A

Summer training report

“Business process analysis of”
kotak security
At Jaipur

Submitted in the partial fulfillment of the

Completion of the degree of
Master Of Business Administration

Session 2005 to 2007

SUBMITTED TO: - SUBMITTED

BY:-
PROF. G.K. JOSHI RUCHI
KHANDELWAL

1
 L.I.E.T Management Studies
CHIKANI ALWAR
University Of Rajasthan, Jaipur

ACKNOWLEDGEMENT
Learning and acquiring knowledge has no leaps and
bounds. It is one resource that never gets exhausted,
the more you preach the better it gets and the more it
lives down through ages. From the day since man set
his foot on earth learning process had begun and is
still evolving making life happier and memorable. One
can only lead a person to things he needs to know, but
never can teach him how to learn. Experience through
failures and hardship makes a man perfect.

I express my sincere gratitude towards Mr. Naresh

Motwani regional manager at Kotak securities for
giving need and opportunity to undergo summer
training in one of the leading financial institution of
India.

I also take the opportunity to thank my project guides

Miss Namita Gupta and Mr. Hament Sharma to
provide me with relevant insights to understand the
project and guided at every step. Without their
guidance and undivided attention, the project would
not have taken this shape.

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I am also thankful to Dr. Manab Adhikary (Director
NDIM, New Delhi ) for considering me suitable for
such a valuable project.

DECLARATION

I, RUCHI KHANDELWAL Student of M.B.A. IInd

year, Laxmi Devi Institute of Engineering &
Technology, Chikani, Alwar (Rajasthan) hereby
declare that all the information facts and figures
produced in this report is based on my own experience
and study during my open market research in analyzing
the “Business process analysis of kotak
securitY”

I further declare that all the information and

facts furnished in this project report are based on
my intensive research findings. They are first
hand and original in nature.

RUCHI KHANDELWAL

Student of M.B.A. II nd Yr,

Place: Chikani, Alwar
Laxmi Devi Institute of

3
 Engineering & Technology,
Alwar (Raj.) 301001

PREFACE
Expansion of an existing product in market is an
interdisciplinary science that investigates the activities
related to the creation of proper distribution channels
through market intermediaries that is why it is committed to
spirit of diversity of consumers.

It is studied as a part of marketing curriculum as it helps in

understanding why and how consumer make their purchase
decision as these insights enables marketers to design more
effective marketing strategies .

So this project has been taken by the KOTAK SECURITIES

to expand the highly successful project title that is
STUDYING THE BEHAVIOUR OF INVESTORS AND
PROMOTION OF CONCEPT OF ONLINE SHARE
TRADING OF KOTEX SECURITIES.

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HISTORY

5
 HISTORY OF THE COMPANY

The Kotak mahindra group was born in 1985 as Kotak capital

management financies ltd. Uday Kotak, Sindey A.A
Pinto,Promoted the company. Industrialists Harish
Mahindra and Anand Mahindra Took a stake in 1886 and
that’s when the company changed its name to KOTAK
MAHINDRA FINANCE LIMITED.

1986: Kotak Mahindra Finance Limited Starts The activity of

bill discounting.
1987: Enters the base and hire purchase market.
1990: Auto finance division was started.
1991: Investing banking was started.
1992: Enters funds syndication sector.
1995: Brokerage and distribution businesses incorporated into
a separate company Kotak Securities.
1996: The auto finance business was hived ofinto aseperate
company- Kotak Mahindra Primus Limited. Kotak
Limited,For financing ford vehicles.
1998: Enters themutual fund market with launch of Kotak
Mahindr
company
2000: Kotak Mahindra ties up with old mutual for the life4
insurance business. Kotak Securities launches Kotak street
system. Com- its online broking site.
2003: Kotak Mahindra finance Limited converts to bank

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Kotak securities limited is a subsidiary of Kotak Mahindra
Bank Limited is one of largest private brokerage and
distribution house Set up in 1994 by Mr. Uday Kotak.Kotak
securities have 25% equity participation fromGoldman Sachs.

Kotak securities have been the largest in IPO distribution and

were ranked no.1 in the year 2003-2004 as book running lead
managers in I PO’s by prime database. The core strengths are
the expertise in equity research and wide retail distribution
network.It has an outstanding research division involved in
macro – economic studies, industry and company specific
equity research with analysts specializing in particular
economic sectors and large cap stocks. Kotak securities
manage assets over rupees 1200 crs under portfolio
management services.

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8
Main areas of business kotak Securities are :-

• Institutional broking business

• Private client group

• Client money management

• Retail distribution of financial products

• Depository services

• Online trading

Institutional broking business:-

This service primarly covers secondary market broking.It

caters to the needs of foreign and Indian institutional investors
in Indian equities Kotak Securities institutional business also
incorporates a comprehensive research cell with sect oral
analysts who cover all the major areas of Indian economy.

Private client group:-

Private client group is a special investment division for high

net worth individuals. Non resident Indian investors, trusts
corporate and banks the investments product range at private
client group is among the widest in the country and covers

9
debt and equity, mutual funds and specialized structured
investment products.

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Client money management :-

This division provides professional portfolio management

services to highnet worth individuals and
corpotate.Efficient fund management is maintained at all
times as well as complete accountability and transprency.
Its expertise in research and stock broking givesit the right
perspectives from which it provide its clientswith
inbestments advisory services that benefit the clients.

Retail distribution of financial products

Kotak Securities has a comprehensive retail distribution

network, comprising about 7000 agents, 13 branches and
over 20 franchisees across India. This network is used for
the distribution and placements of a range of financeal
products that includes company fixed deposits,mutual
funds initial public offerings, equity and small saving
schemes.

Depository services:-

Kotak Securities is a depository participant with national

securities depository limited for trading and settlement of
dematerialized shares.Since it is also in the broking
business investors who use its depository services get dual
benefit.

Online trading:-

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Kotak Securities online broking service kotakstreet.com offers
services for retail investors who like to trade on net its
unique product offering securities as margins and its
market watch facility with real time prices combined in an
order facility not offered by and other web site at present.

PRODUCT
PROFILE

12
 PRODUCT OF THE COMPANY

Introduction to online trading:-

Technology is revolutionizing every field of human endeavor

and activity. The rapid growth in number volume and value
and securities in the Indian capital market exposed the
limitation of handling and dealing in securities. In physical /
paper modes, shortcoming of the market became manifest in
terms of bad deliveries, delay in transfer and irregular
settlements etc. electronic medium of trading introduced first
by national stock exchange (NSE)followed by the stock
exchange Mumbai (BSE) in 1995 by the help of online trading.
Share traders can easily purchase and sell their shares through
their own terminals or through broker’s terminal with out any
paper work .

In order to provide efficiency, liquidity and transparency NSE

introduced a nation wide online fully automated screen based
trading system (SBTS) where a member can punch into the
computer quantities securities and the prices at which he likes
to transact and the transaction executed as soon as it finds a
matching sale or by orders from a counter party SBTS
electronic matches orders on a strict price/ time priority and

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hence cuts down on time cost and risk of errors as will as on
fraud resulting in improved operational effiency.It allows
fasters incorporation of price sensitive information into
prevailing prices, thus increasing the informational efficeincy
of market .

NSE has main computer, which is connected through very

small aperture terminal(V-SAT) installed at its office, Brokers
haveterminal installed at their premises which are connected
through V-SAT/ leased lines/ modems.

Investors inform a broker to place an order on his behalf. The

broker enters the orders though his PC and sends singal to the
satelite vie V-SAT. the signal is directed to mainframe
computer at NSE. The order confirmation message is
immediaterly displayed on the PC of the broker. By the help
of given diagram we can easily understand how people trade
online.

The online division of kotak securities offers its customers the

facility e-broking and through it customers accesses a brokers
website through his Internet enabled PC can place orders on
the trading engine of the e- broker and the orders are routed
the stock exchange and executed there on. Electronics broking
services offered on the Internet by kotak securities through its
website www kotak security.com offers only on the NSE The
scripts on which NSE moves are fifty which are as follows:

 ONGC
 RELIANCE IND.
 TATA CONSULTANTS

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 INFOSYS TECHNOLOGY
 WIPRO
 BHARTI TELEVISION
 ITC
 HLL
 SBI
 ICICI BANK
 HDFC
 BHEL
 SAIL
 RANBAXYLABS
 TISCO
 HDFC BANK
 GAIL
 SATYAM COMPUTERS
 TATAMOTORS
 L&T
 BAJAJ AUTO
 MARUTI UDYOG
 RELIANCE ENC
 HCL TECHNOLOGY

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 PUNJAB NATIONAL BANK
 HERO HONDA
 HIDALCO
 BPCL
 SUNPHARMA
 HPCL
 GRASIM INDS
 CIPLA
 NATIONAL ALU
 GUJRAT AMBUJA CEMENT
 TATA POWER
 MTNL
 GLAXO SMITH P
 ACC
 VSNL
 M&M
 ORIENTAL BANK
 ZEE TELEFILM
 DR. REDDYS
 ABB
 IPCL

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 SHIPING COPORATION
 TATA CHEMICLES
 DABUR
 TATA TEA
 COLGATE

The pre – requisites to start e trading are :

 Trading account to deal in electronic share mutual funds

and ipo’s on kotakstreet.com.
 Demat account with kotaksecutities for dealing.
 Internet bank account with a banking partner to move funds
to kotakstreet.com or receive payments from
kotakstreet.com. The banking partners are Kotak Mahindra
bank HDFC, CITI bank or UTI bank.

The offered by kotak street are:-

 Kotak privilage circle account

 Kotak value account
 Kotak gateway account
 Kotak freeway account
 Kotak high trader account

Kotak privilege circle account:-

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One can activate a KPC account with any amount more than
Rs.10,00,000 as margin by way of cash on stock.
In KPC one can avail the following:-

• 6 times expenses on the margin

• Initial brokerage payment as per the lowest brokerage slab
to be recalculated at the end of the month as per the
turnover
• Acess to KEAT premium free of cost.
• Free call& trade facility.
• Margin finance at attractive rates of 13% p.a.
• Lowest delayed payment interest if 13% p.a.
• Free research advise via SMS.

Kotak value account:-

One can open KVA account with any amount between Rs.
10,00,000 and 5,00,000 as initial margin.
One can avail the following:

 5 times exposure on themargin initial brokerage payment as

per the middle brokerage slabto recalculated at the end of
the month as per the turnover.
 Acess to KEAT desktop free and discount on KEAT
premium charge of Rs. 300 only per month.
 Research advice via SMS for a fee of Rs. 75 per month.
 Call and trade facility with 20 calls free thereafter Rs. 15
per call.
 Discounted delayed payment interest of 16% p.a.

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Kotak gateway account:-

KGA account can be opened with any amount less than

Rs.5,00,000 as inintial margin.

One can avail the following:-

 4 times exposure on the margin,

 Access to KEAT desktop free of cost and KEAT
premium.for Rs 500 only per month.
 Research advice via SMS for a fee of Rs. 100 per month.
 Call and trade facility with 20 calls free thereafter Rs. 20
per call
 Delayed payment interest at 18% p.a.

Kotak free way account:-

Free account can be opened with any amount less than Rs.
1,25,000 as initial margin.

One can avail the following :-

• Zero brokerage plans on square off trades, only levy,
service tax and other charges at 0.03% per transaction.
• Flat fee of Rs. 999 per month.
• 4 times exposure on the margin.
• Maximumexposure Rs.5,00,000
• Delivery brokerage ranging from 0.59% to 0.18%
depending on volumes
• Delayed payment interest at 18% p.a.

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Kotak high trader account :-

High trader account can be opened with any amount of

margin.
In the kotak free way account one can avail the following:-
• 6 times exposure on the margin.
• And auto square off product where al the cash order would
be squared off after 3.10 PM.
• Can trader in the derivative segment on the high trader with
the normal limit i.e. multiple of four on stock derivatives .
• Delayed payment interest at 18% p.a.

THE BROKERAGE STRUCTURE:-

DELIVERY SLABS
Volume Slab Brokerage
<1 lakh 0.59%

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 1 lakh-5 lakh 0.55%
5 lakh-10 lakhs 0.45%
10 lakhs-20 lakhs 0.36%
20 lakhs-60 lakhs 0.27%
60 lakhs-2 crores 0.23%
> 2 crores 0.18%

With Citi bank ,UTI , KOTAK and HDFC bank for online
fund transfer. Any money owed to client credited directly into
Internet bank account of customer by kotak street on the next
day.

Documents required are:-

 Three photographs signed across.

 Identity proof –photocopy of passport, PAN/voters ID

card, driving license.

 Address proof – photocopy of electricity bill, telephone bill,

bank S/M.

 Cheques for margin in the name of kotakstreet.com + bank

account opening
.
 Signature proof – passport, PAN card Bank intro.
Mutual funds:-

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One has the same convenience while investing in mutual
funds; one can easily purchase or invest in mutual funds
without the hassles of filling application forms. The bank
account will be credited directly by the fund house after T+3
days. To suit the changing needs you can switch your money
online from one scheme to another in the same fund family.
Mutual funds on site are:-

 Kotak Mahindra Mutual fund

 Prudential ICICI Mutual fund
 HDFC mutual fund
 Standard Chartered Mutual fund
 Sundaram Mutual fund
 Tata Mutual fund
 Franklin Templeton Mutual fund

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Cash Squaring Up

Volume slab Brokerage

< 25 lakhs 0.06% both sides

25 lakhs- 2 crores 0.05% both sides

2 crores-5crores 0.04% both sides

> 5 crores 0.03% both sides

Buy now sell tomorrow with a guarantee (BNST-G):-

BNST-G is special service offered by kotakstreet.comin which

one can sell 75% of the specified shares that one has purchased
before you receive the delivery of the shares from the exchane,
without the worry of short allotment.

New from kotak street.com:-

 Securities accepted in lieu of cash margin – green channel.

 Multiple available on sales marked for delivery.
 Short sales are possible.
 Stop loss order
 After market order

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 Cash and derivatives rates on single screen

Account opening process:-

Account opening involves opening of trading account with

kotak street.com demat account with kotak securities, bank
account with a banking partner. Demat account can be with
Kotak securities or kotak bank or even with Citi bank. Account
opening fee as per the margin paid up front. Kotak Securities
has Internet banking tie-up

♦ Cholamandalam Mutual fund.

Initial public offerings:-

At kotak street.com one can apply for IPO’s with out going
through the tedious process of application filling, cheque
signing and submission. One need to do is fill the requisite
details in the online screens of IPO application.
Kotakstreet.com will dot the paper work for you on the basis
of information provided by you . This is done on the authority
of the power of attorney executed by you in favor of kotak
street.com

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 DEMAT FORM V/S PHYSICAL FORM:-

A Comparison of investment in securities:-

In physical form In demat form

Insurance is required No insurance is required

Laborious inventory verification The DP’s makes periodic statement

during internal stock taking and of holding available. 0 Easy
audits. verification of audits.

No custody charges if using own Custody charges vary from 3 to 10

premises however, custodians basis points depending upon Dp
charges- 20 to 40 basic points. selected.

Risk of theft No risk of theft

Receipt of corporate benefits need Faster and hassle free receipt of

monitoring and risk of loss in corporate benefits.
transit not ruled out

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Buying:-

In physical form In demat form

High brokerage Low brokerage
Stamp duty at 50 basis points No stamp duty
Posted and handling charges No posted and handling
for lodgments and transfers charges
Cost involved in follow Guaranteed good delivery
up/rectification
No transaction charges Transaction charges vary from
7 to 10basis points.

SELLING:-

In physical form In demat form

High brokerage Low brokerage, NSE brokers
charges half the brokerage on
electronic trades
Transaction only in market No market lot concept
lots

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 Off market transaction are Facility for off market
costly and risky transaction market
transactions, specially within
the group
Jumbo lots need to be split No need to split
into market lots for selling

How a depository similar to bank

Bank
Holds funds in an account
Transfers funds between
accounts on the instruction
of the account holder
Facilities transfer without
having to handle money
Facilities safe keeping of
money
Depository
Hold securities in an account
Transfer securities between
accounts on the instruction of the
account holder
Facilities transfer of ownership
without having to handle
securities
Facilities safe keeping of shares

CDSL-CENTRAL DEPOSIATORY SERVICES

LIMITED

CDSL is another depository after NSDL its promoters are Bombay

Stock Exchange,
The Calcutta Stock Exchange Association Limited, Bank Of India,
HDFC Bank Ltd. Standard charted bank, State Bank Of India, Bank Of

27
Baroda, Union Bank Of Indian, bank Of Maharastra, Centurion Bank
etc.
As on 30th June 2001, CDSL which are to instead to benefit the ultimate
investors, are briefly narrated below:
• CDSL choose the Centralized Data Base Architecture with online
connectivity with the DP’s who provide the services to the investors,
because of the online Centralization, the cost for setting up
Depository Participant services is drastically low. CDSL have urged
the DP”S to pass on the benefit of lower cost of set up to investors.
• CDSL on its part have kept its tariff as low as possible. It has
virtually nil charges under all the major heads except against
transactions. CDSL might add that right from the stage of its
conceptions,. Its promoters, in the main the BSE, have taken a public
stand that there shall be no custody charge on the ground that
(1) Investors who otherwise keep their scripts at Home, do not insure
that charge and
(2) That they can get more and more investors enthused about
Dematerialization and holding there decorates in book entry from.
• Software offer to clearing houses of the stock exchange free of cost
permits direct entry of transaction in the account beneficial owner
(investor), without having go route it through a broker account. this
facility is a safeguard against possible mis-directions
• Of client’s securities, and it cuts down time taken for Complition of
transaction. It is found to be an investor friendly innovate system.

SECURITIES AND EXCHANGE BOARD OF INDIA

Major part of liberalization process was the repeal of the capital Issues
(control) Act,1947, in may 1992. With this, government’s control over
issues of capital, pricing of the issues, fixing of premium and rates of
interest on debentures etc. ceased, and the office which administered
the Act Was abolished: the market was allowed to allocate resources to
computing uses. However, to ensure effective regulation of the market,
SEBI Act 1992 was enacted to establish SEBI with Statutary powers
for:

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• Protecting the interests in securities
• Promoting the development of securities market, and
• Regulation the securities market.

Its regulatory jurisdiction extends over corporate in the issuance of

capital and transfer of securities, in addition to all intermediates and
person associated with securities market. SEBI can specify the matters
to be disclosetr and the standards of disclosure required for the
protection of investors in respect of issues; can issue directions to all
intermediaries and other person associated with the securities market in
the interest of investors of orderly development of the securities market:
and can conduit Enquirer, audits and inspection of all concerned and
adjudicate offences under the Act. In short, it has been given necessary
autonomy and authority to regulate and develop an orderly securities
market. All the intermidiates in the market, search as broker and sub
broker and sub broker, underwriters, merchant bankers, bankers to the
issues, share transfer agents and registrar to the issues, are now required
to register with SEBI and are governed by its regulations. A code of
conduct for each intermediary has been prescribed in the regulation;
capital adequacy and norms have been specified; a system of
monitoring and inspecting their operations has been instituted for
compliment; and discipline action are being taken against the
intermediaries violating are regulation.

Functions of SEBI
SEBI has been obligated to the interest of the investors in securities and
to promote and development of, and to regulate the securities market by
such measures as it thinks fit.

SEBI, in particular, has powers for:

• Regulating the business in stock exchange and other securities

market;
• Registering and regulating the working of stock brokers, sub-brokers
,share transfer agents , bankers to an issues ,trusts of trust deeds
registrar to an issues, an issue, merchant bankers ,underwriters,

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 portfolio managers, investment adviser and such other intermediates
who may be associated with securities markets in any manner;
• Registering and regulating the working of the depositors,
participants, custodians of securities, foreign institutional investors ,
credit rating agencies and such other intermediaries as SEBI may, by
notifaction,specify in this behalf;
• Registering and regulating the working of venture capital funds and
collective investment schemes including mutual funds ;
• Promoting and regulating self- regulatory organization;
• Promoting investors education and training of intermediaries of
securities market;
• Prohibiting insider trading in securities;
• Regulating substantial acquisition of shares and take over of
companies;
• Calling for information from, undertaking inspections, conducting
inquiries and audits of the stocks exchange, mutual funds and other
persons associated with the securities market and intermediates and
self regulating organization in the securities market;
• Performing such functions and exercising to securities Contrast
(regulation)Act, 1956, as may be delegated to it the central
government:
• Leaving fees or other charges for carrying out the purpose of this
sections;
• Conducting research for the above purpose:
• Calling from or furnishing to any such agencies as may be specified
by SEBI such information as may considered necessary by it for the
efficient discharge of its functions.

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ROLE OF THE DP
(DEPOSITORY PARTICIPANTS)

• A depository is an organization formed to provide electronic

depository facilities for securities traded. Securities are then held in
the electronic from through the medium of depository participants
(DPs). The National Securities Depository Limited (NSDL) is the
first depository in India. The functions of NSDL are regulated by the
Securities and Exchange Board of India (SEBI).

• The depository is not just another custodian the depository can

legally transfer beneficial ownership, which a custodian cannot. The
chief objective of a depository is to reduce settlement risk by
minimizing the paperwork involved in trading, settling and
transferring securities.

• To utilize the services offered by a depository, you must open an

account with the depository through a DP. The DP’s are the link
between the shareholder, the company and NSDL.

• Depending on the DP, there may or may not be an opening account

fee. DP’s levy fees towards transaction and custody.

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• Banks, financial institutions custodians and stockbrokers can
become DP’s subject to their meeting certain requirement prescribed
by NSDL and SEBI, NSDL publishes the list of DP’s registered with
them, from time to time.

• The DP will provide you with a passbook or “Statement of Account”

periodically to inform you on your holdings.

• You can even have a zero balance in your account.

• If you lose your “Statement of Account”, inform the DP and obtain a

duplicate.

• If holding in the statement are incorrect, approach the DP for

clarification.

• If you receive an incorrect dividend amount or do not receive it at

all, contact the company or register.

TRADING SYSTEM

THE Exchange, as stated earlier, had an open outcry trading system till
March 1995 where member-brokers used to assemble in a trading ring
for doing transaction in securities. It had switched over to a fully
automated computerized mode of trading known as BOLT (BSE on
Line Trading) System w.e.f March 14, 1995. Through the BOLT
system, the member-broker now enter orders for purchase or sell of
securities from Trader Work Stations (TWSs) installed in their offices
instead of assembling in the trading ring. This system, which was
initially both order and quote driven, is currently only order driven. The
system, which is now only order driven, facilities more efficient in-

32
putting processing, automatic matching and faster execution of orders
in a transparent manner. The trading in securities at the Exchange is
conducted in an anonumous environment and the counter party identify
is not revealed.the buyer and sellers of securities do not know the
names of each other.

The member-brokers of the Exchange were permitted to open trading

terminals only within the city limits of Mumbai till1996. The Exchange
obtained permission from SEBI for expension of its BOLT network to
locations outside Mumbai. The expension of BOLT network to cities
outside Mumbai was inaugurated by shri P. Chidambaram, the Finance
Minister, Government of India on August 31, 1997. The Exchange was
initially allowed by SEBI to set up[ trading terminals in all places
except in the jurisdictional areas of other Regional Stock Exchanges,
for setting-up trading terminal in the jurisdictional areas of other
Regional Stock Exchanges, the Exchanges was required to enter into
Memorandum of Understanding (MOU) with the respective Stock
Exchange.
However, with certain modification in this regard announced by SEBI
towards the end of the year 1999, the member-broke of the exchange
are now free to install their trading terminals at any placer in the
country including in the jurisdictional areas of other Regional Stock
Exchanges.
In order to expand the reach of BOLT network to centers outside
Mumbai to reach out to investors in these centers and provide them
access t the trading facilities in all scripts listed and permitted to be
traded in the Exchange and to support the smaller Regional Stock
Exchange, the Exchange has admitted subsidiary companies formed by
15 Regional.
Stock Exchange as its member-brokers as on June 30, 2003. The
member-brokers of these Regional Stock Exchange work as sub-
brokers of the member-brokers of the Exchange.
Trading on the BOLT System is conducted from Monday to Friday
between 9:55 a.m. and 3:30 p.m. the scripts traded on the Exchange
have been classified into ‘A’, ‘B1’,’B2’, ‘F’, ‘G’, and ’Z’ groups.
The Exchange has for the guidance and benefit of investors classified
the scripts in the Equity Segment in A’, ‘B1’,&’B2’ based on certain

33
qualitative and quantitative parameters which include number of trades,
values traded, etc. for the guidance and benefit of investors.
The ‘F’ group represent the fixed income securities wherein 730
securities were listed as on June 30,2003
The Exchange has commenced trading in Govt. Securities for retail
investors under “G” group w.e.f. January 16, 2003 And 85 Govt.
Securities are traded on the Exchange under this group as on June
30,2003.
The ‘Z’group was introduced by the Exchange in July 1999 and
includes the companies which have failed to comply with the listing
requirement of the Exchange and have failed to resolve investor
complaints or have not made the required arrangement with both the
Depository Ltd.(NSDL) for dematerialization of their securities.
Companies in ‘Z’group numbered 2776 as on June 30, 2003.of these,
1275 companies were in “Z” group for not complying with the
provisions of the Listing Agreement and not resolving pending investor
complaints and the balance 1501 companies were on account of not
making arrangement for dematerialization of their securities with both
the Deposotories.1501 companies have been put by the Exchange in
“Z” group as a temporary measure till they make arrangement for
dematerialization of their securities. Once they finalize the arrangement
for dematerialization of their securities, trading and settlement in their
scripts would be shifted to their respective rest groups.

MEANING OF DEPOSITORY SYSTEM

34
Depository system is concerned with conversion of securities from
physical to electronic form, settlement of trades in electronic segment,
transfer of ownership and custody of securities.

In the depository system, the ownership and transfer of securities place

by means of electronics books entries. This Rids the Capital market of
the dangers and risks related to handling of paper. Its transaction costs
are also less as compared to that of physical transactions.

While investors will continuous to exercise the option of holding

securities in the physical form, those preferring Rematerialisation of
scripts are permitted to withdraw from the depository by requesting the
issue of physical certificate again. Share transaction costs in the
depository shall be lower than the cost of buying and selling physical
shares.

Depository system is not mandatory as of now; it is optional and is left

on the investor to decide whether he wants the securities to be
dematerialized.

Holding and handling of securities in electronic form eliminates

problems that are normally associated with physical certificates and it
facilitates faster settlement cycles.

35
 HOW IS A DEPOSITORY SIMILAR TO A BANK?

BANK DEPOSITORY-AN ANOLOGY

BANK DEPOSITORY
Holds funds in account Hold securities in an account

Transfers funds between accounts Transfers securities between accounts on

on the instruction of the account the instruction of the account holder.
holder
Facilities transfer without having to Facilities transfers of ownership without
handle money having to handle securities.
Facilities safekeeping of money Facilities safekeeping of shares.

Mutual funds

Mutual Funds are an attractive means of saving taxes and

diversifying your investment portfolio. So if you are looking to
invest in mutual funds, Kotak Securities offers you a host of
mutual fund choices under one roof; backed by in-depth
information and research to help you invest smartly.

Kotak securities have made investing in Mutual funds so

simple. All you have to do is one phone call and that’s all. No
paperwork no queues. Simply pick the phone or log on to the
website and place your order.

36
To start investing in NFOs, all you need to do is open an
online trading account. Choose from our wide range of
accounts to suit your investment needs. You can call us and we
will have our representative meet you or mail us at
easymf@kotaksecurities.com

• Kotak Mahindra Mutual fund

• Prudential ICICI Mutual fund
• HDFC mutual fund
• Standard Chartered Mutual fund
• Sundaram Mutual fund
• Tata Mutual fund
• Franklin Templeton Mutual fund
• Cholamandalam Mutual fund

Initial public offerings

At kotakstreet.com one can apply for IPOs without going

through the tedious process of application filling, cheque
signing and submission. One need to do is fill in the
requisite details in the on line screens of IPO application.
KOtakstreet.com will do the paper work for you on the
basis of information provide by you. This is done on the
authority of the power of attorney executed by you in favor
of kotakstreet.com.

37
 DEMAT FORM VS PHYSICAL FORM
A Comparison of investment in securities

In Physical form In Physical form

Insurance is required Insurance is required
Laborious inventory Laborious inventory
verification verification
during internal stock during internal stock
taking and taking and
Audits audits
No custody charges if No custody charges if
using own using own
premises however, premises however,
custodians custodians
charges- 20 to 40 basic charges- 20 to 40 basic
points. points.
Risk of theft Risk of theft
Receipt of corporate Receipt of corporate
benefits benefits
need monitoring and risk need monitoring and risk
of loss of loss
in transit not ruled out in transit not ruled out

38
39
THE GROUP

The group is organized on the following:-

Kotat Mahindra Group Strategic Business Units

Asset Finance Knowledge & Skill

Wealth Management
Insurance

Kotak Mahindra Kotak Securities Kotak Mahindra Om Kotak

Mahindra
Bank Ltd. Capital Company Life Insurance
Ltd

Kotak Mahindra Kotat Mahindra

Peimus Ltd. AMC

Kotak Mahindra
Venture Capital Fund

Kotak Mahindra ( U K )
Ltd.

40
 Kotak Mahindra
(International) Ltd.

Kotak Mahindra Inc

Kotak Mahindra Bank

In Feb. 2003 Kotak Mahindra Bank finance limited the

group’s flagship company was given the license to carry on
banking business by RBI. This approval creates banking
history since Kotak Mahindra Finance limited is the first
company in India to convert to a bank. Mr. K.M. Gherda is the
chairman and Mr. Uday Kotak is the vise chairman managning
director of the bank.

A Kotak Mahindra Primus limited

Kotak Mahindra Primus limited is a joint venture between

Kotak Mahindra bank limited and ford credit formed to
finance all non – ford passenger vehicles. The company was
incorporated on 20th February 1996 and commences its
operation on 1st November 1996. The net worth on 31st March
was 464 crore. Mr. Kotak is the chairman and Mr. Dipak
Gupta, Mr. C. Jairam, Mr. Gaurang Shah, Mr. Pankaj Desai,
Mr. Nishchal kkkk, Mr. Gregery Coham and Mr. Raghu
Nadaaa are the directors of Kotak Mahindra Premium Limited.

41
Kotak Mahindra Asset Management Company

Kotak Mahindra Asset Management Company is a wholly

owned subsidiary of Kotak Mahindra Bank limited is the asset
manager of Kotak Mahindra Mutual Fund. KMAMC started
operation in December 1998 has over 1,35,000 investors in
various schemes.

Kotak Mahindra Venture Capital Fund

KMVCF sponsored by Kotak Mahindra Bank limited was

formed to cater the needs of the modern day entrepreneur. The
fund partner with companies for their first and second of
funding requirements in the emerging high growth sectors
such as IT research and proudest, internet and E-commerce,
media, healthcare, investments in company could range from
Rs. 20 millions to Rs. 100 millions. KMVKF is a SEBI
registered VCF with KMBL as the principal investor and 30

42
other private investors. KMBL is the investment manager of
fund.

Kotak Mahindra International Limited

Kotak Mahindra international limited is the international arm

of Kotak Mahindra Group and was incorporated in 1994 in
Maruitius; with a brand in Dubai and now international
operation are cover the United Kingdom
through Kotak Mahindra UK limited in USA through Kotak
Mahindra Inc. USA. These companies are subsidiaries of
Kotak Mahindra Capital Company.

Kotak Mahindra Capital Company Limited

KMCCL was incorporated 1996 as a joint venture between

Goldman Sachs – the international banking and brokerage firm
and Kotak Mahindra Bank limited. KMCC in its franchisee
business focuses in fine care areas capital markets, mergers
acquisition, corporate advisory, structured finance and
international operational. KMCC has advised some of the
largest telecom and cement deals in India. KMCC is a leading
player in the field of Media and advertisement. KMCC is also
RBI is approved primary deals in the government securities
market. Mr. Kotak is the chairman and Ajay Sondhi is Vice
president and managing director.

Om Kotak Mahindra Life Insurance

Om Kotak Mahindra life insurance ventures a 74:26 joint

venture with old mutual. U.K. Kotak Mahindra Bank limited
believes that life insurance is a logical expansion of its exiting

43
financial services business. Old mutual is a leading financial
services providers in the word, providing a wide range of
financial services in the area of insurance, asset management
and banking.

44
 MARKET SHARE

Kotak Securities is one of the worlds leading brokerage firm

with a market share of 9%. Kotak Securities limited has been
the largest in IPO distribution.

It was ranked no. 1 in year 2003 – 2004 as book running lead

managers in public equity offerings. It has also won the best
equity house award from finance Asia in the year 2004.

45
Again in the year 2005 kotak has also won the Asia’s biggest
brokerage firm award.

In the above diagram it is given that 9% share of the total

market has been captured by kotak, 8.5% by ICICI Direct.com,
8% by IF & FS, 2% by India Bulls and rest 72.5% by other
local brokers like Motilal Oswal, Alankrit, Anand Rathi, UTI
Securities, Sharekhan, johari, 5 paise.com.

46
DETAILED JOB PROFILE

The job undertaken was regarding a detailed analysis of

marketing of promotion of Kotak Securities online trading
products, studying its current scenario and studying the
challenges faced by Kotak Securities online division.

47
The study helps to know about the market position of Kotak
securities as compared to other market players, through the
opinion of customers and promoting the products of
kotakstreet.opinion of customers and promoting the products
of kotakstreet.we use to put canopies in front of various
financial institutions like banks, commercial places and
entertainment places (likegaurav tower, vaibhav multiplex) to
approach to the people and promoting the products of
kotakstreet.

Through directly and data available, we used to do

telemarketing for the investors and the non investors and try to
convince them about the kotakstreet.com and how it is better
from others, then personally meeting them and providing them
with the company brochures and giving them detailed
knowledge about how with a minimum amount of money he
can start with on line trading .Telling him about the various
accounts, which he can open with kotak and telling him the
process how new join his e-trading account, demat account
with his saving account.

At the same time , handling back office work, which included

solving the clients quarries, to place orders, giving daily
recommendation to the existing clients. Also giving
the demonstration of the software K.E.A.T. (kotak E – trading)
Assess Terminal ) through which the clients can buy and sell
his shares and can do all the trading online only.

AREA ASSIGNED AND TARGET ASSIGNED

Area assigned

48
Area assigned to me was Jaipur city only. Where mainly I
have surveyed the investors of Vaishali Nagar, Malviya Nagar,
Gopalpura and Mansarover.

Target assigned

As my work was mainly generating leads and converting them

into the clients, and I was also handling back office work so
the target given to me was 10 accounts in two months.

DAY TO DAY JOB EXPERIENCE

49
As kotak securities is one of the leading financial institution in
India, so for the first 10 days was the training period to about
the profile the company, the knowledge of kotak street, the
product of kotak street, account opening process in Kotak
Securities, complete knowledge of market watch, also about
the ups and downs of the market how NIFTY and SENSEX
moves, what are the main scripts on which they moves and
complete knowledge of the software K.E.A.T.

After the training of the ten days, I was very familiar to all the
products, the account opening process and about the software
and kotak street products and various accounts that can be
opened in Kotak Securities.

I used to do telemarketing to generate leads and converting

them into the clients of Kotak Securities also use to put
canopies in front of banks, commercial places, entertainment
places for promoting the products of Kotak Securities online
division. At the same time I was handling the back office work
which included giving daily recommendations to the existing
clients, solving the clients queries, placing the orders of clients
through call and trade, fillings account opening forms.
During my traning period I was the one to generate maximum
leads ,for which my regional manager and the executive
appreciated me. During the last seven to ten days I have done a
survey of the investors of Jaipur cith and found that still people
are not aware of Kotak Securities and those who are aware are
mainly above the age of 50 as they have a deep knowledge of
share markets.

50
51
Type Of Investors
80
70
60
50
40
30
20
10
0

52
 AGGRESIVE INVESTORS

10%

40% IPO
EQUITY
CASH

50%

In the above diagram we can see that aggressive investors

invest more in equity as compare to cash and debt. As these
types of investors are risk takers and ready to invest whatever
be the market.
Aggressive investors comprises of 50% of in
equity – like equity fund diversified, IPOs 10% in cash like
government securities, liquid funds, long term deposits and
40% in debt, like company fixed deposits, bonds, pensions
schemes, saving schemes, government securities funds.

53
 MODERATE INVESTORS

10%

DEBT
30% EQUITY
60% CASH

Moderate investors are those investors who get ready to invest

when they get assured that they will get good returns on their
investment. They give a lot of thought before investing.

They types of investors invest more in debt like company fixed

deposits, pensions schemes,

54
Government saving schemes. In he above diagram moderate
investors comprises of 60% in debt, 10% in cash and 30% in
equity.

CONSERVATIVE INVESTORS

10%

20% DEBT
EQUITY
CASH

70%

As we can see from the above the diagram that conservative

investors invest very much debt as they run behind the trend,
they are a kind of choosy investors. In equity they invest only
in some specified scripts, which are less risky for example
Infosys, Reliance.

In the above diagram conservative investors comprises of 70%

in debt, 20%in equity and 10% in cash.

55
 VERY CONSERVATIVE
INVESTORS

15%

10% DEBT
EQUITY
CASH

75%

Very conservative investors are least bothered about the

market and invest their maximum amount in debt, cash and
lastly in equity market with more up the downs.

In the above the diagram very conservative investors

comprises of 75% in debt like company fixed deposit, bonds

56
government securities funds, government saving schemes and
pensions schemes. 15% in cash as they get high returns on
their cash deposits and 10% in equity.

Expectation of investors regarding

Their investment to grow

3
25%

2 1
13% 62%

In the above diagram 62% of the surveyed investors expected

their investments to grow at and average rate, 25% expected to
grow at fast rate that is more returns on their investments and

57
13% of the surveyed investors expected their investments to
grow steadily.

Perception of investors with

Respective to return

3
15%

1
2 2
21%
1 3
64%

58
From the above diagram it was found that 64% of the surveyed
investors were more concerned about earning returns above
inflation rate, 21% were more concern about earning high
returns and 15% had a primary motive of the safety of
principal.

Investor’s knowledge about various

Investment schemes

59
 3
8%

2
22%

1
70%

In the above diagram we can see that out of total surveyed

investors 69% were found with average investment
knowledge, 23% were found with good investment knowledge
and 8% of people were found with nil investment of
knowledge.

Age group of various investors

60
 3
17%

1
1
2
51%
3
2
32%

Age group was also a rational issue to know while doing the
survey. It was found that 17% of the total surveyed investors
were between 20-30 years 32% were between 30-50 years and
51% of the total surveyed investors were above 50 years.

It was found that investors above the age of 50 years are

having great potential and good knowledge regarding
investment.

61
 Views of the Investors if the stock
Market crashed down

3
19% 1
29%
1
2
3

2
52%

Out of the total surveyed investors we can see from the above
diagram that 52% of investors wait and watch when the market
crashed down they have a lot of patience. 29% will invest
more as they are risk takers and hope that in future market will
grow and 19% investors will withdraw their money.

62
63
 SWOT ANALYSIS

STRENGTHS

Brand Name
The biggest strength is the tag of Kotak being one of the
largest groups in finance sector

Compatible Brokerage
Brokerage under various products of Kotak secutries is much
more compatible than others.

Diversified Product
The company has diversified product to suit the requirements
of various clients

Research Advice
Kotak providers with research input and valuable
recommendation.

Portfolio Advice
Provides with free portfolio advice and constantly monitor the
value of the client’s portfolio with input from the expert
advisors

64
WEAKNESS

Prone to Market Risk

Equity Market depends on overall macro economic condition
and market scenario

Returns to broker
There is a very tough competition because of large number of
local brokers for e.g. they provide same return on least
brokerage.

OPPORTUNITIES

Indian Capital Market is growing

So more and more new investors are interested in investments

Tailor Made Products

We have tailor made products like customers specified
schemes for example Kotak Assist.

Branch Expansion
Large number of branches are opening day by day and ever we
are trying to tap uncapped market in the country be 60% of
total market.

65
THREATS

Tough competition
There is a tough competition in finance sector, as almost all
the companies are providing with same kind of business.

Unawareness
As major part of GDP is coming from several markets so there
people are unaware of this market.

Changing scenario
Our market scenario is changing day-by-day i.e. our market is
fluctuating, so this makes investors hard to invest.

66
67
DIFFICULTIES FACED

• High Brokerage:- Kotak Securities has high brokerage

as compare to other online players.

• Call and trade:- Call and trade facility is payable which

is not convenient for all the clients.

• Saving Accounts:- saving account with Kotak Mahindra

Bank, UUTI, HDFC, CITI bank is mandatory.

• Documentation:- in Kotak Securities the documentation

process is very lengthy and cumbersome.

• Lack of Awareness:- in Jaipur city, though kotak is well

known but still there is lack of awareness regarding Kotak
Securities and its online division i.e. kotakstreet.com and its
products.

68
MAJOR LIMITATIONS

Uncertainty of market

Securities investments are subject to market risk and there is

no assurance of guarantee that the objective of the scheme will
be achieved.
As with any in securities, the NAV of the units issued under
the scheme can go up or down depending on the factors and
forces affecting the capital market.

Tough Competition

Due to the large number of local brokers investors are

confused that where to invest and where not to invest. Local
brokers are ready to give the same investment plan in very
least brokerage.

69
Rigid and traditional structure

The people believe investing in bank FD’s and post office

saving and are reluctant to invest in mutual fund. People like
to secure money in terms of leading to the people on high
interest, the meant there is safe.

Socio-economic factors

The most of the people of the country are agriculture

dependent. So they invest less in the capital in the market.

Political factors

Due to volatile government and there policies regarding

investors and investment, stoke market is not integrated which
in turn affect the capital market.

70
71
Conclusion and Suggestions

72
 Suggestions

1. According to the analysis the investor above the age of

50 years must be taken into consideration as they are
having great potential regarding investment.

2. Time taken in account opening too long they should

reduce it.

3. Kotak Securities must use marketing tools like point of

purchase, advertisement through mass media, like
newspapers, magazines, televisions, fairs, and
advertisements on Internet.

4. Documents required for an account opening are too

unique and confusing. Voters ID or driving license
should be taken both as identity proof as well as address
proof.

5. The organization is lacking on the parameters of

motivation. For example incentives on targets should be
given time to time.

6. No. of signatures, which are made by the lines are too

many, therefore should be reduced.

7. Kotak must lay some sound strategies to trap more

customers by providing them with less brokerage in
comparison to others.

73
Conclusion

From the analysis of the responses receive from the

investors in Jaipur city, a majority of investors are found to
be conscious and enlightened regarding their investment,
returns and growth.

We have very good market in Jaipur which comprises

potential investors but due to lack of basic promotion and
publicity these investors are not fully aware of our company
and who so ever is aware of the company their investment
decisions are done on the basis of security, analysis of risk
yield and return few parameters like demographic,
physiological, income etc.

E-trading account is a unique combination of saving

account; demat and online share trading account as no other
depository provides all the three facilities together.

So my findings are that kotak street should make little more

efforts to trap the potential investors, like media
advertisements, paper advertisement, seminars and business
meets and building a good relationship with potential
business, more over friendly guidance.

74
75
`

76
BIBLIOGRAPHY

Magazines

• Business world
• Business today
• Brand Equity
• CFA Analyst

Newspaper

• Financial times
• Economic times
• Times of India

Websites

• www.kotak.com
• www.kotakstreet.com
• www.google.com

77
• www.nseindia.com
• www.bseindia.com
• www.tradeonline.com

78
 QUESTIONNAIRE

1. In which DP you have account?

a. ICICI Bank
b. Kotak Securities
c. HDFC
d. India bulls

2. Are you aware of kotakstreet.com?

a. Yes b. No

3. Which trading pattern do you generally prefer?

a. Intraday
b. Delivery base
c. Future & options

4. How frequently do you trade?

79
 a. Daily
b. Weekly
c. Monthly
d. Fortnight

5. Which recommendations do you follow?

a. market news
b. Newspaper
c. Brokers tips

6. What is your trading volume per month?

a. Less than 10,00,000

b. 10,00,000<25,00,000
c. 25,00,000>1,00,00,000

7. Does your service provider fulfill your needs?

a. Satisfactory
b. Very satisfactory
c. Not

8. Brokerage taken by kotak is reasonable

a. Yes b. No

9. What you will do if stock market crashes down?

a. Wait and watch

b. State of withdrawal
c. State of investment

80
10. What you will do if stock market crashes down?

d. Wait and watch

e. State of withdrawal
f. State of investment

SELLING

IN PHYSICAL FORM IN DEMAT ACCOUNT

High Brokerage Lower Brokerage. NSE Brokers Charge
half the brokerage on electronic trades
compared to physical

No transaction costs except the cost Transaction charges vary from Nil to
of personnel handling the sale 10 basis. Servings in brokerage are
more than these costs
Transaction only in market lots No market lot concepts
Jumbo lots need to be split into No need to split
market lots for selling
Off market transactions are costly Facility for off market transactions,
and risky especially within the group

Valuable executive time spent in Flexibility to put future dated delivery

meeting delivery receipt, schedules receipt instruction helps in better time
of Brokers/Stock Exchange signing, management. Delivery is in the form of
stamping and delivery of TDS a single instruction.

81
BUYING

IN PHYSICIAL FORM IN DEMAT FORM

Higher Brokerage Lower Brokerage

Stamp Duty @ 50 basis points No Stamp Duty

Postage and handling charges for No postage and handling charges

lodgments and transfers
Cost involved in follow Guaranteed good delivery
up/rectification

Opportunity cost for delay in Immediate transfer therefore no

transfer of shares opportunity cost

No transaction charges Transaction charges vary from 7 to

10 basis points

82
83