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: Kolkata.region@nirmalbang.com

Website: www.nirmalbang.com

NIRMAL BANG SECURITIES

SUBMITTED BY

KUSHAL GHOSH

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 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.

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Dibyendu Nandy of International School of Business,

Kolkata-700091

Place: Kolkata KUSHAL GHOSH

Date: (Name of student)

TABLE OF CONTENTS
1.ACKNOWLEGDEMENT
5

2.EXECUTIVE SUMMERY
6

3 OBJECTIVE OF THE STUDY

8

4.COMPANY PROFILE
9

5 SERVICES
11
6.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

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 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

ACKNOWLEGDEMENT

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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.

EXECUTIVE SUMMERY
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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.

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In later days companies like Reliance,Kotak,ICICI etc emerged in the
share broking business.

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

India infoline
15%
30% Kotak Securities Ltd
19% Share Khan
Indiabulls
Motilal Oswal
14% 8% Religare
4% 10%
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

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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, 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

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 • 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 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 DERIVATIVES

Trading 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

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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.

COMPETITOR MAP OF NIRMAL BANG IN

EASTERON REGION

Reliance Mutual

India
Infoline

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 S
Motilal
Oswal MC

SB
I
ULIP Nirmal Bang
Security pvt ltd

India
Religar Bulls
e

Share

TATA EQUITY

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.

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  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.

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

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 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.

Page | 16
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.

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 INDIAN STOCK/EQUITY MARKET

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

Page | 18
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.

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

Page | 19
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.

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

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 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:

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.

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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.

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Bombay Stock Exchange (BSE):

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 products

Ambuja Cements Ltd. Cement and Cement Products
Bajaj Auto Ltd. Automobiles - 2 and 3 Wheelers
Bharat Heavy Electricals Ltd. Electrical Equipment
Bharti Airtel Ltd. Telecommunication - Services
Cipla Ltd. Pharmaceuticals
DLF Ltd. Developers/Construction
Grasim Industries Ltd. Diversified

Page | 23
Housing Development Finance Corporation Ltd. Finance - Housing
HDFC Bank Ltd. Banks
Hindalco Industries Ltd. Aluminium
Hindustan Unilever Ltd. FMCG
ICICI Bank Ltd. Banks
Infosys Technologies Ltd. Information Technology
ITC Ltd. FMCG
Larsen & Toubro Ltd. Engineering
Mahindra & Mahindra Ltd. Automobiles - 4 wheelers
Maruti Udyog Ltd. Automobiles - 4 wheelers
NTPC Ltd. Power
Oil & Natural Gas Corporation Ltd. Oil Exploration/Production
Ranbaxy Laboratories Ltd. Pharmaceuticals
Reliance Communications Limited Telecom
Reliance Energy Ltd. Power
Reliance Industries Ltd. Refineries
Satyam Computer Services Ltd. Computers - Software
State Bank of India Banks
Tata Consultancy Services Ltd. Computers - Software
Tata Motors Ltd. Automobiles - 4 Wheelers
Wipro 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.

Page | 24
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 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:

NCCL
NSCCL NSETECH

IISL NSE NSE.IT

Page | 25
 DotEx Intl. Ltd.
NSDL

Some of the listed companies under NSE:

Hindustan Unilever Ltd. Diversified

Housing Development Finance Corporation Ltd. Finance - Housing
I T C Ltd. Cigarettes
ICICI Bank Ltd. Banks
Infosys Technologies Ltd. Computers - Software
Larsen & Toubro Ltd. Engineering
Mahanagar Telephone Nigam Ltd. Telecommunication - Services
Mahindra & Mahindra Ltd. Automobiles - 4 wheelers
Maruti Udyog Ltd. Automobiles - 4 wheelers
NTPC Ltd. Power
National Aluminium Co. Ltd. Aluminium
Oil & Natural Gas Corporation Ltd. Oil Exploration/Production
Punjab 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.

Page | 26
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

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

Page | 27
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.

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.

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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.

3.No Marketing Cost- In channel business the business partner himself

markets his own business. So the company need not market for its

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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.

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As the customers have no direct relation with the company, no such
relation generally grow with the main company.

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.

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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.

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.

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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.

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.

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  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

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 :

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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 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.

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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. City
2. Rural or interior location
3. 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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 PERCENTAGE
100
90
80
70
60
50 AWARE
40 UNAWARE
30
20
10
0
AWARE UNAWARE

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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 MODEOFEARNING

SERVICE
BUSINESS
OTHERS

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.

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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 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

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 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 partners are more available to the customers in
interior side. So availability becomes a big issue here.

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 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

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Secondary data are collected from the sources which are already
exist somewhere.

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.

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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.

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).

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 • 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 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

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 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.

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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

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

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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.

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

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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)

ANNEXURE

1. Your mode of earning

o Service

o Business

o Others

2. If service

o Company name:-
o Designation:-

3. Which mode of investment do you prefer?

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 (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 Yes
o No

5. Do you have any idea about equity market and commodity market?

o Yes
o No

6. Do you trade in share-market?

o Yes
o No

7. Do you trade

o Daily
o Weekly
o Monthly

8. Where do u prefer to trade?

o Branch
o 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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Page | 55