TABLE OF CONTENTS

I. EXECUTIVE SUMMARY 3

II. INTRODUCTION 4-20

A. STATEMENT OF PURPOSE (Objective) 4

B. SIGNIFICANCE OF PURPOSE 5

C. BACKGROND INFORMATION 6

III. PROCEDURES AND RESEARCH METHODS 21-23

USED
A. DESCRIPTION OF SECONDARY (LIBRARY) 21
RESEARCH CONDUCTED

B. DESCRIPTION OF PRIMARY RESEARCH 22

CONDUCTED

C. DESCRIPTION OF INVOLVEMENT OF 23
MEMBERS ON THE PROJECT

IV. FINDINGS AND CONCLUSIONS 24-63

A. PRESENTATIONS OF FINDINGS, DATA TO

SUPPORT FINDINGS

1) FINDINGS OF THE PRIMARY RESEARCH 24

2) ANALYSIS OF IT SECTOR AND BALANCE 28

SHEET ANALYSIS

B. PRESENTATION OF CONCLUSIONS AND 62

RATIONALE TO SUPPORT CONLUSION

V. RECOMMENDATIONS 64-65
 A. RECOMMENDATIONS RESULTING FROM THE 64
STUDY

B. PROJECTED OUTCOMES RESULTING FROM 65

THE STUDY

VI. BIBLOGRAPHY 66

VII. APPENDIX 67-86

1. SECURITIES AND EXCHANGE BOARD OF 68

INDIA

2. BLOOMBERG 72

3. ASSOCIATION OF MUTUAL FUNDS INDIA 78

4. RESERVE BANK OF INDIA 81

I. EXECUTIVE SUMMARY
 This project was a great learning experience for me. The project was under the
guidance of the firm DALAL AND BROACHA, it is a share broking firm. To give you the
brief idea the project has been divided into 3 parts, as follows.

➢ INVESTMENT AWARENESS:

Here we conducted a survey in which the questioner was provided by the firm. It was
designed in way to know the awareness among the retail investors. As it is very important to
know the investment intelligence of the retail investor, the questioner contains questions like
the knowledge of various investment options available in the market and the safety of the
instrument like company deposits. The questioner was lengthy so I decided to approach my
close relatives and friends and met them casually and discussed the various questions in the
questioner.

➢ SECTOR ANALYSIS AND BALANCE SHEET ANALYSIS:

In this part I had to analyse a sector and I selected IT sector. Here first I analyse
sector as a whole and selected top three Indian IT companies to study there balance sheets.
The basic objective behind the study was to know the potential behind the good returns that
IT sector has delivered to its investors in the past.

➢ VISIT TO VARIOUS FINANCIAL REGULATORY AUTHORITIES AND

BLOOMBERG:

As a part of our summer training programme we had visited the various financial
regulatory authorities which are as follows;

Visit to RBI monetary museum and National Clearing House

Visit to SECURITIES AND EXCHANGE BOARD OF INDIA.(SEBI)
Visit to ASSOSIATION OF MUTUAL FUNDS OF INDIA.(AMFI)
Visit to BLOOMBERG ( leading financial news provider)
It was a great experience in all to visit these organisations because we always heard
about them and read about them. These organisations gave there presentation on the role of
these organisation. After the presentation we had a very good interactive session wit them.

I. INTRODUCTION
 A. STATEMENT OF PURPOSE (Objective):

➢ OBJECTIVE BEHIND INVESTMENT AWARENESS:

The basic objective behind this was to know the investment literacy among the retail
investors. And also we had to spread awareness among the investors and potential investor.

➢ OBJECTIVE BEHIND SECTOR ANALYSIS AND BALANCE SHEET ANALYSIS:

It is very important for an investor to know about the sector in which they are
investing or they are planning to invest. However it is not possible for each and every
investor to study and analyse the same. This study is done by the security analyst. The basic
objective behind analysis is to provide information to retail investors so that they use the
study to invest in the capital market.
I have analyse the IT sector and balance sheet of top 3 Indian IT companies viz.,
TCS,INFOSYS and WIPRO the basic objective behind the study was to understand that Why
investor invest in these companies, What are the areas to be consider while investing in any
company and How to identify the sector which will give good returns.

➢ VISIT TO VARIOUS FINANCIAL REGULATORY AUTHORITIES AND

BLOOMBERG:

As a part of our summer training programme at Dalal and Broacha we visited various
financial regulatory authorities as mentioned like RBI,AMFI,SEBI as mentioned earlier. The
basic objective behind the visit was to understand the role of these organisations in capital
market. We also visited Bloomberg’s only office in India at Mumbai. Bloomberg is leading
financial news provider in the world. Here we came to know how Bloomberg is use full for
the organisations related to capital market.

A. SIGNIFICANCE OF PURPOSE
➢ SIGNIFICACE OF INVESTMENT AWARENESS:

Individuals form a major part of the securities in terms of numbers. The individual
investors are further divided into two categories in case of IPO: Retail investors who can
apply for share of an amount less than Rs 1 lakh and High Net worth individuals (HNI) who
can apply for shares of an amount Rs 1 lakh or more.

➢ SIGNIFICACE OF SECTOR ANALYSIS AND BALANCE SHEET ANALYSIS:

Identifying a stock/sector where the outlook seems positive

Meeting the management to have a perspective of the company regarding the industry
scenario, the company positioning and its future plans
Making financial projections
Keeping price target considering the valuations
Monitoring the stocks recommended, on regular basis
The bottom line is that investments/building a portfolio is a process which should be
developed over a period. It should involve a reasonable level of understanding in
terms of “what are we buying” and “at what price”. The company that we are
investing in should have a scalable business for investment. Finally patience
definitely pays.

➢ SIGNIFICACE OF VISIT TO VARIOUS FINANCIAL REGULATORY

AUTHORITIES AND BLOOMBERG:

As an MBA in finance it is very important to know the role and functions of financial
regulatory authorities. These authorities introduce various norms and guide lines for
companies that effect’s their financial results in both ways positively as well as negatively. It
is also important to know about the financial news providers and authencity of the news they
provide. Bloomberg is giant financial search engine it provides news for almost all
companies listed at any stock exchange in the world. Apart from company information they
also provide information and background of their promoters and management.

A. BACKGROND INFORMATION
✔ ABOUT INDIAN STOCK MARKET
✔ BRIEF HISTORY OF INDIAN STOCK MARKET
✔ BASICS OF INVESTMENTS
✔ BENEFITS OF INVESTING IN THE STOCK MARKET
✔ HOW STOCK MARKET FUNCTIONS?
✔ ELABORATE ON VARIOUS TYPES OF INVESTORS

✔ HOW STOCK MARKET FUNCTIONS?

✔ ROLE OF SEBI IN THE PROCESS OF IPO

✔ DESCRIPTION OF BUSINESS (ORGANISATION OVERVIEW)

ABOUT INDIAN STOCK MARKET

 This is an organised set-up with a regulatory body and the members who trade in
shares are registered with the stock market and regulatory body SEBI. Stock market exists in
different cities all over the world with each market having a different set of “listed “shares.
Thus, the shares listed in the Bombay Stock Exchange (BSE) will be different from those in
the Delhi Stock Exchange (DSE), because a company may not want to be listed in a
particular exchange.The stock market is also called secondary market as it involves trading
between two investors.

BRIEF HISTORY OF INDIAN STOCK MARKET

The history of Indian stock market is about 200 years old. Prior to this the hundis and
bills of exchange were in use, specially in the medieval period, which can be considered as a
form of virtual stock trading. The recorded stock trading can be traced only after the arrival
of East India Company. The first organised stock market that was governed by the rules and
regulations came into existence in the form of The Native Share and Stock Broker’s
Association in 1875. After gone through numerous changes this association is today better as
Bombay Stock Exchange, which remains the premier stock exchange since its inception.
During this period several other exchanges were launched and some of which were closed
also. Presently, there are 19 recognized stock exchanges. National Stock Exchange,
established in 1992, was the last exchange.

Although the regional level exchanges are in existence the volume of trading in these
exchanges is negligible. National Stock Exchange and Bombay Stock Exchange are the
leaders of Indian Securities Market in terms of listing, trading and volumes.

The last 15 years of the Indian Securities Market can be considered as the most
important part of the history where the market gone through the post liberalisation era of
Indian economy and witnessed the formation of Securities and Exchange Board of India
(SEBI) which brought substantial transparency in the share market practices and thus
managed to bring in trust of not only domestic investors but also international investors.

BASICS OF INVESTMENTS
 The money earned is partly spent and the rest saved, for meeting the future expenses.
If you keep your savings idle its nominal value remains the same but real value decreases by
prevailing inflation. This can be defined by the following formula:

Real rate of return = Normal rate of return - Inflation

Instead of keeping the savings idle, you must park it somewhere to get a return on this
capital in the future. That is called an investment. There are various avenues for investment.
You may invest in the Bank deposits, jewellery, paintings, life insurance, tax savings
schemes likes PPF/NSC or stock market related instruments called securities like shares,
debentures, bonds, etc. However, the return from each investment option depends on the
associated risk. The riskier the investment, the higher will be the return. For instance, stock
market related investments are risky, but makes you earn more returns than other modes of
investment.

BENEFITS OF INVESTING IN THE STOCK MARKET

Stock market investments offer you benefits like easy liquidity, flexibility of amounts
invested/disinvested, reasonable returns and a regulatory framework to safeguard your rights.
Shares are the most popular form of stock market investments due to their higher potential
for capital growth.

In the long run it is empirically found that in equities given maximum return.
➢ PRIMARY AND SECONDARY MARKETS

The primary market provides the channel for sale of new securities. Primary market
provides opportunity to issuers of securities; Government as well as corporate’s, to raise
resources to meet their requirements of investment and/or discharge some obligation.
Secondary market refers to a market where securities are traded after being initially
offered to the public in the primary market and/or listed on the Stock Exchange. Majority of
the trading is done in the secondary market. Secondary market comprises of equity markets
and the debt markets.
There are two mediums for investors to acquire shares from the primary and
secondary markets. In the primary markets, securities are bought by way of the public issue
directly from the company. In the secondary market shares are traded among investors.

➢ THE MARKET PLAYERS

Investors : Retail or individual investors, Partnership/HUF, Societies and Trusts,

Companies, Mutual Funds, Financial Institutions and Foreign Institutional Investors.

➢ ISSUERS OF SECURITIES: Companies (Promoters), Corporate Bodies, Government

and Mutual Funds, Banks.

➢ INTERMEDIARIES : Investment Bankers (Lead Manager), Registrar to an Issue,

bankers to an issue, Credit Rating Agencies and Depositories.

➢ REGULATORS : RBI, SEBI, Ministry of Company Affairs Appellate Tribunals: SAT,

national Company’s Law Appellate tribunal.

Apart from these, each companies appoints legal counsel and auditors who are not
referred as intermediaries. Their work includes conducting due intelligence, drafting legal
parts of the prospectus, various agreements and providing legal opinion and assistance in
closing the issue.
 ELABORATE ON VARIOUS TYPES OF INVESTORS

The investors can be categorized as follows: Individual investors, Partnership/HUF,

Societies and Trusts, Companies, Mutual Funds, Financial Institutions and Foreign
Institutional Investors.

➢ INDIVIDUAL INVESTORS:

Individuals from a major part of the securities in terms of numbers. The individual
investors are further divided into two categories in case of IPO: Retail investors who can
apply for share of an amount less than Rs 1 lakh and High Net worth individuals (HNI) who
can apply for shares of an amount Rs 1 lakh or more.

The share of the retail investors in an IPO is 35% and that of HNIs is 25%. Thus according to
SEBI regulations retail investors are preferred over the other types of investors.

➢ PARTNERSHIP/HUF:

Association of members or partnership formed by various groups or a joint family

come together to invest their surplus fund in order to earn returns fall into this category.

➢ SOCIETIES AND TRUSTS:

These are also associations of persons, but they have to be empowered by their by-
laws to invest in the security markets. Here the income earned by such investment should be
invested for the objective for which the society or trust is formed.

➢ COMPANIES:

Also termed as corporate investors, companies can also operate as individual

investors for which the board should be authorised by the Memorandum of articles.

➢ MUTUAL FUNDS:

It is a form of collective investment. A mutual fund collects money from many

investors and invests such pooled fund in the share market. Income is received in the form of
capital gains, interests or dividends on securities.
➢ FINANCIAL INSTITUTIONS:

They are the major investors in terms of volumes and values in the securities market
both in the primary and secondary market. These include banks, insurance companies,
pension funds and venture capital companies.

➢ FOREIGN INSTITUTIONAL INVESTORS (FIIS):

This is an entity formed or incorporated outside India with the purpose to invest in
India. These entities are required to be registered with the SEBI as FIIs.

As per SEBI regulations an FII cannot invest more than 10% of total issued capital of
an Indian company. These prescribed limits are subjected to the overall limit of 24-49% of
the sectoral limit as prescribed by the Government of India/Reserve Bank of India.
 HOW STOCK MARKET FUNCTIONS?

➢ HOW ARE SHARES FLOATED?

The way to invite the share capital from the public is through a ‘public issue’. Simply
stated, a public issue is an offer to the public to subscribe to the share capital of a company.
Once this is done, the company allots the shares to the applicants as per the law and thus
shares come into existence.

Here the listed company offers its shares directly to the investors for raising the fund.
An IPO offers a number of advantages to the company as listing and trading generates
considerable interest in a company. It provides opportunities to the companies for repeated
access to the market with follow on issues (FPO). In addition to follow on the public issues,
the company could mobilize addition equity funds through private placements, right issues or
bonus issues.

➢ WHAT SHOULD A LAYMAN LOOK FOR IN THE PROSPECTUS?

The important factors to be considered are:

Promoters, their credibility and track record.

Past performance of the company

Products of the company and future potential of the products

Technology tie-ups, if any, and the reputation of the collaborators

Project cost, means of financing and profitability projections

Risk factors

Rating given by the Credit Rating agency

➢ WHAT IS CREDIT RATING OF THE IPO? IS THE CREDIT RATING OF THE IPO
MANDATORY?
 Earlier an unlisted company making IPO of the equity shares was given option by the
SEBI to obtain grading for IPO from one or more credit rating agencies. Since May 01, 2007,
it has become mandatory for the Issuer to obtain credit rating of the IPO. The grade
represents a relative assessment of the fundamentals of the issue in relation to other listed
equity shares in India. The credit rating agency would assign a ‘grade’ to the IPO. The
grading will be an independent and unbiased opinion of the agency. The purpose of the
grading is to help retail investors to take informed decisions as they do not have means to
assess the IPO like other group of investors. The grading is generally assigned on a 1 to 5
scale where higher score indicates stronger fundamentals.

IPO Grading
Grade Fundamentals
1 Poor
2 Below Average
3 Average
4 Above Average
5 Strong

➢ CREDIT RATING AGENCIES IN INDIA

There are four SEBI registered Credit Rating Agencies in India viz.

CRISIL,

CARE,

ICRA, and

Fitch Rating India Pvt Ltd.

➢ WHAT IS A DEPOSITORY?
 A depository holds shares and other securities of investors in the electronic form.
Through Depository Participants (DP), it provides services related to transactions in
securities. Its structure and functioning are similar to the Bank. Presently in India, there are
two depository viz. National Securities depository Limited (NSDL) and Central Depository
Securities (I) Limited (CDSL). Both of them are registered with the SEBI.

➢ WHAT IS A DP?

DP is a member of a Depository who offers its services to hold securities of Investors

(Beneficial Owners) in dematerialised form. DP is like a Bank branch. It is an agent of the
depository. DPs are required to be registered with SEBI. If an investor wants to avail the
services offered by Depository, he has to open a Demat account with the DP similar to
opening of a bank account with a branch of the bank.

➢ PROCESS OF DEMATERIALIZATION OF PHYSICAL SHARES

Any Beneficial Owner (Investor), who has entered into an agreement with DP, shall
surrender the physical share certificates to DP. The DP on the receipt of the same forward
details of the shares to the Depository and inform the depository that an agreement has been
entered between DP and the beneficial owner. The DP furnishes the required details to the
issuer along with the certificates of shares. The issuer on receipt of the certificates of shares
from the DP immediately cancel it and substitute its record in the name of the Depository as
the registered owner and shall send a certificate this effect to the depository and to every
stock exchange where the shares are listed. Immediately upon receipt of the information
from the issuer, the depository shall enter in its records the name of the person who has
surrendered the certificate of the security as the beneficial owner, as well as the name of the
participant from whom he/she has received the intimation and shall send intimation to the
DP. The issuer maintains a record of certificates which have been dematerialized.
 ROLE OF SEBI IN THE PROCESS OF IPO

SEBI regulates the IPO process and issued detailed Guidelines under Section 11 of
the SEBI Act, 1992 in the name of SEBI (Disclosure and Investors Protection) Guidelines,
2002 generally known as DIP Guidelines.

It is also noted that under the provisions sections 55 of the Companies Act, 1956. The
matters pertaining to the issue and transfers of securities and non payment of dividend in case
of listed companies, the companies intend to get listed are being administered by SEBI.
 DESCRIPTION OF THE BUSINESS
(ORGANIZATION OVERVIEW)

“Success is a journey, not a destination.” If we look for

examples to prove this quote then we can find many but there is none like that of Dalal &
Broacha. Back in the year 1961, five people created history by establishing Dalal & Broacha
and company which is today known as Dalal & Broacha, the largest financial service
provider of India.

➢ SUCCESS SUTRAS OF DALAL & BROACHA:

The success story of Dalal & Broacha is driven by 8 success sutras adopted by it

namely trust, integrity, dedication, commitment,

enterprise, hard work and team play, learning
and innovation, empathy and humility. These are the
values that bind success with DALAL & BROACHA.
➢ COMPANY OVERVIEW:

With more than four decades of experience behind us, we at Dalal & Broacha, are
today one of the leading Stock Brokers in India. The company is incorporated under the
Companies Act and is a member of the Stock Exchange as well as holds a seat on the
National Stock Exchange on both the capital market as well as the derivatives segment.
Credited with a three percent market share of the Indian Institutional Turnover, the firm’s
satisfied client base is its main driving force.

Efficiently, integrity and transparency in transaction has helped build trust. The raison
d’être of the long standing close customer relationships we cherish. Our customers rely
completely on our principles of constant innovation and consistency of performance. In
keeping with these principles we have successfully served our diverse client base, which
includes many Indian Financial Institutions, some Corporate, Banks, Mutual Funds as well as
Non-Resident Indians. We pride ourselves for being amongst the first t service the FII clients
when the market opened further in 1993.

Dalal & Broacha lives by the high ideals with which Mr.Priyakant Dalal founded this
firm in 1961. The antecedents of the firm date back to Manilal Anderji & Co., established in
1926. Our extended family includes more than sixty employees and we handled transactions
worth more than Rs. 16 billion(US$ 345 million)for the financial year 2002 – 03.

➢ KEY EXECUTIVES FOR DALAL &BROACHA STOCK BROKING PVT.LTD

NAME RELATIONSHIP STATUS

Late Priyakant Dalal Founder

Nailesh Dalal Director
Vipul Dalal Director
Milind Karmarkar Head of Research
➢ MISSION STATEMENT:

At Dalal & Broacha, it is our constant effort to continuously offer our clients
innovative and reliable investment ideas enabling them to get better return amidst the ever
changing financial scenario in the country.

➢ VISION STATEMENT:

Dalal & Broacha endeavours to be a leading player in India’s new liberalised

financial sector, by constant innovation and being abreast with the changing market
scenario. The firm’s main focus will remain its commitment to its customers to provide the
safest and the most profitable investment solutions.
➢ INVESTMENT PHILOSOPHY AT DALAL & BROACHA:

“Invest in good business with good management at reasonable prices”

We at Dalal & Broacha believe in investing in stocks with good growth opportunities
and limited risk element. Typically we look at long-term sustainable prospects of the
company and believe in long-term investment philosophy rather than playing the momentum
with a short-term view. T he idea is to generate returns of at least 20-25% on a sustainable
basis. Buying a stock at a “reasonable” price is most important as we believe that even
though a company may be excellent, it is the “price” that determines if a stock is good to
buy. Simultaneously, once the target price is achieved, the profits should be booked unless
the outlook on the stock has changed significantly and there is further upside possible from
the target price levels. Finally patience is extremely important in the market-for both buying
and selling – and one should not be influenced by the short term movements in the markets.

➢ SOME POINTS OF CONSIDERATION FOR INVESTMENTS ARE:-

• “Have a broad basket of stocks with decent exposure to various sectors (higher
exposure to sectors where one is bullish)”
• “Have a combination of large caps and mid caps in the portfolio (preferably in the
proportion of 60:40)”
• “Exposure to any sector should not be more than 20% (at the point of initial
investment)”
• “Exposure to any one stock should not be more than 10%
• ‘Entering the stock market at reasonable valuations and fixing a target exit price for
the stock
• ‘Realising the full potential of the stock rather than trading to avail the short term
fluctuations
• “Monitoring the investments in the stocks on the periodical basis to ascertain if the
things are moving as per expectation
• “In case things are not working as per expectation or have become unfavourable, then
reducing exposure /getting out of those stocks
 • “Once the target is achieved/potential is realized, booking profits and switching to
other stocks

➢ PRODUCTS AND SERVICES:

Dalal & Broacha offers a diverse array of services that include retail and institutional
broking, IPO and mutual fund distribution as well as debt market dealing. Besides broking
and distribution, we also offer research support to all our clients.

RESEARCH FUNDAMENTAL ANALYSIS

TECHNICAL ANALYSIS INSTITUTIONAL BROKING

DERIVATIVE DE

DEPOSITORY SE
 I. PROCEDURES AND RESEARCH METHODS USED

A. DESCRIPTION OF SECONDARY (LIBRARY) RESEARCH

CONDUCTED

For the purpose of analysis, secondary data has been referred from company web
sites and from other web sites like moneycontrol.com. Here history of the company and the
background are referred from company websites and balance sheets and income statement
are taken directly from moneycontrol.com. To carry out proper analysis the book Security
analysis and portfolio management is used majorly. Various magazines are also used to
collect the information about the company. For the purpose of balance sheet analysis tools
like ratio analysis, comparative analysis, management decision & analysis and relative study
and analysis are used.
 B. DESCRIPTION OF PRIMARY RESEARCH CONDUCTED

This research was conducted on 100 people through a Questionnaire containing 28

questions. The major significance of this survey was to understand the SAVING HABITS of
the people in general and to know their VARIOUS INVESTMENT OPTIONS.

Here instead of approaching directly to people we took help of case study to discuss
with them. We discuss the case according to the present situation of the person. We had case
lets on financial trouble, retirement planning etc. After discussing the case we hand over the
questionnaire and request them to fill it. However it was not possible to discuss case with
each of them but majority of people met, we tried to discuss the case with them.

➢ THE QUESTIONAIRRE

Further, the questionnaire was divided in five parts. All questions were close ended
with multiple choice answers.

1st part was about personal information, income earned and assets owned

Q1-5 Investment profile

Where all have you invested your money in?

Majority of your investments are in?

Total Worth of the portfolio?

Risk appetite & Saving pattern

Q6-14 Awareness

Most important source of information

Market awareness

How much time spent every day regarding investment

Understanding of terminology used in advertisement

 Few financial awareness questions

Q15-22 Service they are getting

Q23 & 24 Advisory role

The specimen copy of questionnaire is attached with the hard copy.

A. DESCRIPTION OF INVOLVEMENT OF MEMBERS ON THE

PROJECT

For the entire summer programme company had allotted a project guide, Shekhar and
Aabhas. Both were very supportive and informative.
 I. FINDINGS AND CONCLUSIONS

A. PRESENTATIONS OF FINDINGS, DATA TO SUPPORT

FINDINGS
 FINDINGS OF THE PRIMARY RESEARCH

➢ MAJORITY OF INVESTMENT ARE IN

Conclusion:-
Here we can see that majority of the people still invest their major part of their
portfolio in fixed deposits, which gives low returns but higher safety. Others include
community funds and only 1 out of hundred found to make its investment in real estate.

➢ RISK APPETITE

Conclusion:-
Here it is very clear that most of the people have low risk appetite. People having low
risk appetite keep their money in bank deposits and fixed deposits which gets low returns but
money is safe. People with moderate risk appetite found to be park their money in mutual
funds and gold. People having high risk appetite tend to invest in equity.
➢ SOURCE OF INFORMATION
Conclusion:-
Here its seen that most of the people rely on information provided by their
friends or relatives and information provided by the broker. This is not a good sign from
investment point of view because second hand information can be wrong or it may not reach
on time. This also shows that people do not read news paper regularly and spend very less
time to think about their investment.

➢ GENERAL FINANCIAL AWARENESS

In this section few basic financial questions were asked which are as follows
Name of any group B company listed on BSE?
Basic question related to PE ratio?
Fixed deposit’s offered by companies are unsecured or secured?
Understanding of financial terminology used in advertisement?

Conclusion:-
The reply was very much expected as it was found that most of the people do not
follow news paper regularly. As a result it was found that majority of the people do not have
basic financial awareness, which again is not a good sign from investment point of view.

➢ MAJOR FINANCIAL GOALS

Conclusion:-
From the above chart we can see that majority of the people has house as their
major financial goal followed by education/marriage of the children, now these goals are
long term goals and require good planning. Surprisingly only 12% people have their
retirement planned.

➢ SATISFACTION FROM SERVICE THEY AR EGETTING CURRENTLY

Conclusion:-
This question was for the people who take services of brokers to invest their
money. majority of the people are moderately satisfied this indicates that their is a scope of
improvement in broker services currently available in the market.
 ANALYSIS OF IT SECTOR AND BALANCE SHEET ANALYSIS

➢ OVERVIEW OF IT SECTOR

Information technology (IT), as defined by the Information Technology Association

of America (ITAA), is "the study, design, development, implementation, support or
management of computer-based information systems, particularly software applications and
computer hardware." IT deals with the use of electronic computers and computer software to
convert, store, protect, process, transmit, and securely retrieve information.

Today, the term information technology has ballooned to encompass many aspects of
computing and technology, and the term has become very recognizable. The information
technology umbrella can be quite large, covering many fields. IT professionals perform a
variety of duties that range from installing applications to designing complex computer
networks and information databases. A few of the duties that IT professionals perform may
include data management, networking, engineering computer hardware, database and
software design, as well as the management and administration of entire systems.

When computer and communications technologies are combined, the result is

information technology, or "infotech". Information Technology (IT) is a general term that
describes any technology that helps to produce, manipulate, store, communicate, and/or
disseminate information. Presumably, when speaking of Information Technology (IT) as a
whole, it is noted that the use of computers and information are associated. The term
Information Technology (IT) is sometimes said to have been coined by Jim Domsic of
Michigan in November 1981. Domsic, who worked as a computer manager for an
automotive related industry, is supposed to have created the term to modernize the outdated
phrase "data processing". The Oxford English Dictionary, however, in defining information
technology as "the branch of technology concerned with the dissemination, processing, and
storage of information, esp. by means of computers" provides an illustrative quote from the
year 1958 (Leavitt & Whisler in Harvard Business Rev. XXXVI. 41/1 "The new technology
does not yet have a single established name. We shall call it information technology.") that
predates the so-far unsubstantiated Domsic coinage.

In recent years ABET and the ACM have collaborated to form accreditation and
curriculum standards for degrees in Information Technology as a distinct field of study
separate from both Computer Science and Information Systems. SIGITE is the ACM
working group for defining these standards.

Over the past decade, the Information Technology (IT) industry has become one of
the fastest growing industries in India, propelled by exports (the industry accounted for more
than a quarter of India’s services exports in 2004-05). The key segments that have
contributed significantly (96 percent of total) to the industry’s exports include – Software and
services (IT services) and IT-enabled services (ITeS) ie business services. Over a period of
time, India has established itself as a preferred global sourcing base in these segments and
they are expected to continue to fuel growth in the future.

These segments have been evolving over the years into a sophisticated model of
operations. Indian IT and ITES companies have created global delivery models (onsite-near
shore-offshore), entered into long term engagements with customers, expanded their
portfolio of services offerings, built scale, extended service propositions beyond cost savings
to quality and innovation, evolved their pricing models and have tried to find sustainable
solutions to various issues such as risk management, human capital attraction and retention
and cost management.
➢ MARKET OVERVIEW

Over the past decade, the Information Technology (IT) industry has become one of
the fastest growing industries in India, propelled by exports (the industry accounted for more
than a quarter of India’s services exports in 2004-05). The key segments that have
contributed significantly (96 percent of total) to the industry’s exports include – Software and
services (IT services) and IT-enabled services (ITeS) i.e. business services. Over a period of
time, India has established itself as a preferred global sourcing base in these segments and
they are expected to continue to fuel growth in the future.
➢ COMPARISON OF THE IT SECTORS ACROSS THE WORLD

The Indian information and technology industry has played a key role in putting India
on the global map. Thanks to the success of the IT industry, India is now a power to reckon
with. According to the National Association of Software and Service Companies
(NASSCOM), the apex body for software services in India, the revenue of the information
technology sector has grown from 1.2 per cent of the gross domestic product (GDP) in FY
1997-98 to an estimated 5.5 per cent in FY 2007-08. The net value added by this sector, to
the economy, is estimated to be 3.3 to 3.9 per cent for FY 2007-08.
 The phenomenal growth of the Indian IT Software & Services and ITES-BPO sector
has had a perceptible multiplier effect on the Indian economy as a whole. In addition to the
direct positive impact on national income, the sector has grown to become the biggest
employment generator, and has spawned the mushrooming of several ancillary industries
such as transportation, real estate and catering, and has created a rising class of youthful
consumers with high disposable incomes. This, in turn, has triggered a rise in direct-tax
collections and propelled an increase in consumer spending.

The total IT Software and Services employment is expected to reach the 2- million
mark in 2007-08 (excluding employment in the hardware sector), as against 1.63 million in
2006-07, a growth of 22.7 per cent year-on-year. This represents a net addition of 375,000
professionals to the industry employee base, this year. The indirect employment attributed by
the sector is estimated to about 8 million in year 2007-08. This translates to the creation of
about 10 million job opportunities attributed to the growth of this sector. The Indian IT
industry is recognized the world over for its quality. Today, India leads the world in terms of
the number of quality certifications achieved by centers in any single country. As of
December 2007, over 498 India-based centers (both Indian firms as well as MNC-owned
captives) had acquired quality certifications with 85 companies certified at Software
Engineering Institute (SEI), Carnegie Mellon Capability Maturity Model (CMM) Level 5 –
higher than any other country.

India's IT growth in the world is primarily dominated by IT software and services

such as Custom Application Development and Maintenance (CADM), System Integration, IT
Consulting, Application Management, Infrastructure Management Services, Software testing,
Service-oriented architecture and Web services. The government expects the exports
turnover to touch US$ 80 billion by 2011, growing at an annual rate of 30 per cent per
annum, from the earlier few million dollars worth exports in early 1990s.
➢ AS PER NASSCOM'S LATEST FINDINGS:

Indian IT-BPO sector grew by 33 per cent in FY 2007-08 to reach US$ 64 billion in
aggregate revenue (including hardware). Of this, the software and services segment
accounted for US$ 52 billion, growing by 28 per cent over FY 2006-07.

Software and services exports (including exports of IT services, BPO, engineering

services and R&D and software products) reached US$ 40.4 billion, contributing
nearly 63 per cent to the overall IT-BPO revenue aggregate.

IT-BPO exports (including hardware exports) grew by 28 per cent from US$ 31.8
billion in FY 2006-07 to US$ 40.9 billion in FY 2007-08.

While the US (61 per cent) and the UK (18 per cent) remained the largest IT-BPO
export markets in FY 2006-07, the industry is now making a mark in other countries
as well - with exports to Continental Europe in particular, growing at a compound
annual growth rate (CAGR) of more than 55 per cent over FY 2004-07.

Domestic IT market (including hardware) reached US$ 23.1 billion in FY 2007-08 as

against US$ 16.2 billion in FY 2006-07, a growth of 43 per cent. Hardware remained
the largest segment of the domestic market with a growth rate of 44 per cent in FY
2007-08. Software and services spending grew by over 41 per cent during the year.

Moreover, according to a study by Springboard Research, the Indian IT services

market is estimated to remain the fastest growing in the Asia-Pacific region with a
CAGR of 18.6 per cent.
Further I have chose 3 Indian IT giant for there balance sheet analysis
➢ OVERVIEW COMPANY TCS

Tata Consultancy Services Limited (TCS) is an Indian software services and

consulting company. It is one of India's oldest and largest providers of information
technology and business process outsourcing services. As of 2007, it is Asia's largest
information technology firm. TCS, a part of the Tata group, provides information technology
and management consultation services to organizations in more than 53 countries. The
company offers e-business, application development and maintenance, architecture and
technology consulting, engineering, security, infrastructure development and management
and quality consulting services.

In addition, TCS offers software packages for electronic banking, insurance billing,
customer relationship management, and hospital management. It caters to finance and
banking, insurance, telecommunication, transportation, retail, manufacturing,
pharmaceutical, energy and utility industries. The company generates around 19% of its
revenues from the manufacturing industry, and 6% of its revenues from its engineering and
industrial services (EIS) business.

The company was founded in the year 1968 and is based in Mumbai. It has over
89,000 trained IT consultants in 47 countries. The company generated consolidated revenues
of USD 4.3 billion for the fiscal year ended March 2007. TCS went public in 2004, raising
USD 1.17 billion in one of the largest initial public offerings.

➢ HISTORY
 Tata Consultancy Services was established in the year 1968. It began as the "Tata
Computer Centre", a division of the Tata Group, whose main business was to provide
computer services to other group companies. However, the potential of computerization and
computer services was realized early on, and an electrical engineer from the Tata Electric
Companies, Fakir Chand Kohli, was brought in as the first General Manager. Soon after, the
company was named Tata Consultancy Services. TCS's first software export project was
undertaken in 1974 when it converted the Hospital Information System from Burroughs
Medium Systems COBOL to Burroughs Small Systems COBOL. This project was carried
out entirely in TCS Mumbai on the ICL 1903 Computer. In 1980,

In 1999, TCS started an annual IT Quiz called TCS IT WIZ in India. It has been a
great success and a matter of craze among young students inclined towards IT.[1]

In 2004, TCS became a publicly listed company.

In 2008 Tata Consultancy Services was involved in a variety of industries. Some of

these included telecom, government, insurance, manufacturing, high tech, and banking and
financial services. They offer product life cycle management and systems integration to their
customers.
➢ FINANCIALS

Net

Sales, Total Income, Net Income and Profit Margin in 04/05, 05/06, 06/07 and 07/08 for TCS.

In 2007/08, Tata Consultancy Services had a total income of Rs. 23,349 crore, up
23.4% from Rs. 18,914 crore in 2006/07.[1] Its net income was Rs. 5026 crore with a net
profit margin of 22.0%. In 2006/07, the company's total income was up 41.3% from Rs.
13,386 in 2005/06.[1] Its net income was Rs. 4213 crore with a net profit margin of 22.5%.

➢ I
N
D
U
S
T
R
I
E
S
Tata Consultancy Services sells to companies in the following industries:
Banking, Financial Services and Insurance (Rs. 10,091 crore or 44.1% of net sales)

Manufacturing (Rs. 2,245 crore or 9.8% of net sales)

Retail and Distribution (Rs. 1,476 crore or 6.5% of net sales)

Telecom (Rs. 3,691 crore or 16.2% of net sales)

Others (Rs. 5,360 crore or 23.4% of net sales)

➢ GEOGRAPHIES

In 2007/08, revenues from customers in the Americas amounted to Rs. 12,612 crore
or 55.2% of net sales. The company also had revenues from customers in Europe (Rs. 6,628
crore or 29.0% of net sales), India (Rs. 2,046 crore or 8.9% of net sales) and Others (Rs.
1,578 crore or 6.9% of net sales).

On October 8, 2008, Tata Consultancy Services (TCS), a leading IT services,

business solutions and outsourcing firm, and Citigroup Inc., a leading global financial
services company, today announced that they have reached an agreement for TCS to acquire
all of Citi's interest in Citigroup Global Services Limited (CGSL), the India-based captive
business processing outsourcing (BPO) arm of Citi for all cash consideration of
approximately $505 million, subject to closing adjustments. In addition to the sale, Citi has
signed an agreement for TCS to provide, through CGSL, process outsourcing services to Citi
and its affiliates in an aggregate amount of US$2.5 billion over a period of 9.5 years. The
agreement builds upon the existing relationship between Citi and TCS whereby TCS
provides application development, infrastructure support, help desk and other process
outsourcing services to Citi.
➢ BALANCE SHEET OF TCS

Balance Sheet ------------------- in Rs. Cr. -------------------

Mar '04 Mar '05 Mar '06 Mar '07 Mar '08

12 mths 12 mths 12 mths 12 mths 12 mths

Sources Of Funds

Total Share Capital 36.44 48.01 48.93 97.86 197.86

Equity Share Capital 36.44 48.01 48.93 97.86 97.86

Share Application Money 0.00 0.00 0.00 0.00 0.00

Preference Share Capital 0.00 0.00 0.00 0.00 100.00

Reserves 10.64 3,273.04 5,560.40 7,961.13 10,806.95

Revaluation Reserves 0.00 0.00 0.00 0.00 0.00

Networth 47.08 3,321.05 5,609.33 8,058.99 11,004.81

Secured Loans 0.00 111.01 26.52 41.76 9.27

Unsecured Loans 375.00 9.73 8.98 8.98 8.98

Total Debt 375.00 120.74 35.50 50.74 18.25

Total Liabilities 422.08 3,441.79 5,644.83 8,109.73 11,023.06

Mar '04 Mar '05 Mar '06 Mar '07 Mar '08

12 mths 12 mths 12 mths 12 mths 12 mths

Application Of Funds

Gross Block 226.50 1,041.09 1,695.13 2,315.36 3,240.64

Less: Accum. Depreciation 0.95 132.93 525.35 854.75 1,300.11

Net Block 225.55 908.16 1,169.78 1,460.61 1,940.53

Capital Work in Progress 0.00 120.28 280.00 757.85 889.74

Investments 417.39 1,404.42 1,963.52 3,252.04 4,509.33

Inventories 0.00 0.00 22.94 12.06 17.19

Sundry Debtors 0.25 1,463.45 2,326.63 2,799.80 3,747.01

Cash and Bank Balance 2.25 120.66 170.61 314.66 402.24

Total Current Assets 2.50 1,584.11 2,520.18 3,126.52 4,166.44

Loans and Advances 9.77 735.75 1,490.57 1,925.74 3,104.74

Fixed Deposits 0.00 0.08 0.56 242.48 125.28

Total CA, Loans & Advances 12.27 2,319.94 4,011.31 5,294.74 7,396.46

Deffered Credit 0.00 0.00 0.00 0.00 0.00

Current Liabilities 228.20 783.43 1,239.24 1,750.46 2,525.56

Provisions 4.93 527.58 540.54 905.05 1,187.44

Total CL & Provisions 233.13 1,311.01 1,779.78 2,655.51 3,713.00

Net Current Assets -220.86 1,008.93 2,231.53 2,639.23 3,683.46

Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00

Total Assets 422.08 3,441.79 5,644.83 8,109.73 11,023.06

Contingent Liabilities 0.33 407.76 851.64 3,003.25 2,726.11

Book Value (Rs) 12.92 69.17 114.64 82.35 111.43

➢ P&L A/C OF TCS

Profit & Loss account ------------------- in Rs. Cr. -------------------

Mar '04 Mar '05 Mar '06 Mar '07 Mar '08

12 mths 12 mths 12 mths 12 mths 12 mths

Income

Sales Turnover 0.00 8,051.10 11,236.01 14,942.09 18,536.55

Excise Duty 0.00 0.00 5.51 2.12 2.83

Net Sales 0.00 8,051.10 11,230.50 14,939.97 18,533.72

Other Income 17.74 -152.65 -1.19 216.04 440.45

Stock Adjustments 0.00 0.00 4.14 -2.79 -0.04

Total Income 17.74 7,898.45 11,233.45 15,153.22 18,974.13

Expenditure
Raw Materials 0.00 0.00 161.50 22.02 45.81

Power & Fuel Cost 0.00 44.59 66.85 93.89 135.57

Employee Cost 0.00 3,967.52 5,113.96 6,186.85 6,015.19

Other Manufacturing Expenses 0.00 487.18 793.01 3,095.82 5,687.82

Selling and Admin Expenses 0.01 513.88 756.39 765.08 991.43

Miscellaneous Expenses 0.02 629.48 1,005.52 472.04 632.25

Preoperative Exp Capitalised 0.00 0.00 0.00 0.00 0.00

Total Expenses 0.03 5,642.65 7,897.23 10,635.70 13,508.07

Mar '04 Mar '05 Mar '06 Mar '07 Mar '08

12 mths 12 mths 12 mths 12 mths 12 mths

Operating Profit -0.03 2,408.45 3,337.41 4,301.48 5,025.61

PBDIT 17.71 2,255.80 3,336.22 4,517.52 5,466.06

Interest 0.20 10.40 4.49 3.43 3.42

PBDT 17.51 2,245.40 3,331.73 4,514.09 5,462.64

Depreciation 0.84 133.22 257.38 343.41 458.78

Other Written Off 0.00 0.00 0.00 0.00 0.00

Profit Before Tax 16.67 2,112.18 3,074.35 4,170.68 5,003.86

Extra-ordinary items 0.00 0.00 -38.03 -2.59 -37.52

PBT (Post Extra-ord Items) 16.67 2,112.18 3,036.32 4,168.09 4,966.34

Tax 1.49 280.76 319.45 410.80 457.58

Reported Net Profit 15.18 1,831.42 2,716.87 3,757.29 4,508.76

Total Value Addition 0.03 5,642.65 7,735.73 10,613.68 13,462.26

Preference Dividend 0.00 0.00 0.00 0.00 0.08

Equity Dividend 4.38 552.13 660.56 1,125.39 1,370.05

Corporate Dividend Tax 0.56 74.46 92.64 169.48 232.85

Per share data (annualised)

Shares in issue (lakhs) 364.40 4,801.15 4,893.05 9,786.10 9,786.10

Earning Per Share (Rs) 4.17 38.15 55.53 38.39 46.07

Equity Dividend (%) 12.00 1,150.00 1,350.00 1,150.00 1,400.00

Book Value (Rs) 12.92 69.17 114.64 82.35 111.43

➢ DIVIDEND

Based on the Companys performance, the Directors are pleased to recommend, for
approval of the Members a Final Dividend of Rs.5/- per share on 97,86,10,498 Equity
Shares of Re.1/- each of the Company for the financial year 2007-08. The Final Dividend on
the Equity Shares, if declared as above, would involve an outflow of Rs.489.31 crore towards
dividend and Rs.83.18 crore towards dividend tax, resulting in a total outflow of Rs.572.49
crore. The total outflow on dividend on Equity Shares of the Company for the year 2007-08
would translate to 35.55% of the profits of the Company. A table on the dividends paid by
the Company on Equity Shares during the year and during the previous year is given below:

(Rs. in Crore)
2007-06
No. of Dividend Dividend
shares per share Amount
(Rs.)

First Interim 97,86,10,498 3.00 293.58

Dividend
Second Interim -do- 3.00 293.58
Dividend
Third Interim -do- 3.00 293.88
Dividend
sub-total 880.74
Final Dividend 97,86,10,498 5.00 489.31
Total 14.00 1370.05

The Redeemable Preference Shares which have been allotted on March 28, 2008
are entitled to pro-rata dividend for the year 2007-08, from the date of their allotment. The
Redeemable Preference Shares are entitled to a fixed cumulative dividend of 1% per annum
and a variable non-cumulative dividend of 1% of the difference between the rate of dividend
declared during the year on the Equity Shares of the Company and the average rate of
dividend declared on the Equity Shares of the Company for the three years preceding the
year of issue of the said Redeemable Preference Shares. Accordingly, the Directors have
recommended, for approval of the Members, a Dividend of Re.0.07 per share on
100,00,00,000 Redeemable Preference Shares of Re.1/- each on a pro-rata basis for the
Financial Year 2007-08.
➢ COMPARISION OF YEAR BY YEAR DIVIDENDS

Dividends Declared

Announcemen Effective Dividend Type Dividend (%) Remarks

t Date
Date

07-01-09 28-01-09 Interim 300.00 Third Interim Dividend

17-07-08 29-10-08 Interim 300.00 Second Interim Dividend

21-04-08 18-06-08 Final 500.00 -

08-01-08 23-01-08 Interim 300.00 Third Interim Dividend

03-10-07 22-10-07 Interim 300.00 Second Interim Dividend

06-07-07 27-07-07 Interim 300.00 -

16-04-07 15-06-07 Final 400.00 AGM

08-01-07 22-01-07 Interim 300.00 Third Interim Dividend

09-10-06 23-10-06 Interim 300.00 Second Interim Dividend

11-07-06 28-07-06 Interim 300.00 Interim Dividend (Pre Bonus) & Bonus issue

17-04-06 16-06-06 Final 450.00 Final Dividend of Rs.4.50 per equity share of
Re.1/- each

04-01-06 18-01-06 Interim 300.00 Third Interim Dividend of Rs.3.00 per equity
share of Re.1/- each.

04-10-05 18-10-05 Interim 300.00 Second Interim Dividend

18-07-05 18-08-05 Interim 300.00 -

19-04-05 06-07-05 Final 500.00 AGM

13-01-05 03-02-05 Interim 350.00 Second Interim Dividend

➢ CURRENT STATUS OF THE COMPANY

Market Cap 52,844.97 * EPS (TTM) 48.00 * P/E 11.25 * P/C 10.25

* Book Value 111.43 * Price/Book 4.85 Div (%) 1,400.00 Div Yield (%) 2.59
Market Lot 1.00 Face Value 1.00 Industry P/E 10.31

(as on 15th may 2009)

➢ OVERVIEW OF INFOSYS TECHNOLOGIES

Infosys Technologies is a leading Information Technology (IT) company which

provides end-to-end business solutions that leverage technology. Infosys serves the client
globally and as one of the pioneers in strategic offshore outsourcing of software services, it
has leveraged the global trend of offshore outsourcing. Infosys helps large global
corporations and new generation technology companies in building new products or services
and in implementing prudent business and technology strategies in the contemporary
dynamic digital environment.

➢ SERVICES OFFERED BY INFOSYS ARE

Application Development & Maintenance,

Corporate Performance Management,

Enterprise Quality Services

Infrastructure Services
 Packages Application Services

Product Engineering

Systems Integration

➢ INDUSTRIES SERVED BY INFOSYS INCLUDE:

Aerospace & Defense

Automotive

Banking and Capital Markets

Communication Services

Consumer Packaged Goods

Discrete Manufacturing

Energy

Healthcare

High Technology

Hospitality & Leisure

Insurance

Life Sciences

Media & Entertainment

Resources

Retail

Transportation Services

Utility

Infosys was founded on July 2, 1981 by N.R. Narayan Murthy and six of his
colleagues, namely, Nandan Nilekani, N. S. Raghavan, S. Gopalakrishnan, S. D. Shibulal, K.
Dinesh and Ashok Arora. Narayan Murthy borrowed Rs.10,000 from his wife Sudha Murthy
as seed capital for the company. In 1987 Infosys got its first foreign client, Data Basics
Corporation from the United States and opened its first office in the USA. In 1993, Infosys
became a public limited company and successfully completed IPO in India. In the same year
Infosys received ISO 9001/TickIT certification. Infosys set up its first office in Europe in
Milton Keynes, UK in 1996. In 1999, Infosys crossed $100 Million in annual revenue and
was listed on NASDAQ. It was Indian company to be listed on NASDAQ. In the same year
Infosys opened offices in Germany, Sweden, Belgium, and Australia. In 2000, Infosys
crossed $200 Million in annual revenue. In 2004, Infosys crossed US $1 Billion in annual
revenue. In 2006, Infosys completed 25 years of its existence and its revenues crossed $ 2
billion. Today Infosys has more than 50,000 employees and has presence in more than 20
countries across the world. Its corporate headquarters is in Bangalore. Infosys follows
highest standards of corporate governance. No relative of the founders is eligible to work in
Infosys and all the employees including founders are to retire at the age of 60. Some of the
persons occupying key positions in Infosys are: N. R. Narayan Murthy (Founder, Non
Executive Chairman and Chief Mentor), Nandan Nilekani (Co-founder and Co-Chairman), S.
"Kris" Gopalakrishnan (Co-founder, CEO and MD), and S. D. Shibulal (Co-founder and
COO).

➢ MAJOR ACHIEVEMENTS OF INFOSYS

First Indian company to be listed on NASDAQ

First company to be awarded the "National Award for Excellence in Corporate

Governance" conferred by the Government of India in 2000.

Rated Best Employer of India in a study by Business Today-Hewitt Associates in

2001.

First rank in the Business World's survey of "India's Most Respected Company" in
2002.
➢ BALANCE SHEET OF INFOSYS

Balance Sheet ------------------- in Rs. Cr. -------------------

Mar '04 Mar '05 Mar '06 Mar '07 Mar '08

12 mths 12 mths 12 mths 12 mths 12 mths

Sources Of Funds

Total Share Capital 33.32 135.29 138.00 286.00 286.00

Equity Share Capital 33.32 135.29 138.00 286.00 286.00

Share Application Money 0.00 0.00 0.00 0.00 0.00

Preference Share Capital 0.00 0.00 0.00 0.00 0.00

Reserves 3,220.11 5,106.44 6,759.00 10,876.00 13,204.00

Revaluation Reserves 0.00 0.00 0.00 0.00 0.00

Networth 3,253.43 5,241.73 6,897.00 11,162.00 13,490.00

Secured Loans 0.00 0.00 0.00 0.00 0.00

Unsecured Loans 0.00 0.00 0.00 0.00 0.00

Total Debt 0.00 0.00 0.00 0.00 0.00

Total Liabilities 3,253.43 5,241.73 6,897.00 11,162.00 13,490.00

 Mar '04 Mar '05 Mar '06 Mar '07 Mar '08

12 mths 12 mths 12 mths 12 mths 12 mths

Application Of Funds

Gross Block 1,570.23 2,182.72 2,837.00 3,889.00 4,508.00

Less: Accum. Depreciation 803.41 1,005.82 1,275.00 1,739.00 1,837.00

Net Block 766.82 1,176.90 1,562.00 2,150.00 2,671.00

Capital Work in Progress 203.48 317.52 571.00 957.00 1,260.00

Investments 1,027.38 1,328.70 876.00 839.00 964.00

Inventories 0.00 0.00 0.00 0.00 0.00

Sundry Debtors 632.51 1,252.82 1,518.00 2,292.00 3,093.00

Cash and Bank Balance 338.69 268.15 544.00 680.00 657.00

Total Current Assets 971.20 1,520.97 2,062.00 2,972.00 3,750.00

Loans and Advances 868.75 1,030.29 1,308.00 1,241.00 2,804.00

Fixed Deposits 1,299.32 1,213.39 2,735.00 4,827.00 5,772.00

Total CA, Loans & Advances 3,139.27 3,764.65 6,105.00 9,040.00 12,326.00

Deffered Credit 0.00 0.00 0.00 0.00 0.00

Current Liabilities 560.44 578.56 808.00 1,162.00 1,483.00

Provisions 1,323.08 767.48 1,409.00 662.00 2,248.00

Total CL & Provisions 1,883.52 1,346.04 2,217.00 1,824.00 3,731.00

Net Current Assets 1,255.75 2,418.61 3,888.00 7,216.00 8,595.00

Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00

Total Assets 3,253.43 5,241.73 6,897.00 11,162.00 13,490.00

Contingent Liabilities 197.02 289.87 523.00 670.00 603.00

Book Value (Rs) 488.20 193.73 250.29 195.41 235.84

➢ P&L A/C OF INFOSYS

Profit & Loss account ------------------- in Rs. Cr. -------------------

Mar '04 Mar '05 Mar '06 Mar '07 Mar '08
 12 mths 12 mths 12 mths 12 mths 12 mths

Income

Sales Turnover 4,760.89 6,859.66 9,028.00 13,149.00 15,648.00

Excise Duty 0.00 0.00 0.00 0.00 0.00

Net Sales 4,760.89 6,859.66 9,028.00 13,149.00 15,648.00

Other Income 117.72 172.79 144.00 379.00 683.00

Stock Adjustments 0.00 0.00 0.00 0.00 0.00

Total Income 4,878.61 7,032.45 9,172.00 13,528.00 16,331.00

Expenditure

Raw Materials 9.13 13.55 16.00 22.00 18.00

Power & Fuel Cost 28.72 40.20 62.00 88.00 106.00

Employee Cost 2,367.35 3,183.25 4,274.00 6,316.00 7,771.00

Other Manufacturing Expenses 240.17 563.47 792.00 1,290.00 1,443.00

Selling and Admin Expenses 499.86 697.15 773.49 1,050.53 1,214.00

Miscellaneous Expenses 31.26 35.84 120.51 156.47 132.00

Preoperative Exp Capitalised 0.00 0.00 0.00 0.00 0.00

Total Expenses 3,176.49 4,533.46 6,038.00 8,923.00 10,684.00

Mar '04 Mar '05 Mar '06 Mar '07 Mar '08

12 mths 12 mths 12 mths 12 mths 12 mths

Operating Profit 1,584.40 2,326.20 2,990.00 4,226.00 4,964.00

PBDIT 1,702.12 2,498.99 3,134.00 4,605.00 5,647.00

Interest 0.75 1.09 1.00 1.00 1.00

PBDT 1,701.37 2,497.90 3,133.00 4,604.00 5,646.00

Depreciation 230.90 268.22 409.00 469.00 546.00

Other Written Off 0.00 0.00 0.00 0.00 0.00

Profit Before Tax 1,470.47 2,229.68 2,724.00 4,135.00 5,100.00

Extra-ordinary items 0.49 -4.59 0.00 -5.00 0.00

PBT (Post Extra-ord Items) 1,470.96 2,225.09 2,724.00 4,130.00 5,100.00

Tax 227.49 325.30 303.00 352.00 630.00

Reported Net Profit 1,243.47 1,904.38 2,421.00 3,783.00 4,470.00

Total Value Addition 3,167.36 4,519.91 6,022.00 8,901.00 10,666.00

Preference Dividend 0.00 0.00 0.00 0.00 0.00

Equity Dividend 862.46 309.80 1,238.00 649.00 1,902.00

Corporate Dividend Tax 110.50 42.17 174.00 102.00 323.00

Per share data (annualised)

Shares in issue (lakhs) 666.41 2,705.71 2,755.55 5,712.10 5,719.96

Earning Per Share (Rs) 186.59 70.38 87.86 66.23 78.15

Equity Dividend (%) 2,590.00 230.00 900.00 230.00 665.00

Book Value (Rs) 488.20 193.73 250.29 195.41 235.84

➢ DIVIDEND

In October 2007, we paid an interim dividend of Rs. 6/- per share (120% on par
value of Rs. 5/-). We recommend a final dividend of Rs. 7.25 per share (145% on par value
of Rs. 5/- per share) and a special dividend of Rs. 20/- per share (400% on par value of Rs.
5/-
each). We recommended the special dividend on crossing a significant milestone
of reaching US $ 1 billion in net profits. The total dividend amount is Rs. 1,902 crore, as
against Rs. 649 crore for the previous year. Dividend (including dividend tax) as a
percentage of profit after tax is 49.8% (19.8% excluding the special dividend) as compared
to 19.9% in the previous year.

➢ COMPARISION OF THE DIVIDENDS

Dividends Declared

Announcement Effective Dividend Type Dividend (%) Remarks

Date Date

25-09-08 16-10-08 Interim 200.00 -

15-04-08 29-05-08 Final 545.00 (Final Dividend 145% + Special Dividend

400%)

26-09-07 18-10-07 Interim 120.00 -

13-04-07 06-06-07 Final 130.00 AGM

28-09-06 19-10-06 Interim 100.00 -

14-04-06 25-05-06 Final 770.00 Silver Jubilee special dividend of Rs. 30 per
share (600% on par value of Rs. 5 per share) &
 final dividend of Rs. 8.50/- per share (170% on
an equity share par value Rs. 5/-).

23-09-05 17-10-05 Interim 130.00 -

14-04-05 01-06-05 Final 130.00 Final dividend of Rs. 6.50 per share (130% on
an equity share par value Rs. 5/-).

➢ CURRENT STATUS OF THE COMPANY(as on 15th may 2009)

Market Cap 75,820.60 * EPS (TTM) 94.86 * P/E 13.96 * P/C 12.68

* Book
235.58 * Price/Book 5.62 Div(%) 665.00 Div Yield(%) 2.51
Value

Market Lot 1.00 Face Value 5.00 Industry P/E 10.31

➢ OVERVIEW OF WIPRO

Wipro Technologies is a global services provider delivering technology-driven

business solutions. Wipro is the No.1 provider of integrated business, technology and process
solutions on a global delivery platform. Azim Premji is the Chairman of Wipro
Technologies. He took over the mantle of leadership of Wipro at the age of 21 in 1966.
Under his leadership, the fledgling US$ 2 million hydrogenated cooking fat company has
grown to a US$1.76 billion IT Services organization serving customers across the globe.
Wipro is presently ranked among the top 100 Technology companies in the world. It has
66,000+ employees, serves 592 clients, and has 46 development centers across globe.
➢ WIPRO TECHNOLOGIES DEALS IN FOLLOWING BUSINESSES

• IT Services:
Wipro provides complete range of IT Services to the organization. The range of
services extends from Enterprise Application Services (CRM, ERP, e-Procurement and
SCM) to e-Business solutions. Wipro's enterprise solutions serve a host of industries such as
Energy and Utilities, Finance, Telecom, and Media and Entertainment.

• Product Engineering Solutions:

Wipro is the largest independent provider of R&D services in the world. Using
"Extended Engineering" model for leveraging R&D investment and accessing new
knowledge and experience across the globe, people and technical infrastructure, Wipro
enables firms to introduce new products rapidly.

• Technology Infrastructure Service:

Wipro's Technology Infrastructure Services (TIS) is the largest Indian IT
infrastructure service provider in terms of revenue, people and customers with more than 200
customers in US, Europe, Japan and over 650 customers in India.

• Business Process Outsourcing:

Wipro provides business process outsourcing services in areas Finance &
Accounting, Procurement, HR Services, Loyalty Services and Knowledge Services. In 2002,
Wipro acquiring Spectramind and became one of the largest BPO service players.

• Consulting Services:
Wipro offers services in Business Consulting, Process Consulting, Quality
Consulting, and Technology Consulting.

➢ GROUP COMPANIES OF WIPRO:

• Wipro Infrastructure Engineering:
It has emerged as the leader in the hydraulic cylinders and truck tipping systems
market in India.

• Wipro Infotech:
It is one of the leading manufacturers of computer hardware and a provider of
systems integration services in India.

• Wipro Lighting:
 It manufactures and markets the Wipro brand of luminaries. Wipro Lighting offers
lighting solutions across various application areas such as commercial lighting for modern
work spaces, manufacturing and pharmaceutical companies, designer petrol pumps and
outdoor architecture.

➢ ACHIEVEMENTS OF WIPRO

First Indian IT Service Provider to be awarded Gold-Level Status in Microsoft's

Windows Embedded Partner Program.
World's largest independent R&D Services Provider.
World's 1st PCMM Level 5 software company.
World's 1st IT Services Company to use Six Sigma.
The first to get the BS15000 certification for its Global Command Centre.
Among the top 3 offshore BPO service providers in the world.
Only Indian company to be ranked among the 'Top 10 Global Outsourcing Providers'
in the IAOP-Fortune Global 100 listings.
First company in the world to be certified in BS 7799 (2002) security standards.
➢ BALANCE SHEET FOR WIPRO

Balance Sheet ------------------- in Rs. Cr. -------------------

Mar '04 Mar '05 Mar '06 Mar '07 Mar '08

12 mths 12 mths 12 mths 12 mths 12 mths

Sources Of Funds

Total Share Capital 46.55 140.71 285.15 291.80 292.30

Equity Share Capital 46.55 140.71 285.15 291.80 292.30

Share Application Money 0.00 1.21 7.49 3.50 58.00

Preference Share Capital 0.00 0.00 0.00 0.00 0.00

Reserves 3,461.04 4,751.73 6,135.30 9,025.10 11,260.40

Revaluation Reserves 0.00 0.00 0.00 0.00 0.00

Networth 3,507.59 4,893.65 6,427.94 9,320.40 11,610.70

Secured Loans 94.75 21.59 45.06 23.20 4.00

Unsecured Loans 5.94 40.50 5.10 214.80 3,818.40

Total Debt 100.69 62.09 50.16 238.00 3,822.40

Total Liabilities 3,608.28 4,955.74 6,478.10 9,558.40 15,433.10

Mar '04 Mar '05 Mar '06 Mar '07 Mar '08

12 mths 12 mths 12 mths 12 mths 12 mths

Application Of Funds

Gross Block 1,333.68 1,763.49 2,364.53 1,645.90 2,282.20

Less: Accum. Depreciation 678.66 855.53 1,246.27 0.00 0.00

Net Block 655.02 907.96 1,118.26 1,645.90 2,282.20

Capital Work in Progress 139.71 250.24 612.36 989.50 1,335.00

Investments 2,456.03 2,859.51 3,459.20 4,348.70 4,500.10

Inventories 102.08 127.37 148.65 240.40 448.10

Sundry Debtors 1,062.34 1,406.51 1,968.07 2,582.30 3,646.60

Cash and Bank Balance 290.09 536.89 822.42 1,849.20 3,732.10

Total Current Assets 1,454.51 2,070.77 2,939.14 4,671.90 7,826.80

Loans and Advances 583.90 602.08 1,136.96 1,666.50 4,231.30

Fixed Deposits 0.01 0.01 0.58 0.00 0.00

Total CA, Loans & Advances 2,038.42 2,672.86 4,076.68 6,338.40 12,058.10

Deffered Credit 0.00 0.00 0.00 0.00 0.00

Current Liabilities 856.32 1,211.14 1,776.83 2,998.90 3,361.60

Provisions 824.57 523.70 1,011.56 765.20 1,380.70

Total CL & Provisions 1,680.89 1,734.84 2,788.39 3,764.10 4,742.30

Net Current Assets 357.53 938.02 1,288.29 2,574.30 7,315.80

Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00

Total Assets 3,608.29 4,955.73 6,478.11 9,558.40 15,433.10

Contingent Liabilities 387.99 676.65 509.18 661.60 749.90

Book Value (Rs) 150.70 69.54 45.03 63.86 79.05

➢ PROFIT AND LOSS A/C FOR WIPRO

Profit & Loss account ------------------- in Rs. Cr. -------------------

Mar '04 Mar '05 Mar '06 Mar '07 Mar '08

12 mths 12 mths 12 mths 12 mths 12 mths

Income

Sales Turnover 5,190.40 7,276.18 10,264.09 13,758.50 17,658.10

Excise Duty 55.51 43.02 36.97 74.60 165.50

Net Sales 5,134.89 7,233.16 10,227.12 13,683.90 17,492.60

Other Income 91.92 93.32 151.92 288.70 326.90

Stock Adjustments 11.79 9.29 24.21 86.30 187.00

Total Income 5,238.60 7,335.77 10,403.25 14,058.90 18,006.50

Expenditure

Raw Materials 858.07 1,194.77 1,391.88 1,975.30 3,139.30

Power & Fuel Cost 35.91 46.54 86.46 0.00 0.00

Employee Cost 864.44 2,878.53 4,279.03 5,768.20 7,409.10

Other Manufacturing Expenses 378.72 511.53 934.24 120.50 299.80

Selling and Admin Expenses 1,764.47 657.32 801.07 27.60 557.80

Miscellaneous Expenses 116.62 135.64 274.76 2,624.10 2,558.00

Preoperative Exp Capitalised -13.99 -37.12 0.00 0.00 0.00

Total Expenses 4,004.24 5,387.21 7,767.44 10,515.70 13,964.00

Mar '04 Mar '05 Mar '06 Mar '07 Mar '08
 12 mths 12 mths 12 mths 12 mths 12 mths

Operating Profit 1,142.44 1,855.24 2,483.89 3,254.50 3,715.60

PBDIT 1,234.36 1,948.56 2,635.81 3,543.20 4,042.50

Interest 3.52 5.57 3.13 7.20 116.80

PBDT 1,230.84 1,942.99 2,632.68 3,536.00 3,925.70

Depreciation 151.60 185.97 292.26 359.80 456.00

Other Written Off 0.00 0.00 0.00 0.00 0.00

Profit Before Tax 1,079.24 1,757.02 2,340.42 3,176.20 3,469.70

Extra-ordinary items -23.11 -7.06 -33.85 0.00 0.00

PBT (Post Extra-ord Items) 1,056.13 1,749.96 2,306.57 3,176.20 3,469.70

Tax 141.27 255.15 286.10 334.10 406.40

Reported Net Profit 914.88 1,494.82 2,020.48 2,842.10 3,063.30

Total Value Addition 3,146.15 4,192.44 6,375.55 8,540.40 10,824.70

Preference Dividend 0.00 0.00 0.00 0.00 0.00

Equity Dividend 675.00 351.79 712.88 873.70 876.50

Corporate Dividend Tax 86.48 49.34 99.98 126.80 148.90

Per share data (annualised)

Shares in issue (lakhs) 2,327.59 7,035.71 14,257.54 14,590.00 14,615.00

Earning Per Share (Rs) 39.31 21.25 14.17 19.48 20.96

Equity Dividend (%) 1,450.00 250.00 250.00 300.00 300.00

Book Value (Rs) 150.70 69.54 45.03 63.86 79.05

➢ DIVIDEND

Your Directors declared an Interim Dividend of Rs. 2 per equity share of Rs. 2 each
on October 19,2007- The record date for the purpose of payment of Interim Dividend was
fixed as October 26, 2007 and was paid to our shareholders who were on the Register of
Members as at the closing hours of October 26, 2007.

Your Directors have recommended a final Dividend of Rs. 4 per equity share of Rs.
2 each to be appropriated from the profits of the year 2007-08 subject to the approval of the
shareholders at the ensuing Annual General Meeting. The Dividend will be paid in
compliance with applicable regulations.

During the year 2007-08, unclaimed dividend of Rs. 54,725 was transferred to the
Investor Eduction and Protection Fund, as required by the Investor Education and Protection
Fund (Awareness and Protection of Investor) Rules, 2001.
Dividends Declared

Announcement Effective Dividend Type Dividend (%) Remarks

Date Date

21-04-08 27-06-08 Final 200.00 AGM

10-10-07 25-10-07 Interim 100.00 -

20-04-07 28-06-07 Final 50.00 AGM

14-03-07 26-03-07 Interim 250.00 -

19-04-06 29-06-06 Final 250.00 AGM

22-04-05 29-06-05 Final 250.00 AGM

➢ CURRENT STATUS OF THE COMPANY(as on 15th may 2009)

Market Cap 35,890.53 * EPS (TTM) 20.21 * P/E 12.13 * P/C 10.51

* Book Value 78.93 * Price/Book 3.11 Div(%) 300.00 Div Yield(%) 2.45

Market Lot 1.00 Face Value 2.00 Industry P/E 10.31

➢ WHAT IS IN THERE FOR THE SHARE HOLDERS?

IT sector is the most successful and the blooming sector from the last decade. It is
still an evergreen filed and hence has grabbed to the share holders’ attention. The main
variables why the sector is majorly invested in is because of the following variables:

➢ MARKET CAPITALISATION:

Market cap or market capitalization is simply the worth of a company in

terms of it’s shares! To put it in a simple way, if you were to buy all the shares of a
particular company, what is the amount you would have to pay? That amount is
called the “market capitalization”!

To calculate the market cap of a particular company, simply multiply the

“current share price” by the “number of shares issued by the company”! Just to give
you an idea, ONGC, has a market cap of “Rs.170,705.21 Cr” (when this article was
written)

Depending on the value of the market cap, the company will either be a “mid-
cap” or “large-cap” or “small-cap” company

(Rs.in crores)

Year TCS Infosys Wipro

2008 52844 72850 35890

➢ RESERVES AND SURPLUS

(Rs.in crores)

Year TCS Infosys Wipro

2006 5560 6759 6135
2007 7961 10876 9025
2008 10806 13204 11260
From the above data we can conclude that reseres and surplus of all the three companies are
increasing constantly every year.

➢ NET SALES
(Rs.in crores)

Year TCS Infosys Wipro

2006 11230 9028 10264
2007 14939 13149 13758
2008 18533 15648 17658

From the above data we can conclude the sales of all 3 companies are increasing every year
on a regular basis.

➢ NET PROFIT RATIO

The net profit ratio is net profit expressed as a percentage of total sales. Net profit is taken
before tax and other indirect costs.
Essentially the net profit ratio tells us about how the company's profits relate to their
sales. Different industries have fundamentally different net profit ratios. The net profit ratio
can tell us about the nature of the industry the company is operating in as well as serving to
compare past performances of a company.

The Net Profit Ratio Formula:

The formula for the net profit ratio is as follows:
Net Profit Ratio (%) = (Net Profit before Tax / Total Revenues) x 100.
Year TCS Infosys Wipro
2006 24.18% 26.8% 19.68%
2007 25.14% 28.80% 20.65%
2008 24.32% 28.56% 17.34%
From the above data we ca conclude that net margins of all the 3 companies is good and
constant

➢ EARNING PER SHARE (EPS)

The portion of a company's profit allocated to each outstanding share of common

stock. Earnings per share serves as an indicator of a company's profitability.
Calculated as:

(Rs per share)

Year TCS Infosys Wipro

2006 55.53 87.86 14.17
2007 38.39 86.25 19.48
2008 46.07 78.15 20.96

From the above data we can conclude that EPS is quite good and more or less constant.
 A. PRESENTATION OF CONCLUSIONS AND RATIONALE TO
SUPPORT CONLUSION

CONCLUSIONS FOR PRIMARY RESEARCH

Main purposes of investments are returns & liquidity.

Investors take risk as well as returns into their mind while making the investment.

Businessmen are more interested in the stock market than the others.

People want to invest their money in the security market but they have not the proper
knowledge.

People pay more emphasis on brokerage than service provided by brokerage houses.

There are advantages to being a disciplined investor. Investing regularly via Systematic
Investment Plans (SIP), even if these are small amounts, offers many benefits like, there
is no need to time the markets as you invest at predetermined intervals. This spares you
from investing a lump sum amount at peak prices.

A Systematic Investment Plan renders to you the power of compounding, especially if

you begin your SIP early in life.

SIPs inculcate the savings habit in investors. On a regular basis you put aside affordable
sums of money and without realising it, over the long run you could amass great wealth.

SIPs serve as a great financial tool to counter inflation.

Categorizing equities

○ Diversified – invest in large capitalized stocks belonging to multiple sectors

 ○ Sectorial – Invest in specific sectors like technology, FMCG, Pharma, etc.

CONCLUSIONS FOR SECONDARY RESEARCH

It has been seen that Indian IT sector is booming from past few years. Except the last
fiscal year due global melt down. Indian IT sector is Marjory depended on US, despite of the
recession in the US economy IT sector has delivered at its best. There are many reason
behind this, like cost effectiveness, quality advantage etc. Indian IT sector can face the tough
competition from countries like China and Philippines because of their cheap labour. But
again Indian companies have quality advantage and trust build on its clients over the years.
There is no need to panic at this time because the markets are very volatile; IT sector will
deliver to its investor in the long run. This means investment made for long term will deliver
good returns.

From the above findings it also concludes that why the stocks of IT sector have been
selling like hot cakes. Because the net margins and return on equity was quite satisfactory
and regular over the past few years.
 I. RECOMMENDATIONS

A. RECOMMENDATIONS RESULTING FROM THE STUDY

Commitment should be equalized for every person.

Provide the facility of free demonstrations for all.

Improvement in the opening of De-mat & contract notice procedure is required.

Some promotional activities are required for the awareness of the customer.

People at young age should be encouraged to invest in stock-market.

Seminars should be held for providing information to prospective and present customers.

The most vital problem spotted is of ignorance. Investors should be made aware of the
benefits. Nobody will invest until and unless he is fully convinced. Investors should be
made to realize that ignorance is no longer bliss and what they are losing by not
investing.

Before making any investment Financial Advisors should first enquire about the risk
tolerance of the investors/customers, their need and time (how long they want to invest).
By considering these three things they can take the customers into consideration.

Younger people aged under 35 will be a key new customer group into the future, so
making greater efforts with younger customers who show some interest in investing
should pay off.
 Customers with graduate level education are easier to sell to and there is a large untapped
market there. To succeed however, advisors must provide sound advice and high quality.

Systematic Investment Plan (SIP) is one the innovative products launched by Assets
Management companies very recently in the industry. SIP is easy for monthly salaried
person as it provides the facility of do the investment in EMI. Though most of the
prospects and potential investors are not aware about the SIP. There is a large scope for
the companies to tap the salaried persons.

A. PROJECTED OUTCOMES RESULTING FROM THE STUDY

If an investor study and understand the sector well there are less chances of loosing
the money. People should invest for long term instead of short term. It has been seen that
history on returns on equity is around 15-18% p.a. over the last few years. So investing in
equity we can project returns of approximately 15-18%.
 I. BIBLOGRAPHY

Websites:

http://www.moneycontrol.com

http://www.rediffmoney.com

http://www.rbi.org.in

http://www.reserve-bank.org

http://www.amfi-india.com
 II. APPENDIX

As mentioned earlier I visited various financial monetary regulatory authorities. In

the appendix the role and function of these organisation’s mentioned. These are not included
in the main body of the project because there was no scope to relate these visits as part of the
analysis. Appendix will cover the following points.

✔ SECURITIES AND EXCHANGE BOARD OF INDIA

○ SEBI – Introduction

○ The basic objectives of the Board were identified as

○ Functions Of Sebi

✔ BLOOMBERG
○ Introduction

○ The Bloomberg Keyboard

○ Sample Searches

✔ ASSOCIATION OF MUTUAL FUNDS IN INDIA (AMFI)

○ Introduction

○ The objectives of Association of Mutual Funds in India:

○ The sponsorers of Association of Mutual Funds in India

✔ RESERVE BANK OF INDIA

 ○ ESTABLISHMENT

○ MONETARY AUTHORITY:

○ REGULATOR AND SUPERVISOR OF THE FINANCIAL SYSTEM:

○ ISSUER OF CURRENCY

○ RELATED FUNCTIONS

SECURITIES AND EXCHANGE BOARD OF INDIA

➢ SEBI – INTRODUCTION

In 1988 the Securities and Exchange Board of India (SEBI) was established by the
Government of India through an executive resolution, and was subsequently upgraded as a
fully autonomous body (a statutory Board) in the year 1992 with the passing of the Securities
and Exchange Board of India Act (SEBI Act) on 30th January 1992. In place of Government
Control, a statutory and autonomous regulatory board with defined responsibilities, to cover
both development & regulation of the market, and independent powers have been set up.
Paradoxically this is a positive outcome of the Securities Scam of 1990-91.

➢ THE BASIC OBJECTIVES OF THE BOARD WERE IDENTIFIED AS

• to protect the interests of investors in securities;

• to promote the development of Securities Market;
• to regulate the securities market and
• for matters connected therewith or incidental thereto.
 Since its inception SEBI has been working targeting the securities and is attending to
the fulfilment of its objectives with commendable zeal and dexterity. The improvements in
the securities markets like capitalization requirements, margining, establishment of clearing
corporations etc. reduced the risk of credit and also reduced the market.

SEBI has introduced the comprehensive regulatory measures, prescribed registration

norms, the eligibility criteria, the code of obligations and the code of conduct for different
intermediaries like, bankers to issue, merchant bankers, brokers and sub-brokers, registrars,
portfolio managers, credit rating agencies, underwriters and others. It has framed bye-laws,
risk identification and risk management systems for Clearing houses of stock exchanges,
surveillance system etc. which has made dealing in securities both safe and transparent to the
end-investor.

Another significant event is the approval of trading in stock indices (like S&P CNX
Nifty & Sensex) in 2000. A market Index is a convenient and effective product because of
the following reasons:

• It acts as a barometer for market behaviour;

• It is used to benchmark portfolio performance;
• It is used in derivative instruments like index futures and index options;
• It can be used for passive fund management as in case of Index Funds.

Two broad approaches of SEBI is to integrate the securities market at the national
level, and also to diversify the trading products, so that there is an increase in number of
traders including banks, financial institutions, insurance companies, mutual funds, primary
dealers etc. to transact through the Exchanges. In this context the introduction of derivatives
trading through Indian Stock Exchanges permitted by SEBI in 2000 AD is a real landmark.

SEBI appointed the L. C. Gupta Committee in 1998 to recommend the regulatory

framework for derivatives trading and suggest bye-laws for Regulation and Control of
Trading and Settlement of Derivatives Contracts. The Board of SEBI in its meeting held on
May 11, 1998 accepted the recommendations of the committee and approved the phased
introduction of derivatives trading in India beginning with Stock Index Futures. The Board
also approved the "Suggestive Bye-laws" as recommended by the Dr LC Gupta Committee
for Regulation and Control of Trading and Settlement of Derivatives Contracts.

SEBI then appointed the J. R. Verma Committee to recommend Risk Containment

Measures (RCM) in the Indian Stock Index Future Market. The report was submitted in
November-1998.

However the Securities Contracts (Regulation) Act, 1956 (SCRA) required

amendment to include "derivatives" in the definition of securities to enable SEBI to introduce
trading in derivatives. The necessary amendment was then carried out by the Government in
1999. The Securities Laws (Amendment) Bill,1999 was introduced. In December 1999 the
new framework was approved.

Derivatives have been accorded the status of `Securities'. The ban imposed on trading
in derivatives in 1969 under a notification issued by the Central Government was revoked.
Thereafter SEBI formulated the necessary regulations/bye-laws and intimated the Stock
Exchanges in the year 2000. The derivative trading started in India at NSE in 2000 and BSE
started trading in the year 2001.
➢ FUNCTIONS OF SEBI

SEBI is the nodal agency which protects the interests of an investor in the India
market. Otherwise regulation of the capital markets is primarily the responsibility of the
Securities and Exchange Board of India (SEBI), which is located in Bombay. Some of the
major functions of SEBI are:

• " SEBI is expected to regulate the business in stock exchanges and any other
securities-markets.

• " Registering and regulating the working of collective investment schemes, including
mutual funds is a responsibility of SEBI.

• " SEBI is responsible for prohibiting fraudulent and unfair trade practices relating to
securities markets.

• " Prohibiting insider trading in securities, with the imposition of monetary penalties,
on erring market intermediaries.

• " Regulating substantial acquisition of shares and takeover of companies.

• " Calling for information from, carrying out inspection, conducting inquiries and
audits of the stock exchanges and intermediaries and self regulatory organizations in
the securities market. Keeping this in mind, SEBI has issued a new set of
 comprehensive guidelines governing issue of shares and other financial instruments,
and has laid down detailed norms for stock-brokers and sub-brokers, merchant
bankers, portfolio managers and mutual funds.

• " To promote investor's education and training of intermediaries of securities markets.

• Fraudulent and Unfair Trade Practices

Keeping in mind the role of SEBI as the principal agency looking after the investor's
interests , it is vested with powers to take action against the practices relating to securities
market manipulation and misleading statements to induce sale/purchase of securities.

BLOOMBERG

➢ INTRODUCTION
Bloomberg is a financial services system that provides 24-hour current and accurate
financial, economic, and government information covering all market sectors worldwide. It
also features analytics, company financials, historical market data approximately twenty
years back, statistics and current news reports. This guide is intended to provide a brief
introduction to the Bloomberg system, including the custom Bloomberg keyboard as well as
basic function keys, and the Excel Add-in functionality. For more information, consult the
Bloomberg documentation in the accompanying binder and the help section included in this
guide.
Log on
To access Bloomberg you will first need to check out the Bloomberg binder at the
Jackson Access Services Desk. To log on:
• Press the red <CONN DFLT> key
• Enter Username and Password provided in the binder in the corresponding fields
• Press the green <GO> key

Log off
• Press the red <CONN DFLT> key to log off or right-click the mouse and select Exit
• Return the binder to the Access Services Desk when finished

Help
Note three ways to use the green <HELP> key:
• Press the<HELP> key to define terminology, formulas, and applications for every
screen
• Type the terms you want to research, then press the <HELP> key and make your
selection from the menu
• Press <HELP> <HELP> twice for instant messaging with 24-hour customer support
representative

Enter BU <GO> to access “Bloomberg University” online tutorials and a schedule of

Bloomberg training courses.
➢ THE BLOOMBERG KEYBOARD

The Bloomberg keyboard is customized and colour-coded to allow users to quickly

and easily access the information contained in the Bloomberg system and to perform specific
functions.

Yellow Keys
The yellow keys represent market sectors — government, corporate, mortgage, money
market, municipals, preferred, equity, commodities, index, currencies and client.

GOVT securities issued by national governments and securities by quasi-

governmental agencies

CORP information regarding corporate bonds

MTGE information regarding mortgages and collaterized mortgage obligations

M-MKT money market information

MUNI trading, descriptive, and settlement information regarding municipal and state
bonds

PFD preferred stock of public companies

EQUITY historical and intraday price records for common stock, options, and SEC
filings

CMDTY commodities and their associated futures and options

INDEX generic interest rates as well as economic indices, such as CPI

CRNCY foreign currencies.

Green Keys

The Green keys are action keys and allow you to move throughout the system.

GO to activate a function

NEWS to access Bloomberg’s 24-hr global online news service

HELP to define terminology, formulas, and applications for every screen

MENU to back up through the system to the pervious screen

PRINT to print any screen

Red Keys

CONN / DEFAULT to log off/on CANCEL to reset a screen

Searching Bloomberg

Upon login, Bloomberg opens four windows. Use the blue PANEL key to toggle
between the windows.

Bloomberg is a menu-driven database. To access a function’s menu, use the yellow

Market Sector keys, or mnemonics, or enter a term followed by the green <HELP> key.

Mnemonics are the shortcuts to any function and they are displayed in bold letters
next to numbers on a menu, e.g. HP for Historical Price, WEI for World Equity Indices, MA
for Mergers and Acquisitions menu etc. You can find more mnemonics, arranged by market
sector, in the Bloomberg binder and the Bloomberg Topical Help binder. The latter is located
next to the Bloomberg terminals.
Bloomberg system is structured in three levels:
1. Market Sector and News: the top level can be accessed by selecting the yellow
Market Sector key followed by the <GO> key. For example, to access all the
available functions in securities market, press <EQUITY> <GO> and then make a
menu selection either by typing the selection number or its mnemonic and then
pressing <GO>.
Bloomberg News: Bloomberg Business News is an online proprietary 24-hour global
news service. To open the Bloomberg news menu, press the <NEWS> <GO> then
select News Menu. For screening archive-type news, select Subject Search (option
11) or type TNI <GO>. For the latest news headlines worldwide type TOP <GO>.
2. Single Security: the second level of the Bloomberg menu is security specific, which
means that you must select a security first. For example, typing MSFT <EQUITY>
<GO> will take you to the function menu for Microsoft. From this menu, you may
chose any of the analytics functions by typing the menu number that corresponds to
the function or by entering the mnemonic and <GO>.The easiest way to get the
comprehensive data on one security is to select DES <GO> from the security menu,
and to find all related securities, select RELS <GO>.
3 Two Securities: the third level allows you to compare two securities. You need to
select two securities to access comparative analytics such as Price/Yield Ratio
History, Regression Analysis, Fundamental Analysis, etc. For example, to get a
comparative analysis of Microsoft and Cisco Systems, type MSFT <EQUITY>
CSCO <EQUITY> <GO> to bring up the two-securities’ functions menu for both
companies. You can then choose any of the analysis by typing the menu number that
corresponds to the function or by entering the mnemonic and <GO>.

➢ SAMPLE SEARCHES
All the sample searches use ticker F (Ford Motor Co.) as an example. To find Ford’s
ticker, enter Ford and select the company’s ticker from the matches supplied by
Bloomberg’s Auto-Fill function. If Auto-Fill function is not set up on your terminal, Enter
Ford <Help> and make a selection from the menu. Likewise, find the ticker for S&P 500
index used in the last example.
Find historical stock prices for Ford Motor.
1. Press the F <Equity> <GO>.
2. In the 8) Charts & Tables section, select Historical Table (HP) or type HP <GO>.
3. Specify the date range.
Alternatively, use Mnemonics (short-cut):
Type F, Press the <EQUITY> key, type HP <GO>.
Find information on Ford’s Dividend Reinvestment Program.
1. Type the company’s ticker symbol F, press the <EQUITY> key, then <GO>.
2. In the 3) Company Overview section, select Dividend (DVD) or type DVD <GO>.
3. Scroll down the pages (Page Down key) to Dividend reinvestment incidents.
View Ford’s intraday stock movement.
1. Type the company’s ticker, F, press the <EQUITY> key, then <GO>.
2. In the 8) Charts & Tables section, select Intraday Graph (GIP) or type GIP <GO>.
Find Ford’s bond prices.
1. Type the company’s ticker, F, press the <CORP> key, then <GO>.
2. Select the appropriate bond.
Build a graph comparing Ford Motor Co stock performance with S&P 500 index.
1. Type the company’s ticker, F, press the <EQUITY> key, then <GO>.
2. In 8 Charts & Tables section, select Graph Templates (G).
(Using mnemonics, you can combine step1 and 2 into one string: F <EQUITY> G <GO>)
3. Click Create New red tab or enter 1 <GO>.
4. Click Multiple Security; click Next.
5. Fill in criteria: period (daily, weekly etc.), time range.
6. Add security SPX Index; click Next.
7. Optionally, enter a title for your graph for future use, select folder.
8. Click Finish.
Alternatively, use Mnemonics (short-cut):
1. Type F followed by <EQUITY> key; type SPX followed by <INDEX> key
<GO>.
2. Select the 26) Relative Graphs (RG) or type RG <GO>.
3. Modify data, change dates if needed, delete additional index, Press <GO>
4.Press the Page Down key to view data in table format.
 ASSOCIATION OF MUTUAL FUNDS IN INDIA (AMFI)

With the increase in mutual fund players in India, a need for mutual fund association
in India was generated to function as a non-profit organisation. Association of Mutual Funds
in India (AMFI) was incorporated on 22nd August, 1995.

AMFI is an apex body of all Asset Management Companies (AMC) which has been
registered with SEBI. Till date all the AMCs are that have launched mutual fund schemes are
its members. It functions under the supervision and guidelines of its Board of Directors.

Association of Mutual Funds India has brought down the Indian Mutual Fund
Industry to a professional and healthy market with ethical lines enhancing and maintaining
standards. It follows the principle of both protecting and promoting the interests of mutual
funds as well as their unit holders.

➢ THE OBJECTIVES OF ASSOCIATION OF MUTUAL FUNDS IN INDIA

 The Association of Mutual Funds of India works with 30 registered AMCs of the
country. It has certain defined objectives which juxtaposes the guidelines of its Board of
Directors. The objectives are as follows:

• This mutual fund association of India maintains a high professional and ethical
standards in all areas of operation of the industry.

• It recommends and promotes the top class business practices and code of conduct
which is followed by members and related people engaged in the activities of mutual
fund and asset management. The agencies who are by any means connected or
involved in the field of capital markets and financial services also involved in this
code of conduct of the association.

• AMFI interacts with SEBI and works according to SEBIs guidelines in the mutual
fund industry.

• Association of Mutual Fund of India do represent the Government of India, the

Reserve Bank of India and other related bodies on matters relating to the Mutual
Fund Industry.

• It develops a team of well qualified and trained Agent distributors. It implements a

programme of training and certification for all intermediaries and other engaged in
the mutual fund industry.

• AMFI undertakes all India awareness programme for investors inorder to promote
proper understanding of the concept and working of mutual funds.

At last but not the least association of mutual fund of India also disseminate
information on Mutual Fund Industry and undertakes studies and research either directly or
in association with other bodies.

➢ THE SPONSORERS OF ASSOCIATION OF MUTUAL FUNDS IN INDIA

• Bank Sponsored:-SBI Fund Management Ltd.

BOB Asset Management Co. Ltd.
 Canbank Investment Management Services Ltd.
UTI Asset Management Company Pvt. Ltd.

• Institutions:- GIC Asset Management Co. Ltd.

Jeevan Bima Sahayog Asset Management Co. Ltd.
Private Sector

• Indian:-BenchMark Asset Management Co. Pvt. Ltd.

Credit Capital Asset Management Co. Ltd.
JM Financial Mutual Fund
Kotak Mahindra Asset Management Co. Ltd.
Reliance Capital Asset Management Ltd.
Sahara Asset Management Co. Pvt. Ltd
Tata Asset Management Private Ltd.

• Predominantly India JVs:- Birla Sun Life Asset Management Co. Ltd.
DSP Merrill Lynch Fund Managers Limited
HDFC Asset Management Company Ltd.
Predominantly Foreign Joint Ventures:-
ABN AMRO Asset Management (I) Ltd.
Alliance Capital Asset Management (India) Pvt. Ltd.
Deutsche Asset Management (India) Pvt. Ltd.
Fidelity Fund Management Private Limited
Franklin Templeton Asset Mgmt. (India) Pvt. Ltd.
HSBC Asset Management (India) Private Ltd.
ING Investment Management (India) Pvt. Ltd.
 RESERVE BANK OF INDIA

➢ ESTABLISHMENT

The Reserve Bank of India was established on April 1, 1935 in accordance with the
provisions of the Reserve Bank of India Act, 1934.

The Central Office of the Reserve Bank was initially established in Calcutta but was
permanently moved to Mumbai in 1937. The Central Office is where the Governor sits and
where policies are formulated.

Though originally privately owned, since nationalisation in 1949, the Reserve Bank is
fully owned by the Government of India.

➢ PREAMBLE
 The Preamble of the Reserve Bank of India describes the basic functions of the
Reserve Bank as:

"...to regulate the issue of Bank Notes and keeping of reserves with a view to securing
monetary stability in India and generally to operate the currency and credit system of the
country to its advantage."

➢ CENTRAL BOARD

The Reserve Bank's affairs are governed by a central board of directors. The board is
appointed by the Government of India in keeping with the Reserve Bank of India Act.

• Appointed/nominated for a period of four years

• Constitution:

○ Official Directors

 Full-time : Governor and not more than four Deputy Governors

○ Non-Official Directors

 Nominated by Government: ten Directors from various fields and one

government Official

 Others: four Directors - one each from four local boards.

➢ LOCAL BOARDS

• One each for the four regions of the country in Mumbai, Calcutta, Chennai and New
Delhi

• Membership:

• consist of five members each

• appointed by the Central Government

• for a term of four years

Functions : To advise the Central Board on local matters and to represent territorial and
economic interests of local cooperative and indigenous banks; to perform such other
functions as delegated by Central Board from time to time.

➢ MONETARY AUTHORITY

• Formulates implements and monitors the monetary policy.

 • Objective: maintaining price stability and ensuring adequate flow of credit to
productive sectors.

➢ REGULATOR AND SUPERVISOR OF THE FINANCIAL SYSTEM

• Prescribes broad parameters of banking operations within which the country's

banking and financial system functions.

• Objective: maintain public confidence in the system, protect depositors' interest and
provide cost-effective banking services to the public.

• The Banking Ombudsman Scheme has been formulated by the Reserve Bank of India
(RBI) for effective redressal of complaints by bank customers.

➢ MANAGER OF FOREIGN EXCHANGE

• Manages the Foreign Exchange Management Act, 1999.

• Objective: to facilitate external trade and payment and promote orderly development
and maintenance of foreign exchange market in India.

➢ ISSUER OF CURRENCY

• Issues and exchanges or destroys currency and coins not fit for circulation.

• Objective: the main objective is to give the public adequate supply of currency of
good quality and to provide loans to commercial banks to maintain or improve the
GDP.

➢ DEVELOPMENTAL ROLE

• Performs a wide range of promotional functions to support national objectives.

➢ RELATED FUNCTIONS

• Banker to the Government: performs merchant banking function for the central and
the state governments; also acts as their banker.

• Banker to banks: maintains banking accounts of all scheduled banks.

The basic objectives of RBI are to issue bank notes, to maintain the currency and
credit system of the country to utilize it in its best advantage, and to maintain the reserves.
RBI maintains the economic structure of the country so that it can achieve the objective of
price stability as well as economic development, because both objectives are diverse in
themselves.
➢ RELATED FUNCTIONS

Banker to the Government: performs merchant banking function for the central and
the state governments; also acts as their banker.

• Bank to banks: maintains banking accounts of all scheduled banks

There is now an international consensus about the need to focus the tasks of a central
bank upon central banking. RBI is far out of touch with such a principle, owing to the
sprawling mandate described above.

➢ THE MAIN FUNCTIONS OF THE RESERVE BANK OF INDIA ARE

1. The Reserve Bank of India is the regulator and supervisor of the

financial system.
2. RBI defines the guidelines according to which the banking operations within which
the country's banking and financial system functions. It tries to protect depositors'
interests and provides cost-effective banking services to the public by monitoring the
functioning of banks. If a bank does not solve a customers problem they can approach

the Reserve bank of India through the Banking Ombudsman Scheme.

3. Foreign exchange inflow and outflow is regulated by the The Foreign Exchange
Management Act, 1999 of RBI. All money transfer out of India, for both personal
and trade purposes is subject to limits defined by RBI.

4. The Reserve Bank of India issues currency - notes and coins of various
denominations. It also issues and exchanges or destroys damaged currency and coins
not fit for circulation. The design of the currency is periodically modified to prevent
circulation of fake currency.

5. The RBI is the banker to the Government of India. It performs

merchant banking function for the central and the state governments. Government

departments bank with the Reserve bank of India. For example, in

Mumbai, the Income tax department issues tax refunds drawn on the Reserve

bank of India.
6. RBI is the banker to all major banks. It maintains banking accounts of all scheduled
banks in India. Deposits of up to Rs 1 lakh in scheduled banks are insured. Cash
 withdrawal tax is applicable only for withdrawals from scheduled banks. Smaller co-
operative banks usually are not scheduled banks. Bank interest rates increase or
decrease according to the RBI lending rates

7. The Reserve Bank of India also regulates the trade of gold. Currently
17 Indian banks are involved in the trade of gold in India. RBI has invited
applications from more banks for direct import of gold to curb illegal trade in gold
and increase competition in the market
8. In March 2006, RBI has issued know your customer guidelines for non banking
finance companies (NBFC). Customer whose deposit balance with the NBFC is less
than Rs 50,000 or outstanding credit more than Rs 1 lakh need not provide all the
documents. The customers will be categorized as low risk, medium risk and high risk.
Sahara India is one of the largest NBFC in India.
9. RBI buys and sells foreign currency to maintain the exchange rate of Indian Rupee
vs foreign currencies like the US Dollar, Euro, Pound sterling and Japanese yen.
Trends in exchange rate value for these currencies are available on their website.
10. Depending on the liquidity in the money markets, RBI sets the maximum interest rate
, Indian banks can offer on NRI dollar deposits. From March 2006, banks can offer an
interest rate equal to the London Interbank Offered Rate (LIBOR) - an international
benchmark rate on dollar deposits.
11. The cash reserve ratio (CRR) is the percentage of deposits that banks in India should
keep with RBI. This also depends on the liquidity in the money markets and is
currently 5%. The reverse repo rate is the rate at which RBI absorbs funds from
banks.
12. RBI also regulates the opening /installation of ATM (Automatic Teller Machines).
It is trying to increase the density of the ATMs in rural areas. Fresh currency notes
for ATMs are supplied by RBI
13. There are about 1050 clearing houses which settle transactions related to cheques,
drafts and pay orders. The State Bank of India manages 567 clearing houses, mainly
in the smaller cities and towns.

13. The annual monetary policy is announced in April every year.

14. An outstation cheque from metro cities (Mumbai, Delhi, Chennai, Kolkata) costs
banks only 50 paise for clearing through the RBI clearing system but banks like
 ICICI bank charge Rs 100 for clearing the cheque. RBI has asked banks to display the
service charges on their website, but only 5 banks have complied so far.
15. RBI regulates the opening of branches by banks and ensures that they follow the
Know Your Customer guidelines.