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The ICFAI University
Motilal Oswal Financial Services Limited
“********”.
****
Business Review
Motilal Oswal Financial Services Limited is a well-established and well-diversified company and
is regarded a pioneer in the financial services sector in India. It offers diversified financial
services. The company’s clientele base is huge and diversified; it mainly includes retail investors,
(including high net worth individuals), Mutual Funds, Foreign Institutional Investors, Financial
Institutions, and Corporates.
The company, established in the year 2006, has its headquarters in Mumbai and regional centers
spread across 363 cities with 1,160 business locations. The holding company Motilal Oswal
Financial Services Limited has four subsidiaries under it, namely, Motilal Oswal Securities
Limited (MOSL), Motilal Oswal Commodities Brokers Private Limited (MOCB), Motilal Oswal
Venture Capital Advisors Private Limited (MOVC), and Motilal Oswal Investment Advisors
Private Limited (MOIA).
The Company undertakes activities that include Retail Wealth Management, Institutional Broking,
Investment Banking, Venture Capital Management, and Advisory services. In addition, the
company also offers certain Investment Advisory Services, Financial Planning, and Portfolio
Management Services.
The Institutional Broking business offers services such as equity broking in cash and derivatives
market segments to Indian and overseas clients. The Investment Banking division, on the other
hand, offers financial advisory functions such as capital raising, and other investment banking
services to corporate clients, financial sponsors and other institutions. The Capital Raising Module
includes services such as management of public offerings, rights issues, share buyback,
open offers/delistings, private placement, and syndication of debt and equity.
Table 2006, 2005, 2004, 2003
Page no-35
Ideal Top Management
The promoters of the company, Mr. Motilal Oswal and Mr.Ramdeo Agarwal, are qualified
Chartered Accountants with more than two decades of experience. Besides, the management
comprises qualified and experienced professionals with a successful track record. The Company
believes that its strengths are – management’s entrepreneurial spirit, strong technical expertise,
leadership skills, and insight into the market and customer needs; all these qualities contribute to
the company’s winning strategy to success and provide the company a competitive edge over
others.
Brand Value
Motilal Oswal Financial Services Limited has great brand value among retail and institutional
investors in India. The company believes that its brand is associated with high quality research and
advice, which is very much linked to its corporate value and also integrates it with excellence in
execution to create double profits. The company has also been leveraging on its brand awareness
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to grow its business, build relationships, and to attract and retain individuals who could enhance its
financial services business.
Range of Financial Products offered
Page no- 38
Core value and purpose
The Company believes in being a well-respected and preferred global financial services
organization enabling Wealth creation to its customers.
Corporate values such as Integrity, Teamwork, Meritocracy, Passion, Positive Attitude and
Excellence in execution are the focal strategies followed at Motilal Oswal. The Company also
focuses on increasing its market share in a profitable manner by capturing significanant
opportunities across the financial services spectrum.
Following are some of the key strategies the company follows.
Increasing Market Share in Retail Business
The primary goal of the company is to offer a wide range of products to its retail clients through
multiple channels and with greater flexibility. The Company also believes in expanding its client
base through strengthening its business growth on a continuous basis.
a.
Expanding the distribution network across India: The company intends to expand its
business not only in big cities but also in smaller cities and towns. It is of the opinion that the
expansion of its services would help build a client-centered relationship and also help create
new customer base, particularly among the ‘mid-tier millionaire’ segment thereby increasing
the existing market share.
b.
Focusing on wealth management solutions by offering new products: The company
intends to grow its business through improving customer-relationship, and also intends to
offer good wealth management services through convenient and effective channels of
distribution. It also plans to enhance its financing, commodity broking, and third party
service business.
c.
Leveraging on research and advisory capabilities: The company intends to enhance its
research capabilities across various business sectors and companies; it also proposes to
enlarge its advisory team in order to strengthen its relationship with clients.
d.
Technological up gradation: By upgrading technology based products and services the
company can achieve customer satisfaction.
Increasing Market Share in Institutional Brokerage
Motilal Oswal Financial Services Limited believes in sustaining and increasing its market share
through the following measures:
a.
Focusing on Overseas Investors: Overseas investors account for the incremental flows in
Indian equities. The company desires to increase its market position through servicing its
hedge funds.
b.
Building Stronger Relationships: Building strong relationship with its institutional broking
clients and leveraging its investment platform would help in offering other equity and capital
market services.
c.
Increasing its Research Support: The company is expanding its research base for a planned
growth of Institutional Brokerage Business by leveraging on its investment-banking platform;
it also offers services in equity and capital market.
d.
Expanding Institutional Derivatives Business: The company plans to strengthen its position
in derivatives business, which accounts for large turnovers.
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Fee-Based Revenues Growth
The increased awareness about fee-based services has led to the recent establishment of investment
banking business and there are plans to diversify the revenue stream and also lessen transactionbased revenues.
a.
Expanding Investment Banking Division: Motilal Oswal has recently established its
investment banking business and plans to diversify its revenue stream through a combination
of equity capital markets, debt capital markets and advisory services. There exists a separate
market for Initial Public Offerings.
b.
Leveraging on Portfolio Management Services: The company recently focused on
portfolio management services and also expanded its business into venture capital investment
management and advisory business.
c.
Increasing distribution of Mutual Funds and adding insurance products: The company
plans to expand distribution of third party mutual fund schemes and is also contemplating
introducing and distributing insurance products. Revenue, in such cases, would depend on the
number of mutual fund schemes and insurance polices distributed.
Business Streams
Motilal Oswal Limited primary products and services are listed below
Figure
Page no-107
A detailed description of the MOFSL is as follows.
Portfolio Management Services
The choice of equity investments and the different approaches adopted to manage retail investors’
investments makes MOFSL different from its counterparts. The company is registered with the
SEBI in order to provide Portfolio Management services. Statistical figures as on 31st December
2006, say that the company served approximately 1,366 PMS clients. The total assets under
management have also grown ten-fold, depicting a massive statistical boom in the number of
products and services. The different categories of Portfolio Management Services are as follows.
a.
Value PMS – This service is tailored for investors with a long-term investment horizon.
Thus, this scheme is based on low portfolio turnover and a high ‘margin of safety’ investment
philosophy for long-term and sustainable wealth creation.
This scheme also includes aspects such as identifying businesses with strong and stable cash
flows, having a portfolio with a bottom-up approach and buying undervalued stocks and
selling overvalued stocks, irrespective of the stock index.
b.
Bull’s Eye PMS – This scheme is targeted for investors who are risk averse in nature and are
likely to take moderate risk. It aims to generate returns from short- to medium-term
movements in the equity market. Bull’s eye is about identifying and picking large-cap and
mid-cap stocks with a potential to generate high returns within one to six months.
c.
Discover value PMS – This Scheme is targeted at retail investors and requires a minimum
investment of Rs.500,000 (US $ 11,335).
Financial Products Distribution
The company is known for its huge market share, distribution network and its enormous customer
base. It recently started third party services like the distribution of mutual funds, and initial and
follow on equity offerings.
The services this brokerage house provides are neutral and at the same time are based on the
vigorous research dedicated advisors did. The company also distributes various funds through its
retail distribution network. There is also a plan of introducing online mutual fund offerings.
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Financing
Motilal Oswal is registered as Non-Banking Financial Company with the Reserve Bank of India It
also provides finance to various customers. This kind of financing allows customers to partially
pay for certain amount of stock up to sanctioned limit, and the balance is funded by MOFSL.
Depositary Services
Motilal Oswal Limited is a depositary participant with National Security and Depositary Limited
(NSDL) and Central Depositary Services Limited (CDSL), and offers depositary services to its
broking customers as a value added service. These customers are able to use their depositary
services to execute and settle their trades. All this is done through an online portal/channel –
mybroker.com.
Distribution Channels
Figure page no –110
The company is headquartered in Mumbai; and as of December 31, 2006, it has a network spread
across 363 cities and towns comprising 1,160 business locations.
Institutional Broking
The institutional broking business division, established in the year 1994, offers trading in cash and
derivatives broking services, Mutual funds, Banks, Financial Institutions, Insurance Companies
and Foreign Institutional Investors. The company has certain parameters under which selection of
right broker is made; the parameters include certain aspects such as research capability, quality of
service etc.
Research
The company has a well-qualified research team to cater to the needs of retail wealth management
and institutional broking business. Statistics reveal that as on December 31, 2006, there was a
28-member equity research team and 5-member commodity research team, which comprised 33
analysts, with 29 having a counting experience of three years.
The companies research team covers more than 208 companies in 25 sectors analyzing the Indian
and global economy to potentially create equity investment ideas.
a.
Market and Technical analysis: ‘Most Momentum,’ a monthly newsletter on the technical
analysis, the company prepares intraday and short- to medium-term investment ideas and
strategies as well as a weekly futures and options guide.
b.
Fundamental Research: Fundamental research comprises getting quarterly results of
different companies belonging to different sectors.
c.
Thematic Research – It includes bringing out various reports such as “Wealth Creation
Report,” as well as developing specific reports on issues like budget, economy etc. In
addition to this, certain reports are specifically prepared on Indian macro variables.
d.
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Investment Banking
The Investment Banking Division of the company was established in May 2006 and is a SEBI
Registered entity. This division comprises a 17-member professional team. Members have
significant experience in Investment Banking, Corporate Banking and advisory work. Overall, this
division offers banking services, financial advisory, services relating to mergers and acquisitions,
divestitures, restructurings and spin-offs.
Venture Capital Management
The Venture Capital division was incorporated in April 2006 and the company was also
established as an Investment Manager and Advisor for the US$100 million Private Equity Fund
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launched in the year 2006. During January 2007, the company obtained additional amounts of
Rs.1,638.73 crore (US$ 37.15 million).
Technology
Advanced technology gives the ability to meet customer needs with the help of sophisticated
methodologies. Motilal Oswal Financial Services limited has set up a dedicated data center with
high performing trading software in Mumbai.
The main features of the company’s technical infrastructure are:
a.
A well-balanced technology wherein exists the right combination of managerial personnel,
engineering graduates, Software engineers, Application Support Managers, Network and
hardware managers across all business locations.
b.
Management of multi-product and multi architecture system helps in serving the needs of
retail, online broking, institutional and Wealth management customers.
c.
The company also incorporated a sourcing and outsourcing approach in combination with
information technology in order to quickly respond to the burning business issues.
d.
Development of a scalable platform wherein the evaluation of risk can be made.
e.
Development of sophisticated server and network infrastructure.
f.
Establishment of alternative network connections in order to maintain data redundancy in
contingent situations.
g.
Maintaining adequate data backup.
Connectivity Infrastructure: The Company’s database operates through Wide Area Network
(WAN). A special system of routers is also developed in order to maintain adequate data
structures. All these changes help in reducing the time.
Business History
The company was incorporated under the Companies Act as ‘Motilal Oswal Financial Services
Limited,’ which it received on May 18, 2005 though it was received as on June 3, 2005.
The promoters of the company, along with its subsidiaries, offer a diversified range of products
and services that include retail wealth management, used in combination of commodities broking,
Portfolio management services, institutional broking, investment banking services, Venture
Capital management, and advisory services.
The founders of the company Mr. Motilal Oswal and Mr. Ramdeo Agarwal were sub brokers
initially, but after acquiring membership in the Bombay Stock Exchange in the year 1990 it
became an independent entity. In order to carry on the business of stock broking and offering
certain other services, Mr. Motilal Oswal ad Mr. Ramdev Agarwal incorporated Deo Securities
Private Limited.
In the Year 1995, the two founders incorporated another company named Motilal Oswal Stock
Brokers Limited to carry out Asset Management Activities. The new entity was renamed as
Motilal Oswal Securities Limited in the same year.
The company aimed to achieve better performance, to utilize resources in the primary and
secondary market properly, and for all overt growth of mutual fund industry. In this process, the
company was restructured and the retail and institutional stock broking division was handed over
to Deo Securities with an additional facility of in-house Equity research.
As on November 30, 2000, Motilal Oswal Securities Limited was renamed Motilal Oswal
Investment Limited and subsequently it was changed to Motilal Oswal Investments Private
Limited. After a series of changes in the name of the company again it was given its original name,
The Motilal Oswal Securities Limited and received a fresh certificate of incorporation.
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Major Events in the history of the company
Figure-4
Pageno-125
Industry Overview
Indian economy is one of the fastest developing economies having the highest Gross Domestic
Product (GDP) at prices of Rs.32,509.32 billion (US$737.01), i.e. the present mark of the GDP
growth rate of 9.2% at the fiscal year ending 2007.
In the recent years, Indian economy has become a global destination for many foreign investors in
the form of Foreign Direct Investments (FDI); all this has been possible because of the marketing
techniques the companies adopted; not only this, the government made efforts to position the
industry as one of the fastest runner-up in Asia-Pacific region. Thus, the statistical survey tells that
India attracted FDI around US$ 35.07 billion between Fiscal 2000 and the Fiscal 2006.
Figure
Pagno-91
Source RBI annual report 2005-2006
The following table shows the Indian economic growth in comparison to the other developing
countries in terms of percentage and as well as predicted growth for the fiscal year 2006 and 2007.
Figure
Page no-91
Source World Economic Outlook, IMF, September 2006
Indian Financial Services Sector
The financial services sector in India experienced a significant growth especially in the last five
years. This massive change is a result of the reforms and considerable broadening of Indian
financial markets. Other aspects that can be marked as contributing for the development is the
introduction of innovative financial instruments, the recent entry of international players in the
form of Foreign Institutional Investors (FIIs) and Foreign Direct Investments.
A view on the sectoral growth in the financial market shows that there has been a huge growth in
sectors such as banking, brokerage, and asset management services. Not only have these sectors
been liberalized but entry of private companies has also been permitted. The impact of all these
changes can be seen on non-banking financial services like equities, derivatives, commodity
brokerage, residential mortgage, and insurance services. The changes will lead to the development
of individual sectors thereby enabling them to achieve high growth rates in the overall financial
market.
Industry Key Themes
Consolidation: The brokerage industry/sector in the year 1990 remained fragmented as the
business was spread among 5000 brokers. The retail participation was also low as the client base
mainly constituted high net worth individuals with high amounts at their disposal. A report
submitted to National Stock Exchange revealed that the market share was 38% in Fiscal year 2006.
This growth is considered high from the initial value of 29% in the year 1996 1.
Technology: Technology can be regarded as the driving force behind the consolidation that was
taking place in the Brokerage industry. The introduction of new technologies such as screen-based
trading, electronic matching, and paperless securities have made the process of trading convenient
1
www.money.cnn.com
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and streamlined. There has also been better telecom connectivity with lower cost; this made
interconnected operations across multiple locations through centralized operations, and effective
risk management and control.
E-broking: The E-broking business offers dual benefits – better service and convenience – to
retail investors at lower costs, and at lower risk for brokers. Growing participation by retail
investors has helped E-broking to expand. Today, it is spread across the country. In addition to
this, growing Internet usage and better telecommunications also have contributed for the expansion
of E-broking.
Growth in Retail Segment
The retail segment in India is fragmented and underdeveloped. Most retail investors rely on
sub-brokers networks for facilitating investment in equities. This makes it evident that the retail
trade segment in brokerage industry will soon achieve great heights.
a.
Regulatory reforms in the Financial Markets: Reforms in the Financial Market have
become user-friendly; this was made to boost the confidence of retail investors.
b.
Diversified Asset Instruments: Due to various investment avenues available to the
investors, the role of investment advisors has gained great momentum.
c.
Changing Demographic Profile: There has been a change in the demographic profile of the
investors and their perception towards equity investments. Government reforms resulted in a
shift in investment patterns and there was a shift from traditional investments like gold to the
modern capital market products.
d.
Falling Interest Rates: The recent interest rates decline in the past few months has led to a
decrease in the yield from bank deposits. In such a scenario, investors are looking for
investments, which could yield attractive returns.
Foreign Participation
There has been a significanant increase in Foreign Institutional Investments in India over the past
few years. The number of FIIs registered with the SEBI has increased from 482 to 1,048 as on
January 11, 2006. In view of the present market scenario, one can anticipate further growth in the
number.
Table
Page no – 93
Source -RBI
Capital Markets
The Bombay Stock exchange has 4796 listed companies as on December 2006. In recent years,
capital markets have witnessed many substantial reforms in regulation and supervision. A
landmark event in this reform is the establishment of SEBI. In order to regulate the market
determined rates, and the allocation of resources, rolling settlement for securities (which is at
present T+2), Scrip less settlement and electronic transfer of securities were introduced. These
huge reforms made the working mechanism more reliable thereby improving its performance.
In India, at present, there are 23 exchanges, including Over-the–Counter exchange of India
(OTCEI). All small and new companies and the NSE use this OTCEI. Thus, this system was set to
support investors and also to provide better service to them.
Primary Equity Market
There has been widespread development in the Indian Capital Market. There are various reasons
for this development. Some of them are – surge for various instruments in a market driven by
strong fundamentals in the economy, improvement in corporate results, and a buoyant secondary
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market revival. In addition to this, the SEBI has also come up with Investor-Friendly framework in
order to boost investor participation.
The Number of primary market Issuances in India is set forth in the Table below
Figure
Pageno-94
Source- RBI
Secondary Equity Market
The Indian equity market is steadily growing since 2003 with the Benchmark BSE sensex crossing
the 14,500 mark in February 2007 and now i.e. during July 2007 it crossed 15000 points. It is all
set to cross the 16000 mark shortly and is set to create new record.
Table
Page no-94
Source – NSE Website
Volume trade in Secondary Markets (BSE)
Table
Pageno-95
Source – BSE Website
The average turnover at the NSE and for different market segments has also increased. The daily
turn over in the market segment increased approximately from Rs.54 billion at the end of F- 2001
to approximately to Rs.63 billion at the end of FY-2006. During this year, there has also been an
increase in the number of financial products offered in the market.
Equity Brokerage
The positive factors that worked for the development of brokerage business in India are: the
availability of more sophisticated products in the Indian capital market, the massive regulations
that were made in the trading volumes, and availability of better technology for back office
operations. These major developments have resulted in the disappearance of a number of small
players in the market leading to consolidation in the industry. These changes also resulted in a
better Risk management system.
The share of top five brokers in the National Stock Exchange has increased from 12 percent in the
FY-2004 to about 16 percent in FY-2006. These figures indicate that long-term consolidation
process has highly fragmented the securities brokerage industry with hundreds of small players
exiting the market and the market for large gainers becoming larger and larger day by day.
The following table shows the volume of trades on the NSE and the percentage undertaken by the
top bankers.
Table
Page no- 96
Source- NSE website
The introduction of online trading was also an allied factor, which subsequently led to the increase
in the number of retail investors. The following table shows the average on-line trading volume for
the periods indicated and the percentage of total trading volume.
Table
Page no-97
Source-NSE fact book 2006
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Mutual Funds
The mutual fund industry experienced considerable growth, as the total assets under management
grew from Rs.1,396,160 as on March 31, 2004 to Rs.2,318,620 million as on March 31, 2006 and
to Rs.3,235,980 by December 30, 2006. During this time, the mutual fund industry also witnessed
major consolidation, the number of private sector mutual funds with their assets under
management have also increased. The Total AUM was around 2,567,240 million as in December
2006.
The mutual fund sector can be broadly divided based on their nature and on the schemes they
offer. The fixed income asset class comprises income, liquid, gilt, and money market schemes. All
this comprises a major part of shares in total funds under management. The two asset classes – the
equity and balanced schemes – experienced significant growth in the years 2004 and 2005
respectively.
Asset Under Management
Table
Pageno-98
Source –AMFI Monthly
Commodities Exchange
India is a nation where the main occupation is predominantly agriculture. In spite of this, till recent
times there was no sophisticated multi commodity exchange in India. Trading was done in the
form of ‘open outcry system’ under single commodity exchanges.
The growth in the Indian economy has also led to the growth of many Indian companies. Today,
these companies strive hard for value creation. There has also been a predominant increase in the
shareholder value. Companies are striving hard to meet strategic objectives in the form of
restructuring their group companies. Thus, Indian companies are evaluating various options to
raise capital either through equity or from debt markets. The chart provided explains the
phenomenon. Also, the prevailing competition in the market has intensified the situation whereby
the participation of foreign investors is large; besides, there is a rise in the number of small and
mid-sized companies’ participation in the commodities market.
Figure
Pageno-99
Source –Bloomberg data as on February 25, 2007
Private Equity
Private Equity as an investment option is gaining ground slowly. Though private equity
investments were not active until recently, the scenario has changed today. There has been a
change in the nature of funding also, which can be known from the fact that small investors are
giving way to large-scale capital investors.
The Indian capital markets have benefited with the growth in the Indian economy. The active
secondary market, the Indian government’s structural reforms, and the investor-friendly
regulations have altered the scenario and regulatory framework. The development of the
infrastructure can also be regarded as a predominant factor for this development.
These analysis show that there has been a constant rise in the number of companies in the higher
market capitalization category, indicating the growth in equity value of these companies. Thus,
one can say that there are a number of avenues available in the Indian capital market. The road
ahead for its full-fledged development is not too far.
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Interest
There was an increase in interest rate by Rs.1.26 million from the value of Rs.10.73 million for the
year ended March 31, 2004 to Rs.11.99 million for the year ended March 31, 2005, an increase of
11.21%. This increase was principally due to increased volumes in the number of transactions.
Profit Before Tax
The Profit Before Tax of the company increased by Rs.175.43 million from the initial value of
Rs.261.54 million for the year ended March 31, 2004 to Rs.436.97 million during the year ended
March 31, 2005.
Provision for Taxation
The provision for taxation including the deferred revenue expenditure increased by Rs.51.64
million from the initial value of Rs.97.78 million for the year ended March 31, 2004 to Rs.149.42
million for the year ended March 31, 2005, i.e., registering an increase of 52.81%.
Profit After Tax
The Net profit increased by Rs.123.79 million from Rs.163.76 million for the year ended March
31, 2004 to Rs.287.55 million for the year ended March 31, 2005 i.e., an increase of 75.52%.
Liquidity and Capital Resources
Liquidity
The Primary usage of the capital in the Motilal Oswal Company has been limited to finance
working capital needs and capital expenditure. The principal funds are parked in banks to get the
right trading exposure on the exchanges. Thus, the funds the company obtains can help in catering
the cash flow transactions of the company.
Risk Management
Internet Based Trading
Motilal Oswal Financial Services Limited has established an Internet trading platform that allows
integrating the diverse engines that are functioning in the market in order to bring them on a single
platform. This kind of system will allow traders, customers, dealers and relationship managers to
bring in single platform, by which they can obtain the diverse knowledge across all asset classes
and product segments. Thus, the Internet based platform can handle large number of customers
concurrently.
The Internet based trading platform is complemented by the real –risk management, which enables
the clients to provide with the information. This system also helps in evaluating the post- time and
pre-time risk.
Security
Motilal Oswal Financial Services Limited has sophisticated and secured Layer 3 data center. In
addition to this security system, the company has built–in security that handles the sensitive data
of the market in order to prevent unauthorized access.
Back Office and Data Processing Operations
The Company has its back office operations in Malad where the data is centralized. The company
uses SQL/ASP.net based back office software called “CLASS” that has been customized in
accordance to the company requirements. There are certain features in the software that helps in
determining risk management and reporting capabilities in order to cater high transactions volumes
in the business.
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Risk Management
Effective risk management is the prime reason for the success of any operation in an economy.
Motilal Oswal believes in this mantra. The company has a risk management process whereby it
can evaluate and manage the risk. This method helps evaluating many risks such as credit,
liquidity, operational, legal, and reputation risk.
The Board of Directors of Motilal Oswal Company Limited has the overall responsibility of
monitoring the risk exposures, risk management polices, and the processes. The review of credit
polices is done by the top management and the recent dynamics in the market are also incorporated
accordingly. Management of Information System appraises the management on a day-to-day basis.
The company’s Risk Management system (RMS) monitors the market exposure on the basis of
total margin collected from the clients, the total margin deposited from the exchanges, and the line
of credit available from the bank. Thus, the risk management department analyses the risk of
various departments and prepares strategies to reduce and overcome them in the future.
Depositary
The depositary information is centralized; the data at the local centers are entered and then
transferred to Malad Business location. The data center after receiving it verifies and gives it the
authenticity.
Client Exposure
The client’s limits are set and monitored centrally on a daily basis through the facility of Online
Risk Management Service. The limits are based on factors such as
a.
Cash Deposited by End-clients with the company.
b.
Cash Deposited by Business Associates with the company.
c.
Value of stock in the company’s depositary account, with attorney power for liquidating the
stocks in the periods of crisis.
d.
Value of stock transferred form the security margin to the company.
The factors under the critical risk management are:
a.
When the Client ledger has more debit balance, and there is no additional purchase of
securities until the debt is cleared.
b.
If there is insufficient security for a ledger debit, then the client account is suspended until
the debts are received.
c.
When there is no permission for illiquid scrips at local terminals and business locations.
d.
When scrip wise monitoring is done in order to ensure that the value does not exceed10% of
the day’s market volume.
e.
When the client debit ledger balance is more than 7 days, the Risk Management Service
Team will recover the amount due.
f.
In cases where the Business Associates do not collect payments from their end-clients against
the debit balance for 15 days, then the losses are transferred to Business Associates’
brokerage accounts.
g.
In the form of additional Risk coverage, the company has a direction to adjust the outstanding
balance of the end-client against the deposit paid by introducing business associate.
Settlement Management
There is a system wherein contact notes are maintained in digital format and then sent by Email to
the client. The notes are then kept in the website, where even the remote business locations can
access the information. All this helps in making pay-in and pay-out transactions.
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Receivables Management
In order to be successful, a company must manage its receivables in an efficient and timely
manner. For timely delivery, T+1 system is initiated wherein the transaction has to be completed
within one day. Detailed Data on deposits is maintained and RMS and data center can access
these details and the reconciliation of these details is done at a certain time frame.
Risk Monitoring and mitigation
According to company practice, they use a technology for monitoring the positions of traders, the
volatility impact, and the concentration position on a few types of scrip.
Audit and Inspection
There is a time bound review of audit and inspection procedures in order to enhance effectiveness,
usefulness and timeliness. Even a clear scrutinity is maintained on the operational activities. All
these are audited on a quarterly basis by individual Chartered Accountancy firms.
Security and Disaster recovery
Motilal Oswal Financial Services Limited has a comprehensive information security policy
whereby it conducts periodic examination and network penetration tests to review the venerability
of the infrastructure.
Competition
The company has competition in all its business lines; and the competition is not only from
domestic but also from foreign institutions such as Franklin Templeton, JP Morgan, ABN Amro,
and HSBC.
Motilal Oswal securities Limited
Annexure – 1
Pageno-220, 221,222
Motilal Oswal Securities Limited
Annexure –2
Pageno-223, 224
Motilal Oswal Securities limited
Annexure –3
Pageno-225
Motilal Oswal Securities limited
Annexure –5
Pageno-232, 233,234,235
Motilal Oswal Securities limited
Annexure –6
Pageno-235,
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TTT
0001-01
Motilal Oswal Securities limited
Annexure –7
Pageno-236
Motilal Oswal Securities limited
Annexure –8
Pageno-237
Motilal Oswal Securities limited
Annexure –9
Pageno-238
Motilal Oswal Securities limited
Annexure –10
Pageno-238
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