business Development
Acquiring new Client Base:
In the first phase we were intimated about the
working at ‘Edelweiss Broking Limited’. Training about the company and the products & services offered was imparted to us by the senior executives of Edelweiss.
Later we were trained how to deal with clients. Leads
used to be provided by the senior executives through a database sheet & also from the Lead Management System (LMS). We were then asked to call up the clients and fix meetings in order to intimate them about the services offered at edelweiss through the sale of a DEMAT and trading account.
The types of leads provided to us are of 3 types:
1. People who register themselves on the Edelweiss website willing to be a client at Edelweiss Broking Ltd. 2. People who have an account with another broker. 3. People who are totally new to investing in the stock market.
We then have to call up the leads mentioned above
and fix up meetings inorder to intimate them about products and offer them the same.
The clients already having a demat account with
another broker were a little tough to convince as they had faith and trust in their dealer. Hence we had to convince them by intimating them about the benefits if they had an account at Edelweiss.
The investors who were totally new to investing were
given a gist of trading and were suggested that they could take the assistance of their Equity Adviser and Relationship Manager appointed to them once the account has been activated for any queries that would come up while trading.
Finally the form used to be filled and all the
important documents used to be collected from the clients.
Meeting the expectations of the investors: While trading most of the investors expected that they should have an online portal so that they could trade without any difficulty and at their convenience. However there were a few who preferred offline trading. At Edelweiss Broking Limited both the online and offline services are available making it convenient for the investors.
The Online Portal:
The various sections on the Edelweiss online portal are: • • • • • Trade My Edelweiss Markets Research Strategies
This section enables the investor to buy or sell a script online. Under this section we have a java based software called as ‘ XPRESS’. This software acts as an online bolt just as those available to the dealers or brokers. This enables the investors to keep a close watch on the fluctuations in the market and accordingly place the trade. My Edelweiss:
This section enables the investor to create his own portfolio. This helps him to know the various investments he may have done at a click of a button. The various investment options could be stocks, mutual funds, fixed deposits etc. This section also enables the investor to do his own Research on a particular script and also compare that with an index such as Sensex, Nifty etc.
This section enables the investors to keep a track on the market. It gives the investor the current news, helps the investor to know the top gainers and losers for the day, also shows the market movements sector wise etc.
This section provides the investor various Research reports about a company or a particular sector. These research reports are prepared by the expert research team of Edelweiss. This intimates the investor of the performance of a company or a sector over a number of years and thus forms the basis for investment.
Strategies useful to clients to make decisions
The Edelweiss research experts do a proper analysis of the market, the stocks, the various sectors and provides useful strategies which is helpful for the investors to make proper investments. The research team provides us with the Current market price, the target and stop loss of a particular stock. This is useful to the investor while making investments. Another important strategy useful to the investors is that of baskets. These baskets are very much useful to the new investors or the investors who are fresh to the market. These investors do not have any idea of the market and hence do not know in which stock the investment needs to be made. These baskets consist of stocks from different sectors. These stocks are chosen by the research experts of Edelweiss. You choose a basket may be a mid cap basket or a large cap basket and the stocks are chosen by the research team.
Some of the baskets are:
Advantages of Baskets: • • • • Diversification of risk as basket of stocks is recommended Definite entry and exit plan Back testing done over a period of 8-9 years thus Testing done over bullish as well as bearish market phase,
instead of single stock.
historically proven strategies. baskets outperformed index across different phases.
providing flexibility to client to strike optimum between risk and return. Procedure of using the baskets:
1. Go to the Basket page in Strategy section
investment amount > Click on execute.
2. Basket order page in trading section > Check order details > Click on submit and confirm the orders
Baskets Tracking & Square Off:Tracking: Go to the Strategy tracker in the My Strategies section > Click on any of the strategies > You can also compare performance of your basket with any indices.
Square Off: Click on the Square Off button above the basket table > Check the order details on basket order page in trading section and submit orders
Offline Trading:A dedicated team of 3 : • • • Dealer Equity Advisor Relationship manager
Offline trading has lost some popularity but it is still the main form of investing. Some of the investors who are not familiar with online trading can use this form. Offline trading offers many benefits as well. 1. The one benefit that an investor appreciates the most is that they are not alone when making investment decisions. 2. There are experienced and professional brokerage companies that handle their investments for them. 3. Investors are not faced with the challenge of making these vital investment decisions; especially, if they do not have the experience necessary to make the appropriate investments. 4. Also, there is someone there to answer any questions that may cause concerns.
With offline trading mistakes are less likely to take place. No one wants to throw their money away or stand by and watch someone else throw their money away. It may be wise to hire a professional to assist you in making the correct investment decisions if you feel you lack the knowledge necessary.
Lead Management System
Investors who want to invest in the share market register themselves at the Edelweiss site either by entering the Edelweiss site or through a pop up while browsing at Rediff.com Importance of LMS: 1. Generating leads
Through the LMS the leads can be generated and the interested client can be contacted or followed up from there on.
The name and contact details of the client are mentioned and so this makes it easy in order to contact and follow up with the client.
3. Track of Clients
A proper track as to how many times the sales executives has followed up with the client can be kept and necessary action for further follow up can be taken.
4. Track of performance
The LMS also allows to keep a good track on the performance of the sales executives. The above mentioned data gives my record of the number of clients I was able to convert or the number of forms lodged in the last 2 months of my internship.
• Efficient Research team Edelweiss Broking Limited has an highly efficient Research Team which enables the customers and investors in making right decision while investing. The research team of Edelweiss gives good research reports, provides various strategies and helps the investors in making the right investment decisions. • Product offered Edelweiss Broking Limited offers product differentiation as compared to other industry players. This helps them to capture good market customers and gain a competitive edge in the market. Edelweiss Broking Ltd charges a relatively lesser brokerage as compared to the other broking firms. The big traders in the market are quiet happy with the working of Edelweiss as they are able to save a lot on brokerage. • Online portal is very user friendly Portals provide a way for enterprises to provide a consistent look and feel with access control and procedures for multiple applications and databases, which otherwise would have been different entities altogether.
• Tips generated hits the target Due to efficient research team of Edelweiss Broking Limited the tips and recommendations suggested by analyst are very relevant and certain which helps customers to take investments decision with less risk and high security and more value.
Recommendations:• Company should increase their advertisement as many
people are not aware of Edelweiss as a Broking Firm. • They should also increase the variety of offerings as
customers want more options to buy any service or product. • They should update their database regularly
Customer’s Recommendations & Feedback:
Increase in the turnover limit in higher Advance
Brokerage( ADB ) The turnover limit should be increased in higher ADB. This will help to generate more value in terms of revenue and also increase the market share of the company. This would help in the expansion and enhancement of the firm.
The ADB should be paid in instalments The ADB should be allowed to be paid in instalments. Many traders find it difficult to pay brokerage especially when they have to pay the amount upfront
without any trade taking place & hence if this is made payable on a monthly or quarterly basis it would be more beneficial to the investors and at the same time would generate funds and increase the market share of the company.
Feedback from the sales team The sales team of any company forms a bridge between the company and the clients. Thus they should be allowed to give proper feedback of their dealings with the clients. This would enable the top management to know the requirements of their investors and thus mould their strategies accordingly.
Skilled Executives required Qualified and skilled employees who possess a good understanding of the products and policies of the company should be appointed. This would definitely ensure a proper understanding of the products and
services on behalf of the customers and give proper feedback to the management.
This research has been done in the month of May and June 2010 and hence the data mentioned here is only upto this date. Based on the findings and research done, Edelweiss Broking Limited has a good scope for expansion and can increase its market share. Edelweiss Broking Ltd. has a good and young team of dedicated workforce. These executives come up with innovative and competitive strategies to boost its working. This research and the work done at Edelweiss has given me a good experience of the work environment and has also increased my knowledge and understanding of the financial sector.
• • • •
www.edelweiss.in www.sharekhan.com www.edelworld.com www.dnb.co.in/equitybroking Internal Data
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