Beruflich Dokumente
Kultur Dokumente
INDUSTRY PROFILE
A capital market is a market for securities (debt or equity), where business enterprises (companies) and governments can raise long-term funds. It is defined as a market in which money is provided for periods longer than a year, as the raising of short-term funds takes place on other markets (e.g., the money market).
1937
Re-organization and set up of the Madras Stock Exchange Limited (Pvt.) Limited led by improvement in stock market activities in South India with establishment of new textile mills and plantation companies
1944 1947
Establishment of "The Hyderabad Stock Exchange Limited" "Delhi Stock and Share Brokers' Association Limited" and "The Delhi Stocks and Shares Exchange Limited" were established and later on merged into "The Delhi Stock Exchange Association Limited"
Post Independence Scenario The depression witnessed after the Independence led to closure of a lot of exchanges in the country. Lahore Stock Exchange was closed down after the partition of India, and later on merged with the Delhi Stock Exchange. Bangalore Stock Exchange Limited was registered in 1957 and got recognition only by 1963. Most of the other Exchanges were in a miserable state till 1957 when they applied for recognition under Securities Contracts (Regulations) Act, 1956. The Exchanges that were recognized under the Act were: 1. Bombay 2. Calcutta 3. Madras 4. Ahmadabad 5. Delhi 6. Hyderabad 7. Bangalore 8. Indore
The Equity Broking Industry in India has several unique features like it is more than a century old, dynamic, forward looking, and good service providers, well conversant, highly innovative and even adaptable. The regulations and reforms been laid down in the Equity Market has resulted in rapid growth and development. Basically, the growth in the equity market is largely due to the effective intermediaries. The Broking Houses not only act as an intermediate link for the Equity Market but also for the Commodity Market, Foreign Currency Exchange Market, and many more. The Broking Houses has also made an impact on the Foreign Investors to invest in India to certain extent. In the last decade, the Indian brokerage industry has undergone a dramatic transformation. From being made of close groups, the broking industry today is one of the most transparent and compliance oriented businesses. Long settlement cycles and large scale bad deliveries are a thing of the past with the advent of T+2 settlement cycle and dematerialization. Large and fixed commissions have been replaced by wafer thin margins, with competition driving down the brokerage fee, in some cases, to a few basis points. There have also been major changes in the way business is conducted. Technology has emerged as the key driver of business and investment advice has become research based. At the same time, adherence to regulation and compliance has vastly increased. The scope of services have enhanced from being equity products to a wide range of financial services. Investor protection has assumed significance,. Major Players in the Region
Religare Securities ICICI Direct India Infoline Security Pvt. Ltd. HDFC Securities India bulls Kotak Securities Fortune Equity Brokers India Ltd Sharekhan Securities Motilal Oswal Anand Rathi Securities
Financial Markets The financial markets have been classified as cash market, derivatives market, debt market and commodities market. Cash market, also known as spot market, is the most sought after amongst investors. Majority of the broking firms are dealing in the cash market, followed by derivative and commodities. 27% firms are dealing only in the cash market, whereas 35% are into cash and derivatives. Almost 20% firms trade in cash, derivatives and commodities market. Firms that are into cash, derivatives and debt are 7%. On the other hand, firms into cash and commodities are 3%, cash & debt market and commodities alone are 2%. 4% firms trade in all the markets.
In the cash market, around 34% firms trade at NSE, 14% at BSE and 52% trade at both exchanges. In the equity derivative market, 48% of the sampled broking houses are members of NSE and 7% trade at BSE, while 45% of the operate in both stock exchanges. Around 43% of the broking houses operating in the debt market, trade at both exchanges with 31% and 26% firms uniquely at NSE and BSE respectively.
Of the brokers operating in the commodities market, 57% firms operate at NCDEX and MCX. Around 20% and 21% firms are solely in NCDEX and MCX respectively, whereas 2% firms trade in NCDEX, MCX and NMCE.
Products The survey also revealed that in the past couple of years, apart from trading, the firms have started offering various investment related value added services. The sustained growth of the economy in the past couple of years has resulted in broking firms offering many diversified services related to IPOs, mutual funds, company research etc. However, the core trading activity
is still the predominant form of business, forming 90% of the firms in the sample. 67% firms are engaged in offering IPO related services. The broking industry seems to have capitalized on the growth of the mutual fund industry, which was pegged at 40% in 2006. More than 50% of the sample broking houses deal in mutual fund investment services. The average growth in assets under management in the last two years is almost 48%. Company research is another lucrative area where the broking firms offer their services; more than 33% of the firms are engaged in providing company research services. Additionally, a host of other value added services such as fundamental and technical analysis, investment banking, arbitrage etc are offered by the firms at different levels.
Of the total sample of broking houses providing trading services, 52% are based in the West, followed by 25% from North, 13% from South and 10% from the East. Around 50% of the firms offering IPO related services are based in the West as compared to 27% in North, 13% in
South and 10% in East. In providing mutual funds services, the Western region was dominant amounting to 49% followed by 27% from North; The South and the East are almost at par with 13% and 11% respectively.
2. COMPANY PROFILE
A. BACKGROUND AND INCEPTION
Fortune Group which comprises the holding company Fortune Financial Services (India) Limited and its wholly-owned subsidiaries, is engaged in providing a range of Financial Services right from Equities and Derivatives trading, Equity Research, Commodities Trading, Portfolio Management Services, Distribution of Mutual Funds, IPO & Insurance products and also Investment banking services. Fortune Financial Services (India) Limited was incorporated in the year 1991 by Mr. J. T. Poonja, Chairman and Mr. Nimish C Shah, Vice Chairman and Managing Director. Founded headquarters Key people industry 14-june-1991 Mumbai, Maharashtra J.T. Poonja, chairman and Nimish.C.Shah, managing director Finance - general
Products/services Investment Banking & Corporate Advisory, Broking, Distribution Services revenue Total assets 4000lacs 19878lacs
The main activities of the company are conducted through Fortune Financial Services which is also the holding company & its wholly owned subsidiaries. A brief snapshot of all the companies is outlined as under.
M/s Fortune Financial Services (India) Ltd. M/s. Fortune Financial Services (India) Ltd. is listed on the Bombay Stock Exchange Ltd and is SEBI registered Category I Merchant Banker. It has recently got approval from SEBI to launch its Portfolio Management Services (PMS). FFSIL has four business verticals viz. Fortune Equity Brokers (India) Limited, Fortune Commodities & Derivatives (India) Ltd., Fortune Credit Capital Ltd. and Fortune Financial India Insurance Brokers Limited. M/s. Fortune Equity Brokers (India) Ltd. It offers broking services in the Cash and Future & Option Segments of the National Stock Exchange of India Ltd and the Bombay Stock Exchange Limited. It is also a Depository Participant of Central Depository Services (India) Ltd. M/s. Fortune Commodities & Derivatives (India) Ltd. It is engaged in the business of commodities broking. It is having memberships with the MCX and NCDEX, two leading Indian Commodities Exchanges. M/s. Fortune Credit Capital Ltd. It is formed for the purpose of financing, lending to the clients. The Company has received license from RBI for NBFC operations. M/s. Fortune Financial India Insurance Brokers Limited. It is formed for the purpose of providing insurance broking and related products and services.
The services provided by this entity include: Equity segment Fortune ventured into stock broking arena as an institutional broker and has focused on helping clients maintain healthy portfolios through sound, fundamental and technical analysis. Fortune offers customized solutions for clients based on their short, medium and long term investment needs, for institutional, HNI and retail clients with personalized services to facilitate the execution of buy and sell orders in a flawless and efficient manner on both BSE & NSE segments Derivatives segment Fortune provides trading calls and various hedging and risk management strategies for trading in the derivatives segment. Depository Fortune provides flexible and cost-effective depository services which include online account management or limited power of attorney to speed up settlement pay-in-process. Internet trading (Equity & Commodity) Fortune provides user-friendly solutions for trading through www.fortunetrade.com, payment gateway with major banks like HDFC and AXIS to live streaming quotes and intra-day calls.
IPOs, Mutual Funds & Bonds AMFI registered mutual fund distributors and is also engaged in the distribution of IPOs. Tailor made solutions are provide to each & every investment preferences.
C. VISION, MISSION and QUALITY POLICY Vision: Fortune practices customer centric approach to be the leading broking firm. The
company vision is 1. To be the top most company for providing investment advisory and financial planning services in India. 2. To be a leading investment intermediary for transaction through both online and offline medium.
Mission: To educate and empower the individual investor to make investment decisions
through quality advice and superior service.
D. AREA OF OPERATION
As on 30th September, 2009, we are operational from the following 163 locations across India
North
Delhi (7), Ludhiana (14), Srinagar, Amritsar (5), Chandigarh (6), Panchkula (2), Varanasi, Meerut, Jalandhar (4), Mohali, Greater Nodia, Jaipur (8), Kota, Jodhpur (2), Karnal (2), Jammu
South
Hyderabad (8), Bangalore (5), Mangalore, Belgaum (9), Mysore (4), Cochin (6), Raichur (2), Mandya, Prakasham Dist (AP), Udupi
West
Mumbai (10), Pune (26), Ahmadabad (9), Surat, Goa, Baroda (12), Nagpur, Latur, Navi Mumbai, Thane
East
Kolkata (4)
E. OWNERSHIP PATTERN
Fortune Financial Services (India) Ltd.
31/12/2010
30/09/2010
30/06/2010
Face Value
10.00
10.00
10.00
No. Of
Shares Holding
PROMOTER'S HOLDING
5823738 5823738
52.47 52.47
5823738 5823738
52.47 52.47
5823738 5823738
52.47 52.47
Institutional Investors
497552 497552
4.48 4.48
497552 497552
4.48 4.48
497552 497552
4.48 4.48
Other Investors
586189
5.28
599385
5.40
299408
2.70
36.08 6.97
4017875 760835
36.20 6.85
3717898 1060812
100.00 11100000
100.00 11100000
F. COMPETITORS INFORMATION
Last Price
Sales Turnover 571.50 2,003.09 191.39 57.26 24.31 94.50 132.44 140.56 42.73 14.78 5.79
Net Profit
Total Assets
India Infoline India bulls Edelweiss Cap Motilal Oswal F HSBC Invest Network 18 Future Capital Geojit BNP Delta Corp Nalwa Sons Inv Fortune Fin Ser
118.55 106.35 427.05 175.50 223.55 107.40 186.60 35.10 37.50 1,088.25 121.55
3,380.26 3,295.66 3,204.48 2,510.82 1,573.75 1,225.52 1,185.43 787.99 626.85 558.94 134.92
103.59 99.45 26.37 45.31 -15.21 -19.41 9.31 14.39 8.31 11.26 2.32
1,049.99 10,392.97 1,865.28 433.49 667.45 862.11 1,216.75 276.06 356.87 270.90 79.95
G. INFRASTRUCTURE FACILITY:
Credit and Risk Management Investor Service Centers Investor Service Desk Compliance team
1991 Mr. J.T. Poonja and Mr. Nimish C. Shah incorporated Fortune Financial Services (India) Private Limited as a Non-Banking Financial Company (NBFC). Besides core investment banking and corporate advisory services, Fortune's also focused on fund based activities such as lease, hire purchase, bill discounting and inter-corporate loans 1993 Fortune became a SEBI registered Category - I Merchant Banker. 1995 Fortune made an Initial Public Offering (IPO) 1999 Fortune Financial became the 1st Indian company to go in for a buyback of its shares, subsequent to the guidelines for Buyback of shares coming into effect from Jan 1999. Fortune offered to buy back 25% of its paid-up capital of Rs.549 lacs at an offer price of Rs.10/- each per share as against the average quoted market price of Rs.5.65 per share. An amount of Rs.114 lacs was reduced from the share capital consequent to the buyback Successfully completed the second buyback and reduced Rs. 47 lacs from the share capital 2000 Acquired Corporate Membership of Bombay Stock Exchange Limited (BSE)
2001 Fortune completed the private placement of equity shares of Popular Entertainment Network Limited and clickforcotton.com, India's first cotton exchange portal 2005 Fortune was associated with ECB/FCCB overseas fund raising for its Indian mid-sized corporate clients in excess of $250 million. Commenced F&O operations on the National Stock Exchange (NSE) 2006Commenced DP Services
Customer acquisition
Filled account opening form & other documents is sent to depository team
Post trade
Generate net trade obligation statement printing and dispatch of contracts notes
Trade execution
Branches/franchisees
Clients
Support
Stock broking
Distribution services
Over the next two years, fortune plans to bulk up its services into a full services financial services company.
Stock broking
Channel dealing and broking business into retail specific, HNI specific and corporate specific Providing fund management expertise to HNI and corporate clients Develop and strengthen futures & options and commodity business Franchise network focusing on retail (broking and distribution of all products)
Distribution services
Branches/franchise/direct clients Savings products (mutual funds, IPOs, P.O. schemes, RBI schemes, GOI savings schemes etc., Insurance
Support
-
Provide in-house research capabilities; Strong marketing team Provide Depository Services Provide Real Time Back office support
The Mc Kinsey 7s Model is a widely discussed framework for viewing the interrelationship of strategy formulation and implementation. It helps to focus managers attention on the importance of linking the strategy to a variety of activities that can affect the implementations of that strategy. Originally developed as a way of thinking more broadly about the problems of organizing effectively, the 7s framework provides a tool for judging the do ability of strategies. The model starts on the premise that an organization is not just a structure, but consists of seven elements. These seven variables include structure, strategy, systems, skills, style, staff and shared values. These seven elements are further divided into three hard elements- strategy, structures, and systems, and four soft elements- shared values, skills, staff, and style. The hard elements are classified as such because they can be empirically measured, and the soft elements are classified as such because they lie below the surface and do not lend themselves for evaluation so readily. The shape of the model (as shown in figure) was also designed to illustrate the interdependency of the variables. This is illustrated by the model also being termed as the "Managerial Molecule". STRUCTURE Structure is defined as the skeleton of the organization or the organizational chart. The designing of an organizational structure is the critical task of the management. The operation at Fortune is carried out through various departments
STRATEGY The strategy is the plan or course of action in allocating resources to achieve identified goals over time. Fortune aims at improving its customer base by providing integrated financial services to all the customers. Most prominent part of Fortunes growth strategy is focus on inhouse research to cater to different segments of clients and meet their rising expectations. Fortune believes in-house research is not only an essential part of business requirement it also gives control over quality of input and relative advantage in this intense business environment..Today fortunes client base has increased to 73% in capital market and the branch and franchise network to 186 from 49 in the previous year. SYSTEMS The systems are the routine processes and procedures followed within the organization. It includes production planning g and control system, capital budgeting systems etc. In Fortune the core operations include
Customer Acquisition: - the offline method of acquisition of customers through the brokers is followed for this purpose.
Research: - the research is done mainly at the head office in Mumbai. The fundamental analysis of the different companies through balance sheet analysis, profit and loss statement and the technical analysis with regards to the various sectors, the volatility in these sectors is also done at the head office.
Dealing: - the dealing system refers to the actual trading activities that are done through advice. The orders are placed according to the needs of the investors. The volume generated through these activities forms the core revenue for the company.
Back office Operations: - the back office acts as the backbone for all the activities of Fortune. This system handles all operations involving cheque processing, contract notes, IS (Delivery Instruction Slip) etc.
Risk and Compliance: - this part of the support operations handles the risk associated. The software needed for these operations handles this and makes sure that all the norms are met in any form of the transaction.
STYLE The way in which key managers behave in achieving organizational goals is considered to be the style variable; this variable is thought to encompass the cultural style of the organization. Democratic style has been followed in fortune which allows individual department to take necessary decisions. The style of operation that is followed towards the customer is much focused and it is aimed to give utmost attention to the customer. Personalized care is taken to satisfy with any of the problems faced by the clients.
SKILLS The skill refers to the capabilities of the staff within the organization as a whole. The company has the skill needed to carry out the companys strategy like: Good and specialized knowledge about the products.
STAFF The term staff refers to the way organization introduce young recruits in to the main stream of their activities and the manner in which they manage their careers in the new interns develop employees and shape basic value. The employees in all the departments are given training for 6 months where they will be given all the necessary skill that is needed for their respective jobs. The efficiency of the existing employees is also measured to know the growth and their relative position in the organization. There are 1600 employees all over the country.
SHARED VALUES The shared values, originally termed as super ordinate goals, refer to the significant meanings or guiding concepts that organizational members share. Shared values are considered to be the foundation of ethics, community and culture. When peoples values are met and matched, they feel a sense of satisfaction, harmony, or rapport. When their values are not met or matched, people often feel dissatisfied, incongruent, or violated. Customer - personalized attention is the key. Integrity - highest ethical standards are used in all the transactions. Mutual Respect trust in working relationship. Quality Advice scientific approach in quantifying the risk.
4. SWOT ANALYSIS
Brief about SWOT analysis
It is a tool that identifies the strengths, weaknesses, opportunities and threats of an organization. The method of SWOT analysis is to take the information from an environmental analysis and separate into external (opportunities and threats) and internal issues (strengths and weakness). Once the identification of SWOT is done, it determines what may assist the firm in accomplishing its objectives, and what obstacles must be overcome or minimized to achieve desired results.
Strengths:
Experience of more than decades of trust and credibility in the Indian stock market. Strong industry focus leading to innovative and informed strategic advisory services. Deep understanding of Indian mid market corporate clients. Debt free group. Comprehensive range of financial services for HNIs & retail investors. Non-exclusive working relationship with leading international investments banks. Dedicated research team for technical and fundamental analysis. A well equipped customer team, which will assist a new comer in the matters relating to transactions, billing, De-mat and other technical queries
Weakness:
Highly risk oriented business. Slight entry level of investors. Lacks in advertising. Concentrated much on HNIs and corporate clients which ignores small investors.
Opportunities:
Booming financial market both country wide and worldwide. Increase in varied domestic assignments follow on issues, buyback program, open offers, IPOs. Strong momentum in franchise in the last two years. Overseas fund raising of approximately US$ 500 million in the last 18 months. Critical mass and experience across the globe. All factors which aid to the well functioning of the capital market will pave the way to the expansion of most of the brokerage firms.
Threats:
Unexpected changes in the capital market such as rules and regulations etc. Increasing competition in the industry. Fast changing in technology. Increasing number in the defaulters and threat of security in terminals.
12 mths
12 mths
12 mths
12 mths
12 mths
Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Net worth Secured Loans Unsecured Loans Total Debt Total Liabilities 3.88 3.88 0.00 0.00 7.02 10.90 3.70 0.00 3.70 14.60 Mar '06 7.77 7.77 0.00 0.00 8.51 16.28 4.79 4.45 9.24 25.52 Mar '07 10.00 10.00 0.00 0.00 33.57 43.57 9.32 1.47 10.79 54.36 Mar '08 10.00 10.00 0.00 0.00 43.12 53.12 0.00 0.00 0.00 53.12 Mar '09 11.10 11.10 0.88 0.00 67.32 79.30 0.00 0.66 0.66 79.96 Mar '10 12 mths 12 mths 12 mths 12 mths 12 mths
Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs) 4.98 2.15 2.83 0.00 3.08 0.06 0.70 10.28 11.04 1.71 0.00 12.75 2.89 1.15 4.04 8.71 0.00 14.62 0.00 28.09 4.67 2.36 2.31 0.01 4.50 0.00 0.72 2.45 3.17 5.70 21.20 30.07 7.06 4.32 11.38 18.69 0.00 25.51 0.01 20.95 5.23 2.81 2.42 0.00 6.43 0.00 7.10 0.36 7.46 8.59 45.28 61.33 8.02 7.80 15.82 45.51 0.00 54.36 0.00 43.57 9.19 8.87 0.32 0.02 38.84 0.00 1.68 2.30 3.98 15.35 8.26 27.59 1.63 12.02 13.65 13.94 0.00 53.12 0.00 53.12 1.18 0.74 0.44 0.00 55.86 0.00 1.73 1.28 3.01 17.37 12.32 32.70 0.27 8.80 9.07 23.63 0.02 79.95 24.29 70.65
Mar '06 Investment Valuation Ratios Face Value Dividend Per Share Net Operating Profit Per Share (Rs) Free Reserves Per Share (Rs) Profitability Ratios Net Profit Margin (%) Return On Capital Employed (%) Return On Net Worth (%) Liquidity And Solvency Ratios Current Ratio Quick Ratio Debt Equity Ratio Debt Coverage Ratios Interest Cover Total Debt to Owners Fund Management Efficiency Ratios Debtors Turnover Ratio 6.33 21.21 0.34 1.15 3.14 0.34 34.55 21.10 20.33 10.00 1.50 14.41 18.09
Mar '07
Mar '08
Mar '09
Mar '10
2.02 2.02 --
38.04 0.57
20.18 0.25
4.59 --
23.29 0.01
21.22
4.03
7.45
3.29
Fixed Assets Turnover Ratio Total Assets Turnover Ratio Earnings Per Share
-0.66 12.51
--2.09
March 10 3.61:1
Current ratio is an indication of a company's ability to meet short-term debt obligations; the higher the ratio, the more liquid the company is. We can see that in the year 2009 the ratio is 2.02:1 which means their ratio was slightly more than the ideal ratio. This also indicates that the companys short term financial strength is good. In the year 2010 their current ratio has increased to 3.6:1 which is very much higher than the ideal ratio 2:1 this shows that the company has purchased a fairly large amount of current assets in that year and it also shows their short term financial strength is very strong.
QUICK RATIO
Quick ratio is a measure of a company's liquidity and ability to meet its obligations. Quick ratio, often referred to as acid-test ratio, is obtained by subtracting inventories from current assets and then dividing by current liabilities. Quick ratio tells us the amount of easily convertible assets for every unit of current liability In the year 2010 the companys quick ratio is 3.06:1 as against 2.02:1 in the year 2009. Their financial strength has increases in the year 2010. This means they have purchased a fairly large amount of easily convertible assets
DEBT EQUITY RATIO
Debt equity ratio is a measure of a company's financial leverage. Debt/equity ratio is equal to long-term debt divided by common shareholders' equity. In other words it means how much money a company should safely be able to borrow over long periods of time. The debt equity ratio in the year 2009 is nil which means there has been no debt in that year. But in the year 2010 the ratio is 0.01 which is very less than the ideal ratio of 2:1. It is important to realize that if the ratio is greater than 1, the majority of assets are financed through debt. If it is smaller than 1, assets are primarily financed through equity. The companys ratio is 0.01 which less than 1 hence we can say that majority of the companys assets are financed through equity.
INTEREST COVERAGE RATIO
Interest coverage ratio is calculated to know a company's ability to meet its interest payments on outstanding debt. There is no specific ideal ratio for interest coverage ratio but we know that the lower the interest coverage ratio, the larger the debt burden is on the company. In the year 2009 the companys ratio is 4.59 which are not high as compared to 2010. Hence in the year 2009 the interest burden was high. Where-as in the year-2010 companys ratio is 23.29 which is high. Hence we can say that the company was able to service its loan amount without burdening much.