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Motilal Oswal

By Motilal Oswal 03-May-2011 | 16:43

The one thing that is constant is change.

In business it’s very difficult to keep up with changes. And the pace at which things have changed is amazing. Be it products, service or technology, ‘change’ is the name of the game. So it’s upon us to capitalise on the changes around us. Accept them in the right way, and there is a definite benefit for you. I would like to share, the opportunities which you all could really capitalise on; and some challenges and problems which we need to address.

First, lets talk about the opportunities.

The Big Opportunity in Equity

You must`ve seen India and China; the global powers are shifting from developed markets to developing markets to India. In China 11% of population invests equities and in Korea it is 10%; but at our end, its only slightly higher than 1%. We have only 1 crore DP accounts. These are likely to go up to 5 crores in the upcoming years. But even then that will be only a small part of the 120 crore bank accounts we will have in the country by 2020. In the upcoming years there is a huge amount of new people who would be investing into equities.

Target the equity growth opportunity aggressively.

The Intermediation Opportunity

If you look at the broking business size; in 2009-10 Rs11700 crores of brokerage was generated. Now, the big picture -10 years down the line, the annual brokerage is estimated to be Rs 65000 crores. There is huge growth expected in mutual funds distribution commissions and insurance distribution commissions as well. The goal you set for yourselves in terms of share of this kitty is very critical. Even if you want to target 0.1 percent of the brokerage kitty, it would be 65 crores! I will not be surprised if the above growth estimates are surpassed.

The equity broking business will be big business!

The Market is 10 times bigger than you think it is

We have been talking about thinking big. And it’s going to be much bigger in future. The future will be different from the past. If you don’t think big; you will be redundant. So the first thing is to stop being pessimistic about growth prospects. Plan and think big. Keep on thinking about growth as an opportunity. Are you planning for the next 3-5 years when you invest in technologies or processes? Right now, our corporate office is 15000 sq. feet. We are talking about a 250000 sq. feet office next year. Are you planning big too? With every opportunity comes a challenge as well.

Now let’s outline the challenges and some proactive measures we can take.

Maintaining Strong Client Relationships

If you think the current market is competitive; you haven’t seen anything yet. Everyone is looking to profit from the India growth story. Competition will intensify with new players and consolidation. Your current customer is also someone else’s future prospect. You need to bulletproof your existing relationships so that business from your current customers grows and thrives. Profile your existing customers – are they Investors or Traders, find out about their financial goals - what is their investible corpus, what is their risk appetite, what are their returns expectations. Once you have this vital insight; you will be better equipped to go about fulfilling their needs. The more a customer believes you understand his needs; the more business he will give you. Organic growth from current customers is one of the most efficient ways to grow your business