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<p>PROJECT REPORT</p> <p>Measures for Improving Retail Investors Confidence in Indian Primary Market</p> <p>RELIGARE SECURITIES LTD. Submitted to:DR. Y.P. SINGH Faculty IISE Lucknow</p> <p>Submitted by:TARUN PRAKASH SINGH P.G.D.B.A. II Enroll. No. - 878 Session: 2006-2008</p> <p>INTERNATIONAL INSTITUTE FOR SPECIAL EDUCATION</p> <p>ACKNOWLEDGEMENTWhen walking down the path of life, remember its true that every man must feel the thorns that grow along the way and every soul will stumble for every man is weak and the road of life is uncertain and its prospects often bleak. But always give a helping hand to help the soul beside you walk across each weary mile. I hereby express my profound gratitude to all those respected people who supported me in the completion of this project. I would like to thank my company guides, Mr. Sameer Kaila (Branch Head, Religare, Janakpuri branch), Mr. Chander Narula (RM, Religare, Janakpuri Branch) and all the staff members of Religare (Janakpuri Branch) for their cooperation and support. I would also like to extend my thanks to my project guide, Mr. Anurag Singh (Faculty, DSPSR) for his constant support and valuable suggestions without which this project would not been successfully completed. Lastly, no words are enough to express my heartiest gratitude to my parents whose blessings are inspiration in the foundation of my work. I am really thankful to all of them for their immense support and valuable guidance in the completion of this project.</p> <p>(TARUN PRAKASH SINGH)2</p> <p>TABLE OF CONTENTSS No. 1 I II III IV V 2 I II III IV V VI VII VIII IX X 3 I II III IV V VI VII VIII IX 4 5 Topic Introduction Of The Company About Company Group Company Promoter Group Business Interests Business Line Brand Identity An Overview Of The Capital Market Capital Market Primary Market Methods Of Issuing Securities In The Primary Market Eligibility Norms For Making Issues SEBIs Role In An Issue Retail Investor Defined Promoter Defined Pricing And Allotment Of Issue IPO As An Investment Avenue For Retail Investors Learn Before You Leap Into The IPO Mart Project Report Introduction Need Of The Study Results Of Literature Survey Objective Proposed Methodology Data Analysis &amp; Interpretation Limitations The Conclusion Recommendations Bibliography Questionnaire Page Nos. 4-5 6-8 9 10 11-12 13 13-14 15-17 18-19 20-21 22 22-23 24-26 27-28 29-32 33-34 35 36 37 38 39-50 51 52-54 55-56 59 60-61</p> <p>3</p> <p>INTRODUCTION OF THE COMPANYABOUT COMPANY Religare is driven by ethical and dynamic process for wealth creation. Based on this, the company started its endeavor in the financial market. Religare Enterprises Limited (A Ranbaxy Promoter Group Company) through Religare Securities Limited, Religare Finvest Limited, Religare Comdex Limited and Religare Insurance Advisory Services Limited provides integrated financial solutions to its corporate, retail and wealth management clients. Today, we provide various financial services which include Investment Banking, Corporate Finance, Portfolio Management Services, Equity &amp; Commodity Broking, Insurance and Mutual Funds. Plus, theres a lot more to come your way. Religare is proud of being a truly professional financial service provider managed by a highly skilled team, who have proven track record in their respective domains. Religare operations are managed by more than 1500 highly skilled professionals who subscribe to Religare philosophy and are spread across its country wide branches. Today, we have a growing network of 150 branches and more than 300 business partners spread across 180 cities in India and a fully operational international office at London. However, our target is to have 350 branches and 1000 business partners in 300 cities of India and more than 7 International offices by the end of 2006.</p> <p>4</p> <p>Unlike a traditional broking firm, Religare group works on the philosophy of partnering for wealth creation. We not only execute trades for our clients but also provide them critical and timely investment advice. The growing list of financial institutions with which Religare is empanelled as an approved broker is a reflection of the high level service standard maintained by the company. VISION To build Religare as a globally trusted brand in the financial services domain and present it as the Investment Gateway of India. MISSION Providing financial care driven by the core values of diligence and transparency. BRAND ESSENCE Religare is driven by ethical and dynamic processes for wealth creation.</p> <p>5</p> <p>GROUP COMPANIES Religare Enterprises Limited group comprises of Religare Securities Limited, Religare Comdex Limited, Religare Finvest Limited and Religare Insurance Advisory Services Limited which deal in equity, commodity and financial services business.</p> <p>Religare Securities Limited Member of National Stock Exchange of India (NSE) and Bombay Stock Exchange of India (BSE). Depository Participant with National Securities Depository Limited (NSDL) and Central Depository Services (I) Limited (CDSL), A SEBI approved Portfolio Manager. RSL serves a platform to all segments of investors to avail the opportunities offered by investing in Indian equities either on their own or through managed funds in Portfolio Management</p> <p>6</p> <p>Religare Comdex Limited Member of National Commodity Derivative Exchange (NCDEX) and Multi Commodity Exchange (MCX). RCL provides platform to both agro and non-agro commodity traders to derive the actual price of the commodity and also to trade and hedge actively in the growing commodity trading market in India. Religare Finvest Limited A Non Banking Finance Company (NBFC) is aggressively making a name in the financial services arena in India. In a fast paced, constantly changing dynamic business environment, RFL has delivered the most competitive products and services. RFL is primarily engaged in the business of providing finance against securities in the secondary market. It also provides finance for application in Initial Public Offers to non-retail clients in the primary market. RFL is also planning to initiate personal loan portfolio as fund based activity and mutual fund distribution as fee based activities. Religare Insurance Advisory Services Ltd. Religare has been taking care of financial services for long but there was a missing link. Financial planning is incomplete without protective measure i.e. structured products to take care of event of things that may go wrong. Consequently, Religare is soon coming up with Religare Insurance Advisory Services Limited. As composite insurance broker, we would deal in both insurance and reinsurance, providing our clients risk transfer solutions on life and non-life sides.</p> <p>7</p> <p>This service will take benefit of Religares vast business empire spread throughout the country -- providing our valued clients insurance services across India. We aim to have a wide reach with our services literally! Thats why we are catering the insurance requirements of both retail and corporate segments with products of all the insurance companies on life and non-life side. Still, there is more in store. We also cater individuals with a complete suite of insurance solutions, both life and general to mitigate risks to life and assets through our existing network of over 150 branches expected to reach 250 by the end of this year! For corporate clients, we will be offering value based customised solutions to cover all risks which their business is exposed to. Our clients will be supported by an operations team equipped with the best of technology support. RIAL aims to provide neutral, transparent and professional risk transfer advice to become the first choice of India.</p> <p>8</p> <p>PROMOTER GROUP BUSINESS INTERESTS</p> <p>Pharma</p> <p>DiagnosticsGroup Business Interests</p> <p>Healthcar e</p> <p>Financial Services</p> <p>9</p> <p>BUSINESS LINES</p> <p>Equity &amp; Derivative Private Equity Institutional Distribution</p> <p>Investment Banking &amp; Corporate Finance Wealth Management Services</p> <p>Depository Services</p> <p>Commodity Services International Equity &amp; Commodity</p> <p>10</p> <p>BRAND IDENTITY The Name Religare is a Latin word that translates as 'to bind together'. This name has been chosen to reflect the integrated nature of the financial services the company offers. The name is intended to unite and bring together the phenomenon of money and wealth to co-exist and serve the interest of individuals and institutions, alike. The Symbol The Religare name is paired with the symbol of a four-leaf clover. The four-leaf clover is used to define the rare quality of good fortune that is the aim of every financial plan. It has traditionally been considered good fortune to find a single four leaf clover considering that statistically one may need to search through over 10,000 three-leaf clovers to even find one four leaf clover. Each leaf of the four-leaf clover has a special meaning in the sphere of Religare. The first leaf of the clover represents Hope. The aspirations to succeed. The dream of becoming. Of new possibilities. It is the beginning of every step and the foundations on which a person reaches for the stars. The second leaf of the clover represents Trust. The ability to place ones own faith in another. To have a relationship as partners in a team. To accomplish a given goal with the balance that brings satisfaction to all not in the binding but in the bond that is built. The third leaf of the clover represents Care. The secret ingredient that is the cement in every relationship. The truth of feeling that underlines sincerity and the triumph of diligence in every aspect. From it springs true warmth of service and the ability to adapt to evolving environments with consideration to all. The fourth and final leaf of the clover represents Good Fortune. Signifying that rare ability to meld opportunity and planning with11</p> <p>circumstance to generate those often looked for remunerative moments of success. Hope, Trust, Care, Good fortune. All elements perfectly combine in the emblematic and rare, four-leaf clover to visually symbolize the values that bind together and form the core of the Religare vision. Accent usage The diacritical tilde mark ( ) over the letter A in the Religare typeface indicates a palatal emphasis sound of the letter A. Pronunciation religare (rel'i-gir)</p> <p>12</p> <p>AN OVERVIEW OF THE CAPITAL MARKETCAPITAL MARKET Capital Market is the backbone of any countrys economy. It facilitates conversion of savings to investments. Capital market can be classified as primary and secondary market. The fresh issue of securities takes place in primary market and trading among investors takes place in secondary market. Primary market is also known as new issues market. Equity investors first enter capital market through investment in primary market. These new securities issued in the primary market are traded in the secondary market. The secondary market enables participants who hold securities to adjust their holdings in response to changes in their assessment of risks and returns. PRIMARY MARKET The primary is that part of the capital markets that deals with the issuance of new securities. Companies, governments or public sector institutions can obtain funding through the sale of a new stock issue. This is typically done through a syndicate of securities dealers. The process of selling new issues to investors is called underwriting. In the case of a new stock issue, this sale is an initial public offering (IPO).</p> <p>13</p> <p>Features of Primary Market are:1. This is the market for new long term capital. The primary market is the market where the securities are sold for the first time. Therefore it is also called New Issue Market (NIM). 2. In a primary issue, the securities are issued by the company directly to investors. 3. The company receives the money and issue new security certificates to the investors. 4. Primary issues are used by companies for the purpose of setting up new business or for expanding or modernizing the existing business. 5. The primary market performs the crucial function of facilitating capital formation in the economy.</p> <p>14</p> <p>METHODS OF ISSUING SECURITIES IN THE PRIMARY MARKET Primarily, issues can be classified as a Public, Rights (for existing Companies) or Preferential Issue (also known as private placements). While public and rights issues involve a detailed procedure, private placements or preferential issues are relatively simpler.</p> <p>Public issues can be further classified into Initial Public Offerings (IPO) and Further Public Offerings (FPO). In a public offering, the issuer makes an offer for new investors to enter its shareholding family. It then makes detailed disclosures as per the guidelines in its offer document and offers it for subscription.</p> <p>15</p> <p>Initial Public Offering (IPO) is when an unlisted company makes either a fresh issue of securities or an offer of sale of its existing securities or both for the first time to the public. This paves way for listing and trading of the issuers securities. A Further Public Offering (FPO) is when an already listed company makes either a fresh issue of securities to the public or an offer for sale to the public, through an offer document. An offer for sale in such scenario is allowed only if it is made to satisfy listing or continuous listing obligations. Rights Issue (RI) is when a listed company which proposes to issue fresh securities to its existing shareholders as on a record date. The rights are normally offered in a particular ratio to the number of securities held prior to the issue. This route is best suited for companies who would like to raise capital without diluting stake of its existing shareholders unless they do not intend to subscribe to their entitlements. A Private Placement is an issue of shares or of convertible securities by listed companies to a select group of persons under Section 81 of the Companies Act, 1956 which is neither a rights issue nor a public issue. This is a faster way for a company to raise equity capital. A private placement of shares or of convertible securities by a listed company is generally known by name of preferential allotment. A listed company going for preferential allotment has to comply with the requirements contained in Chapter XIII of SEBI (DIP) Guidelines pertaining to preferential allotment in SEBI (DIP) guidelines which interalia include</p> <p>16</p> <p>pricing, disclosures in notice etc, in addition to the requirements specified in the Companies Act. A Qualified Institutions Placement is a private placement of equity shares or securities convertible in to equity shares by a listed company to Qualified Institutions Buyers only in terms of provisions of Chapter XIIIA of SEBI (DIP) guidelines. The Chapter contains provisions relating to pricing, disclosures, currency of instruments etc.</p> <p>17</p> <p>ELIGIBILITY NORMS FOR MAKING ISSUES SEBI has laid down eligibility norms for entities accessing the primary market through public issues. There is no eligibility norm for a li...</p>