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Project report
On
“EXPANSION OF NIRMAL BANG IN EASTERN
REGION THROUGH CHANNEL BUSINESS MODEL OR OWN BRANCH MODEL.”
IN
Telephone no: (033)3058 4293, 3058 4293
E-mail: [email protected]
Website: www.nirmalbang.com
NIRMAL BANG SECURITIES
SUBMITTED BY
KUSHAL GHOSH
Page | 1
PROJECT REPORT
SUBMITED FOR THE PARTIAL FULLFILLMENT OF PGDBM/MBA
AT
INTERNATIONAL SCHOOL OF BUSINESS, KOLKATA
“EXPANSION OF NIRMAL BANG IN EASTERN REGION
THROUGH CHANNEL BUSINESS MODEL
OR OWN BRANCH MODEL.”
2008-2010
BY
KUSHAL GHOSH
NIRMAL BANG PVT LTD
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STUDENT DECLARATION
I hereby declare that the Summer Internship Project titled
.EXPANSION OF NIRMAL BANG IN EASTERN REGION THROUGH CHANNEL
BUSINESS MODEL OR OWN BRANCH MODEL being submitted for Award of
Post Graduate Diploma in Business Management has not formed the
basis for Award of any other Degree, Diploma, Associate or other
similar title and this dissertation was done independently by me under
the guidance of Mr./Ms. Sandip Guhathakurta of Nirmal Bang Security
Pvt Ltd (name of organization where SIP is done) and Mr. /Ms.
Dibyendu Nandy of International School of Business, Kolkata-700091
Place: Kolkata KUSHAL GHOSH
Date: (Name of student)
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TABLE OF CONTENTS
1.ACKNOWLEGDEMENT 5
2.EXECUTIVE SUMMERY 6
3 OBJECTIVE OF THE STUDY 8
4.COMPANY PROFILE 9
5 SERVICES 116.SWOT ANALYSIS OF NIRMAL BANG 13
7.PERFORMANCE OF NIRMAL BANG IN EASTERN REGION 14
8. INDIAN STOCK/EQUITY MARKET 16
9. INDIAN COMMODITY MARKET 23
10. CHANNEL BUSINESS MODEL VS OWN BRANCH MODEL 24
I. DEFINITION OF CHANNEL BUSINESS MODEL
II. DEFINITION OF OWN BRANCH MODEL
11. ADVANTAGES AND DIS ADVANTAGES OF CHENNEL BUSINESS MODEL AND OWN BRANCH MODEL 25
I. CHANNEL BUSINESS MODEL- ADVANTAGES
II. CHANNEL BUSINESS MODEL- DISADVANTAGES
III. OWN BRANCH MODEL- ADVANTAGES
IV. OWN BRANCH MODEL- DISADVANTAGES
12. STUDY DESIGN 29
13. RESEARCH METHODOLOGY 29
14. DATA ANALYSIS AND INTERPRETATION 33
15. FINDINGS & RECOMMENDATION 38
16. LEARNING/WORKING TILL DATE 41
17.CONCLUSION 43
18. BIBLIOGRAPHY 44
19. A N N E X U R E 45
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ACKNOWLEGDEMENT
First and foremost, I would like to thank and express my gratitude to Nirmal Bang Financial Group which is a leading organization in Stock & Commodity trading, for giving me an opportunity to work in their esteemed organization. During my tenure, I undertook Market Research & Cross selling and gained hands on knowledge about the actual stock market scenario.
My special obligation lies to my corporate guide Mr. Sandip Guhathakurta(AVP) who has directed me all through.
I would also like to mention about my faculty guide, Mr Dibyendu Nandy, without his guidance & support, it would not have been possible for me for the completion of the project.
I also like to thank Mr. Subarna Saha (Senior Manager), & Mr Sudipto Ganguly franchisee owner of Nirmal Bang Financial Group for helping me and providing me useful & necessary information related to the project. I would take this opportunity to thank all senior executives and every associates of Nirmal Bang Group without their cooperation I would not be able to complete this project.
I would also like to thank all our faculties who have taught me and have shared their experience with me which has helped me in doing my project.
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EXECUTIVE SUMMERY
This project offers a valuable opportunity to take a glimpse on the expansion strategy of any broking house in eastern region.
In today’s increasingly competitive and complex world it is vital to choose proper way of expansion strategy. The choice of proper way of expansion will flourish the company promptly in business world.
The equity brokerage industry in India is one of the oldest in the Asia region. India had an active stock market for about 150 years that played a significant role in developing risk markets as also promoting enterprise and supporting the growth of industry.
The roots of a stock market in India began in the 1860s. At that time brokers used to gather to seek stock tips and share news on step of a bank building. After being disallowed to use the steps of the bank building the share brokers had to find a place their own which later turn in to DALAL STREET. A group of about 300 brokers formed the stock exchange in Jul 1875, which led to the formation of a trust in 1887 known as the “Native Share and Stock Brokers Association”.
A unique feature of the stock market development in India was that that it was entirely driven by local enterprise, unlike the banks which during the pre-independence period were owned and run by the British. Following the establishment of the first stock exchange in Mumbai, other stock exchanges came into being in major cities in India, namely Ahmedabad (1894), Calcutta (1908), Madras (1937), Uttar Pradesh and Nagpur (1940) and Hyderabad (1944). The stock markets gained from surge and boom in several industries such as jute (1870s), tea (1880s and 1890s), coal (1904 and 1908) etc, at different points of time.
A new phase in the Indian stock markets began in the 1970s, with the introduction of Foreign Exchange Regulation Act (FERA) that led to divestment of foreign equity by the multinational companies, which created a surge in retail investing. The early 1980s witnessed another surge in stock markets when major companies such as Reliance accessed equity markets for resource mobilization that evinced huge interest from retail investors.
From the year1987 broking houses like Ashika, India Bulls, Motilal Owsal came in to existence in share broking industry. Then the share broking business gets the test of corporate house and becomes more organized. In later days companies like Reliance,Kotak,ICICI etc emerged in the share broking business.
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My study is emphasizing on the expansion strategy of Nirmal Bang in eastern region as it put its foot step newly in eastern region where leading companies like Kotak securities, Religier,India Bulls, India Infoline, Motilal Owsal etc are already established broking houses and there the main competitor of Nirmal Bang in eastern region.
Here my study tries to help Nirmal Bang to choose the proper expansion strategy and to achieve their goal in future in eastern region.
Market Share of top Share broking House in India
15%
19%
8%10%4%
14%
30%
India infoline
Kotak Securities Ltd
Share Khan
Indiabulls
Motilal Oswal
Religare
Others
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OBJECTIVE OF THE STUDY
The study is on the expansion strategy of the company. Now a days in this competitive business world the growth of a company depends very much on different strategies taken in different time. The main objective of my study is:
1.To understand the potential market of Nirmal Bang in eastern region.
2.To understand the expectation of traders and franchisee.
3.To take proper initiative to satisfy the expectation of traders and franchisee.
4.To choose proper expansion model for Nirmal Bang in Eastern region.
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COMPANY PROFILE
Incorporation Year 1987
Nirmal Bang Group
Incorporated by Mr. Nirmal Bang, it started its equity broking business operations in 1987 as a sub-broker. Currently, Group is engaged in various capital market related operations like equity broking, commodity broking, arbitrage trading, investment activities, margin funding, and distribution of the financial products. All the group companies are held 100%, directly or in-directly by the promoters.
Nirmal Bang Securities Private Limited
Nirmal Bang Securities Private Limited is a flag-ship company of Nirmal Bang Group, and started its broking operations under corporate license in 1997. Currently, NBSPL is engaged in equity broking, arbitrage trading, depository operations and distribution of the financial products. NBSPL is held 100% directly or indirectly by the promoters.
Nirmal Bang Group is one of the largest retail broking houses in India, providing the investors state of art services in capital markets in the country. We are a financial services company in India,
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offering a wide range of financial products and services targeted at retail investors, high net worth individuals and corporate and institutional clients. The Group has memberships of Bombay Stock Exchange Limited, National Stock Exchange of India Limited, Multi Commodity Exchange of India Limited, National Commodity and Derivatives Exchange limited and is also a Depository participant of NSDL and CDS (I) L, the Depositories of the country.
Our principal group companies are:
Nirmal Bang Securities Private Limited
Member- National Stock Exchange of India Limited
Member- Bombay Stock Exchange Limited
Participant- National Securities Depository Limited
Participant- Central Depository Services (India) Limited
Nirmal Bang Commodities Private Limited
Member- Multi Commodity Exchange of India Limited
Member- National Commodity & Derivatives Exchange Ltd
Bang Equity Broking Private Limited
Member- Bombay Stock Exchange Limited
Nadi Finance & Investment Private Limited
RBI registered Non Banking Finance Company
Shresth Financial & Insurance Services Pvt Ltd
We started in 1986 under the leadership of Late Shri Nirmal Bang and have grown steadily and progressively since then. Our clients as well as Business Partners have contributed tremendously to
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our growth we recognize and applaud this, we value our relationship with them and for their convenience we have all investing avenues under one roof.
It is a consistent profit making company from Last 5 years. It’s an extremely well capitalized company with high Net worth
SERVICES
EQUITY AND DERIVATIVESTrading platform for equities and equity derivatives on NSE and BSE- the Company has a reach of over 100 branches at 36 locations in the country to cater to retail and high net worth individuals. The branches constitute of self owned hubs and franchise/ remissers/ sub broker through whom the business is sourced.
COMMODITIES
Trading platform for commodities on NCDEX and MCX- Commodity trading facility is provided to all the clients at all the centers and location. The company is planning to establish itself as a leading research center for commodities market in the country.
DISTRIBUTION
Distribution of retail finance products – Mutual Funds and IPO’s. The group is empanelled with all the Fund Houses in the country to sell their Mutual Fund and NFO’s using the retail network. IPO’s selling is undertaking from all the branches of the company.
FINANCIAL ADVISORY SERVICES
Investment and trading advisory services to its clients are based on technical, fundamental and market research- The Company has one of the best fundamental research and technical analysis teams in the company. We release reports based on fundamental research of industries, sectors, companies and individual stock to our clients.The technical research team gives the clients recommendations using charting tools like Falcon and Metastock. Comprehensive reports on volume breakouts, delivery reports and F&O open interest positions are given to all the clients.
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COMPETITOR MAP OF NIRMAL BANG IN EASTERON REGION
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Reliance Mutual Fund
TATA EQUITY FUND
ULIP
SBI
MF
India Infoline
Share Khan
Motilal Oswal
India Bulls
Nirmal Bang Security pvt ltd
Religare
SMC
SWOT ANALYSIS OF NIRMAL BANG
Strengths:
Company having young management team which consists of very talented and knowledge professionals from different fields.
Nirmal Bang is a well capitalized group with net worth of 3500 crores.
Company is unaffected in this global recession which shows company’s never say die sprits. It means company is armed with proper resources to fight any adverse situation.
Company‘s research team provides tremendous research calls to their clients with high success record and generates level of satisfaction to clients.
Weakness:
Investors are not completely aware of Nirmal Bang, so the brand value of the company not yet created.
The market share of the company in commodity and equity market in terms of turnover is not significant.
Opportunities:
The growth of capital market is very high. Investors are now ready to invest their money in this market because the return is much higher compare to other place for investment, so they are ready to bear risk factor associated with it. It means volume will increase year by year in this sector.
As Nirmal Bang having its presence in 36 location of the country, so company has good opportunities to extents its branches all over the country.
Company has not come yet with its own IPO, this is a good chance for the company to be a public limited company which will help company to get money and create brand awareness in this market.
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Threats:
Company has to face a tough competition from major market leaders, so it will be a difficult task for Nirmal Bang to sustain itself in this cut throat competitions.
Recently financial market is not performing well due to global recession and investors have suffered a huge loss, so investors now investing their money at much safer place instead of this market.
PERFORMANCE OF NIRMAL BANG IN EASTERN INDIA
Nirmal Bang became fully operational in Eastern India in both the equity and commodities market from October 2008. Since then the company has shown a tremendous growth in the amount of earning in each month. In October 2008 the company’s total earning was around Rs.6.4 lakhs. This increased to around Rs.22 lakhs in March 2009, which further increased to around 25 lakhs in April 2009.
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There has also been a tremendous increase in the earnings from the commodities market for Nirmal Bang in Eastern India. In October 2008 the earnings from commodities market was around Rs. 40 thousands. This increased to Rs. 2.2 lakhs in February 2009, which further increased to Rs. 4.7 lakhs in April 2009.
The rate of growth of the company itself speaks for the character and determination of the company and all the employees. If the company keeps on growing at this rate then it will soon be able to compete with all the big players in Eastern India.
Nirmal Bang is also undertaking a very aggressive expansion policy. Already Nirmal Bang has its Head Office of the Eastern India in Kolkata and two other branches in Durgapur and Siliguri. Also the company has around 50 sub-brokers all over West Bengal.
Nirmal Bang is planning to open up another 20 branches and about 200 sub-brokers within the next one year. Thus there will be more 250 contact point for the clients. Also the company will be providing a lot of employment opportunity for the local people.
INDIAN STOCK/EQUITY MARKET
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stock market is a public market for the trading of company stock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately.
India stock market offers a great opportunity to the investors as right now it is experiencing a boom in many of its shares. The speedy ascension of the Indian stocks has made the Indian Market of Securities very lucrative for those interested in making profits by investing in the Indian Stock Exchange. The healthy banking and monetary services have secured the investment possibilities in the Indian Stock Market to a large extent.
The Bombay Stock Exchange BSE, the oldest organization in Asia, gives information about the prices of the shares of the Stock Market in India. The other organizations highlighting on the share trading in the Indian Stock Market are:
The National stock exchange of India (NSE)
Securities and Exchange Board of India (SEBI)
NSDL
CDSL
The Nifty and the Sensex are the indicators which are the parameters denoting the prices of the stocks of the major companies of the NSE and the BSE respectively.
Investing in the Indian Stock Market provides a chance to the interested investors to be rewarded handsomely. The rising curve of the profit in the Indian Stocks foretells that soon India might be one of the most profitable stock market in the world.
The Indian Equity Market is also the other name for Indian share market or Indian stock market. The forces of the market depend on monsoons, global funding flowing into equities in the market and the performance of various companies. The Indian market of equities is transacted on the basis of two major stock indices, National Stock Exchange of India Ltd. (NSE) and the
Bombay Stock Exchange (BSE), the trading being carried on in a dematerialized form. The physical stocks are in liquid form and cannot be sold by the investors in any market. Two types of funds are there in the Indian Equity Market; Venture Capital Funds and Private Equity Funds.
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The equity indices are correlated beyond the boundaries of different countries with their exposure to common calamities like monsoon which would affect both India and Bangladesh or trade integration policies and close connection with the foreign investors. From 1995 onwards, both in terms of trade integration and FIIs India has made an advance. All these have established a close relationship between the stock market indexes of India stock market and those of other countries. The Stock derivatives add up all futures and options on all individual stocks. This stock index derivative was found to have gone up from 12 % of NSE derivatives turnover in 2002 to 35 % in 2004. The Indian Equity Market also comprise of the Debt Market, dominated by primary dealers, banks and wholesale investors.
Indian Equity Market at present is a lucrative field for the investors and investing in Indian stocks are profitable for not only the long and medium-term investors, but also the position traders, short-term swing traders and also very short term intra-day traders. In terms of market capitalization, there are over 2500 companies in the BSE chart list with the Reliance Industries Limited at the top. The SENSEX today has rose from 1000 levels to 8000 levels providing a profitable business to all those who had been investing in the Indian Equity Market. There are about 22 stock exchanges in India which regulates the market trends of different stocks. Generally the bigger companies are listed with the NSE and the BSE, but there is the OTCEI or the Over the Counter Exchange of India, which lists the medium and small sized companies. There is the SEBI or the Securities and Exchange Board of India which supervises the functioning of the stock markets in India.
In the Indian market scenario, the large FMCG companies reached the top line with a double-digit growth, with their shares being attractive for investing in the Indian stock market. Such companies like the Tata Tea, Britannia, to name a few, have been providing a bustling business for the Indian share market. Other leading houses offering equally beneficial stocks for investing
in Indian Equity Market, of the SENSEX chart are the two-wheeler and three-wheeler maker Bajaj Auto and second largest software exporter Infosys Technologies.
Other than some restricted industries, foreign investment in general enjoys a majority share in the Indian Equity Market. Foreign Institutional Investors (FII) need to register themselves with the SEBI and the RBI for operating in Indian stock exchanges. In fact from the Indian stock market analysis it is known that in some specific industries foreigners can have even 100% shares. In the last few years with the facility of the Online Stock Market Trading in India, it has been very convenient for the FIIs to trade in the Indian stock market. From an analysis on the Indian Equity Market it can be said that the increase in the foreign investments over the years no doubt have accentuated the dynamism of the Indian market of equities. Foreign investors are allowed to buy Indian equity for the purpose of converting the equity into ADR or GDR.
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Thus, the growing financial capital markets of India being encouraged by domestic and foreign investments is becoming a profitable business more with each day. If all the economic parameters are unchanged Indian Equity Market will be conducive for the growth of private equities and this will lead to an overall improvement in the Indian economy.
The market for long term securities like bonds, equity stocks and preferred stocks is divided into two categories –
1) Primary Market
2) Secondary Market
Primary market:
The primary market deals with the new issues of securities Stocks available for the first time are offered through primary market. The issuer may be a new company or an existing company. These issues may be of new type or the security used in the past. In the new issue market or primary market the issuer can be considered as a manufacturer. The issuing houses, investment bankers and brokers and brokers act as the channel of distribution for the new issues. They take the responsibility of selling the stocks to the public.
The main service functions of the primary market are origination, underwriting and distribution. Origination deals with the origin of the new issue. The proposal is analyzed in terms of the nature of the security, the size of the issue, and timing of the issue and floatation method of the issue. Underwriting contract makes the share predictable and removes the element of uncertainty in the subscription. Distribution refers to the sale of securities to the investors. This is carried out with the help of the lead managers and brokers to the issue.
The main agencies who are involved in the primary market are underwriters, bankers, advertising agencies, financial institutions and government/statutory agencies.
Secondary Market:
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A market in which an investor purchases a security from another investor rather than the issuer, subsequent to the original issuance in the primary market. Also called Secondary Market.
In the secondary market, the investors can sell and buy securities. Stock market predominantly deals in the equity shares. Well regulated and active stock market promotes capital formation. Growth of the primary market depends on the secondary market. The health of the economy is reflected by the growth of the stock market. The term "secondary market" is also used refer to the market for any used goods or assets, or an alternative use for an existing product or asset where the customer base is the second market
With primary issuances of securities or financial instruments, or the primary market, investors purchase these securities directly from issuers such as corporations issuing shares in an IPO or private placement, or directly from the federal government in the case of treasuries. After the initial issuance, investors can purchase from other investors in the secondary market.
The secondary market for a variety of assets can vary from fragmented to centralized, and from illiquid to very liquid. The major stock exchanges are the most visible example of liquid secondary markets - in this case, for stocks of publicly traded companies. Exchanges such as the New York Stock Exchange, NASDAQ and the American Stock Exchange provide a centralized, liquid secondary market for the investors who own stocks that trade on those exchanges. Most
bonds and structured products trade “over the counter,” or by phoning the bond desk of one’s broker-dealer.
In case of Indian stock market, Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) are the two most important stock exchanges where the transaction being takes place.
Bombay Stock Exchange (BSE):
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Bombay Stock Exchange is the oldest stock exchange in Asia with a rich heritage, now spanning three centuries in its 133 years of existence. What is now popularly known as BSE was established as "The Native Share & Stock Brokers' Association" in 1875.
BSE is the first stock exchange in the country which obtained permanent recognition (in 1956) from the Government of India under the Securities Contracts (Regulation) Act 1956. BSE's pivotal and pre-eminent role in the development of the Indian capital market is widely recognized. It migrated from the open outcry system to an online screen-based order driven trading system in 1995. Earlier an Association of Persons (AOP), BSE is now a corporatized and demutualised entity incorporated under the provisions of the Companies Act, 1956, pursuant to the BSE (Corporatisation and Demutualization) Scheme, 2005 notified by the Securities and Exchange Board of India (SEBI). With demutualization, BSE has two of world's best exchanges, Deutsche Borse and Singapore Exchange, as its strategic partners.
Over the past 133 years, BSE has facilitated the growth of the Indian corporate sector by providing it with an efficient access to resources. There is perhaps no major corporate in India which has not sourced BSE's services in raising resources from the capital market.
Some of the listed companies under BSE:
ACC Ltd. Cement and cement productsAmbuja Cements Ltd. Cement and Cement ProductsBajaj Auto Ltd. Automobiles - 2 and 3 WheelersBharat Heavy Electricals Ltd. Electrical EquipmentBharti Airtel Ltd. Telecommunication - ServicesCipla Ltd. PharmaceuticalsDLF Ltd. Developers/ConstructionGrasim Industries Ltd. DiversifiedHousing Development Finance Corporation Ltd. Finance - HousingHDFC Bank Ltd. BanksHindalco Industries Ltd. AluminiumHindustan Unilever Ltd. FMCGICICI Bank Ltd. BanksInfosys Technologies Ltd. Information TechnologyITC Ltd. FMCG
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Larsen & Toubro Ltd. EngineeringMahindra & Mahindra Ltd. Automobiles - 4 wheelersMaruti Udyog Ltd. Automobiles - 4 wheelersNTPC Ltd. PowerOil & Natural Gas Corporation Ltd. Oil Exploration/ProductionRanbaxy Laboratories Ltd. PharmaceuticalsReliance Communications Limited TelecomReliance Energy Ltd. PowerReliance Industries Ltd. RefineriesSatyam Computer Services Ltd. Computers - SoftwareState Bank of India BanksTata Consultancy Services Ltd. Computers - SoftwareTata Motors Ltd. Automobiles - 4 WheelersWipro Ltd. Computers – Software
National Stock Exchange (NSE):
The National Stock Exchange (NSE), located in Bombay, is India's first debt market. It was set up in 1993 to encourage stock exchange reform through system modernization and competition. It opened for trading in mid-1994. It was recently accorded recognition as a stock exchange by the Department of Company Affairs. The instruments traded are, treasury bills, government security and bonds issued by public sector companies.
In National Stock Exchange there is trading of equity shares, bonds and government securities. India's Stock Exchanges particularly National Stock Exchange has achieved world standards in the recent years. The NSE India ranked its 3rd position since last four years in terms of total number of trading per calendar year.
Presently there are 24 stock exchanges in India, out of which 20 have exchanges National Stock Exchange (NSE), over the Counter Exchange of India Ltd, (OTCEI) and Inter-connected Stock Exchange of India limited (The fully computerized National Stock Exchange (NSE) is considered India’s second exchange. Also based in Mumbai, it was set up in 393 and allows traders from other Indian cities access to stocks of thousands of companies through its screen-based trading system. Its network covers more than 40 cities across India. The NSE is also set to start derivatives trading.
The main index of the NSE is the S&P CNX Nifty, a diversified blue-chip index comprised of 50 stocks accounting for 25 sectors of the economy. To be included in the index a company should have a market capitalization of at least 5 billion rupees. The NSE also
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developed a dollar-denominated version of the Nifty called S&P CNX Defty, which is aimed at FLLs. There is also the Nifty Junior which is comprised of the next 50 largest liquid stocks in India. The NSE produces the S&P CNX 500, India’s first broad-based benchmark, representing about 90 per cent of total market capitalization and about 98 per cent of the NSE’s total turnover. In addition, there are numerous industry indices, including the IT sector and public sector enterprises.
Following are the National Stock Exchange group:
NSCCL
NCCL NSETECH
IISL
NSE NSE.IT
DotEx Intl. Ltd.
NSDL
Some of the listed companies under NSE:
Hindustan Unilever Ltd. DiversifiedHousing Development Finance Corporation Ltd. Finance - HousingI T C Ltd. CigarettesICICI Bank Ltd. BanksInfosys Technologies Ltd. Computers - SoftwareLarsen & Toubro Ltd. EngineeringMahanagar Telephone Nigam Ltd. Telecommunication - ServicesMahindra & Mahindra Ltd. Automobiles - 4 wheelers
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Maruti Udyog Ltd. Automobiles - 4 wheelersNTPC Ltd. PowerNational Aluminium Co. Ltd. AluminiumOil & Natural Gas Corporation Ltd. Oil Exploration/ProductionPunjab National Bank Banks
INDIAN COMMODITY MARKET
Investment in India has traditionally meant property, gold and bank deposits. The more risk-taking investors choose equity trading. But commodity trading forms a part of conventional investment instruments. As a matter of fact, future trading in commodities was banned in India in mid-1960 due to excessive speculation. In February 2003, the government revoked the ban and threw open futures trading in 54 commodities in bullion and agriculture. It gave the go-ahead to four exchanges (The National Commodity and Derivative Exchange (NCDEX), The Multi Commodity Exchange of India (MCX), The National Multi Commodity Exchange of India (NMCE) and The National Board of Trading in Derivatives (NBOT)) to offer online trading in commodity derivatives products.
The gradual evolution of commodity market in India has been of great significance for our country's economic prosperity. In the Indian commodity market there are so many verities of products including agricultural products like rice, wheat, cattle etc; energy products like coal, petroleum, kerosene, gasoline; metals like copper, gold, silver, aluminum and many more. There are some delicate commodities also such as sugar, cocoa, and coffee, which is perishable, so cannot be put in stock for long time. The commodity futures exchanges were evolved in 1800 with the sole objective of meeting the demand of exchangeable contracts for trading agricultural commodities. Nowadays a wide range of agricultural products, energy products, delicate commodities and metals can be sold under standardized contracts on exchanges prevailing across the globe. Commodities have gained importance with the development of commodity futures indexes along with the mobilization of more resources in the commodity market.
CHANNEL BUSINESS MODEL VS OWN BRANCH MODEL
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DEFINITION OF CHANNEL BUSINESS MODEL- When producers of products or service do not sell or serve their product or service to the final users, between them stands a set of intermediaries, performing a variety of functions. These intermediaries constitute a marketing channel(also called a trade channel or distribution channel).When a company expand its business through distribution channel, it is called CHANNEL BUSINESS MODEL.
These intermediaries are basically business partner of the main company. Generally these intermediaries have to deposit some amount for using the goodwill, name, product or service of the company. In lieu of this they get share of the total profit. Company gives the intermediaries knowledge and support about the utility of their product or service to make the channel business Successful.
In India LIC is the most successful financial organization. They use CHANNEL BUSINESS MODEL. No other company are able to expand its business in remote corners of the country like LIC as it does not possess better channel than LIC. Now the other companies are following the same path of LIC.
In recent years Monginis one of the most successful bakery in West Bengal, who runs their business using channel business model.
In share broking industry most of the share broking companies uses this channel business model. Motilal Owsal, India Infoline became most successful broking house using this channel business model.
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DEFINITION OF OWN BRANCH MODEL- When producers of products or service sell their product or service to the customer directly through its own machinery, it is called OWN BRANCH MODEL.
In this model company establishes its own branches in different location to sell its product or service. In this model company has to invest huge capital to establish its branches towards rent or purchase place, to maintain human resource etc. Company also have to bear its establishment charge. Generally bank’s operate through own branches. In gem and jewellery sector in West Bengal P.C.Chandra & company, Anjali jewelers acquire success through own branch model.
In broking industry some companies follow own branch model. Companies like Kotak securities ltd, India Bull follow this model and they became successful.
ADVANTAGES AND DIS ADVANTAGES OF CHANNEL BUSINESS MODEL AND OWN BRANCH MODEL
Both the models have some advantages and disadvantages. These are explained in the following lines.
CHANNEL BUSINESS MODEL-
ADVANTAGES:
1.No Capital Investment- In channel business model company need not invest any capital. Here the channel business partners invest and bear the incidental expenses. So company has no financial headache. So by following this model company can expand into the remote corners of the country without investing any capital.
2.No Human Resource Cost- As in channel business model there is no employee Of the company so company has no human resource cost. Now a days human resource cost is one of the biggest cost for a company. So in channel business model human resource cost is avoided.
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3.No Marketing Cost- In channel business the business partner himself markets his own business. So the company need not market for its business. So the company indirectly gets the brand promotion. Therefore the company need not make any expenditure towards marketing.
4.Better Penetration- Through this model the company can penetrate every corner of the country. But the company bears no capital cost, supplies only its product and goodwill.
5. Faster and more cost effective way to Brand Building- Channel business model is the fastest and more cost effective way for brand building. As channel business partner comes from different corners so companies product, service, brand name are well circulated. People are well aware of the activity of the company.
DISADVANTEGES
1.Less control- In channel business model the company has less control over the channel partners
as the partner is not its own employee. So the company cannot manage according to its will.
2.Difficulty in maintaining the service standard- The success of channel business model depends on the effective /standard service of the company. If the company has large numbers of channel business partners, its become difficult for a company to maintain the standard/effective service. This is harmful for the business of the company.
3.Profit sharing- In channel business the company has to share its profit with his channel business partner.
4. Lack of relation between customer and company- In channel business model the customers enlist their names to the channel business partners, the relationship between the customers and the business partners grows. As the customers have no direct relation with the company, no such relation generally grow with the main company.
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5. Misrepresentation of brand / Brand dilution- If the channel business partner is involved in any legal controversy with the customer the goodwill of the company effected. But the company has nothing to do.
OWN BRANCH MODEL
ADVANTAGES
1.Better human resource- In own branch model company can recruit its employee as per its choice and standard. Generally the employees of the company are well educated, they render useful services to the customers. This service helps to expand the goodwill of the company .
2.Better service- In own branch model company has its own well educated and trained personals so company can serve better service towards its customer. In own branch model company has direct relation with its customer so company can offer better and standard service to its customer.
3.No profit sharing- In own branch model company need not share any profit with its business
partner. So company gets hundred percent profit.
4.Direct relation between customer and company- As the company has direct relation with its
customer, any time the company can communicate with its customer easily. Customer can also
contacts company whenever necessary. Company earns faith of the customers by direct relation.
5.Better control- In own branch model company has better control on its employee. This control
helps the company to achieve its vision and mission. If there is any misunderstanding between the
company and the customer, the company can take necessary action to solve the problem at an
earliest.
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DISADVANTAGES
1.Huge capital investment- In own branch model company has to invest huge capital to establish its branches in different corners. More over it has to spend a large sum of money to run the branches. So sometimes it may be a burden on the company.
2.Problem with human resource- An experienced human resource is always an asset to the company. But always adequate experienced personals are not available in mofussil and rural areas. Lack of experienced personal in mofussil branches the company may not render good service to the customer so company may face loss due to shortage of customer.
3.Low penetration- It is not possible for a company to establish its branches in remote corners so there will low penetration. It may affect the growth of the company.
4.Slower way for brand building- It is not easy to establish branches whenever necessary, so the growth of the company falls back and ultimately the brand building of the company also effected so it is a slower way of brand building.
5.Higher marketing cost- Marketing is very necessary to run a branch. But it needs a huge sum of money for advertisement and ancillary works. This expenditure effects the balance sheet of the company.
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STUDY DESIGN
Personal interaction with the project guide to set up the research objective and
evolve the detail action plan.
Searching of relevant information about the project to identify the key issue
which could form the basis for the main questionnaire.
Design of structured close-end questionnaire.
Planning of market survey (whom to visit, how to visit, time duration of survey,
area of survey etc.).
Filling up of questionnaire.
Analysis of data collected through questionnaire.
Discussion with internal project guide.
Preparation of final summer training report.
Submission of the complete report to the program coordinate
RESEARCH METHODOLOGY
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I have done a research in order to judge the acceptability of branch and channel partners to the customers of various economic and social backgrounds. We have more than 50 channel associates and 4 branches in NIRMAL BANG SECURITY PVT LTD
Research Objective :
A survey was done on the traders and non traders. The survey was directed at certain target and the main objectives of the survey are as follows:
To clearly identify the awareness level about Nirmal Bang Financial Group.
To clearly identify the awareness level about the advantage and disadvantage of own branch and franchisee.
To find out the expectations of the investors regarding the service provided by a broking firms and sub brokers.
To take proper initiative to satisfy investor and sub brokers’ expectations.
Research Approaches
Primary data are collected through survey method.
Survey ---- survey is the best suitable method for descriptive research. Surveys are mainly done to know about people’s opinion, beliefs, preferences etc. I have done a survey to know traders and
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non traders preference between company’s own branch against franchisee and for that purpose I interviewed large number of investors and non investors in equity market in Kolkata, Hooghly
district.
Research Instrument
Questionnaire is used as a research instrument.
Questionnaire ---- The questionnaire is the most common instrument to collect primary data. It consists of a set of questions. There are mainly two types of questionnaires – open-end and closed-end. In my survey I used closed-end questionnaire.
Sample Plan
After deciding on the research approaches and instruments, I design a sampling plan.
Sampling unit ---- It means - who is to be surveyed?
In my survey I collect data from traders as well as non traders in different part of Kolkata and Hooghly district.
Sample size ---- It means – how many people should be surveyed?
In my survey a total sample size of 100 people is covered to collect primary data.
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Sample procedure ---- It defines – how should the respondents be chosen?
I visited different franchisee, market in different location .
Area coverage ---- Kolkata,Rishra,Chunchura,Srerampur,Konnagar.
Sampling Technique
For any kind of research work, a proper sampling method is required. Sampling means understanding the needs and the demands in different market segments. By the help of proper techniques a sampling can be done. As we choose a sample consisting of people from different occupation e.g. service, business etc. a stratified sampling technique is adopted.
Stratified Sampling also has some following advantages:
Easy research process.
Increase of Accuracy.
Error Free Research.
Easy analysis of survey.
LIMITATION OF THE STUDY
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1. I have gathered information and data from the secondary source like internet. These data may be true or not.
2. People do not have sufficient knowledge to distinguish between advantages and disadvantages of trading between companies own branch and franchisee.
3. For primary data, I filled questionnaire from 100 people to suggest proper expansion model for Nirmal Bang in Eastern Region. Now based on the opinion of such a small sample size it is very difficult to suggest anything for greater and diversified area.
4. Some times people never read the questionnaire seriously, they just filled it quickly and run away. In such way it is almost impossible to get the real opinion of people.
DATA ANALYSIS AND INTERPRETATION
As per survey location they can be classified in to 3 categories –
1. City2. Rural or interior location3. Town
1. Awareness about Nirmal Bang .
It is found that 8% of the investors are aware of the company Nirmal Bang and the remaining 92% of the investors are not aware of the company.
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2. Mode of earning of the investors in city.
Among the 100 investors whom were surveyed 31% are office goers, 63% are business persons and the remaining 6% have other mode of earning.
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3.Mode of earning of investors in town and rural area-
Among the 100 investors whom were surveyed 41% are office goers, 56% are business persons and the remaining 3% have other mode of earning.
3.Preference in city- Customers residing in cities prefer own branches over channel partners or franchises, the main reason being security. There are various other reasons as follows –
o Security: - People in cities expect assured service even if it comes at slightly higher price. The services provided at different own branches of a company naturally comes with more assurance of quality and availability, rather than those provided by channel partners. Moreover, since this is an insurance company, lots of money is always at stake. So naturally, customers strive for more security than anything else. They think that chances of any kind of fraud activities are much less if they can contact the company directly, rather than through some third party (in this case channel partners).
o High Profile Customer: - High profile customers are major go to for the companies in any business. For these kinds of customers, the security is not the only concern. So, they want
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better service in every way and also direct attention of the company. So for them, branches are always a better choice.
o Effective Relationship Management: - Service is not of sole importance, it is also important HOW you provide the service. So, relationship management is very important aspect of any business and it is truer in our case. Customers should not feel ignored. The companies are well aware of this fact, and they strive for excellence in maintaining good business relation with each and every customer. But, the channel partners may not always be able to do that, simply because of lack of investment and proper man-power too (they obviously are not such BIG business units like companies). So, branches in cities win in this aspect and they are more preferable to the city-customers.
o Effective risk management: - Branches owned by companies posses much more effective risk management which is again a major area of concern for customers. So they have easily become the first choice for customers in cities.
PREFERENCE
4.Preference in interior or rural area- In interior side, the acceptability criteria changes and so does acceptance. Customers in rural area prefer channel associates over own branches. The reasons are as follows -
o Mobility Criteria: - The idea of channel associates came up because of this mobility factor. Companies can not always set up a branch in these rural places. They think that it will not be profitable investment as businesses are expected to be slightly lower in those places. So they channelize there business through channel-associates in those rural areas. Naturally channel
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partners are more available to the customers in interior side. So availability becomes a big issue here.
o Well-known employees: - Customers in rural areas can rely more on people they know personally. They prefer well-known people more than a well-trained but unknown officiates. In the case of insurance policies, this factor becomes even more important for them. As the franchises are based locally, they naturally employ local people and this comes as an advantage over branches.
o Positive customers: - Channel associates only have positive customers who invest in good amount.
PREFERENCE
5.Preference in town- As customers in towns are based in the middle sphere of society both economically and socially, so they prefer both channel associates and company own branches.
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PREFERENCE
Data Sources
During the survey both primary and secondary data are collected.
Primary data are those data which are gathered freshly for a specific purpose or research objective.
Primary Data Sources ---- Structured Questionnaire , INTERNET, BROCHURE
Secondary data are collected from the sources which are already exist somewhere.
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Secondary Data Sources ---- Books, Internet and Newspaper.
FINDINGS & RECOMENDATION
The major findings that were revealed during the research are as follows :-
FINDINGS
1.The level of awareness among the investors about Nirmal Bang is very low
2.Most of the investors are businessman, the tendency of investing is much high among the businessmen than those involved in service.
3.Most of the investors are invest their money from Kotak securities, Sharekhan, Motilal Oswal and very few of them are known about Nirmal Bang securities pvt.ltd.
4. The most popular source of information about the market among the investors are television
and newspaper followed by internet and business magazines.
5. People who trade in franchisee they face one common problem that is lack of
proper infrastructure. Many franchisees do not have proper back up for electricity and broad band service.
6. Franchisee owners have lack of knowledge regarding stock / commodity market. Many franchisees have not clear idea about the equity and commodity market.
7. In franchisee traders have to pay high brokerage charge.
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8 Traders of small town and rural area give more importance on personal
Relation and mobility.
9. Traders who have big portfolio they like to trade from company’s own
branch.
10. In city traders prefer to trade in company’s own branch.
11. Sometimes franchisee’s do not able to give proper service and guidance.
12. The investors provided valuable suggestions about better service of a broking firm. The
most popular suggestions are
Good tips and calls.
Less brokerage.
Easy money transfer (pay-in and pay-out).
Good trading software.
Regular research reports.
Educating the clients about the market.
Good relation with the dealers and the relationship manager.
RECOMMENDATION
Keeping in mind the preference and demand of the people in different locations and studying both channel business model and own branch model and comparing the advantages and disadvantages of the models I would like to provide some suggestions
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which may help Nirmal Bang to choose proper expansion strategy for the growth of its market share in Eastern Region.
1.Improve the brand awareness of Nirmal Bang by increasing advertisements and promotional activities like performing campaigning programs. This will improve the brand of Nirmal Bang which will help to attract more clients.
2.Customers residing in cities prefer own branches over channel partners or franchises, the main reason being security, effective relationship management, risk management system. Besides these the high profile client prefer companies own rather than franchisee. So in cities company can go for own branch model.
3.Customers in rural area prefer channel associates over own branches due to easy communication with channel associates ,as it is not always possible for them to contact with main office. The customers of rural area emphasize on personal relation. So in rural area company can go for channel business model.
4.In town customers prefer both franchisee and branch. So in town company should make a thorough market study and take its decision.
5.If in city company goes for channel business model then that franchisee should possess good infrastructure and human resource otherwise that franchisee will not able to compete with other companies’ branches and franchisee.
6.Company should train its franchisees about the equity and commodity market so that they can give better service and knowledge to their customers.
7.In case of channel business model the company may occasionally send its personal to the franchisee’s office to inspect the activities of the franchisee and gives its proper support and guidance where necessary.
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LEARNING/WORKING TILL DATE
The 14 weeks at Nirmal Bang had been a very fruitful experience. The axiom which states that there is a lot of difference between bookish knowledge and practical knowledge has found a perfect manifestation in my three month SIP at Nirmal Bang. The corporate structure is completely different. I worked in a Nirmal Bang franchisee at Chunchura. Here I got the chance to implement my marketing knowledge and skill to develop the business of the franchisee.
A unique learning opportunity that I got at Nirmal Bang was to get an understanding of the process of developing a business of a small office. The process is explained in details below
DATABASE COLLECTION
The initial task was to create a database of the potential individual client. The database was formed through various methods. Firstly, the name and phone numbers of the investors were collected from the internet and from newspaper. Secondly, initially I had to accompany my seniors to campaigning programs where name and phone numbers of individual clients were collected.
FIXING APPOINTMENTS
The next step in acquiring clients were to give them a call and finalizing an appointment with the interested individuals.
VISITINGS POTENTIAL CLIENTS
After the appointment is fixed, the next step was to visit these potential clients. I was most of the time accompanied by a senior while visiting any client. I had to visit many clients mostly in Chunchura,Rishra,Sreerampur, Konnagar, etc. In these client visits, we used to pitch our product and services according to the needs of the clients.
FOLLOW UP PROCESS
Most of the potential clients were not readily convinced at the first visit. Thus I had to keep in touch with these clients and updating my seniors with the present situation
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CLOSING DEAL
When a client is convinced, we needed to close the deal by filling up our forms and getting the required documents like Xerox of PAN card, Xerox of address proof, photograph, etc. When all these formalities were completed, only then the deal was completed.
CAMPAIGN PROGRAM
I did campaign program in different locations like different railway station, market etc for publicity. From this campaign program we ware to able make us known name in Chunchura as well as its surroundings.
RECRUITMENT OF MARKETING EXECUTIVES
As Chunchura and its surrounding is very potential market. So we recruit two marketing executives for marketing to capture the market and to generate new client base. I also trained them as per requirement.
RESULT
As a result of the above mentioned process, in my 2 months of SIP I was able to open the account of 10 individual clients. Also many individual clients are still in the follow up process and are partially convinced.
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CONCLUSION
The two months summer internship project has been a learning experience for me. This is my first job experience in any financial institution and experience at Nirmal Bang will always serve me as a guiding map for the rest of my career.
In this two months training I have learnt that stock market (equity market) plays a vital role in the economic development of a nation. The equity markets are set for an exceptional growth in the future with the adoption of technology and thereby bringing in transparency, ensuring quality standards. Government institutions and market participants have to work towards increasing the awareness regarding stock market futures among the general inhabitants, So after almost two years that stock market is finding favors with Indian investors and is been seen as a separate asset class with good growth opportunities. Sometimes stock market are being effected by market volatility but those problems are being solves out with the high quality of technology and proper information about Indian stock market.
In conclusion, the two months summer internship project has been learning experience for me. My experience at Nirmal Bang will always serve me as a guiding map for the rest of my career. In my two months’ SIP I was able to apply my little marketing knowledge, experience and skill. I also understood the importance of expansion strategy of a company to develop its business. This strategy also varies according to location of the institution and need and expectation of people.
My SIP at Nirmal Bang is a perfect blend of corporate and market exposure coupled with hands on experience will serve as an important ingredient in my recipe of success in all future endeavors.
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BIBLIOGRAPHY
For the preparation of project and other required concepts following websites are consulted for the information –
www.nirmalbang.com
www.answers.com
www.businessstandard.com
www.google.com
http://en.wikipedia.org/wiki
Following books, magazine and newspapers are also consulted:
1) Business World
2) Business Economy
3) The Economic Times
4) Business standard
5) Business line
6) Security analysis and Portfolio management (Punithavathy Pandian)
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A N N E X U R E
1. Your mode of earning
o Serviceo Businesso Others
2. If service
o Company name:-o Designation:-
3. Which mode of investment do you prefer?
(A) Mutual fund (B) Insurance (C) Bank(D) Fixed deposit (E) Share (F) Others
4. Do you know anything about NIRMAL BANG Pvt. Ltd.?
o Yeso No
5. Do you have any idea about equity market and commodity market?
o Yeso No
6. Do you trade in share-market?
o Yeso No
7. Do you trade
o Dailyo Weeklyo Monthly
8. Where do u prefer to trade?
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o Brancho Franchise
9. If you prefer branch, then why?
(A) High exposure facility (B) Better service(C) Better return (D) Mobility
10. If you prefer franchise, then why?
(A) High exposure facility (B) Better service(C) Better return (D) Mobility
11. What kind of service do you expect from branch?
12. What kind of service do you expect from franchise?
13. Customer’s feedback about franchise/own branch
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