CHAPTER:1

EXECUTIVE SUMMARY

The increasing trend towards globalization and industrialization has increased the
trend of competition in the financial market, intensified by the coming of Non-
Banking Financial Company (NBFC), like Master Trust, and so has the need for
the marketing of financial instruments has intensified.
This project is completely focused to study and analyses the Indian Brokerage
Firms. The tools used for studying the attractiveness of the Firms are Michael E.
Porter’s five forces model and PESTEL analysis. It also undertakes the study some
of the demand drivers and supply factors that affect the working of the Indian
Brokerage Firms, and in this regard, what are the various differentiating factors
that provide Master Trust a competitive edge over other players in the market.
There has been an emphasis on the various aspects of Master Trust that make it
standout in this league, rather than being a “me too” product. In words of Al Ries
and Jack Trout, “differentiate or die”.

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 CHAPTER: 2
INTRODUCTION

The Brokerage Firms is currently characterized by a large number of companies

(private or unorganized). In effect it is a Fragmented Firms with a large number of
participants. The Firms thus has ‘monopolistic competition’, i.e. a large number of
Firms selling a slightly differentiated product.
2.1 LATEST DEVELOPMENT IN THE SPECIFIC TOPIC:
As the topic is related to brokers and brokerage firms, one needs to be abreast of
the present developmental aspects of the Industry. The latest developments in the
brokerage industry are listed below:
 Traditional brokers have either changed their way of conducting business or
started a completely new venture with competitive offerings. Kotak
Securities Limited is offering a zero brokerage plan on intraday trading
along with a refund of fee and brokerage within one month, if the customer
feels dissatisfied. All firms have embraced the change due to the heavy
influx of competitive firms.
 Zerodha, a Bangalore-based renowned brokerage firm rethinks customer
retention as the best strategy to build long-lasting relationship. In this regard,
they have introduced new type of services although it reduces the firms
profit margins initially. Offering the right products to the valued customers
is the primary motive of the firm.
 Due to the impact of COVID 19, technological advancement was give much
importance. Customers became aware about the use of technology and
digitalization became the new normal to attract customers. With the
increased use of smart phones, on boarding customers by the banking and
financial services firms became much easier.

2.2 Indian Stock Brokerage Firms:

Indian stock Brokerage Firms is the oldest trading Firms that has been around even
before the establishment of BSE in 1875. Despite passing through a number of
changes in post liberalization period, the Firms brokers found its way towards

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sustainable growth. With the purpose of gaining deeper understanding about the
role of Indian stock Brokerage Firms, in the country’s economy, let us have a look
at the following data:
On the basis of geographical concentration, Western region has maximum of
52%, around 24% are located in the North, 13% in South, and 10% in the
East.
3% of Firms started broking operations before 1950, 65% between 1950-
1995, and 32% post 1995.
On the basis of terminals 40% are located in Mumbai, 12% in Delhi, 8% in
Ahmadabad, 7% in Kolkata, 4% in Chennai, and 29% in other cities.
From the study it was found that 36% of Firms trade in cash, 27% in
derivatives, and 20% in cash, derivatives and commodities.
In the cash market, 34% trade in NSE, 14% in BSE, 45% in both. Whereas
in debt market, 31% trade in NSE, 26% trades in BSE, and 43% in both.
Majority branches are located in North, i.e. 40%, 31% in West, 24% in
South, and 5% in East.
In terms of sub-brokers, around 55% are located in South, 29% in West,
11% in North, and 4% in East.
Trading, IPOs and Mutual Funds are the top three products offered by 90%
of Firms offering trading, 67% IPOs, and 53% offering Mutual Fund
transaction.
In terms of various areas of growth, 84% of Firms have shown their interest
in expanding their institutional clients, 66% Firms intend to increase FIIs,
and 34% are interested in setting up Joint Ventures in India and abroad.

In terms of IT penetration 62% Firms provide their website, and 90% have email
facility.

2.3 The Brokerage Firms:

Domestic Economic Environment
In 1991,Manmohan Singh, as Finance Minister in NarasimhaRao’s
governmentembarked on a programmed of liberalization prompted by an acute
balance-of-payment crisis. PHASES OF INDIAN BROKERAGE FIRMS

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Fig: 1 (Indian economy growth factors)

Indian Brokerage Firms-Pre 2000

Post liberalization period.
Business restricted to friends and relatives.
Settlement T+15 days.
Low trade volumes- No derivatives trading allowed.
Lack of investment in technology- No front or back-office software.

Indian Brokerage Firms 2000-2008

Venture capital funding for brokerage businesses.
Investment in technology- Front end and back end.
National presence.
Integrated risk management system.
Significant increase in trade volumes- Derivatives trades play a major role.
Margin funding for the retail clients.

Indian Brokerage Firms2009 onwards

Paradigm shift from transaction oriented to research/ portfolio based
advisory.
Focus on franchisee-based business model.

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 Dematerialized accounts access for international trade.
India has achieved a long-term competitive transformation, but the next
stage of development will be more challenging.

Current Global Economic Environment

The global economy is slowly recovering from a deep recession, with
significant risks remaining.
Euro crisis has become one of the hindrances in the overall economic growth
of the world economy and thereby, Indian economy too.
Countries are looking for ways to achieve sustainable economic growth and
job creation.
Competitiveness has become more important than ever
 Globalization will continue and strong international competitors are
emerging.
 Companies are re-examining everything in terms of how and where
they operate.

Fig:2 (winning strategy of Indian Brokerage Firms)

Seeing the overall brokerage as a single unit as mention in the fig:2, the key
success factors or the winning strategy of Indian Brokerage Firms is a mixture of:
People
Process
Technology

There are the three ingredients that together create value for both international and
domestic customers.

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By people it indicates to the service providers or the employees of the various
Firms of this Firms, who day in and day out interact with the customers and
provide them services and satisfy them.
Transparency of the process followed and disclosure method is yet another success
factor. The settlement of transactions is generally done in a process of T+2 days.
And the government support even still plays a very vital role in forming the rules
and norms of such processes.
Technology enables to stay competitive and on edge with the competitors;
facilitating the ease of processes and speed and to maintain and be up to date. This
serves as a great success of the Brokerage Firms.
All these factors together help create value to the customer.

2.4 DEMAND AND SUPPLY DRIVERS OF THE FIRMS:

Demands for financial products are driven by risk-reward assessment, which
considers:

Potential yield :
The expectation of financial incentives or return on investment is a great
demand driver which tempts people to invest or engage into transactions of the
financial markets.
Risk Rating :
Higher risks assumes higher profits and vice versa. Risk ratings are a vital point
when making a decision to park one’s resources into this Firms.
Liquidity :
To maintain strong and flexible liquidity position people tend to invest in
financial markets, in order to meet their contingencies.
Availability of information :
The more disclosure, the more is information symmetry, and so will be visibility
and access to returns and so will be the expectation from this market increase
along with investment.
Access to alternatives :

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 More the disclosure in the market more will be the competition with more
profits, so more will be the choices and access to alternatives to park one’s
resources.

The major supply drivers are:

Money supply :
The supply of money has a big role to play in this Firms, the more the
supply of money in this Firms; more will be the availability of financial
services and products.
Interest rates :
Interest rate determines the terms of trade, fluctuations in interest rates can
entirely fluctuate this Firms. Higher interest rate= will give higher returns,
with great supply no doubt but borrowing or ascertaining the real market
value may become difficult.
Inflation :
Value of a currency appreciates and depreciates with the rates of inflation.
Inflation thus serves as a great supply driver in this market. As in high
inflation with higher supply of money there will be higher supply and vice
versa.

Economic conditions :
Rates of inflation, the upsurge or downturn in the domestic and global
economy is another supply driver which is beyond the control of any
business firm.
Government Regulations :
The attitude of the government towards the trade policies and various other
financial Firms and Firms matters a lot. Various restrictions or duties or
taxes may restrict the supply and may hinder the growth of this Firms. And
will flourish with the ease of trade.

2.5 LEGAL ISSUES WITH A BROKERAGE FIRM:

Securities Exchange Act of 1934 (Exchange Act)

In contrast to theSecurities Act, the Exchange Act primarily regulates transactions

of securities in the secondary market - that is, sales that take place after a security

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is initially offered by a company (the issuer).  These transactions often take place
between parties other than the issuer, such as trades that retail investors execute
through brokerage Firms.  The Exchange Act operates somewhat differently from
the Securities Act.  To protect investors, Congress crafted a mandatory disclosure
process that is designed to force companies to make public information that
investors would find pertinent to making investment decision.  In addition, the
Exchange Act provides for direct regulation of the markets on which securities are
sold (the securities (stock) exchanges) and the participants in those markets (Firms
associations, brokers, and issuers).

Monetary and Fiscal Policies

In the securities Firms there exist regulators who have established a set of rules and
regulations that administer the entire Firms. Financialmarkets, depositors,clearing
houses, and vendors work together to regulate the investment in the Firms.

The 3 major US government agencies that govern the securities Firms and frame
monetary and fiscal policy, they are: The Federal Reserve System, the Securities
Exchange Commission (SEC), and the Office of Comptroller of the Currency.

Federal Reserve System:

The Federal Reserve System is a government institution created to
administer nation’s credit and monetary policies and to oversee the banking
Firms as well as certain aspects of the broker activity, such as credit.

The Federal is responsible for establishing and enforcing monetary policy

and for regulating the amount of credit outstanding. The fed does this by
establishing the bank discount rates and the rules for credit. The market’s
response to the Fed’s determination to control inflation by raising and
lowering the discount rate affects long term interest rates, which have a
significant impact on the securities’ market.

Securities Exchange Commission:

The Securities Exchange Commission (SEC) is the primary regulatory
agency that oversees the securities Firms. The SEC is an independent
bipartisan, quasi-judicial agency of the government. The laws administered

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 by SEC deal with securities and finance and seek to provide protection for
investors in their securities’ transactions.

2.6 COMPANY OVERVIEW:

Master Trust is one of the leading financial services group in India with 26 years
of customer's patronage built on loyalty and trust. The Philosophy of “Master
Trust” has its seeds embedded in the group's belief in nurturing the investment
culture towards value investing.
Its constant endeavor to understand the client's needs and meeting them with the
right financial solutions has helped it emerge as one of the leading broking houses
in the country. As a one stop shop catering to all kinds of investment needs, Master
Trust focuses on the retail investors who are looking for value added financial
solutions.
With a network of over 750 Business Locations across India & around 1.5 Lac
client base we provide products like Equity, Derivatives, Commodity, Currency,
Gold ETF, Mutual Funds, Insurance, IPO, Forex, NRI Services & Merchant
Banking.

Our endeavor is to constantly meet every financial need of our clients. The one-
stop destination is specifically designed for retail customers who require a very
strong relationship driven approach towards value investing. We provide
unmatched convenience by serving individual consumers, small and middle market
businesses and large corporations with a full range of investment, asset
management and risk mitigation products. Our strength is seamless integration of
asset holdings, advisory based execution of trades & financial planning.

Needless to say Master Trust services have ushered in an era of unmatched quality
and excellence never experienced before. Our open-mindedness together with our
innovative and personalized services has helped us emerge as one of the leading
financial services group in India.

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COMPETITIVE ADVANTAGE OF MASTER TRUST BROKERAGE
SERVICES
One of the lowest brokerage charges in the Firms (currently).
Best software in the Firms.
Listed company and aggressive in brand promotion.
Mobile trading tie ups with Blackberry and other phones, where one can
trade with ease.
Both online and offline facilities are provided.
Competitive commissions and service support at fair price (value for
money).
Relationship manager facility to assist customers as and when they need
assistance and guidance.
Full access to Master Trust’s Equity Analysis, follows a fact-based approach
to rating stocks.
Easy access to customers of the snap shots of their account statement and
portfolio statements and to digital contract notes.

India, at present has become a giant corporate game reserve.So Indian companies
are sprucing up their acts like never before to face up to the realities of fiercely
competitive post-liberalization.

Gone are the days of monopolies and with the advent of consumerism more and
more business corporations are beginning to realize that the ultimate cutting edge
of any business over its rival will be provided, by its people. Provision of
providing broking service is a very crucial activity. It has a lot of legal
complications & various norms; rules n regulations have to be followed.
I have realized this fact after completion of my summer training project. Despite of
various difficulties and limitations faced during my summer training project on the
topic "Future Prospects of Broking Firm", I have tried my level best to find out the
most relevant information from the organization to complete the assignment that
was given to me. After completion of my summer training project I gained lot of
experiences in the field of securities market. I got the opportunity to deal with
various people. This summer training project has given me the opportunity to have
first experience in the corporate world.

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 Theoretical knowledge of a person remains dormant until it is used and
tested in the practical life. Through training I got an opportunity to apply my
theoretical knowledge that I have acquired in my classroom to the real business
world. In spite of few limitations and hindrances in the summer training project I
found that even though the work was challenging but was fruitful in many ways. It
gives enough knowledge about the online trading process undertaken by the
company. It provided the practical knowledge of the working process of Relegate
Securities Limited. Also this summer training project has enhanced my capability
in order to manage business effectively and in my career in future.
Moreover it was the first experience to mound the theoretical knowledge into
practicality. In our course material whatever we read about stock market, research
work, growth pattern of the Indian financial market, the emergence of Brokerage
Firms etc, all were seems to be factual and I tried to apply those classrooms
learning into my corporate life. So through this training I got the realization that
although our organizational working style was quite practical but it was either an
exaggerate form of our bookish theory or completely based upon the very fact of
our bookish theory. Emergence of Online Trading
Online trading is the service offered on the internet for purchase and sales of
shares. In the real world you place orders on your stock broker either verbally or in
a written form. In online trading you will access a stock broker's website through
your internet enabled PC and place orders through the brokers internet-based
trading engine. These orders are routed to the stock exchange without manual
intervention and executed their own in the matter of a few seconds. From the past
two years the volume of the internet trading has increased largely.
Traditionally stock trading is done through stock brokers, personally or through
telephones. As number of people trading in stock market increase enormously in
last few years, some issues like location constrains, busy phone lines, miss
communication etc start growing in stock broker offices. Information technology
(Stock Market Software) helps stock brokers in solving these problems with Online
Stock Trading.

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 CHAPTER: 3
REVIEW OF LITERATURE

Al Ries and Jack Trout, in his work said “differentiate or die”, too many
less differentiated products creates a kind of information overload, and in
this clutter of too much information, products which are not properly
differentiated or advertised just end up becoming a me-too product. To avoid
it every marketer needs to position his/ her products in a way that makes a
specific image in the minds of consumers.

Jack Miller, in his work published on June 03, 2010, talked about how
investors make investment decisions. He broke the process of decision
making in pulling the buy or sell trigger. According to him investors made
the investment decisions in the ways like simple screening, then lateral
recommendation, followed by piggy bank investing.

U.S. Securities and Exchange Commissions’, one of the articles: investors

first evaluate their current financial roadmap, and then they evaluate their
comfort zone in taking on risk. Consider an appropriate mix of investments,
create and maintain an emergency fund, consider dollar averaging, consider
rebalancing portfolio occasionally, and in the process also try to avoid the
circumstances that can lead to fraud.

S Kalaiselvi, C Sangeetha - Asian Journal of

Multidimensional: Brokerage Firms are the business entities that deal with
stock trading. India, with an increasing capital market and a growing number
of investors, has a number of brokerage Firms. The study is an attempt to
cover the financial performance of select stock Brokerage Firms in India for
a period of ten years from 2005–2006 to 2014–2015. The study covers
secondary data of 5 stock broking companies and activity and solvency
ratios applied for analysis.

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 CHAPTER: 4
OBJECTIVE OF THE PROJECT

An increasing trend has been observed in demand for the services of Non-Banking
Financial Institutions nowadays. This project focuses on the Brokerage Firms in
general and the competitive position of Master Trust Ltd. in particular. There has
also been emphasis to find out the plus points of Master Trust or the differentiating
factors that give Master Trust a competitive edge. In short:

To analyses the Indian Brokerage Firms.

To find out various competitive advantages that makes Master Trust of the
leading stock broking companies in India.

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 CHAPTER: 5
RESEARCH METHODOLOGY

Research methodology is a methodology for collecting all sorts of information and

data pertaining to the subject in question. The objective is to examine all the issues
involved and conduct situational analysis. The methodology used in the study
consists of Secondary data. Secondary data has been collected from the official
websites of some Private sectors, reviews from previous reports, and other related
projects.
5.1 SELECTION OF TOPIC:
The present topic selected is very relevant because the brokerage industry is
experiencing the new changes which will be beneficial both for the brokerage
firms as well as the customers. The topic chosen throws light on the new changes
in the industry and its significant impact on the various stakeholders.
5.2 NATURE OF STUDY:
The study aims to analyze the developmental aspects of the entire brokerage
industry in general and selected firms in particular on the basis of the recent trends.
5.3 SCOPE OF STUDY:
The outcome of the study is multi faceted. It will allow researchers to explore the
various initiatives undertaken by the brokerage industries and it will also help the
existing as well as new firms to design their bouquet of services to enable better
customer retention and improve in quality of service.
5.4 SAMPLING PROCEDURE AND DESIGN:
Data Collection: Secondary Data
Research Technique: Descriptive
Data Type: Exploratory

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5.5 METHOD OF DATA COLLECTION:
The data is collected from secondary sources only. Secondary Source of Data
include:
Study of files and other related projects and documents.
Official websites of some Private Sectors
Review of previous reports related to the topic.
Various websites providing data on the topic.

5.6 LIMITATION OF THE STUDY:

The study may be beneficial to the existing brokerage firms but for the newly
established firms , it will create certain procedural difficulties in the
implementation of new technologies and adoption of new practices. Also, changing
the pre existing practices will take some time.

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 CHAPTER:6
DATA ANALYSIS AND INTERPRETATION

Analysis of brokerage Firms based on Michael Porter’s 5 forces

model:
First described by Michael Porter in his classic 1979 Harvard Business
Review article, Porter’s insights started a revolution in the strategy field and
continue to shape business practice and academic thinking today. Porter’s Five
Forces is a model that identifies and analyses five competitive forces that shape
every industry and helps determine an industry's weaknesses and strengths. Five
Forces analysis is frequently used to identify an industry's structure to determine
corporate strategy. Porter's model can be applied to any segment of the economy to
understand the level of competition within the industry and enhance a company's
long-term profitability. The Five Forces model is named after Harvard Business
School professor, Michael E. Porter.

Understanding Porter's Five Forces:

Porter's Five Forces is a business analysis model that helps to explain why various
industries are able to sustain different levels of profitability. The model was
published in Michael E. Porter's book, "Competitive Strategy: Techniques for
Analysing Industries and Competitors" in 1980.1 The Five Forces model is widely
used to analyse the industry structure of a company as well as its corporate
strategy. Porter identified five undeniable forces that play a part in shaping every
market and industry in the world, with some caveats. The five forces are frequently
used to measure competition intensity, attractiveness, and profitability of an
industry or market.

INDUSTRY STRUCTURE IS DYNAMIC

Industry structure changes over time, and is not static. Over time, buyers or

suppliers can become more or less powerful. Technological or
managerial innovations can make new entry or substitution more or less
likely. Changes in regulation can change the intensity of rivalry, or affect barriers
to entry. Choices by competition, such as new pricing or distribution approaches,
can also affect the path of industry competition.  

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Five Forces analysis is essential to anticipate and exploit industry structural
change.

Fig: 1 Michael Porter’s 5 forces model

Given below is the explanations of Michael Porter’s 5 forces model:

Competition in the firms :
The Firms is now in a fairly high growth phase. However the brokerage
Firms is very cyclical and is impacted by activity levels in the markets.
During the downturns such as 2008-2009 periods, the smaller players were
squeezed out of the business. As a result there is a contrast consolidation
happening in the Firms.

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 Potential of new entrants:
A new entrant in addition to the above also needs a reasonable level of
capital to fund the working requirements of the business (finance to
customers, deposits with exchanges, etc).
The scale requirements are increasing constantly and as a result a
new entrant will require higher levels of investments in the future to enter
the business. As pointed out, it is likely to see many entrants in the Firms.
On the contrary, it is likely that the smaller players will exit by selling out or
closing.
Power of the supplier:
Not much relevant in most segments except investment banking, where
employees control client relationships and hence have to be highly
compensated.
Power of the buyers/customers:
This is important in the institutional brokerage business which involves high
volume and low brokerage charges. The extent of buyer power is very low to
non-existent in all kinds of retail segments.
Threat of substitutes:
The products offered by all Firms in this Firms are more or less
differentiated. Investing rather saving in the bank rather than investing in a
brokerage firm can be one option; else this is not applicable for this Firms.

In a summary the Firms has a moderate to low level of competitive advantage.

There is low level of customer lock-in and customer will move his or her business
if the brokerage rates are not competitive with rest of the Firms. The only
competitive advantage for companies in this sector comes from size and scale
which enables them to leverage their size to reduce average costs and thus make a
profit on low brokerage margins.
In addition to high fixed costs, the Firms has very low margin cost. As a result the
cost of adding an additional customer is low and per transaction costs are limited.
Due to this reason, we are seeing a constant pressure on the brokerage rates has
intensified the competition in the Firms and is resulting in consolidation with the
top players.

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The basic brokerage business is now sometimes a loss leader to enable the
brokerage firm to acquire customers and sell other products such as wealth
management services, or third-party mutual funds. This segment will provide
adequate returns in the future for a company with scale.

GLOBAL AND DOMESTIC ECONOMIC ENVIRONMENT OF

THE FINANCIAL FIRMS
According to global 2000 (annual report by Forbes), seven of the top 10
companies belonged to the financial Firms. These included the Citigroup,
Bank of America, HSBC Holdings, and JPMorgan Chase. Their combined
revenue in 2007 was worth $647 billion, down from 2006 high of $785
billion.
According to Fortune 500 rankings, in 2006 financial services generated
$257 billion in profits, a third of total Fortune 500 profits. In 2008, however,
they lost a staggering $213 billion, a total swing of $470 billion. Big players
on the list, such as City group and Bank of America, may only be alive
today just because of government money.

The financial Firms is a Firms in itself as well as an ancillary that supports other
industries. Trade and commerce across the world would come to standstill if there
was no means to fund, pay and protect the transactions.

PESTEL ANALYSIS OF BROKERAGE FIRMS

PESTEL ANALYSIS stands for "Political, Economic, Social, Technological,
Environmental and Legal analysis" and describes a framework of macro-
environmental factors used in the environmental scanning component of strategic
management. It is a part of the external analysis when conducting a strategic
analysis or doing market research, and gives an overview of the different macro
environmental factors that the company has to take into consideration. It is a useful
strategic tool for understanding market growth or decline, business position,
potential and direction for operations.

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 Fig: 2Pestel Analysis
Given below are the explanations of Pestel Analysis:
Politicalfactors are how and to what degree a government intervenes in the
economy. Specifically, political factors include areas such as tax policy,
labour law, environmental law, trade restrictions, tariffs, and political
stability.
Economicfactors include economic growth, interest rates, exchange rates
and the inflation rate. These factors have major impacts on how businesses
operate and make decisions. For example, interest rates affect a firm's cost of
capital and therefore to what extent a business grows and expands.
Socialfactors include the cultural aspects and include health consciousness,
population growth rate, age distribution, career attitudes and emphasis on
safety. Trends in social factors affect the demand for a company's products
and how that company operates.
Technological factors include technological aspects such as R&D activity,
automation, technology incentives and the rate of technological change.
They can determine barriers to entry, minimum efficient production level
and influence outsourcing decisions. Furthermore, technological shifts can
affect costs, quality and lead to innovation.
Environmentalfactors include ecological and environmental aspects such as
weather, climate, and climate change, which may especially affect industries
such as tourism, farming, and insurance.
Legal factors include discrimination law, consumer law, antitrust law,
employment law, and health and safety law. These factors can affect how a
company operates, its costs, and the demand for its products.

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SWOT ANALYSIS OF MASTER TRUST LTD.

This is a strategic planning method to evaluate the Strength, Weaknesses

(limitations), Opportunities and Threats involved in a project or business venture.
It involves specifying the objectives of the business venture or project and
identifying internal and external factors that are favorable or unfavorable to
achieve it. This technique is credited to Albert Humphrey of Stanford University

Fig: 3 SWOTANALYSIS

Given below are the explanations of SWOT Analysis:

STRENGTH
Online trading platform.
Diverse branches and networks provide a great opportunity to cater tapped
and untapped market as well.
Provides competitive brokerage and DP charges.
Equity analysis reports to support its clients.
Both online and offline trading facility.
Real time online transfer of funds and exposure facility with HDFC, City
bank, ICICI, etc

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 WEAKNESSES
It should have its own mutual funds as it provides advises on mutual funds.
Position to answer the questions of the clients in their fields.
It does not provide indices on major world markets, ADR prices of Indian
scripts.
Lacks banking arm.

OPPORTUNITIES
Financial services like mutual funds and insurance.
It is registered with Luxemburg Stock Exchange so can target other stock
exchanges also.
ATM facility should be provided for easy withdrawals.
Tie-ups with third party companies for selling products.
High client base will help for cross sales of its products.
THREATS
Companies like Share khan, ICICI Direct, Kotak Securities, and private
brokers are major threats.
Banks with demit facilities are jockeying for position.
Local brokers capable of charging lower brokerage.
Changes in SEBI guidelines and other tax implications.
Government regulations.

COMPARISON OF VARIOUS RATES( DIFFERENT FIRMS):

FIRMS HDFC SHAREK MOTILAL M.T KOTAK INDIABULLS

HAN OSWAL
FACTOR

BROKERAGE 5p to 50p 5p to 25p 5p to50p, 3p to 4p to 40p 2p to 20p or

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 1p-10p 25p 1p to 10p (min)
( min)

MINIMUM Rs 10000, Rs 10000 Rs 50000 Rs 0 Rs 10000 Rs 0

AMOUNT Rs 0
(for big
corporate
clients)

MINIMUM Rs 799 Nil Rs 200 Rs 555 Rs 550 Rs 1350

OPENING
CHARGES

PRODUCTS -Equity, Trade ETF, IPO, IPO, K-25 and IPO, Mutual
features Tigers, mutual Mutual T-25. Funds, Real
and IPO, MF funds, and Funds, Brokera Estate, Home
options, online, NRI and ge, IPO, loans,
ETF, IPO, contract offerings. Commo Mutual Commodity,
mutual note on dities Funds, and
funds. paper, and Commod Derivatives.
-Do it ODIN ities.
yourself Software.
systematic
investment
planning,
and
-NRI
offerings,
loans, FD.

SERVICES -J2 ME Brokerage Call and Broker Brokera Brokerage,

windows, services, trade. age-e ge and Online and
blackberry, trade on and banking Offline
android, mobile, bankin services. Trading
iPhone. online, call g available on all
- Call and and trade, services phones, No
trade, dedicated . extra charges
online and dealer desk on calls from
offline at every clients.
services for city.
different
time zones.

QUALITY OF Good Good Good Good Good Good

SALESPERSON

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 PROCESS T+2 days T+2 days T+2 days T+2 T+2 days T+2 days
days

Table: 1 COMPARISON OF VARIOUS RATES

In the above table(1) we have compare the various brokerage firm on the basis of
BROKERAGE, Minimum amount needed to open Account, products, services,
Quality of sales person and the time taken to register the account.

FINANCIAL EVALUATION OF MASTER TRUST

INCOME STATEMENT
(as at march 2018 to march 2020)

Mar '20 Mar '19 Mar '18

 
  12 moths 12 moths 12 moths

 
Income    
Sales Turnover 10.57 5.73 4.6
Excise Duty 0 0 0
Net Sales 10.57 5.73 4.6
Other Income 0.13 0.13 0.06

Stock Adjustments 0 0 0
Total Income 10.7 5.86 4.66
Expenditure    
Raw Materials 0 0 0
Power & Fuel Cost 0 0 0
Employee Cost 0.81 0.85 0.92

Other Manufacturing Expenses 0 0 0

Selling and Admin Expenses 0 1.09 0.22

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Miscellaneous Expenses 0.67 0.18 0.52
Tot Expenses 1.48 2.12 1.66

  Mar '20 Mar '19 Mar '18

 

  12 moths 12 moths 12 moths

Operating Profit 9.09 3.61 2.94
PBDIT 9.22 3.74 3
Interest 6.77 1.76 1.87
PBDT 2.45 1.98 1.13
Depreciation 0.07 0.05 0.05
Other Written Off 0 0.01 0.01
Profit Before Tax 2.38 1.92 1.07

Extra-ordinary items 0.01 -0.03 0.14

PBT (Post Extra-Ord Items) 2.39 1.89 1.21

Tax 0.01 0.22 0.05
Reported Net Profit 2.38 1.69 1.03

Total Value Addition 1.48 2.12 1.66

Preference Dividend 0 0 0
Equity Dividend 1.09 0.61 0.61

Corporate Dividend Tax 0.03 0 0

Per share data (annualized)    

Shares in issue (lakhs) 108.77 68.4 62

Earnings Per Share (Rs) 2.19 2.47 1.66

Equity Dividend (%) 10 10 10

Book Value (Rs) 63.36 57.78 55.02

Table: 2 INCOME STATEMENT

In the above table (2) we have analysis the income statement of Master trust from 2018
to 2020 And we observe the book value of the company get increase from 55.02 CR.
On March 2018 to 63.36 CR. On March 2020.

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 BALANCE SHEET
(as at march 2017 to march 2020)

  Mar '20 Mar '19 Mar '18 Mar '17      

  12 moths 12 moths 12 moths 12 moths      

Sources of Funds            

Total Share Capital 10.92 6.78 6.14 6.14      

Equity Share Capital 10.92 6.78 6.14 6.14      

Share Application Money 0 7.03 0 4.82      

Preference Share Capital 0 0 0 0      
Reserves 57.99 32.74 27.97 22.6      

Revaluation Reserves 0 0 0 0      
Net worth 68.91 46.55 34.11 33.56      
Secured Loans 13.14 1.73 3.47 0.81      

Unsecured Loans 54.23 1 1 1      

Total Debt 67.37 2.73 4.47 1.81      
Total Liabilities 136.28 49.28 38.58 35.37      

  Mar '20 Mar '19 Mar '18 Mar '17      

  12 moths 12 moths 12 moths 12 moths      
Application of Funds            
Gross Block 1.44 1.18 2.74 2.97      

Less: Aksum. Depreciation 0.67 0.61 0.55 0.5      

Net Block 0.77 0.57 2.19 2.47      
Capital Work in Progress 0 0.07 0 0      

Investments 25.35 16.1 17.69 12.44      

Inventories 3.74 5.91 0.96 2.99      

Sundry Debtors 12.72 0.1 0.37 0.86      

Cash and Bank Balance 2.44 0.47 0.27 0.46      

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 Total Current Assets 18.9 6.48 1.6 4.31      

Loans and Advances 93.5 48.07 38.24 46.1      

Fixed Deposits 0 2.83 4.79 2.31      
Total CA, Loans &
Advances 112.4 57.38 44.63 52.72      
Current Liabilities 0.93 23.6 24.66 31.74      
Provisions 1.31 1.24 1.27 0.54      

Total CL & Provisions 2.24 24.84 25.93 32.28      

Net Current Assets 110.16 32.54 18.7 20.44      

Miscellaneous Expenses 0 0.01 0.01 0.02      

Total Assets 136.28 49.29 38.59 35.37      

Contingent Liabilities 117 141.05 67.55 45.63      

 
Book Value (Rs) 63.36 57.78 55.02 46.36    
               

         
Table: 3 Balance Sheet

In the above table(3) we have analysis the Balance sheet statement of Master trust
from 2017 to 2020 and we observe the net current asset is 110.16 in 2020 and total
liability is 136.28

CASH FLOW STATEMENT

(as at march 2016 to march 2020)

  Mar '20 Mar '19 Mar '18 Mar '17 Mar '16      

  12 moths 12 moths 12 moths 12 moths 12 moths      

 

Net Profit Before Tax 2.38 1.91 1.08 1.65 1.73      

Net Cash from Operating Activities -11.91 -13.89 4.63 -13.66 2.7      

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Net Cash (used in)/from      
Investing Activities -9.44 3.09 -5.01 3.56 -5.41      
Net Cash (used in)/from Financing
Activities 20.49 9.04 2.67 11.02 0.02      

Net (decrease)/increase In Cash and

Cash Equivalents -0.86 -1.76 2.28 0.92 -2.68      

Opening Cash & Cash Equivalents 3.3 5.06 2.77 1.85 4.53      

Closing Cash & Cash Equivalents 2.44 3.3 5.06 2.77 1.85      
                 

       
       
     
Table: 4 Cash Flow Statement
In the above table(4) we have analysis the Cash flow statement of Master trust
from 2016 to 2020 and we observe that the profit of the company in 2020 is 2.38
cr. Before paying tax

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 CHAPTER:7
FINDINGS AND RECOMMENDATIONS

FINDINGS:

Indian equity brokerage turnover has been growing at more than 30% CAGR
since FY1999-2000 primarily attributed to the growth in trading turnover in
the derivative segment, which commenced operations in FY00-01 and now
accounts for almost ~75% of total turnover.

Equity brokerage turnover at National Stock Exchange and Bombay Stock

Exchange, combined, reported a decline of 19% in FY08-09 against the
backdrop of the global market meltdown and higher base effect of FY07-08,
which was a bumper year for domestic capital markets.

Majority of the Brokerage Firms entered the business post 1990. A majority
of members have memberships in more than one stock exchange and across
equities, equity derivatives and commodities futures in domestic and
International stock exchange.

The market share & broking volume of Relegate Securities was maximum in
the year 2007-08, while it went down in 2008-09 due to the global slow
down caused by the American crisis. The market share then further
increased in 2009-10.

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 CHAPTER: 8
SUGGESTIONS/RECOMMENDATIONS

Majority of the Brokerage Firms entered the business post 1990. A majority
of members have memberships in more than one stock exchange and across
equities, equity derivatives and commodities futures in domestic and
International stock exchange.

The recession in America though had its effect on Indian economy for quite
some time but the European crisis didn't have much effect.

Relegate Securities Limited is the only broking firm which is providing

interest on unutilized cash while no other broking firm does so.

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 CHAPTER: 9
CONCLUSION

I have realized this fact after completion of my project. Despite of various

difficulties and limitations faced during my project on the topic "Future Prospects
of Broking Firm", I have tried my level best to find out the most relevant
information from the organization to complete the assignment that was given to
me. After completion of project I gained lot of experiences in the field of securities
market. I got the opportunity to deal with various people. This project has given
me the opportunity to have first experience in the corporate world. Moreover it was
the first experience to mound the theoretical knowledge into practicality. In our
course material whatever we read about stock market, research work, growth
pattern of the Indian financial market, the emergence of broking firms etc., all were
seems to be factual and I tried to apply those classrooms learning into my
corporate life. Traditionally stock trading is done through stock brokers, personally
or through telephones. As number of people trading in stock market increase
enormously in last few years, some issues like location constrains, busy phone
lines, miss communication etc. start growing in stock broker offices. Information
technology (Stock Market Software) helps stock brokers in solving these problems
with Online Stock Trading. Gone are the days of monopolies and with the advent
of consumerism more and more business corporations are beginning to realize that
the ultimate cutting edge of any business over its rival will be provided, by its
people.

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 CHAPTER: 10
BIBLIOGRAPHY

www.mastertrust.co.in
www.moneycontrol.com
www.nseindia.com
www.secgov/investor/pubs/financialnavigating.html
www.tradestreaming.com/2010/06/04/investmentdecisions
Review of literature reference: Google Scholar
www.rediffmoey.com
Economicstimes.indiatimes.com>opinion
www.valueline.com/stock/industry
www.smallbusiness.wa.gav.au/business-life-cycle
Robinhood of Indian stock broking: Traditional brokers open up low-cost
trading for retail investors | The Financial Express
Broking goes mainstream - Dec 2021 – Z-Connect by Zerodha Z-Connect by
Zerodha
India Financial Brokerage Market Report 2021: The Industry
(globenewswire.com)
AlRies and Jacktrout,1972,( Principles of modern marketing management).
S.kalaiselvi, C.Sangeetha, S.Priyanga,vol.3, issue.1, january 2014 in Asian
journal of multidimensional research.
SEC (10 June 2013) SEC.gov. U.S. Securities and Exchange Commission.
Retrieved March24, 2017.
Jack’s miller (Behavioural finane) vol 14, issue 2, (3 June 2010).
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 CHAPTER: 11
ANNEXURES

 Sample Questionnaire

 Interview Transcript

 Sample Questionnaire Results

 Letters and Correspondence

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