final summer project report

8/2/2019 Final Summer Project Report

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A

Project Study ReportOn

Titled

FINANCIAL SERVICES PROVIDED BY ANAND RATHI

Submitted in partial fulfillment for the

Award of degree of

Master In Management Studies

Submitted By

Sohan Kamble

MMS Roll No. 61

(2010-2012)


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certificate


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ACKNOWLEDGEMENT

The Project would not be completed without the mention of those who have spared their

valuable time and shared their rich experience in making this project this success.

Research is the search of knowledge and searching knowledge is very tedious job. Hence it is

my responsibility to pay my thanks regard s that has directly or indirectly helped out to solve

the objectives.

First of all, I express my deep sense of gratitude and deep beholden to Mr NIKHIL PATEL,

Relationship Manager, Anand Rathi Securities Ltd. for giving me the permission to

undertake my project training in the company and their valuable guidance and motivation in

completing the assignment.

I am equally thankful to our, GECJ and to all those who have directly or indirectly helped me

in completing this project a reality.

Date: 26/07/2011

Place: Mumbai SOHAN KAMBLE


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COMPANY PROFILE

Training is the essence for the practical orientation of the professional studies undertaken and

without practical training one cannot understand the real basics and theoretical applications in

practice and everything just goes in vain. A Trainee come to face live problems in the industries

and the field the institute where one person pursues his studies cannot provide him that practical

knowledge on all aspects of learning often the studies of a subject is said to be incomplete until

the student has been expose to his practical.

In the equity market, ANAND RATHI SECURITIES is a growing name with the rising users in

its arm and I would be honored to say that it is going to push up the growth of securities and

equity market in the coming years to come as well as financially viable for the upcoming market

segment. Our performance area was FINANCIAL SERVICES.

Under ANAND RATHI SECURITIES I made a deep understanding of share market, opening

of Demat accounts and growth opportunities in the sector since people are getting aware and

investing in the share and securities market which we say equity market. With the feedback that

we gathered from customers we tried to provide fruitful information that would be important

for the organization.


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EXECUTIVE SUMMARY

In my summer internship I did project in finance stream with ANAND RATHI

at its office in Chandrapur (Maharashtra). Working with ANAND RATHI as a summer

trainee has been a real learning experience. My tenure at ANAND RATHI was of 45 days.

During my internship, I worked on financial services project in the organization. In my

project I analysed the type of Services Company provide to its customer to achive the

objective of the project.

I started the project from understanding project, defining its objective and divide it into steps to

achieve defined objective. These steps became helpful to me in timely completion and

acquiring information at required time.

An insight view of the project will encompass what it is all about,what it aims to achieve,

what is its purpose and scope, the various methods used for collecting data and their sources,

including literature survey done further specifying the limitations of our study and in the last,

drawing inferences from the learning so far.

Under ANAND RATHI SECURITIES I made a deep understanding of share market, opening

of Demat accounts and growth opportunities in the sector since people are getting aware and

investing in the share and securities market which we say equity market. With the feedback that

we gathered from customers we tried to provide fruitful information that would be important

for the organization.


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CONTENT

SR.No. Topic Page No.

1 Introduction to the Industry 7

2 Introduction to the Company 8

3 Private Wealth Management 11

4 Brokerage and Distribution Services 13

5 Managed Investment Services 15

6 Institutional Wealth Management 16

7 Corporate Advisory Services 19

8 Investment Banking and Corporate Finance 20

9 Anand Rathi (History Profile) 22

10 Equity and Derivatives 24

11 Swot Analysis 33

12 Conclusion 35


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INTRODUCTION TO THE INDUSTRY

1.1 WHAT IS FINANCIAL SERVICE INDUSTRY

There is a potential source of confusion regarding careers in finance. On the one hand there is a

function called finance that is a common to all business enterprises, in every industry. On the

other hand, there is a financial service industry. Our focus will be on the later definition. To add

yet more potential confusion, the finance functions but one of many possible career paths

within the financial service industry.

1.2 THE FINANCE FUNCTION

The finance function encompasses a variety of jobs categories. Degrees and / or professional

certification in accounting are necessary in only a minority of cases, for the most part, fall into

these three broad categories:

Corporate controller staff Internal audit staff Corporate treasury staff

1.3 THE FINANCIAL SERVICE INDUSTRY

The financial services industry includes firms that are engaged in activities such as investing,

lending, insurance, securities trading and securities issuance. This is not an exhaustive list, but

these is companies can be characterized as being in one or more of the following line of

business:

Banking Insurance Securities Brokerage Investment Banking Securities Trading Investment management (or money management) Securities Analysis


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INTRODUCTION TO THE COMPANY

ABOUT ANAND RATHI

AnandRathi (AR) is a leading full service securities firm providing the entire gamut of

financial services. The firm, founded in 1994 by Mr. AnandRathi, today has a pan India

presence as well as an international presence through offices in Dubai and Bangkok. AR

provides a breadth of financial and advisory services including wealth management, investment

banking, corporate advisory, brokerage & distribution of equities, commodities, mutual funds

and insurance, structured products - all of which are supported by powerful research teams. The

firm's philosophy is entirely client centric, with a clear focus on providing long term value

addition to clients, while maintaining the highest standards of excellence, ethics and

professionalism. The entire firm activities are divided across distinct client groups: Individuals,

Private Clients, Corporates and Institutions and was recently ranked by Asia Money 2006 poll

amongst South Asia's top 5 wealth managers for the ultra-rich. In year 2007 Citigroup Venture

Capital International joined the group as a financial partner.

Anand Rathi CORE STRENGTHS

Breadth of Services: In line with its client-centric philosophy, the firm offers to its clients the

entire spectrum of financial services ranging from brokerage services in equities and

commodities, distribution of mutual funds, IPOs and insurance products, real estate, investment

banking, merger and acquisitions, corporate finance and corporate advisory.

Clients deal with a relationship manager who leverages and brings together the product

specialists from across the firm to create an optimum solution to the client needs.

MANAGEMENT TEAM

AR brings together a highly professional core management team that comprises of individuals

with extensive business as well as industry experience.


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In-Depth Research: Our research expertise is at the core of the value proposition that we offer

to our clients. Research teams across the firm continuously track various markets and products.

The aim is however common - to go far deeper than others, to deliver incisive insights and

ideas and be accountable for results.

Management Team:

Our senior Management comprises a diverse talent pool that brings together rich experience

from across industry as well as financial services.

1. Mr. Anand Rathi - Group Chairman, Chartered Accountant, Past

President, BSE; Held several Senior Management positions with one

of India's largest industrial groups

2. Mr. Pradeep Gupta - Vice Chairman; Plus 17 years of experience in

Financial Services

3. Mr. Amit Rathi - Managing Director; Chartered Accountant & MBA;

Plus 11 years of experience in Financial Service

MILESTONES

1994: Started activities in consulting & Institutional equity sales with 15 staff.

1995: Set up a research desk and empanelled with major institutional investors

1997: Introduced investment banking businesses; Retail brokerage services launched

1999: Lead managed first IPO and executed first M & A deal

2001: Initiated Wealth Management Services

2002: Retail business expansion recommences with ownership model

2003: Wealth Management assets cross Rs1500 crores; Insurance broking launched; Launch of

Wealth Management services in Dubai; Retail Branch network exceeds 50

2004: Commodities brokerage and real estate services introduced; Wealth Management assets

cross Rs3000crores; Institutional equities business relaunched and senior research team put in

place; Retail Branch network expands across 100 locations within India


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PRIVATE WEALTH MANAGEMENT

PRIVATE WEALTH MANAGMENT

Introduction

Affluent individuals need sophisticated advice and strategic guidance to capitalize on

opportunities to preserve, grow and transfer their wealth. In addition, a desire exists within

wealthy families to simplify the management of multigenerational needs and lessen the

profound emotional impact of wealth on family members. AR offers the most extensive

platform of customized servicing, individual strategies and products to help meet the

requirements of the affluent private investor. We provide comprehensive, integrated investment

strategies to address your wealth management needs. Working closely with specialists across

firm PWM offers an array of products & services, which includes AR's highly-rated research.

Philosophy

We at AnandRathi try and understand your financial needs; to offer you personal advice and

expert analysis that you need to make your assets go the Xtra mile. Our ability to think far

ahead and formulate a long-term strategy, coupled with long hours of practice and research are

the key drivers, which make your wealth work harder for you.

We believe that the key to build wealth lies in allocating assets across various markets,

financial instruments and industry sectors. Keeping this in mind we leverage our expertise in

scientific asset allocation, to help you maximize returns and minimize risks.

Process

We realize the need to simplify the complexities of the investment strategies and we achieve

this by offering highly customized wealth management product - LaXmi TM (let your Assets

go the Xtra Mile TM). Our Personalized Relationship Managers along with the expert team of

analysts and advisors will assist you in analyzing all your investment needs and advice you on

specialized solutions created exclusively for you. We have a dedicated research team who

constantly screens the market for investment prospects. The team provides support in fine-

tuning the investment strategy & suggests how to capitalize on these opportunities.


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Research

Our research expertise is at the core of the value proposition that we offer to our clients.

Research teams across the firm continuously track various markets and products. The aim is

however common - to go far deeper than others, to deliver incisive insights and ideas and be

accountable for results. AR research processes incorporate quantitative areas well as qualitative

analyses. This multi-pronged approach helps us to provide superior risk- adjusted returns for

our clients. AR analysts provide objective and decisive research that is designed to enable

clients to make informed investment decisions. The team covers entire spectrum of financial

markets from equities, fixed income, and commodities to currencies. They also cover the global

markets, to give clients an unparalleled macro-view of the investment opportunities across the

globe.


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BROKERAGE & DISTRIBUTION SERVICES

1 Equity & Derivatives Brokerage: AnandRathi provides end-to-end equity solutions to

institutional and individual investors. Consistent delivery of high quality advice on individual

stocks, sector trends and investment strategy has established us a competent and reliable

research unit across the country. Clients can trade through us online on BSE and NSE for both

equities and derivatives. They are supported by dedicated sales & trading teams in our trading

desks across the country. Research and investment ideas can be accessed by clients either

through their designated dealers, email, web or SMS.

2. Mutual Funds: AR is one of India's top mutual fund distribution houses. Our success lies in

our philosophy of providing consistently superior, independent and unbiased advice to our

clients backed by in-depth research. We firmly believe in the importance of selecting

appropriate asset allocations based on the client's risk profile. We have a dedicated mutual fund

research cell for mutual funds that consistently churns out superior investment ideas, picking

best performing funds across asset classes and providing insights into performances of select

funds.

3. Depository Services: AR Depository Services provides you with a secure and convenient

way for holding your securities on both CDSL and NSDL. Our depository services include

settlement, clearing and custody of securities, registration of shares and dematerialization. We

offer you daily updated internet access to your holding statement and transaction summary.

4. Commodities: Commodities broking - a whole new opportunity to hedge business risk and

an attractive investment opportunity to deliver superior returns for investors. Our commodities

broking services include online futures trading through NCDEX and MCX and depository

services through CDSL. Commodities broking is supported by a dedicated research cell that

provides both technical as well as fundamental research. Our research covers a broad range of

traded commodities including precious and base metals, Oils and Oilseeds, agri-commodities

such as wheat, chana, guar, guar gum and spices such as sugar, jeera and cotton. In addition to


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transaction execution, we provide our clients customized advice on hedging strategies,

investment ideas and arbitrage opportunities.

5. Insurance Broking: As an insurance broker, we provide to our clients comprehensive risk

management techniques, both within the business as well as on the personal front. Risk

management includes identification, measurement and assessment of the risk and handling of

the risk, of which insurance is an integral part. The firm deals with both life insurance and

general insurance products across all insurance companies. Our guiding philosophy is to

manage the clients' entire risk set by providing the optimal level of cover the least possible cost.

The entire sales process and product selection is research oriented and customized to the client's

needs. We lay strong emphasis on timely claim settlement and post sales services.

Our services:

Risk Management Due diligence and research on policies available Recommendation on a comprehensive insurance cover based on clients needs Maintain proper records of client policies Assist client in paying premiums Continuous monitoring of client account Assist client in claim negotiation and settlement6. IPO: We are a leading primary market distributor across the country. Our strong

performance in IPOs has been a result of our vast experience in the Primary Market, a wide

network of branches across India, strong distribution capabilities and a dedicated research team.

We have been consistently ranked among the top 10 distributors of IPOs on all major offerings.Our IPO research team provides clients with indepth overviews of forthcoming IPOs as well as

investment recommendations. Online fillng of forms is also available.


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MANAGED INVESTMENT SERVICES

1. Portfolio Management Services (PMS): AR Portfolio Management Service is a

discretionary investment service created to meet the demand for more targeted investment

styles and opportunities. It offers a range of specialized investment strategies designed to

capture opportunities across the market spectrum. The range of products varies from the highly

defensive, capital-protected to the most aggressive strategies in the equities and derivatives

markets. Our investment process ensures that your strategy and portfolio are built on solid

foundations. Together you and your relationship manager select the strategy in line with your

individual goals. AR investment specialists then construct and manage your portfolio in

accordance with the chosen investment strategy.

2. Real Estate Opportunities Fund: AR Real Estate Opportunities Fund is a private equity

fund for high net-worth individuals, corporates and institutions, to invest in equity-linked

instruments in the Indian real estate and infrastructure sectors. As part of the structural reforms

to further boost India's economic growth, the government has recognized the need for

institutional finance in the real estate sector. In early 2005, the government has relaxed the FDI

guidelines in real estate and also allowed the setting up of real estate investment funds underSEBI guidelines. These developments are expected to provide much needed capital to provide

for the increasing demand for quality real estate in major urban centers across the country. To

capture this opportunity, AR has brought together a team of specialists and advisors to guide

the fund's investments who bring together expertise in the areas of real estate consulting,

development, legal and financial structuring.


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INSTITUTIONAL WEALTH MANAGEMNET

Introduction

Corporate and Institutional treasuries need ever more sophisticated advice that is backed by

serious and credible research. AR IWM provides its institutional clients integrated wealth

management solutions across global markets, which are backed by proprietary global economic

& investment research.

We understand that your needs could range from finding short-term surplus management

strategies to higher yielding and long term investments. The IWM team brings together the

highly-rated AR research across fixed income, currencies and equities markets to provide

investment solutions that meet your complex needs - from simple money-market mutual funds

to complex arbitrage strategies in the equities or commodities markets.

Products

Equity & Derivatives

Mutual Funds

Depository Services

Commodities

Insurance

IPOs

Client List

ACC Bayer Tata Iron & steel Century Textiles Clariant CRISIL Crompton Greaves Dabur


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Datamatics GE Shipping Godrej Goodlass Nerolac Grasim Gujarat Ambuja Cements Gujarat Pipavav Port Heinz India Hindalco Hindustan Lever H&R Johnson IDFC Indian Rayon Jindal Group Larsen & Toubro Mastek Mahindra & Mahindra Raymonds Sterlite Group Syngen


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Research: Our research expertise is at the core of the value proposition that we offer to our

clients. Research teams across the firm continuously track various markets and products. The

aim is however common - to go far deeper than others, to deliver incisive insights and ideas and

be accountable for results. AR research processes incorporate quantitative areas well as

qualitative analyses. This multi-pronged approach helps us to provide superior risk- adjusted

returns for our clients. AR analysts provide objective and decisive research that is designed to

enable clients to make informed investment decisions. The team covers entire spectrum of

financial markets from equities, fixed income, and commodities to currencies. They also cover

the global markets, to give clients an unparalleled macro-view of the investment opportunities

across the globe.


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CORPORATE ADVISORY SERVICES

Introduction: AnandRathi Advisors assists companies in realizing tangible improvements in

various facets of their businesses by providing a range of corporate advisory services that

includes the entire gamut from financial, organizational and operational restructuring, to profit

improvement and business turnaround strategies. Highly qualified and thoroughly professional,

our specialists, experts and associates assist you in conceptualising problems and devising

effective solutions, whatever be your need.

Successful assignments undertaken for leading organisations in India as well as overseas bear

ample testimony to our wide-ranging capabilities, utilising our unparalleled business know-how

to give you the competitive edge. We have successfully handled various assignments under

industry segments like refinery, cement, mining, power, paper, metals, airlines and optic fibre.

Services

1. Performance Improvement and Cost Reduction2. Business Strategy and Re-engineering3. Financial, Business & Organizational restructuring4. Business Turn-around Strategies5. Management Systems: MIS, Review & Control Mechanism


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INVESTMENT BANKING AND CORPORATE FINANCE

INVESTMENT BANKING AND CORPORATE FINANCE

Investment Banking: AR Investment Banking provides comprehensive services to clients

including raising money in the equity capital markets to identifying strategic alliances, mergers

and acquisition opportunities and debt financing & restructuring advisory.

Corporate Finance: The AR Corporate Finance team helps clients manage their debt-financing

needs by profiling business and cash-flow risks, defining the alternative sources of funding,

building in multiple variables such as currencies, fixed-floating, tenure, collateral etc. in a

comprehensive manner and finally negotiating with the prospective lenders / buyers. The teamhas also built an impressive track-record in debt restructuring based on its superior

understanding of business needs and relationships with key lenders. The Corporate Finance

team has handled assignments in businesses like paper, hospitality, telecom, textiles and sugar.

Services

Investment Banking :

Merchant Banking

A highly experienced equity capital markets team, a pan-India distribution presence and a high

level of quality and integrity in executing client's transactions has enabled us to provide

tangible value to our clients' businesses.

We bring quality independent advice and excellent execution capabilities to create landmark

transactions for clients. Our track record of successfully lead managed IPOs includes Tips

Industries, Emami, HCL Infosystems and Provogue.

M&A, Private Equity

Our Mergers & Acquisition team works with clients in creating lasting stakeholder value

through advice on mergers, acquisitions, divestitures and private equity financing.The team

leverages on the firm's superior understanding of businesses and tax and regulatory

environments as well as a deep network of relationships across the professional and corporate


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world. We have worked extensively with clients in industries like cement, sugar, chemicals,

power and textiles for mergers and acquisition deals, valuation and business restructuring.

Corporate Finance :

Raising Cost-effective debt resources in Rupee and Foreign Currency for Projects, WorkingCapital and Specific needs.

Financial Restructuring, CDR, OTS, Interest Cost Reduction, Long-term Corporate Loansfor Working Capital Margins.

Financial products and services in hedging of interest and currency risks.

Distribution Capabilities

1. Strong pan- India distribution network, with presence at over 130 locations across India.2. Leading distributor of equity related products including IPOs & mutual fund3. Have been consistently amongst the top 8 brokers, inspite of not being a lead manager.4. 50000 plus captive Institutional clients and HNIs5. Strong after market support


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ANAND RATHI (HISTORY PROFILE)

ANAND RATHIHISTORY FILE

1994: Started activities in consulting and Institutional equity sales with staff of 15

1995: Set up a research desk and empanelled with major institutional investors

1997: Introduced investment banking businesses

Retail brokerage services launched

1999: Lead managed first IPO and executed first M & A deal

2001: Initiated Wealth Management Services

2002: Retail business expansion recommences with ownership model

2003: Wealth Management assets cross Rs1500 crores

Insurance broking launched

Launch of Wealth Management services in Dubai

Retail Branch network exceeds 50

2004: Commodities brokerage and real estate services introduced

We

alth Management assets cross Rs3000crores

Institutional equities business relaunched and senior research team put in place

Retail Branch network expands across 100 locations within India

2005: Real Estate Private Equity Fund Launched

Retail Branch network expands across 200 locations within India

2006: AR Middle East, WOS acquires membership of Dubai Gold & Commodity Exchange

(DGCX) Ranked amongst South Asia's top 5 wealth managers for the ultra-rich by Asia Money

2006 poll Ranked 6th in FY2006 for All India Broker Performance in equity distribution in the


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High Net worth Individuals (HNI) Category Ranked 9th in the Retail Category having more

than 5% market share

Completes its presence in all States across the country with offices at 300+ locations within

India

2009: Citigroup Venture Capital International picks up 19.9% equity stake

Retail customer base crosses 100 thousand

Establishes presence in over 350 locations

2010: Anand Rathi Private Wealth adjudged Best Domestic Private Bank (India) by Asia

Money Polls 2010 for the second consecutive year.

2011: AnandRathi for the third time in a row has been voted as the 'Best Domestic PrivateWealth Management Firm' by Asiamoney Polls 2011.

When any corporate event such as rights or bonus or dividend is announced for aparticular security, the Depositories will give all the details of the clients having electronic

holdings of that security as of record date / book closure to the Registrars and Transfer Agents

of the Company who will then calculate the corporate benefits due to all the share holders. The

disbursement of cash benefits such as dividend / interest will be done by the Company whereas

the distribution of securities / entitlements will be done by the Depositories based on the

information provided by the Registrars and Transfer Agents of the Company. Thus, bonus /

rights shares, if any, will be credited to your account electronically.

Well, in case of those corporate events where you can exercise your option such asrights issue or optional conversion of debentures to shares, you do have a choice of either

physical or electronic mode of holdings. However, corporate entitlements such as bonus will be

made in the same form as of your original holdings.

You can approach your DP who in turn will contact the Registrars and Transfer Agentsof the Company for clarifications regarding allotment of securities. In case of discrepancies in

cash benefits you will have to contact the Registrars and Transfer Agents of the Company.
http://www.rathi.com/Asiamoney%20award%202010.pdfhttp://www.rathi.com/Asiamoney%20award%202010.pdfhttp://www.rathi.com/Asiamoney%20award%202011.jpghttp://www.rathi.com/Asiamoney%20award%202011.jpghttp://www.rathi.com/Asiamoney%20award%202011.jpghttp://www.rathi.com/Asiamoney%20award%202011.jpghttp://www.rathi.com/Asiamoney%20award%202010.pdfhttp://www.rathi.com/Asiamoney%20award%202010.pdf


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EQUITY AND DERIVATIVES

Equity

Equity is a share in the ownership of a company. It represents a claim on the company's assets

and earnings. As you acquire more stock, your ownership stake in the company increases. The

terms share, equity and stock mean the same thing and can be used interchangeably.

Holding a company''s stock means that you are one of the many owners (shareholders) of a

company, and, as such, you have a claim (to the extent of your holding) to everything the

company owns. Yes, this means that technically, you own a portion of every piece of furniture;

every trademark; every contract, etc. of the company. As an owner, you are entitled to yourshare of the company's earnings as well as any voting rights attached to the stock Another

extremely important feature of equity is its limited liability, which means that, as a part-owner

of the company, you are not personally liable if the company is not able to pay its debts.

In case of other entities such as partnerships, if the partnership goes bankrupt, the partners are

personally liable towards the creditors/lenders and they may have to sell off their personal

assets like their house, car, furniture, etc., to make good the loss. In case of holding equity

shares, the maximum value you can lose is the value of your investment. Even if a company ofwhich you are a shareholder goes bankrupt, you can never lose your personal assets.

Characteristics of equity

1. Equity is unsecured and a high risk-return investment: When you invest your money ina debt investment such as a bank deposit, bonds, etc., you are promised a fixed amount of

interest on your investment and return of capital. This isn't the case with an equity investment.

By becoming an owner, you bear the risk of the company not being successful. However, the

rewards for bearing this risk are high. Equity shareholders are entitled to a share in the profits

of the companys business as well as any appreciation in the perceived value of the shares. The

risks and rewards of investing in equity are clearly apparent from the Bombay Stock Exchange

Sensitive Index (BSE Sensex), which is a popular stock market index.


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2. Equity remains in perpetual existence: The perpetual existence of a company impliesthat the death, disability, retirement or termination of a shareholder, director or officer, will not

affect the existence of the company. For an equity shareholder, this is convenient since he does

not need to renew/renegotiate the terms of his investment (like in the case of a fixed tenure debtinvestment). He also has the option to sell his equity holding through the stock exchange if he

no longer wants to remain invested in the company.

3. Limited liability: Another extremely important feature of equity is its limited liability,which means that, as a part-owner of the company, you are not personally liable if the company

is not able to pay its debts. In case of other entities such as partnerships, if the partnership goes

bankrupt the partners are personally liable towards the creditors/lenders and they may have to

sell off their personal assets like their house, car, furniture, etc., to make good the loss

4. Income from equity investing

Capital appreciation: Equity shares of companies are listed and traded on a stock exchange

(the Bombay Stock Exchange or the National Stock Exchange). The market prices of

these shares are continuously moving up or down depending on the interest in the companys

stock, its business potential, etc. As an equity shareholder, you can profit/lose from the market

price rise/fall.

Bonus shares: When you purchase shares of a company, you become a shareholder of the

company. When the company is doing well, it may declare a bonus issue. This means that the

company will issue fresh equity shares to its existing shareholders, for free. As a shareholder,

you will be entitled to receive bonus shares in proportion to your holding in the company.

When you sell your bonus shares in the stock market, the market price at which you sell your

bonus, minus brokerage charges and necessary taxes (Service Tax, Securities Transaction Tax,

etc.), will be your profit i.e. capital appreciation. In this case, there will be no cost of purchase

since you have received the bonus for free.


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Rights shares: Another way a company offers benefits to its shareholders is by offering rights

shares. This means that the company will offer fresh equity shares to its existing shareholders

at a price, which is lower than the current market price of the share.

Dividend income: Companies report their profits earned on a quarterly basis. Based on the

quantum of profits, companies declare dividends to distribute a portion of these profits to their

shareholders. Dividends are declared as a percentage of the shares face value. As a

shareholder, you will be entitled to dividend to the extent of your share holding.

Stock Selection Guidelines

1. Know the business: Warren Buffett, one of the worlds most successful investors, follows

the philosophy of buying stocks of only those businesses that he understands. Select companies

in businesses that you already have an idea of and find interesting. One of the businesses that

could be of interest to you would be the one, which you are affiliated to because of your

employment. For instance, if you are working in a pharma company, you may understand this

business well.

2. Assess the past performance: All companies present details of their financial performance

in their Annual Reports. In case of a company having its Initial Public Offering IPO (when a

company offers its shares to the public for the first time, it is called Initial Public Offering), it is

required to publish its past performance in its IPO offer document. There are also a vast number

of research reports published by research and brokerage houses, and company analysis done by

the media, which is worth reading, to assess a companys past performance and future potential.

Ratio Analysis is widely used to assess a companys past performance.

3. Know the promoters: The promoters and management team of a company are the key

people who drive its business. Their integrity dictates whether the business benefits or they

benefit personally. Also, their experience and business competence is crucial for business

growth. Evaluate the companys promoters and management on the basis of four Cs:

Competence, Credibility, Corporate governance and Concern for shareholders.


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4. Assess the future prospects of the company: Although a company may have performed

well in the past, it is not necessary that it will continue performing well in the future. All

companies go through business cycles of ups and downs. It is important that you form a view

on the future trends of the business the company is a player in.

5. Assess the stock price: As mentioned earlier, the share price of all companies continuously

fluctuate on the stock markets with investors buying and selling the shares. The price at which

an investor is willing to buy or sell a share of a company is the perceived value of the share of

the com pany taking into consideration the companys present business and future business

growth. In addition to this, investor sentiment plays a large role in pricing of stocks. To help

you assess this, you could use a popular stock market ratio called the Price/Earning ratio (P/E

ratio) & is based on the following formula: P/E ratio = Market price of the share; Earning per

share (EPS); *EPS = Profit After Tax (PAT) The P/E ratio helps judge by how many times the

companys share is traded based on its earnings. Inthis case, the companys stock is available

at a multiple of 15 times its earnings. The higher the P/E ratio, the higher is the stocks

valuation. Usually market prices of well-established companies with a good past track record

and reputed promoters command a high P/E ratio.

Equity Investing Strategies

There are various methods and strategies one can adopt while investing in equity. Some of the

popular ones are enumerated below

1. Value investing: Value investing means investing in companies that are believed to be

currently undervalued but whose worth will be recognized by the market eventually. Thesecompanies intrinsic or fundamental values are higher than their market values. This strategy

implies investing in such rcompanies before the markets recognize their true values and push up

their share prices accordingly.


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2. Investing in dividend yield stocks: Dividend yield is a ratio, which divides the dividend

paid out by a company with the current market price. For instance, if a company pays out Rs 5

per share as dividend and its current market price is Rs 55, its dividend yield is about 9 per cent

(Rs 5 / Rs 55 x 100). Companies, which offer high dividend yields, are usually valuecompanies, which value investors look for.

3. Diversification: Diversification means spreading your money over a number of investments.

In other words, you dont concentrate your money over just one or two, or only over a few

investments. For instance, if you have an investible surplus of Rs 1 lakh, you can diversify into

two ways. Firstly, dont invest the entire Rs 1 lakh in just one asset class.

Diversification benefit and pitfall. Diversification is a well-established risk management

investment strategy. It helps spread your risks over investment options offering different risk-

return levels. Diversification especially help when one invests in investment options with

complementary risk-return profiles.

However, by investing in both, debt and equity, a portion of your portfolio, which is invested in

debt, will offer profits during this time to reduce the losses on your equity investments,

resulting in either an overall lower loss, or even a marginal gain depending on the level of

investment in debt. The reverse will hold true if the equity markets are moving upwards and the

debt markets are stagnant. However, diversification also results in lower profits.

Diversification methods: Diversification can be done across different asset classes (equity,

debt, mutual funds, gold, property, etc.) as well as across different investment options (say, in

case of equity investment in companies with different market capitalisations, in different

sectors, etc.). The amount of investment made in each asset class and investment option will

depend on your investment risk profile and expected investment returns.

4. Growth investing: Growth investing means investing in companies, whose turnover and

profits are expected to grow significantly, which will result in appreciation in their share prices.

These companies are in a phase of rapid growth and expansion of their businesses.


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5. Rupee cost averaging / value averaging

To buy low and sell high is very difficult to do, especially in volatile markets (where prices

rise and fall significantly over very short periods of time). One investment strategy that helps

overcome this volatility and take advantage of it by averaging out cost of investment, is Rupee

cost averaging (RCA) or Value averaging.

Procedure Of Investing In Equity: In the past, investing in equity involved a high cost (high

brokerage charges of about 2 per cent of the transaction value) and a number of hassles (shares

were traded in the physical form, which involved a lot of paperwork and often resulted in bad

deliveries due to signature mis-matches, forgery, etc.). Today, the entire scenario of equity

investing has changed for the better. Shares are now traded in the electronic (dematerialized)

form and costs of investing have reduced dramatically. All this will be done without the

investor having to make efforts at every stage for the necessary action

3-step process of investing in equity:

Step 1: Open the necessary accounts

Before you start investing in equity, you need to open the following accounts:

Broking account: This is an account you open with a broker. You will need to fill in an

application form, which will require you to submit details such as your full name, address,

Permanent Account Number (PAN), etc. Once your application has been processed, you will

receive a broking account number.

Demat account: This is the account, which will hold shares purchased by you, in electronic

form. This works like a bank account. In case of a bank account, you deposit and withdraw

your money and receive a bank statement periodically, which shows you how much money is


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remaining in your account. Similarly, in case of a demat account, shares purchased by you are

deposited into your account and shares sold by you are withdrawn from your account, and you

receive a statement periodically, showing the shares remaining in your account. A demat

account can be opened with a depository participant. It is preferable to have your demat accountmaintained with your broker or an entity affiliated to your broker.

This ensures prompt transfers to and from your demat account of shares purchased and sold by

you without any effort required to be made by you (you simply need to issue necessary one-

time instructions to your broker).

Bank account: You can use an existing bank account for your equity investments.

Step 2: Decide your mode of transactingin cash or with margins

You have two options of investing in equity:

1. By making purchases in cash and taking delivery of the shares or

2. By undertaking margin trading (you pay only a portion of the cost for purchases and your

broker funds the balance) and squaring off your positions (you dont take delivery of the shares.

You simply book your profit or loss).

If you decide to undertake cash purchases, you need to have sufficient funds in your bank

account to make the purchases. If you decide to undertake margin trading, you need to pay the

broker the margin amount and start your trading.

Step 3: Deciding on which mediums to use for transacting

There are a number of mediums you can use to transact in equity. These are:

Visits to the brokers office/branches: You can simply visit your brokers office or closest

branch and undertake your transaction by interacting with a counter representative.

Via telephone: This is the traditional way of transacting. You simply call your broker and place

your order. This facility is available in the form of call centres.


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The Internet: Register yourself with your brokers internet portal and use the equity-trading

platform available to conduct your trades.

Kiosks: Kiosks are like booths or cabins placed at prominent locations across the city. Simply

enter a kiosk and execute your trade. A kiosk is used for trading through the internet. The only

difference is that instead of using your home computer, you can use the kiosk located outside

your home.

DERIVATIVES

Derivatives, as the name suggests, are financial instruments that derive their value from an

underlying security or asset. The underlying could be equity shares or an index, a commodity, a

currency or the exchange rate, bonds, etc. Sounds complicated? In a way, it is. But once you are

clear about how a derivative product derives its value from an underlying asset and yet has a

price and an identity of its own, it will become just another financial product to you. Then

again, derivative products have more variants than any other financial products since they have

been created to meet a variety of niche needs. There are various derivative products, which

derive their value from equity shares or an index, a commodity, a currency or the exchange rate,

bonds, etc. These derivative products vary according to their structure and terms and

conditions. The most popular derivative products are Forwards, Futures, Options, Warrants and

Swaps. Some of these are short term in nature while others are long term. For example stock

and index options that can be traded on stock exchanges are short term in nature, while options

like warrants and rights have a longer term.

Derivative products have been around for a long, long time. In fact, as early as the 1650s,

dealings resembling present day derivative market transactions were seen in rice markets in

Osaka, Japan. The first leap towards an organized derivatives market came in 1848, when the

Chicago Board of Trade (CBOT), the largest derivative exchange in the world, was established.


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Today, equity and commodity derivative markets are rapidly gaining in size in India. In terms

of popularity too, these markets are catching on like a forest fire. So, what are these markets all

about? What are the products that they trade in? Why do people feel the need to trade in such

products and what sort of traders benefit from such trades? Do these markets hold scope forretail investors too? And if so, how exactly can you go about trading in them?

Derivative markets in India

Globally, the last four decades have seen phenomenal growth in derivative markets. In the

process, many new products have been developed and this has also led to a sharp rise in

volumes over the years. Today, derivative markets have become an integral feature of financial

markets in developed countries and this phenomenon is gaining momentum in developing

countries, too.

Since the introduction of futures and options in the Indian equity markets, the turnover in this

segment has increased manifold. For instance, in the case of the National Stock Exchange

(NSE), the average daily turnover in the futures and options segment stood at Rs 410 crore for

the financial year 2001-02. By fiscal 2004-05, it increased 24 times over to more than Rs

10,000 crore!

Since the introduction of futures and options in the Indian equity markets, the turnover in this

segment has increased manifold. For instance, in the case of the National Stock Exchange

(NSE), the average daily turnover in the futures and options segment stood at Rs 410 crore for

the financial year 2001-02. By fiscal 2004-05, it increased 24 times over to more than Rs

10,000 crore!.


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SWOT ANALYSIS

STRENGTHS

1. The Company has a good reputation with the bulk of financial services under its arm tooffer to the customers at large.

2. The firm offers to its clients the entire spectrum of financial services ranging frombrokerage services in equities and commodities, distribution of mutual funds, IPOs and

insurance products, real estate, investment banking, merger and acquisitions, corporate finance

and corporate advisory.

3. The management of the company is consisting of highly trained and skilledprofessionals

WEAKNESSES

1. Since the company is reaping the benefits of its high level performance still due to thelow network there is a low customer base being foreseen as compare to other competing

companies in Indian stock and security market.

OPPORTUNITIES

1. Immense opportunities in Indian Stock market since very few investors have turned upas compared to the past years.

2. Still few competitors fighting for the vast securities market.3. Increasing knowledge of DEMAT inspiring hesitant investors to deal with Indian stockmarket without any issue of being loss of their money.


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THREAT

1. Since there is a wide speculation involved in securities and stock market, people prefer to

invest in mutual fund, insurance and in banks for their safety of money.

2. Competitors are rising and making their tremendously and many other FIIs and MNCs are

planning to come in to field of securities and investment since rising finance sector is attracting

them a lot.


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CONCLUSION

At the conclusion of the summer training project in ANAND RATHI Securities Ltd., I

would like to conclude my opinion that there is a vast untapped potential for a emerging and

rising company like ANAND RATHI to grow in business of securities with other supporting

financial services being provided by the company.

Since a highly enriched corporate environment is being provided in the company I gained a

tremendous knowledge and experience in respect to learning the concept of Dematerlisation

and its significance to the shareholders and every new prospects applying for the existing shares

and/or any new public offer (NPO) without any hesitation and with all legal procedures so that

the amount invested could be remain secure and safe legally.

Thereby I came to realize the growth of the financial sector as it is reaping success since the

major rising sector being notified as per my knowledge is finance since company are

establishing their business entities in securities, mutual fund, insurance and many others.

The experience of summer training was indeed a worth in utilizing my professional approaches

under the prestigious like company ANAND RATHI Securities Ltd.

final summer project report

Documents