A Study on

Risk and return analysis for automobile Industry in India

Study conducted at Motilal Oswal Securities Limited
A Synopsis to Visvesvaraya Technology University, Belgaum
In the partial fulfillment of the requirement for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

Submitted by:
YESHWANTH .R
(USN: 1AT13MBA45)
Under the guidance of
INTERNAL GUIDE
Prasanna Byahatti Ph.D
Asst. Professor
Dept. of Management studies
Atria Institute of Technology
Bangalore

EXTERNAL GUIDE
Mr. Amzad Shaikh
Branch Manager
Motilal Oswal Securities limited
Bangalore

PG Department of Business Adminstration

Mr.
PG

Atria Institute of Technology

Bengaluru-560024
2013-2015

CERTIFICATE

This is to certify that Mr. YESHWANTH . R bearing University Seat Number (USN)
1AT13MBA45, is a bonafide student of Master of Business Administration course of the ATRIA
INSTITUTE OF TECHNLOGY - 2013 batch, affiliated to Visvesvaraya Technological
University, Belgaum. Internship report on RISK AND RETURN ANALYSIS ON
AUTOMOBILE INDUSTRY IN INDIA is prepared by her under the guidance of Mr.
AMZAD SHAIKH at MOTILAL OSWAL SECURITIES LTD, BANGALORE in partial
fulfillment of the requirements for the award of the degree of Master of Business
Administration of Visvesvaraya Technological University, Belgaum Karnataka

Signature of Internal Guide

Signature of H O D

Signature of Principal

DECLARATION

I, Mr. YESHWANTH.R hereby declare that the Internship report entitled RISK AND
RETURN ANALYSIS ON AUTOMOBILE INDUSTRY IN INDIA

with reference to

MOTILAL OSWAL SECURITIES LTD Bangalore prepared by me under the guidance of Mr.
PRASANNA BYAHATTI, Asst. Professor of MBA Department, ATRIA INSTITUTE OF
TECHNOLOGY, Bangalore. and external assistance by Mr. AMZAD SHAIKH, Branch
Manager, MOTILAL OSWAL SECURITIES LTD.
I also declare that this internship work is towards the partial fulfillment of the university
regulation for the awards of degree of Master of Business Administration by Visvesvaraya
Technological University, Belgaum.
I have undergone a summer project for a period of 12 weeks. I further declare that this project is
based on original study undertaken by me and has not been submitted for the award of any
Degree/Diploma from any other University/ Institution

Place:

Bangalore

(Yeshwanth.R)

Date:

ACKNOWLEDGEMENT

I have been fortunate enough to get good timely advice and support from a host of people to
whom I shall remain grateful.

I take this opportunity to express my heartfelt thanks to Dr. Rajanandam Principal, Atria
Institute of Technology Bangalore, for his support and cooperation to undertake and complete the
project work.

I am extremely thankful to Dr. K.S. Bhat Head of the Department of Management Studies &
Research Centre Atria Institute of Technology Bangalore, for his advice and support throughout
the completion of the project work.

It gives me immense pleasure to thank my Internal Guide Mr. Prasanna Byahatti asst. professor
of Department of Management Studies & Research Centre Atria Institute of Technology
Bangalore, for his valuable guidance and untiring support and cooperation in completing the
project work.

I acknowledge the insights provided by my External Guide Mr. AMZAD SHAIKH., Branch
Manager, MOTILAL OSWAL SECURITIES LTD. Which helped me to a great extent in
completion of the project work.

And finally, there are heartfelt thanks for the patience and cooperation of the family and friends,
without whom the endeavor would not have been possible.

(Yeshwanth . R)
USN: 1AT13MBA45

TABLE OF CONTENTS
CHAPTER
NO

CONTENTS

PART A
GENERAL INTRODUCTION

Statement of the problem

Objective of the study
Scope of the study
Research methodology
Limitations of the study
2.

COMPANY PROFILE
Background and Inception of the company
a.
b.
c.
d.
e.

Nature of Business carried

Vision mission and Quality
Product/ services Profile
Area of Operation
Ownership Pattern

PAGE
NO

f. Competitors inform
g. Infrastructural facilities
h. Achievements
i. Work flow model
j. Future growth and prospects
3.1

MCKINSEYS 7S FRAME WORK

3.2

SWOT ANALYSIS

3.3

ANALYSIS OF FINANCIAL STATEMENT

PART B
4

ANALYSIS AND INTERPRETATION

SUMMARY OF FINDINGS, SUGESSTION

CONCLUSION

ANNEXTURE

CHAPTER -1

TITLE OF THE STUDY

Risk and Return analysis for Automobile Industry in India: at Motilal
Oswal Securities Ltd

INTRODUCTION
General utility theory suggests that the average investor is risk averse. Given the same
expected return of two assets with different risks, he would prefer the one with less risk. (This
assumption may not be perfectly true for all individuals in all situations, but for the investor
community as a whole it is probably true). Therefore, investors demand a higher expected return
for riskier assets. Note that a higher expected return does not guarantee a higher realized return.
Because by definition returns on risky assets are uncertain, an investment may not earn its
expected return For an asset with uncertain cash flows and payoffs, which are normally
distributed, the mean of the distribution will be the expected return while the standard deviation
forms some kind of risk. Choosing the less risky asset therefore comes down to choosing the
asset with the lowest standard deviation in its payout distribution. An investor could also
approach the problem from the other direction, choosing among assets with the same risk and
then choose the asset with the highest expected return.

SCOPE OF THE STUDY

The area of study is restricted only to equity diversified funds of automobile sector
The calculation of the necessary parameters for each stock are for a period of one year
The study does not cover the technical analysis of the stocks

OBJECTIVES

To Identify the Risk and Return involved in the investment of securities in the market

specifically with the Indian automobile industry.

To study the price movements of the stock with respect to Nifty index

 To study the variation involved in the stock with respect to its returns
To suggest the investor whether to buy, sell or hold a particular stock based on the
analysis.

METHODOLOGY
This research study has adopted descriptive research design .These data were drawn from the
historic data from the NSE (National Stock Exchange) both the S&P CNX NIFTY and the
Stock Return of the individual firms(TATA, M&M, HERO HONDA, ASHOK LEYLAND &
MARUTHI). Internet is used as the primary source to draw the data for the analysis of the risk in
the securities of these firms in the automobile industry.

LITERATURE REVIEW

American Economic Review by PETER C FISHBURN Vol.67,no 2. March 1999

MEAN- RISK ANALYSIS WITH RISK ASSOCIATED WITH TARGET RETURNS
it shows modles for choice among mutually exclusive investment opportunities or
portfolios having uncertain returns .this group includes a variety of parametric models
based on mean, semi variance, variance, loss probabities.etc.

A Study on Risk & Return analysis of Automobile industry in India

By Dr P Vikkraman, P Varadharajan (2004-2007) The risk and return analysis linked with
any industry reveals the intricacies involved with the particular industry. A close
watch on these values throws light on a clear understanding and facilitates in decision
making about the investment in securities.. The importance of returns in any investment
decision can be traced to the factors: it enables investors to compare alternative
investments in terms of what they have to offer the investor, it helps in measuring of
historical returns which enables the investors to assess how well they have done, it

facilitates in measuring of the historical returns also helps in estimation of future returns
Asian Journal of Research in Business Economics and Management Year : 2012,
Volume : 2, Risk and return analysis of automobile Since the inception of mankind on
earth, the only force that has driven it through the various phases of improvements and

advancements is the urge to find solutions better, efficient and quick by way of mobility
from one place to another. This urge gives birth to technology which has changed the
world around us. The World of both the Automobile Industry of 21st century sets the best
example by the virtue of breakthrough technologies & never tiring urge for more
innovative technical advancement in all the aspects of the Industry. Our work aims at
probing into the scenario of determining the risk and return relationship of the selected
sectors for the study

LIMITATION OF STUDY

The project is limited by the period of study

The project is based on secondary data.

The data collected is for a period of one year only

The study mainly covers only the automobile sector
The project is based on the information provided by the employees of the organisation
and other primary organisational documents.

CHAPTER 2

INDUSTRY PROFILE
HISTORY

The equity brokerage industry in India is one of the oldest in the Asian region. India had an
active stock market for about 150 years that played a significant role in developing risk markets
and also promoting enterprise and supporting the growth of industry.

The roots of a stock market in India began in the 1860s during the American civil war that led
to a sudden surge in the demand for cotton from India resulting in setting up of a number of joint
stock companies that issued securities to raise finance. This trend was akin to the rapid growth of
securities markets in Europe and the North America in the background of expansion of railroads,
exploration of natural resources and land development.

Historical records show that as early as 1864, there were about 1,000 brokers with the stock
markets functioning from three places in Mumbai, between 9 am to 7 pm at the junction of
Meadows Street and Rampart Row, from day break till 9 am and from 7 pm to early hours of
next morning at Bazargate.

Share prices rose sharply even at that time. A share of Colaba Land Company during the boom
period of the 1860s rose from Rs 10,000 at par to Rs 120,000 and that of Backbay Shares went
up from Rs 2,000 to Rs 54,000. Bombay, at that time, was a major financial centre having housed
31 banks, 20 insurance companies and 62 joint stock companies.

Reports on stock markets around that time indicate that an ordinary broker in 1864 earned
about Rs 200 per day, a huge sum in those days. The boom period came to an abrupt end in 1865.
In July 1865, what was then used to be called the share mania, ended with burst of the stock
market bubble. Never had I witnessed in any place a run so widely distributed nor such distress
followed so quickly on the heels of such prosperity thus wrote Richard Temple, who served as
the Governor of Bombay at that time. An interesting aspect is that despite the collapse of the
stock market, most of the brokers met their payment commitments.

In the aftermath of the crash, banks, on whose building steps share brokers used to gather to
seek stock tips and share news, disallowed them to gather there, thus forcing them to find a place
of their own, which later turned into the Dalal Street. A group of about 300 brokers formed the
stock exchange in July 1875, which led to the formation of a trust in 1887 known as the Native
Share and Stock Brokers Association.

A unique feature of the stock market development in India was that, it was entirely driven by
local enterprise, unlike the banks which during the pre-independence period were owned and run
by the British. Following the establishment of the first stock exchange in Mumbai, other stock
exchanges came into being in major cities of India, namely Ahmedabad (1894), Calcutta (1908),
Madras (1937), Uttar Pradesh and Nagpur (1940), and Hyderabad (1944). The stock markets
gained from surge and boom in several industries such as jute (1870s), tea (1880s and 1890s),
coal (1904 and 1908) etc., at different points of time.

RAPID GROWTH
The last decade has been exceptionally good for the stock markets in India. With the
background of wide ranging reforms in regulation and market practice and the growing
participation of foreign institutional investment, stock markets in India have showed phenomenal
growth in the early 1990s. The stock market capitalization in mid-2007 is nearly the same size as
that of the gross domestic product as compared to about 25% of the latter in the early 2000s.
Stock markets became intensely technology and process driven, giving little scope for manual
intervention that has been the source of market abuse in the past. Electronic trading, digital
certification, straight through processing, electronic contract notes, online broking have emerged
as major trends in technology. Risk management became robust reducing the recurrence of
payment defaults. Product expansion took place in a speedy manner. Indian equity markets now
offer, in addition to trading in equities, opportunities in trading of derivatives in futures and

options in index and stocks. ETFs are showing gradual growth. Within five years of introduction
of derivatives, Indian stock markets now are ranked first in stock futures and fourth in index
futures.
Indianstock markets are transaction intensive and thus rank among the top five markets in this
regard .Stock exchange reforms brought in professional management separating conflicts of
interest between brokers as owners of the exchanges and traders/dealers. Foreign institutions
took stake in Indias two leading domestic stock exchanges. While NYSE Group led consortium
took stake in the National Stock Exchange, Deutsche Borse and Singapore Stock Exchange
bought equity in the Bombay Stock Exchange Ltd.

NATIONAL STOCK EXCHANGE (NSE)

The National Stock Exchange (NSE) is Indias leading stock exchange covering various cities
and towns across the country. NSE was set up by leading institutions to provide a modern, fully
automated screen-based trading system with national reach. The Exchange has brought about
unparalleled transparency, speed & efficiency, safety and market integrity. It has set up facilities
that serve as a model for the securities industry in terms of systems, practices and procedures.
There are two kinds of players in NSE:

Trading members

Recognized members of NSE are called trading members who trade on behalf of
themselves and their clients

Participants

Participants include trading members and large players like banks who take direct
settlement responsibility.
Unless stock markets provide professionalized service, small investors and foreign investors
will not be interested in capital market operations and capital market being one of the major
sources of long-term finance for industrial projects, India cannot afford to damage the capital
market path. In this regard NSE gains vital importance in the Indian capital market system.

BOMBAY STOCK EXCHANGE (BSE)

Bombay Stock Exchange is the oldest stock exchange in Asia with a rich heritage of over 133
years of existence. What is now popularly known as BSE was established as The Native Share
& Stock Brokers Association in 1875. BSE is the first stock exchange in the country which
obtained permanent recognition (in 1956) from the Government of India under the Securities
Contracts Regulation Act (SCRA) 1956. BSEs pivotal and pre-eminent role in the development
of the Indian capital market is widely recognized.
It migrated from the open out-cry system to an online screen-based order driven trading
system in 1995. Earlier an Association of Persons (AOP), BSE is now a corporatized and
Ldemutualized entity incorporated under the provisions of the Companies Act, 1956, pursuant to
the BSE (Corporatization and Demutualization) Scheme, 2005 notified by the Securities and

Exchange Board of India (SEBI). With demutualization, BSE has two of worlds prominent
exchanges, Deutsche Bores and Singapore Exchange, as its strategic partners.
Today, BSE is the worlds number 1 exchange in terms of the number of listed companies and
the worlds 5th in handling of transactions through its electronic trading system. The companies
listed on BSE command a total market capitalization of USD 1.63 Trillion as on December,
2010,makingit the 4th largest stock exchange in Asia and the 8th largest in the world. BSE reaches
to over 400 cities and town nation-wide and has around 5,034 listed companies; with over 7745
scrips being traded as on 31stDec, 2010.
The BSE Index, SENSEX, is Indias first and most popular stock market benchmark index.
Sensex is tracked worldwide. It constitutes 30 stocks representing 12 major sectors. The
SENSEX is constructed on a free-float methodology, and is sensitive to market movements and
market realities. Apart from the SENSEX, BSE offers 23 indices, including 13 sectorial indices.
It has entered into an index cooperation agreement with Deutsche Borse and Singapore Stock
Exchange. These agreements have made SENSEX and other BSE indices available to investors
across the globe. Moreover, Barclays Global Investors (BGI), at Hong Kong, the global leader in
ETFs through its iShares brand, has created the exchange traded fund (ETF) called iShares.
BSE provides an efficient and transparent market for trading in equity, debt instruments and
derivatives. It has always been at par with the international standards. The systems and processes
are designed to safeguard market integrity and enhance transparency in operations. BSE is the
first exchange in India and the second in the world to obtain an ISO 9001:2000 certifications. It
is also the first exchange in the country and second in the world to receive Information Security
Management System Standard BS 7799-2-2002 certification for its BSE On-line Trading System
(BOLT).
BSE continues to innovate. In 2006, it became the first national level stock exchange to launch
its website in Gujarati and Hindi and now Marathi to reach out to a larger number of investors. It
has successfully launched a reporting platform for corporate bonds in India christened the ICDM
or Indian Corporate Debt Market and a unique ticker-cum-screen aptly named BSE Broadcast
which enables information dissemination to the common man on the street.

LIST OF STOCK EX-CHANGES IN INDIA

There are 22 stock exchanges in India. These are shown below:
1. Bombay Stock Exchange
2. National Stock Exchange
3. Bangalore Stock Exchange
4. Bhubaneswar Stock Exchange
5. Calcutta Stock Exchange
6. Cochin Stock Exchange
7. Coimbatore Stock Exchange
8. Delhi Stock Exchange
9. Guwahati Stock Exchange
10. Hyderabad Stock Exchange
11. Jaipur Stock Exchange
12. Ludhiana Stock Exchange
13. Madhya Pradesh Stock Exchange
14. Madras Stock Exchange
15. Magadha Stock Exchange
16. Mangalore Stock Exchange
17. Meerut Stock Exchange
18. OTC Stock Exchange
19. Pune Stock Exchange
20.Saurasthra Stock Exchange
21. Uttar Pradesh Stock Exchange
22. Vadodara Stock Exchange

WORLDWIDE STOCK MARKETS

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15

Country
USA
Japan
United Kingdom
France
Germany
Canada
Hong Kong
Switzerland
Italy
Spain
Australia
Russia
South Korea
India
Taiwan

Market cap (US$ billion)

15,517
4,079
3,067
1,828
1,256
1,239
1,001
872
788
688
687
592
557
506
475

% of world
39.5
10.4
7.8
4.7
3.2
3.2
2.6
2.2
2.0
1.8
1.8
1.5
1.4
1.3
1.2

SECURITY & EXCHANGE BOARD OF INDIA (SEBI)

SEBI was established in 1988 and became a fully autonomous body in the year 1992 with
defined responsibilities to cover both development and regulation of Stock Market.
FUNCTIONS OF SEBI :
1. Regulation of Stock exchanges and Subsidiaries:
One of the key functions of the Board is to supervise and monitor the activities of the
exchanges, clearing houses and the settlement system, strengthen market infrastructure
and ensure that appropriate risk management systems are in place. Main functions
include Inspection of Stock Exchanges, Inspection of Subsidiaries of Stock Exchanges,

Restructuring of Management of Subsidiaries, Takes Strict actions against Illegal Trading

in Securities.
2. Registration and Regulation of the working of Intermediaries:
In order to interpose between issuers and investors, regulators recognize various classes
of intermediaries in the capital market. SEBI, over the period, recognized many types of
capital market intermediaries in India and operations during the year is reviewed in the
following sections.
i.

Primary Market: Intermediaries such as merchant bankers, underwriters,

debenture trustees, bankers to an issue, registrars to an issue and share transfer
agents and portfolio manager are the intermediaries that function in the
primary markets.

ii.

Secondary Market: Brokers & sub-brokers will function in the secondary

market. Sub-brokers are intermediaries between the broker and the investors.

iii.

Registration of FIIs

iv.

Registration of Custodian of Securities

3. Registration and Regulation of Collective Investment schemes including mutual

Funds
4.

Promotion and Regulation of Self-Regulatory organizations

5. Fraudulent and Unfair Trade practices

6. Investor Education and the Training of Intermediaries.

MAJOR INITIATIVES TAKEN BY SEBI

PAN was made the sole identification number for all transactions in securities market
irrespective of the amount.

Format of the New Scheme Report by Mutual funds revised.

Long term options on Sensex and Nifty with tenures up to 3 years Introduced and the
options cycle, risk containment measures specified.

BSE and NSE permitted to put in place corporate bond trading platforms to enable
efficient price discovery and clearing and settlement in a gradual manner.

COMPANY PROFILE
BACKGROUND AND INCEPTION OF THE COMPANY
Motilal Oswal securities limited was founded in 1987 as a small sub-broking unit, with just
two people running the show Mr. MotilalOswal and Mr. RaamdevAgarwal laid the foundation
for MOFSL. It is headquartered in Mumbai having one of Indias largest networks spreading
over 563 cities and towns comprising 1538 business locations operated by business partners. As
of 30 Sept 2011 it has 732173 registered customers.MOITAL OSWAL FINANCIAL
SERVICES GROUP consists of 5 highly renowned entities which are as follow:
MOIAPL (Motilal Oswal Investment Advisors Private Ltd.)
MOCBPL (Motilal Oswal Commodities Broker Private Ltd.)
MOPEAPL (Motilal Oswal Private Equity Advisors Private Ltd.)
MOAMC (Motilal Oswal Asset Management Company)
MOSL (Motilal Oswal securities Ltd)

Focus on customer-first-attitude, ethical and transparent business practices, respect for

professionalism, research-based value investing and implementation of cutting-edge technology
has enabled us to blossom into an over 2000 member team.

NATURE OF THE BUSINESS

MOFSL is a broking unit and a well-diversified financial services firm offering a wide
range of financial services and products. Being a subsidiary MOSL carries the same business
where it particularly deals Investment Banking, Private Equity, Wealth Management,
Institutional Equities, Asset Management, Broking and Distribution, Principal Strategies .
Motilal Oswal Securities Advisory Group is equipped to augment and alter the investments in an
effort to create healthy portfolio.

Motilal Oswal Securities Ltd follows a network of

franchisee/sub-brokers shop and Remises model. Their systems and policies are deeply evolved
and centred on the business requirements of the sub broker.
The business is carried on in two different areas .The first one is client acquisition and the
second one is franchisee acquisition .There are few ways in which client acquisition takes
place .They include tele-calling, cold calling, referrals from existing clients and directly targeting
competitor data base, walk-ins. Franchisee acquisition means insisting the interested sub brokers
to open up a franchise or sub brokerage firms of Motilal Oswal. This might be either on the
premises of Motilal Oswal or a separate office where the support service is provided by Motilal
Oswal. There are people who work independently in the premises of Motilal Oswal who are
known as Business Associate Group (BAG).

CORE PURPOSE AND VALUES

VISION
To provide opportunities for children and their families to move from poverty and dependence
to self-reliance. At MotilalOswal Financial Services Limited our motto is `Knowledge First` and
we believe that education can bring prosperity and equality in the society.
MISSION

To be a well-respected and preferred global financial services organization enabling wealth

creation for all our customers
Values
Our core purpose is complemented by our organizational values. Living these values, we
believe, helps us achieve our core purpose.
Integrity: A company honoring commitment with highest ethical and business practices.
Passion & Attitude: High energy and self-motivatedwith a Do it attitude and entrepreneurial
spirit. .

PRODUCTS AND SERVICES

MOSL understands customer profile and uses a combination of the following products and
services to look after their needs
Equities BSE/NSE

Derivatives- NSE-Cash and F&O and BSE Cash and F&O

Commodities- NCDEX/MCX
Portfolio Management Services
Private Equity
Mutual Funds
Online Trading
IPOs
Depository Services
Loan against shares
Asset management
Investment banking
Wealth Management

EQUITY:
Motilal Oswal securities Ltd is a member of NSE and BSE, has a network of over 480
branches inIndia and abroad, rendering quality equity trading services. Motilal Oswal Securities
Ltd not only has a strong offline presence but also provides but also provide automated online
trading services. Motilal Oswal Securities Ltd is retail spread caters to the need of individual

investors. Trading in equities is made simple, safe and interesting with smart advice from the
research desk through daily SMS alerts, market pointers, periodical research, stock
recommendations and customer meets organized frequently.
DERIVATIVE:
A Derivative is a financial contract, between two or more parties, which is derived from
the future value of an underlying asset. At any point of time there will always be available near
three month contract periods. Currently, settlement of all derivatives trades is in cash. There is
daily as well as final settlement. As long as the position is open, the same will be mark to market
at the daily settlement price, the difference will be credited or debited accordingly and the
positions shall be brought forward to the next day at the daily settlement price.
INTERNET TRADING:
If you have access to the Internet then you can register with your to view your demat
account over the internet. This is very beneficial as you can avail of a host of services at no extra
cost. You will be able to view your holdings, reports, and ledger and will have free access to our
research reports at any time.
DEPOSITORY SERVICES:
A depository can be compared to a bank. It holds securities such as shares, debentures,
bonds, government securities, units etc. Of investors in electronic form.

Motilal Oswal

Securities Ltd is a depository participant of NSDL. Investors can open demat accounts with
NSDL through MOSL. One can approach the nearest branch of Motilal Oswal Securities Ltd for
opening an account. Agreement charges along with annual maintenance charge (AMC) are
collected upfront while opening an account. It takes two to three days to open a demat account.
PORTFOLIO MANAGEMENT SERVICES:
Motilal Oswal Securities Ltd a SEBI registered portfolio manager offers discretionary
portfolio management services.

Motilal Oswal Securities Ltd has a team of experts who

carefully take investment decisions based on the clients objectives. The portfolio management
team has a successful track record of more than 10 years in the capital markets.

COMMODITIES:
MOCB provides commodity broking facilities through its membership of NCDEX and
MCX. They trade for their clients in a wide variety of 63 commodities, including agricultural
products, bullion, industrial products, oil and oil seeds and energy products. MOSL brokerage
clients have access to exclusive customized trading advice and reports on highly traded
commodities.
RETAIL WEALTH MANAGEMENT:
Retail wealth management services are offered through MOFSL, MOSL and MOCB.
They seek to offer customized investment management services including planning, advisory,
executive and monitoring or a range of investment products to our retail customers. Through
various types of brokerage accounts, our customers can purchase and sell securities, including
equities, derivatives as well as commodities traded on NSE, BSE, OTCEI, NCDEX and MCX.
MUTUAL FUNDS:
Mutual funds offer a platform to participate in the equity & debt market indirectly through
professional management. Motilal services regarding client profiling, asset allocation plan,
scheme selection, re-balancing. It offers need based advisory fully backed by solid research, it
understands the needs and builds a prudent portfolio, it reviews the portfolios on a monthly basis.

AREAS OF OPERATION:
Motilal Oswal Financial Services is a national player as of March 31 st, 2010, network
spread over 591 cities and research coverage of more than 1755 companies and towns
comprising 1,397 business locations operated by our business partners. As at march 31 st, 2010,
they have 6,21,215 registered customers, with a network over 1500 outlets and more than 5 lakh
investors in over 450 cities and towns needs of all kinds of customers. They have established
Indias largest dealing room and advisory desk spread over 2600 Sq.Ft area housing over 250+
advisors at Malad, Mumbai. The reason for the growth and size has been a large sub-broker
network. Over 1300 of their outlets are run by their sub-brokers.

As a part of MOFSL, Motilal Oswal Securities Ltd (MOSL) located in Bangalore. Almost
10% of the revenue is invested in equity research and they hire and train the best resources to
become advisors. MOSCL has the highest credit rating for 4.0billion short term debt program.
Credit rating agency CRISIL has assigned the highest rating of P1+ to the companys short
term debt program.

Geographic reach through

Branch network
Franchisee network
Alliances with banks dedicated HNI channel brand
Purple

Registered office
Palm spring center, 2nd floor, palm court complex,
New link road, Malad (W), Mumbai-400 064
Call: 022-30896680
Email: mfservice@motilaloswal.com
Bangalore regional Office
Bellary Rd, Palace Orchards, Sadashivanagar,
Bangalore - 560 080
Tel: 09341875446/080 67133400/ 441

OWNERSHIP PATTERN:

Particulars
Promoter and Promoter Group
Indian
Foreign
Public Shareholdings
Institution
Mutual Funds/UTI
FII

No. Of Shares
100,575,851
NIL

69.31%
NIL

15,663,077
1,428,606

10.79%
0.98%

Non- Institutions
574,607
Body Corporate
9,322,558
Individuals
Others (NRI, Foreign
17,554,770
Co., Directors, trusts,

Clearing Members)
A. Custodians
TOTAL

% holdings

NIL
145,119,469

0.40%
6.43%
12.11%

NIL
100%

COMPETITORS INFORMATION:
Motilal Oswal has many competitors like Stock Holding Corporation of Karvy
Consultancy, BGSE, Infrastructure Leasing & Financial Services Limited (IL&FS), Share Khan,
ICICI Direct, India Bulls, Kotak Securities, Standard Chartered, Religare, India bulls etc.

INFRASTRUCTURE FACILITIES
MOTILAL OSWAL FINANCIAL SERVICES LTD is located at Bellary road, palace
orchards, Sadashivanagar, Bangalore. Office Total Area rented by the company is 2,200 square
feet. With very good technology support is available. Cleanliness is given utmost importance in
the company. There are air- conditioners, proper lighting and ventilation and telecommunication
facilities. The company also provides travel allowances and medical allowance facilities to the
employees and parking facility is also available. There is a Relationship Manager Cabin, a
Conference hall, a Training room, a Dealing room, back office department, a reception hall.

The softwares used are trading :

1. Online trading Fast Trade software also known as My Broker
2. Offline trading- Lite Desktop provided by 3i InfoTech.

ACHIEVEMENTS AND AWARDS:

Best Equity Broking House award for FY011 at the Dun and Bradstreet Equity Broking
Awards2011
Best Capital Markets and Related NBFC award at the CNBC TV18 India Best Banks
and Financial Institution Awards 2011.
Excellence in HR through Technology and Excellence in Healthcare awards at Asias
Best Employer Brand Awards 2011 in Singapore.
Most Innovative Fund of the Year award at the CNBC TV18-CRISIL Mutual Fund
Awards 2011
Adjudged the Best Performing Equity Broker at CNBC TV18 Financial Advisors
Awards 2010.
Investment Banking bagged Asia Pacific Cross-Border Deal of the Year and India
M&A Investment Banker award.
Rated No. 1 Best Recommendations Mid & Small Caps and won awards in 3 out of 4
categories at the Star Mine India Broker Rankings 2009 from Thomson Reuters.
Alliance with Axis Bank for offering Online Trading services.

FUTURE GROWTH AND PROSPECTS:

Grow distribution networks India

Leverage research and advisory
Investor awareness and education
Increase distribution of mutual fund and insurance products
Focus on wealth solutions and new product offering
Grow investment banking business
Judicious use of capital ensures high Return on Equity and low leverage
Flexible cost structure to maintain profitability across market cycles
Build stronger Institutional relationship through wider and quality research
Increase research support
Grow institutional derivative business
Building Principal Strategies Group to maximize returns using risk free arbitrage
strategies

Grow margin funding book size.

MCKINSEYS 7S FRAMEWORK
The 7-s framework of Mckinsey is a Value Based Management (VBM) model that
describes how one can holistically and effectively organize a company..The model indicates
the interrelationship between the major aspects of the company and the way in which they are
coordinated.
McKinsey 7S framework Developed in the early 1980s by Tom Peters and Robert
Waterman, two consultants working at the McKinsey & Company consulting firm, the basic
premise of the model is that there are seven internal aspects of an organization that need to be
aligned if it is to be successful.
The 7S model can be used in a wide variety of situations where an alignment perspective is
useful, for example to help you:

Improve the performance of a company.

Examine the likely effects of future changes within a company.

Align departments and processes during a merger or acquisition.

Determine how best to implement a proposed strategy.

The Seven Elements

The McKinsey 7S model involves seven interdependent factors which are categorized as either
"hard" or "soft" elements:
Hard Elements

Soft Elements

Strategy

Shared Values

Structure

Skills

Systems

Style
Staff

"Hard" elements are easier to define or identify and management can directly influence
them: These are strategy statements; organization charts and reporting lines; and formal
processes and IT systems.
"Soft" elements, on the other hand, can be more difficult to describe, and are less tangible
and more influenced by culture. However, these soft elements are as important as the hard
elements if the organization is going to be successful.

The McKinsey 7S Model

STRATEGY:
FOCUS STRATEGY

MOSL offers customized investment management services to its retail customers.

Focus on the customer first philosophy

Customer segmentation based on understanding of individual needs

Wide bouquet of product offering (Direct equity, PMS, Mutual funds, Commodities).

EXPANSION STRATEGY

Increase market share in retail business

Increase market share in institutional brokerage

Grow fee-based revenues

Grow fund based revenues

STRUCTURE OF MOTILAL OSWAL:

SYSTEMS:

Trade management system

MOSL use a trade management system called iBOSS Trader Workstation (IBTW). IBTW

SYSTEMS :
Trade management system
MOSL use a trade management system called iBoss Trader workstation (IBTW). IBTW
is a high performance trade order management system that handles exchange-traded instruments
such as equities, commodities, futures and options. IBTW allows to send multiple orders to
multiple exchanges and multiple segments simultaneously.

Internet Based Share Trading System

MOSL have implemented an internet trading platform that allows to integrate their diverse
trading engines into a single platform. This allows customers, dealers and relationship managers
have a unique single window experience across all asset classes and product segments. This
internet platform is architecturally scalable to handle a large number of customers concurrently.

Audit and inspection

MOSL actively review its existing audit and inspection procedures to enhance their
effectiveness, usefulness and timeliness. Furthermore, all operational activities are subject to
concurrent internal audits at frequent intervals. The Business Locations are audited on a quarterly
basis by individual chartered accountancy firms appointed in their respective location.

Security and disaster recovery

MOSL has a comprehensive information security policy and conducts periodic systems and
network penetration tests to review the vulnerability of infrastructure. They are now gearing
towards a BS 7799 certification, of all IT processes to achieve a comprehensive control of
IT.MOSL have a sophisticated and secure layer III data center. In addition, iBTW has an inbuilt
security system that ensures that the sensitive data handled by iBTW is protected from
unauthorized access and misuse

STYLE:
Motilal Oswal securities Pvt. Ltd is a stock broking company where the nature of the
business is broking and distribution. They work participative leadership style in order to form
and increase high network of franchises and sub-brokers to maintain client relationship and to
share views for research purpose. MOSL follows a top down style of management .The decisions
are taken by the top management concerning matters related to the organization and decisions

towards department related matters are taken by the department heads

STAFF: The details of staff in Motilal Oswal regional o are as follows

STAFF DETAILS
DETAILS OF STAFF

MOSL regional office Money

spider

Bangalore

broking private ltd

Employees

26

Franchisees

80

BAG

Direct Channel/ Retail

13

IT

Back Office

Office boy

stock

SKILLS:
Programs for Employees
Increasing Employee Engagement

Through ting 451 business process improvement ideas will be provided.

Through coffee with chairman program: It is a platform to appreciate the employees

efforts and encourage them to provide new ideas.

Enhancing performance management

The performance of employees is measured through Balance scorecard and KRA audit through
HR Portal my zone

Training System: For Building Employee Capability: Through M-powered 138 training
programs, over 5,000 man days and CFP certification

SHARED VALUES:
The company is a broking company where its operation of work depends on the stock
exchange market which is volatile in nature.
MOSL goes for the following values:

Integrity: A company honoring commitment with highest ethical and business practices.

Teamwork: Attaining goals collectively and collaboratively.

Passion & Attitude: High energy and self-motivated with a Do It attitude and
entrepreneurial spirit.

Excellence in Execution: Time bound results within the framework of the companys
value system.

SWOT ANALYSIS
The strength, weakness, opportunities and threats of Motilal Oswal can be stated as follows:
STRENGTHS OF MOSL:

Large and diverse distribution network

Strong research and sales teams
Original Research
Integrated Technology Platform
User friendly software to its customers to facilitate online trading on their own.
Brand recognition
Strong private equity operations
Strong investment culture
Strong risk management practices
Leadership in franchisee business
Financial products and services such as Wealth Management, Broking & Distribution,
Commodity Broking, Portfolio Management Services, Institutional Equities, Private
Equity, Investment Banking Service

WEAKNESS OF MOSL:

Charges are high compared to other companies in the industry.

No service in rural segment.
Less penetration in developing cities.
Lack of advertising causes low awareness amongst investors.

OPPORTUNITIES OF MOSL:

Growing Financial Services industry's share of wallet of disposable income

Huge market opportunity for wealth management service providers as Indian wealth

management business is transforming from mere wealth safeguarding to growing wealth.

Favourable government policies which motivate public to invest money in share market.
Increasing awareness about the stock exchange among the public.
Leveraging technology to enable best practices and processes
Growing rural market.
Earning Urban Youth looking for investments.

THREATS OF MOSL:
Market fluctuations.
Government polices
Increased intensity of competition from local and global players
Unfavourable economic conditions
High inflation and interest rates
Entry of foreign finance firms in Indian Market.

Analysis of financial statement

Balance sheet
Particulars

Rs in crores
Mar13

Mar 12

Mar 11

Mar 10

Mar 09

Sources of funds
Equity share capital

14 .52

14.51

14.32

14.2

0. 00

0.00

0.00

0.00

0.10

Reserves

553.61

543.93

498.13

459.17

419.16

Net worth

568.13

558.44

512.57

473.49

433.46

25.00

0. 00

0.00

0 .00

0 .00

Unsecured loan

125.30

0.00

0.00

59.32

0.00

Total debt

150 .30

0.00

0.00

59.32

0.00

558.44

512.57

532.81

433.46

160.67

164.25

16.82

15.84

0.01

8.41

0.94

0.01

0.01

0.00

152. 26

163.31

16.81

15.83

0.01

0.00

0.38

120.49

87.48

0.00

119.69

98.7

83.26

58.24

31.35

0.00

0.00

0.29

107.76

32.72

0.16

0.61

24.56

200.12

0.16

0.9

132.32

232.84
206.68

Share application money

Secured loan

Total liabilities

718. 43

14.44

Application of funds
Gross block
Less: Accum. Depreciation
Net block
Capital Work in progress
Investments
Inventories
Cash and bank balance
Total current assets
Loans and advances
Fixed deposits
Total CA, loans & advances

11.22
11.22
469.89

365.84

368

296.72

0.00

1.00

1.00

0.5

367

369.9

429.54

440.64

481.11

1.12

Current liabilities

8.71

56.07

11.27

3.74

0.98

Provisions

25.92

14.87

66.61

54.55

37.61

Total CL & provisions

34.63

70.94

77.88

58.29

38.59

446.48

296.06

292.02

371.25

402.05

0.00

0.00

0.00

0.00

0.08

Total assets

718.43

558.45

512.58

532.8

433.49

Contingent liabilities

158.64

9.11

27.22

42

4.7

Book value

39.12

38.48

35.49

33.07

30.51

Net current assets

Miscellaneous expenses

PFOFIT AND LOSSES ACCOUNT

Rs in crores
Particulars

Mar13

Mar 12

Mar 11

Mar 10

Mar 09

Income
Sales turnover

70.01

46.43

49.53

51.09

55.71

Net sales

70.01

46.43

49.53

51.09

55.71

Other income

8.52

35.52

14.71

13.16

16.53

Total income

78.53

81.95

64.24

64.25

72.24

Employee cost

6.31

6.45

2.64

1.36

1.24

Other manufacturing exps

0.00

0.76

0.03

0.04

Selling & admin exps

0.00

4.43

2.92

2.28

2.58

Miscellaneous exps

5.00

3.02

0.23

0.43

0.05

Total expenses

11.31

13.9

6.55

4.1

3.91

Operating profit

58.70

32.53

42.98

46.99

51.8

PBDIT

67.22

68.05

57.69

60.15

68.33

Interest

13.45

0.9

1.16

2.85

7.32

PBDT

53.77

67.15

56.53

57.3

61.01

Depreciation

8.36

0.93

0.01

PBT

45.41

66.22

56.52

57.3

61.01

Extra ordinary items

0.00

0.13

-0.06

PBT
(post
items)

45.41

66.35

56.46

57.3

61.01

6.65

10.06

13.82

14.91

15.7

38.75

56.3

42.66

42.4

45.31

11.31

13.9

6.54

4.1

3.9

29.05

21.77

20.23

17.18

11.36

1.18

-2.09

3.28

0.63

0.51

1452.36

1,451.23

1,444.19

1431.72

1420.20

2.67

3.88

2.95

2.96

3.19

Expenditure

extra-ord

Tax
Reported net profit
Total value addition
Equity dividend
Corporate dividend tax
Shares in issue (lakhs)
EPS (Rs)