A Study of Distribution Channels of SBICAP Securities for Pune Region

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A

Project Report

On

A Study of Distribution Channel of SBICAP securities

for Pune Region

By

Girish Shrikrishna Jade

Submitted to

University of Pune

In partial fulfillment of the requirement for the award of the degree of

Master of Business Administration (MBA)

Through

MBA Department

Matrix Educational Foundations

Matrix School of Management Studies

Pune 41

(2012-2014)
https://www.sbicapsec.com/


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Acknowledgement

I am highly indebted to sbicap securities for giving me this

opportunity to do my internship project in their esteemed organization.

It has contributed immensely to my learning.

I would like to thank my external guide Prasanna Puranik

(Channel Manager) for giving me the required support in

completing my project.

My profound gratitude towards our Director, Dr. Satish S. Ubale for

giving me valuable guidance, suggestions and advice without which

this project could not have been completed.

I would also like to thank my internal guide for giving me the

necessary insight into my study.

Girish Shrikrishna Jade

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INDEX

Chapter

No.

Title Page No.

Executive Summary

1 Introduction

1.1

1.2

1.3

1.4

Introduction of the Study

Objectives of the Study

Scope of the Study

Limitation of the Study

2 Company Profile

2.1

2.22.3

2.4

Company Profile

Vision & MissionCompany Product

Board of Director

3 Research Methodology

3.1

3.2

3.3

Research Design & Methodology

Sampling

Data Collection

4 Theoretical Background

4.1

4.2

4.3

4.4

Meaning of Distribution Channel

About Distribution Channel

Components of Distribution Channel

Advantages of Distribution Channel

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5 Analysis & Interpretation of The Data

6 Finding & Suggestion

7 7.1

7.2

7.3

Conclusion

Appendix

Bibliography

INTRODUCTION

Place, Distribution, Channel, or Intermediary.

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A channel of distribution comprises a set of institutions which perform all of

the activities utilized to move a product and its title from production to consumption.

Bucklin - Theoryof Distribution Channel Structure (1966)Another element of Neil H.Borden's Marketing Mix is Place. Place is also

known as channel, distribution, or intermediary. It is the mechanism through which

goods and/or services are moved from the manufacturer/ service provider to the user

or consumer.

There are six basic 'channel' decisions:

Do we use direct or indirect channels? (e.g. 'direct' to a consumer, 'indirect' via

a wholesaler)

Single or multiple channels

Cumulative length of the multiple channels

Types of intermediary (see later)

Number of intermediaries at each level (e.g. how many retailers in Southern

Spain).

Which companies as intermediaries to avoid 'intra channel conflict' (i.e.

infighting between local distributors)

Selection Consideration - how do we decide upon a distributor?

Market segment - the distributor must be familiar with your target

consumer and segment.

Changes during the product life cycle - different channels can be exploited

at different points in the PLC e.g. Foldaway scooters are now available

everywhere. Once they were sold via a few specific stores.

Producer - distributor fit - Is there a match between their polices,

strategies, image, and yours? Look for 'synergy'.

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Qualification assessment - establish the experience and track record of

your intermediary.

How much training and support will your distributor require?

Types of Channel Intermediaries.

There are many types of intermediaries such as wholesalers, agents, retailers,

the Internet, overseas distributors, direct marketing (from manufacturer to user

without an intermediary), and many others. The main modes of distribution will be

looked at in more detail.

1. Channel Intermediaries - Wholesalers

They break down 'bulk' into smaller packages for resale by a retailer.

They buy from producers and resell to retailers. They take ownership or 'title'

to goods whereas agents do not (see below).

They provide storage facilities. For example, cheese manufacturers seldom

wait for their product to mature. They sell on to a wholesaler that will store it

and eventually resell to a retailer.

Wholesalers offer reduce the physical contact cost between the producer and

consumer e.g. customer service costs, or sales force costs.

A wholesaler will often take on the some of the marketing responsibilities.

Many produce their own brochures and use their own telesales operations.

2. Channel Intermediaries - Agents

Agents are mainly used in international markets.

An agent will typically secure an order for a producer and will take a

commission. They do not tend to take title to the goods. This means that

capital is not tied up in goods. However, a 'stockist agent' will hold

consignment stock (i.e. will store the stock, but the title will remain with the

producer. This approach is used where goods need to get into a market soon

after the order is placed e.g. foodstuffs).

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Agents can be very expensive to train. They are difficult to keep control of due

to the physical distances involved. They are difficult to motivate.

Channel Intermediaries - Retailers

Retailers will have a much stronger personal relationship with the consumer.

The retailer will hold several other brands and products. A consumer will

expect to be exposed to many products.

Retailers will often offer credit to the customer e.g. electrical wholesalers, or

travel agents.

Products and services are promoted and merchandised by the retailer.

The retailer will give the final selling price to the product.

Retailers often have a strong 'brand' themselves e.g. Ross and Wall-Mart in the

USA, and Alisuper, Modelo, and Jumbo in Portugal.

4. Channel Intermediaries - Internet

The Internet has a geographically disperse market.

The main benefit of the Internet is that niche products reach a wider audiencee.g. Scottish Salmon direct from an Inverness fishery.

There are low barriers low barriers to entry as set up costs are low.

Use e-commerce technology (for payment, shopping software, etc)

There is a paradigm shift in commerce and consumption which benefits

distribution via the Internet

OBJECTIVES OF THE STUDY

The study is very significant to understand the distribution channels.

The study is important to know the dealers satisfaction level for the

dealership.

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The study is important to know the dealers satisfaction level in brokerage

rates.

The study is important to know the dealers preference for the quality.

The study is very important to know the sales volume.

The study is also analyses the effective media for improving the sales.

The study is important to know performance of mutual funds.

SCOPE OF THE FURTHER STUDY

* The scope of the study is confirmed to distribution channel with special reference

to the SBIcap Securities in Pune Region.

* The study can help to the management to know the factors why their sales

volumes are low.

* The study will help to improve the sales volumes of the SBIcap Securities

* The recommendation and suggestion of the study can also be applied to the

similar project or similar situation

LIMITATION OF THE STUDY

One of the important of the study was lack of time. Though the respondent to

the study was vast due to the time constraints the sample size was limited.

The researcher has difficulty with most of the respondents who was not aware

of various types of financial products, so it is very difficult to get the response

from them.

The research had also difficulty in getting some information, which the

respondents were not interested to give.

The researcher had difficulty with the respondents because they did not fill up

the questionnaire in proper time.

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Another limitation of the study was confined with not only retailers but also

consumers for survey of this study.

COMPANY PROFILE

SBI CAP SECURTIES:-

SBI CAP undertakes merchant banking activities, advisory services, project appraisal,

credit syndication and securities broking.

SBI CAPs current focus is on infrastructure project advisory and syndication

mandates, particularly in sectors, such as, urban infrastructe and power, which are

reckoned as the growth drivers. The other focus areas are public issues of equity,

book-building issues, debt placements, broking and sales and distribution.

During the year, SBI CAPs forged ahead in issue management project advisory and

structured finance, sales and distribution. It focused on infrastructure project advisory

and syndication mandates, particularly in the energy sector, which is reckoned as the

critical growth driver in the growth of the economy.On the international front SBI CAPs bagged an infrastructure (water) advisory

assignment from the Ministry of National Economy, Oman and was an integral part of

the team effort for SBIs firs acquisition of a bank overseas. It was also associated

with SBI for providing advisory in respect of pariticipation of Societe General Asset

Management, France in SBI Mutual Fund.

In handled seven public issues out of the thiry four issues, which hit the primary

market during the period. The company recorded an improved financial performance

during the year with gros income amounting to Rs.175.06 crore as against Rs.142.75

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crore in the previous year, a y-o-y growth of approx. 23%. PAT of Rs.88.12 crore as

against Rs. 63.23 crore in the last year shows a y-o-y growth of approx.40%

CORPORATE PROFILE

SBICAP Securities Limited (SSL)

OVERVIEW:

SBICAP Securities Ltd (SSL) is a 100% subsidiary of SBI Capital Markets Ltd which

is one of the oldest players in the Indian Capital Market and has a dominant position

in the Indian primary capital markets. SBI Capital Markets Ltd. commenced broking

activities in March 2001 to fulfill the secondary market needs of Financial

Institutions, FIIs, Mutual Funds, Banks, Corporate, High Net worth Individual, Non-

residential Investors and Retail domestic investors. SBICAP Securities Ltd. (SSL) is a

company, which has been formed to take over the broking operations of SBI Capital

Markets Ltd. SSL commenced operations in the first quarter of financial year of 2006-

2007

Services currently offered include Institution Equity, Retail Equity, Derivatives,

Broking, Depository Participant services, E-Broking.

SSL is registered with the Securities Exchange Board of India for its various

services, a summary of which is as under:

Registered with/as Registration no.

SEBI -Stock Broker-NSE INB231052938

SEBI- Stock Broker BSE INB011053031

SEBI- Stock Broker-NSE- F&O INF231052938

SEBI- Depository Participant IN-DP-CDSL-370-2006

State Bank of India (SBI) has formed a new company called SBI Cap Securities to

carry out exclusive stock broking activities in the country, according to agency

reports.

The new company will be a hundred per cent subsidiary of SBI Capital Markets, amerchant banking unit of SBI. SBI Cap securities will provide facilities such as

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equities and debt securities. It is also undertakes distribution of mutual fund units and

insurance products. The new company aims to provide three major services to their

clients that include broking services, savings account for transfer of funds and

depository services for transfer of shares.

SSL, which commenced its operations in June 2006, is a broking company offering

equity broking services to retail and institutional clients both in the Cash as well as in

the Futures and Options segments. It is also engaged in sales & distribution of other

financial products like Mutual Funds, etc. The Company has launched e-broking

services to the clients of SBI and Associate Banks. SSL has 48 branches and 18

franchisees and offers Demat, e-broking, e-IPO and e-MF services to both retail and

institutional clients.

SBICAPSEC is the 100 per cent subsidiary of SBI Capital Markets Limited, which

has a share holding of 86.16 per cent by State Bank of India and Asian Development

Bank, which owns 13.84 per cent

Mission of SBICAP SECURETIES:-

Their mission is to be a leading, preferred service provider to our customer, and they

aim to achieve this leadership position by building an innovative, enterprising, and

technology driven organization which will set the highest standards of service and

business ethics.

To provide Credible, Professional and Customer Focused world-class investment

banking services.

Vision of SBICAP SECURITIES:-

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To be the best India based Investment Bank.

Board of Director of SBI Capital securities ltd.

Name of person Designation

Smt. Arundhati Bhattacharya Chairperson

Shri. A. Krishna Kumar Nominee Director

Shri S. Vishvanathan Nominee Director

Smt. Bharati Rao Nominee Director

Mr.V G Kannan Non Executive Director

Smt. Swati Desai Managing Director

Shri Anil Bhandari Whole-time Director Shri M.P. Mehrotra Independent Director

Shri H.N. Varma Independent Director

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PRODUCT PROFILE

1. EQUITY

2. DERIVATIVES

3. MUTUAL FUND

4. INITIAL PUBLIC OFFER

5. BONDS

6. NRI TRADING

1) EQUITY:-

A stock market or equity market is a public market for the trading of company

securities listed on a stock exchange. An equity investment generally refers to the

buying and holding or trading of shares to gain income from daily price

movements, dividends and capital gains, as the value of the stock moves.

Participants in the stock market range from small individual stock investors to

large institutions and mutual funds, which can be based anywhere. The tenure of

investors/traders varies from few minutes (for jobbers / arbitrageurs) to multiple

years (for long term investors). The liquidity that an exchange provides affords

investors the ability to quickly and easily sell securities. This is an attractive

feature of investing in stocks, compared to other less liquid investments. Todays

equity markets provide modern, fully computerized trading systems designed to

offer investors across the length and breadth of the country a safe and easy way to

invest.

We at SSL understand the requirements of different type of investors & offer our

customers with incisive Fundamental & TechnicalResearch thereby empowering

them to take informed investment decisions. For more information related to the

Equity market such as stock quotes, company information, market news, etc.

2) DERIVATIVES

Financial innovation has brought many new financial instruments whose pay-offs

or values depend on the prices of stocks. A derivative is a financial instrument - or

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more simply, an agreement between two parties. Its value is determined by the

price of something else (called the underlying). Futures and options are the most

common types of derivative contracts. More complex derivatives can be created

by combining the elements of these basic types. They offer traders / investors the

opportunity to trade, hedge and exploit arbitrage opportunities in markets.

Derivatives may be used to trade large blocks of stocks for a much smaller amount

of money than would be required by outright purchase or sale. SSL has a team of

analysts providing comprehensive insights into the Derivatives segment. For more

information related to the derivatives market such as Open Interest, Market News,

Trade Statistics etc.

3) MUTUAL FUND

Mutual Fund is a trust which pools money from investors having similar financial

goals, and invests the money so collected, as per the guideline to attain the

stipulated objective. Thus, a mutual fund is an appropriate investment vehicle for

the common man as it provides the benefits of a diversified portfolio managed by

professionals at a relatively low cost. That apart, it also offers the benefits of

diversification across asset classes through a single product. For example, a

Balanced Fund which invests a major portion in Equity as well as Debt Securities

or a Monthly Income Plan (MIP) which invests a major portion in debt.

In the recent past, we have also been witness to AMCs launching funds with a

difference funds investing across 3 asset classes viz. equity, debt and gold. In

addition, we also have Gold ETFs, Index ETFs and the like which give investors

the benefit of moving in line with the markets (in case of equity Index ETFs),

while Gold ETFs track the underlying price of gold.

SSL also provides equity schemes of eleven Mutual Fund companies on our state

of the art online platform. The online Mutual Fund facilitates the investors to

make investments in Mutual Fund without the hassle of filling up tedious

application forms and maintaining statements. One can view the Mutual Fund

portfolio online for all the Mutual Fund investments made through online account

with us. Advantages of investing in Mutual Fund through SBICAP Securities

Limited:

4) INITIAL PUBLIC OFFER ( IPO )

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After attaining a certain size, it becomes difficult for a private company to grow

with just the promoters money or by issuing further debt. One of the ways by

which a private company raises funds is through an IPO. In an IPO, the company

collects money from the participating public investors and in return, issues its

shares to them. Generally, these funds are used for the companys expansion or a

foray into new business activities or for debt repayment. Post an IPO, the private

company becomes a widely held public company. Thus, the company offers

investors a chance to take part in its potential future growth in return for the

confidence shown in it by way of subscribing to its shares.

An investor can earn good returns by investing in companies raising funds through

Initial Public Offer (IPO). We enable investors to invest in the IPOs. We help

investors invest in IPOs through offline and online mode. The client can deposit

the application to the nearby branch. We also provide all the IPOs on our online

platform and facilitate paperless investment in IPOs. We also provide news on

the IPOs including allotment status, listing dates etc. Our research analysts also

provide fundamental research on all the open IPOs. For more information related

to IPO News, forth coming IPOs, IPO Research etc

5) BONDS:

SBICAP Securities Limited enables their clients to invest in 54EC Bonds like

REC, NHAI (Capital Gain Tax Bonds) and also in GOI bonds.

54EC (Capital Gain) Bonds

Capital bonds are being issued as 'Long term specified assets' within the meaning

of Sub- Section 54-EC of the Income Tax Act, 1961. Those desirous of availing

exemption from capital gains tax under Section 54 EC may invest in these bonds.

Capital gains arising from transfer of Long-term capital assets can be invested in

these bonds within a period of six months from the date of transfer of the asset for

getting exemption from the capital gains tax.

Infrastructure bonds

Section 80CCF was introduced in the Income Tax Act, 1961 in the budget of

February 2010. As per this section investments made in notified infrastructure

bonds are exempt from tax up to maximum of Rs 20,000 per year. Section 80CCF

allows individuals to invest Rs. 20,000 in infrastructure bonds, and reduce this

amount from taxable income. This exemption is in addition to the Rs. 100,000

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deduction under section 80C (Investment in instruments like ELSS Mutual Funds,

Life Insurance, Provident Fund etc).

GOI Bonds - 8 % Savings (Taxable) Bonds, 2003

GOI Bonds are issued by Reserve Bank of India (RBI). The same are available for

sale on ongoing basis at select few branches (Mumbai, Delhi, and Kolkata) of

SBICAP Securities Limited. These bonds bear interest @ 8% per annum. The

interest is taxable in the hands of the investor.

6) NRI TRADING

SBICAP Securities Limited (SSL) offers a full suite of services to cater to the

investment requirements of NRIs residing across the globe. SSL in association

with State Bank of India provides state of the art online trading solution to NRIs,

so they can feel at home while taking investment decisions. We support our

valued NRI customers by having a dedicated NRI desk where they can also

transact via offline channel (as required by the guidelines of the respective

overseas country). Our NRI client base, located across 34 countries is a testament

to the quality of SSLs services.

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RESEARCH METHODOLOGY

INTRODUCTION:-

Research Methodology refers to search of knowledge .one can also define research

methodology as a scientific and systematic search for required information on a

specific topic.

The word research methodology comes from the word advance learner s dictionary

meaning of research as a careful investigation or inquiry especially through research

for new facts in my branch of knowledge for example some author have define

research methodology as systematized effort to gain new knowledge.

RESEARCH DESIGN

For the proper analysis of data simple quantitative technique such as percentage were

used. It help in marketing more accurate generalization From the data available .The

data which was collected from a sample of population was assumed to be representing

entire population was interested .Demographic factor like age, income and

educational background was used for the classification purpose.

METHODS OF DATA COLLECTION:-

In the project work Primary data secondary data (both) sources of data has been used .

PRIMARY DATA COLLECTION:-

In dealing with real life problem it is often found that data at hand are inadequate, and

hence, it becomes necessary to collect data that is appropriate. There are several ways

of collecting the appropriate data which differ considerably in context of money costs,

time and other resources at the disposal of the researcher.

Primary data can be collected either through experiment or through survey.

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The data collection for this study was done in the following manner:

Through personal interviews:-

A rigid procedure was followed and we were seeking answers to many preconceived

questions through personal interviews.

Through questionnaire:-

Information to find out the investment potential and goal was found out through

questionnaires.

Through Tele-Calling:-

Information was also taken through telephone calls.

Secondary data:

For the secondary sources of data Internet is used. Basically secondary data Available

on company website.

SAMPLE UNIT:

Population is basically investor who comes in the bank.

SAMPLE SIZE:

Considering the constraints it was decided to conduct the study

Based on sample size of 150 peoples.

AREA OF STUDY:

My field work is for Pune Region Only.

LIMITATIONS

The time constraint was one of the major problems.

The study is limited to the different schemes available

under the SBIcap securities.

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The lack of information sources for the analysis part.

Geographical locations.

Extreme variability in MARKET.

DATA ANALYSIS AND INTERPRETATION

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FINDINGS

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SUGGESTIONS

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CONCLUSION

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APPENDIX

QUESTIONNAIRE

Name : ______________________________

Contact No: _____________________________________

1) Are you selling LIC Policies?

1. Yes

2. No

2) Reason for Selling LIC Policies?

1. Margin

2. Promotional Schemes

3. Demand

4. Credit Policy

3) How Much time does it take for delivery of LIC Policy after ordering?

1. 6-12 Hours

2. 1 to 2 Days

3. 2 to 7 Days

4. More than 7 Days

4) How Do you rate the schemes of the company?

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1.

5)

Q5. How do you rate the schemes of the company?

a. Good

b. Average

c. Poor

Q6. How do you rate the credit policy of the company?

a. Good

b. Average

c. Poor

Q7. How do you rate the Margin of the company?a. Good

b. Average

c. Poor

Q8. How do you rate the Quality of XYZ Product?

a. Good

b. Average

c. Poor

Q9. How do you rate the Brand Pull of the company?

a. Goodb. Average

c. Poor

Q10. How do you rate the Supply norms of the company?

a. Good

b. Average

c. Poor

Q11. Does the company executives convey schemes on time ?

a. Yes

b. No

Q12. How do you rate the Representative behaviour with retailers ?

a. Highly Satisfied

b. Satisfied

c. Dissatisfied

d. Highly Dissatisfied

Q13. How do you rate the Damage Policy ?

a. Highly Satisfied

b. Satisfied

c. Dissatisfiedd. Highly Dissatisfied

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Q14. Are you getting information about scheme of XYZ Product at proper time?

a. Yes

b. No

Q15. Are you satisfied with the distribution channel of XYZ Product?

a. Yesb. No

BIBLIOGRAPHY

Documents

A Study of Distribution Channels of SBICAP Securities for Pune Region