CHAPTER III – COMPANY PROFILE

IIFL Ltd

The IIFL (India Infoline) group, comprising the holding company, India Infoline Ltd and its
subsidiaries, is one of the leading players in the Indian financial services space. IIFL offers
advice and execution platform for the entire range of financial services covering products
ranging from Equities and derivatives, Commodities, Wealth management, Asset
management, Insurance, Fixed deposits, Loans, Investment Banking, Gold bonds and other
small savings instruments. IIFL recently received an in-principle approval for Securities
Trading and Clearing memberships from Singapore Exchange (SGX) paving the way for IIFL
to become the first Indian brokerage to get a membership of the SGX. IIFL also received
membership of the Colombo Stock Exchange becoming the first foreign broker to enter Sri
Lanka. IIFL owns and manages the website, www.indiainfoline.com, which is one of India’s
leading online destinations for personal finance, stock markets, economy and business.

IIFL has been awarded the ‘Best Broker, India’ by Finance Asia and the ‘Most improved
brokerage, India’ in the Asia Money polls. India Infoline was also adjudged as ‘Fastest
Growing Equity Broking House - Large firms’ by Dun & Bradstreet. A forerunner in the field
of equity research, IIFL’s research is acknowledged by none other than Forbes as ‘Best of the
Web’ and ‘…a must read for investors in Asia’.

The company’s research is available not just over the Internet but also on international wire
services like Bloomberg, Thomson First Call and Internet Securities where it is amongst one
of the most read Indian brokers.
A network of over 2,500 business locations spread over more than 500 cities and towns
across India facilitates the smooth acquisition and servicing of a large customer base. All our
offices are connected with the corporate office in Mumbai with cutting edge networking
technology. The group caters to a customer base of about a million customers, over a variety
of mediums viz. online, over the phone and at our branches.

VISION
The company’s vision is to be the most respected company in the financial services space.

COMPANY STRUCTURE

India Infoline Limited

India Infoline Limited is listed on both the leading stock exchanges in India, viz. the Stock
Exchange, Mumbai (BSE) and the National Stock Exchange (NSE) and is also a member of
both the exchanges. It is engaged in the businesses of Equities broking, Wealth Advisory
Services and Portfolio Management Services. It offers broking services in the Cash and
Derivatives segments of the NSE as well as the Cash segment of the BSE. It is registered with
NSDL as well as CDSL as a depository participant, providing a one-stop solution for clients
trading in the equities market. It has recently launched its Investment banking and
Institutional Broking business.
A SEBI authorized Portfolio Manager; it offers Portfolio Management Services to clients.
These services are offered to clients as different schemes, which are based on differing
investment strategies made to reflect the varied risk-return preferences of clients.

India Infoline Media and Research Services Limited

The services represent a strong support that drives the broking, commodities, mutual fund
and portfolio management services businesses. It undertakes equities research which is
acknowledged by none other than Forbes as 'Best of the Web' and '…a must read for
investors in Asia'. India Infoline's research is available not just over the internet but also on
international wire services like Bloomberg (Code: IILL), Thomson First Call and Internet
Securities where India Infoline is amongst the most read Indian brokers.

India Infoline Commodities Limited.

India Infoline Commodities Pvt Limited is engaged in the business of commodities broking.
Their experience in securities broking empowered them with the requisite skills and
technologies to allow them to offer commodities broking as a contra-cyclical alternative to
equities broking. It enjoys memberships with the MCX and NCDEX, two leading Indian
commodities exchanges, and recently acquired membership of DGCX. It has a multi-channel
delivery model, making it among the select few to offer online as well as offline trading
facilities.

India Infoline Marketing & Services

India Infoline Marketing and Services Limited is the holding company of India Infoline
Insurance Services Limited and India Infoline Insurance Brokers Limited.
 India Infoline Insurance Services Limited is a registered Corporate Agent with the
Insurance Regulatory and Development Authority (IRDA). It is the largest Corporate
Agent for ICICI Prudential Life Insurance Co Limited, which is India's largest private
Life Insurance Company. India Infoline was the first corporate agent to get licensed
by IRDA in early 2001.
 India Infoline Insurance Brokers Limited India Infoline Insurance Brokers Limited is
a newly formed subsidiary which will carry out the business of Insurance broking.

India Infoline Investment Services Limited

Consolidated shareholdings of all the subsidiary companies engaged in loans and financing
activities under one subsidiary. Recently, Orient Global, a Singapore-based investment
institution invested USD 76.7 million for a 22.5% stake in India Infoline Investment Services.
This will help focused expansion and capital raising in the said subsidiaries for various
lending businesses like loans against securities, SME financing, distribution of retail loan
products, consumer finance business and housing finance business. India Infoline Investment
Services Private Limited consists of the following step-down subsidiaries.
 India Infoline Distribution Company Limited (distribution of retail loan products)
 Moneyline Credit Limited (consumer finance)
 India Infoline Housing Finance Limited (housing finance)

IIFL (Asia) Private Limited

IIFL (Asia) Private Limited is wholly owned subsidiary which has been incorporated in
Singapore to pursue financial sector activities in other Asian markets. Further to obtaining the
necessary regulatory approvals, the company has been initially capitalized at 1 million
Singapore dollars.
IIFL MANAGEMENT

 THE MANAGEMENT TEAM

Mr. Nirmal Jain, Chairman & Managing Director

Nirmal Jain, MBA (IIM, Ahmadabad) and a Chartered and Cost Accountant, founded India’s
leading financial services company India Infoline Ltd. in 1995,
providing globally acclaimed financial services in equities and
commodities broking, life insurance and mutual funds distribution,
among others.

Mr. R Venkataraman, Executive Director

R Venkataraman, co-promoter and Executive Director of India
Infoline Ltd., is a B. Tech (Electronics and Electrical Communications
Engineering, IIT Kharagpur) and an MBA (IIM Bangalore). He joined the
India Infoline board in July 1999.

 THE BOARD OF DIRECTORS

Apart from Nirmal Jain and R Venkataraman, the Board of Directors of India Infoline Ltd.
comprises:

Mr. Nilesh Vikamsey, Independent Director

Mr. Vikamsey, Board member since February 2005 - a practicing Chartered Accountant and
partner (Khimji Kunverji & Co., Chartered Accountants), a member
firm of HLB International, headed the audit department till 1990 and
thereafter also handles financial services, consultancy, investigations,
mergers and acquisitions, valuations etc
Mr Kranti Sinha, Independent Director

Mr. Kranti Sinha — Board member since January 2005 — completed his
masters from the Agra University and started his career as a Class I
officer with Life Insurance Corporation of India.

Mr Arun K. Purvar, Independent Director

Mr. A.K. Purvar – Board member since March 2013 – completed his
Masters degree in commerce from Allahabad University in 1966 and a
diploma in Business Administration in 1967.

PRODUCTS & SERVICES

Equities

India Infoline provided the prospect of researched investing to its clients, which was hitherto
restricted only to the institutions. Research for the retail investor did not exist prior to India
Infoline. India Infoline leveraged technology to bring the convenience of trading to the
investor’s location of preference (residence or office) through computerized access. India
Infoline made it possible for clients to view transaction costs and ledger updates in real time.
The Company is among the few financial intermediaries in India to offer a complement of
online and offline broking. The Companies network of branches also allows customers to
place orders on phone or visit our branches for trading.

Commodities

India Infoline’s extension into commodities trading reconciles its strategic intent to emerge as
a one stop solutions financial intermediary. Its experience in securities broking has
empowered it with requisite skills and technologies. The Companies commodities business
provides a contra-cyclical alternative to equities broking. The Company was among the first
to offer the facility of commodities trading in India’s young commodities market (the MCX
commenced operations in 2003). Average monthly turnover on the commodity exchanges
increased from Rs 0.34 bn to Rs 20.02 bn.
Insurance

An entry into this segment helped complete the client's product basket; concurrently, it
graduated the Company into a one stop retail financial solutions provider. To ensure
maximum reach to customers across India, it has employed a multi pronged approach and
reaches out to customers via our Network, Direct and Affiliate channels. India Infoline was
the first corporate in India to get the agency license in early 2001.

Invest Online

India Infoline has made investing in Mutual funds and primary market so effortless. Only
registration is needed. No paperwork no queues and No registration charges. India Infoline
offers a host of mutual fund choices under one roof, backed by in-depth research and advice
from research house and tools configured as investor friendly.

Wealth Management

The key to achieving a successful Investment Portfolio is to have a carefully planned

financial strategy based on a thorough understanding of the client's investment needs and risk
appetite. The IIFL Private Wealth Management Team of financial experts will recommend an
appropriate financial strategy to effectively meet customer’s investment requirements.

Asset Management

India Infoline is a leading pan-India mutual fund distribution house associated with leading
asset management companies. It operates primarily in the retail segment leveraging its
existing distribution network to reach prospective clients. It has received the in-principle
approval to set up a mutual fund.

Portfolio Management

IIFL Portfolio Management Service is a product wherein an equity investment portfolio is

created to suit the investment objectives of a client. India Infoline invests the client’s
resources into stocks from different sectors, depending on client’s risk-return profile. This
service is particularly advisable for investors who cannot afford to give time or don't have
that expertise for day-to-day management of their equity portfolio.
Newsletters

As a subscriber to the Daily Market Strategy, client’s get research reports of India Infoline
research team on a priority basis. The Indiainfoline Weekly Newsletter is the flashback for
the week gone by. A weekly outlook coupled with the best of the web stories from
Indiainfoline and links to important investment ideas, Leader Speak and features is delivered
in the client’s inbox every Friday evening.
 INDUSTRY PROFILE

FINANCIAL MARKETS
Finance is the pre-requisite for modern business and financial institutions play a vital role in
the economic system. It is through financial markets and institutions that the financial system
of an economy works. Financial markets refer to the institutional arrangements for dealing in
financial assets and credit instruments of different types such as currency, cheques, bank
deposits, bills, bonds, equities, etc.

Financial market is a broad term describing any marketplace where buyers and sellers
participate in the trade of assets such as equities, bonds, currencies and derivatives. They are
typically defined by having transparent pricing, basic regulations on trading, costs and fees
and market forces determining the prices of securities that trade.

Generally, there is no specific place or location to indicate a financial market. Wherever a

financial transaction takes place, it is deemed to have taken place in the financial market.
Hence financial markets are pervasive in nature since financial transactions are themselves
very pervasive throughout the economic system. For instance, issue of equity shares, granting
of loan by term lending institutions, deposit of money into a bank, purchase of debentures,
sale of shares and so on.

In a nutshell, financial markets are the credit markets catering to the various needs of the
individuals, firms and institutions by facilitating buying and selling of financial assets, claims
and services.
CLASSIFICATION OF FINANCIAL MARKETS

Financial
markets

Organized Unorganized
markets markets

Money Lenders,
Capital Markets Money Markets Indigenuos
Bankers

Industrial
Call Money
Securities
Market
Market

Commercial Bill
Primary Market
Market

Secondary
No
market

Government
Securities
Market

Long-term loan
market
Capital Market
The capital market is a market for financial assets which have a long or indefinite maturity.
Generally, it deals with long term securities which have a period of above one year. In the
widest sense, it consists of a series of channels through which the savings of the community
are made available for industrial and commercial enterprises and public authorities. As a
whole, capital market facilitates raising of capital.

The major functions performed by a capital market are:

1. Mobilization of financial resources on a nation-wide scale.
2. Securing the foreign capital and know-how to fill up deficit in the required resources
for economic growth at a faster rate.
3. Effective allocation of the mobilized financial resources, by directing the same to
projects yielding highest yield or to the projects needed to promote balanced
economic development.

Capital market consists of primary market and secondary market.

Primary market: Primary market is a market for new issues or new financial claims. Hence it
is also called as New Issue Market. It basically deals with those securities which are issued to
the public for the first time. The market, therefore, makes available a new block of securities
for public subscription. In other words, it deals with raising of fresh capital by companies
either for cash or for consideration other than cash. The best example could be Initial Public
Offering (IPO) where a firm offers shares to the public for the first time.

Secondary market: Secondary market is a market where existing securities are traded. In
other words, securities which have already passed through new issue market are traded in this
market. Generally, such securities are quoted in the stock exchange and it provides a
continuous and regular market for buying and selling of securities. This market consists of all
stock exchanges recognized by the government of India.

Money Market

Money markets are the markets for short-term, highly liquid debt securities. Money market
securities are generally very safe investments which return relatively low interest rate that is
most appropriate for temporary cash storage or short term time needs. It consists of a number
of sub-markets which collectively constitute the money market namely call money market,
commercial bills market, acceptance market, and Treasury bill market.

Derivatives Market

The derivatives market is the financial market for derivatives, financial instruments like
futures contracts or options, which are derived from other forms of assets. A derivative is
a security whose price is dependent upon or derived from one or more underlying assets. The
derivative itself is merely a contract between two or more parties. Its value is determined by
fluctuations in the underlying asset. The most common underlying assets include stocks,
bonds, commodities, currencies, interest rates and market indexes. The important financial
derivatives are the following:

 Forwards: Forwards are the oldest of all the derivatives. A forward contract refers to
an agreement between two parties to exchange an agreed quantity of an asset for cash
at a certain date in future at a predetermined price specified in that agreement. The
promised asset may be currency, commodity, instrument etc.
 Futures: Future contract is very similar to a forward contract in all respects excepting
the fact that it is completely a standardized one. It is nothing but a standardized
forward contract which is legally enforceable and always traded on an organized
exchange.
 Options: A financial derivative that represents a contract sold by one party (option
writer) to another party (option holder). The contract offers the buyer the right, but not
the obligation, to buy (call) or sell (put) a security or other financial asset at an
agreed-upon price (the strike price) during a certain period of time or on a specific
date (exercise date). Call options give the option to buy at certain price, so the buyer
would want the stock to go up. Put options give the option to sell at a certain price, so
the buyer would want the stock to go down.
 Swaps: It is yet another exciting trading instrument. Infact, it is the combination of
forwards by two counterparties. It is arranged to reap the benefits arising from the
fluctuations in the market – either currency market or interest rate market or any other
market for that matter.

Foreign Exchange Market

It is a market in which participants are able to buy, sell, exchange and speculate on
currencies. Foreign exchange markets are made up of banks, commercial companies, central
banks, investment management firms, hedge funds, and retail forex brokers and investors.
The forex market is considered to be the largest financial market in the world. It is a
worldwide decentralized over-the-counter financial market for the trading of currencies.
Because the currency markets are large and liquid, they are believed to be the most efficient
financial markets. It is important to realize that the foreign exchange market is not a
single exchange, but is constructed of a global network of computers that connects
participants from all parts of the world.

Commodities Market

It is a physical or virtual marketplace for buying, selling and trading raw or primary
products. For investors' purposes there are currently about 50 major commodity markets
worldwide that facilitate investment trade in nearly 100 primary commodities. Commodities
are split into two types: hard and soft commodities. Hard commodities are typically natural
resources that must be mined or extracted (gold, rubber, oil, etc.), whereas soft commodities
are agricultural products or livestock (corn, wheat, coffee, sugar, soybeans, pork, etc.)
INDIAN FINANCIAL MARKETS

India Financial market is one of the oldest in the world and is considered to be the fastest
growing and best among all the markets of the emerging economies. The history of Indian
capital markets dates back 200 years toward the end of the 18th century when India was
under the rule of the East India Company. The development of the capital market in India
concentrated around Mumbai where no less than 200 to 250 securities brokers were active
during the second half of the 19th century. The financial market in India today is more
developed than many other sectors because it was organized long before with the securities
exchanges of Mumbai, Ahmadabad and Kolkata were established as early as the 19th
century. By the early 1960s the total number of securities exchanges in India rose to eight,
including Mumbai, Ahmadabad and Kolkata apart from Madras, Kanpur, Delhi, Bangalore
and Pune. Today there are 21 regional securities exchanges in India in addition to the
centralized NSE (National Stock Exchange) and OTCEI (Over the Counter Exchange of
India).

However the stock markets in India remained stagnant due to stringent controls on the market
economy that allowed only a handful of monopolies to dominate their respective sectors. The
corporate sector wasn't allowed into many industry segments, which were dominated by the
state controlled public sector resulting in stagnation of the economy right up to the early
1990s. Thereafter when the Indian economy began liberalizing and the controls began to be
dismantled or eased out; the securities markets witnessed a flurry of IPO’s that were
launched. This resulted in many new companies across different industry segments to come
up with newer products and services.

A remarkable feature of the growth of the Indian economy in recent years has been the role
played by its securities markets in assisting and fuelling that growth with money rose within
the economy. This was in marked contrast to the initial phase of growth in many of the fast
growing economies of East Asia that witnessed huge doses of FDI (Foreign Direct
Investment) spurring growth in their initial days of market decontrol. During this phase in
India much of the organized sector has been affected by high growth as the financial markets
played an all-inclusive role in sustaining financial resource mobilization. Many PSUs (Public
Sector Undertakings) that decided to offload part of their equity were also helped by the well-
organized securities market in India.

The launch of the NSE (National Stock Exchange) and the OTCEI (Over the Counter
Exchange of India) during the mid 1990s by the government of India was meant to usher in
an easier and more transparent form of trading in securities. The NSE was conceived as the
market for trading in the securities of companies from the large-scale sector and the OTCEI
for those from the small-scale sector. While the NSE has not just done well to grow and
evolve into the virtual backbone of capital markets in India the OTCEI struggled and is yet to
show any sign of growth and development. The integration of IT into the capital market
infrastructure has been particularly smooth in India due to the country’s world class IT
industry. This has pushed up the operational efficiency of the Indian stock market to global
standards and as a result the country has been able to capitalize on its high growth and attract
foreign capital like never before.

The regulating authority for capital markets in India is the SEBI (Securities and Exchange
Board of India). SEBI came into prominence in the 1990s after the capital markets
experienced some turbulence. It had to take drastic measures to plug many loopholes that
were exploited by certain market forces to advance their vested interests. After this initial
phase of struggle SEBI has grown in strength as the regulator of India’s capital markets and
as one of the country’s most important institutions.