Internship Report on Sri Hari Securities Private Limited PDF

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GENERAL BUSINESS PRACTICES OF SRI HARI SECURITIES (P) LIMITIED Kamaladi, Kathmandu

By: Bibek Chouhan Kathmandu Model College Exam Roll No: 7442/10 T.U. Registration No: 7-2-446-102-2010

An Internship Report Submitted To Sri Hari Securities Private Limited Kamaladi, Kathmandu

In partial fulfillment of the requirements for the degree of Bachelor of Business Administration (BBA)

Balkumari, Lalitpur August, 2014

DECLARATION

I hereby declare that the internship report entitled “General Business Practices of Sri Hari Securities” with respect to Sri Hari Securities (P) Limited (Broker No #56), Kamaladi, Kathmandu, submitted to Sri Hari Securities Private Limited, Kamaladi, Kathmandu is my original work done in the form of partial fulfillment of Bachelor in Business Administration (BBA) under the keen supervision of Mr. Madhushudan Gautam, Faculty of Kathmandu Model College.

……………………….. Bibek Chouhan Exam Roll No: 7442/10 T.U. Registration No: 7-2-446-102-2010

ACKNOWLEDGEMENT This report has been prepared for the purpose of reinforcing knowledge with practice from my internship in the institution. However, writing a report is often the endeavor of a number of people. Without their help and assistance report writing would never come to fruition. I would like to enter my sincere gratitude to all of them. First of all my sincere gratitude goes to the Tribhuvan University for including such a reinforcing internship program in the academic curriculum of BBA that has played an effective role for the development of our knowledge and understanding on real working environment. Along with that I must thank Kathmandu Model College for providing me an opportunity to acquire practical knowledge and thanks to Mr. Madhusudan Gautam for his kind help, supervision and guidance. With the deep respect and gratitude, I would like to proffer my cardinal acknowledgement to the Chief Executive Officer Mr. Sandeep Jalan for providing me an incredible opportunity to work as an internee in Sri Hari Securities (P) Limited. I further would like to express my gratitude to Mr. Chhatra Thapa, Pranish Raj Giri, Anita Thapa, Dilli Upreti, Sajana Maharjan, Satis Das of Sri Hari Securities, for providing the necessary information, guidance and cooperation. Finally, my thanks and appreciation goes to all the teachers of KMC, my colleagues, and especially to all the staffs of Sri Hari Securities Private Limited who have supported and guided me during the time of internship in gaining knowledge, skills and providing me their valuable suggestions and support

………………………. Bibek Chouhan

TABLE OF CONTENTS Title

Page No.

Cover Page Recommendation Internship Completion letter Declaration Acknowledgements Table of Contents List of Tables and Figures Abbreviations Chapter I: Introduction

1-6

1.1 Background

1

1.2 Objectives of the study

2

1.3 Methodology

2

1.3.1 Organizational selection

3

1.3.2 Placement

3

1.3.3 Duration

4

1.3.4 Activities Performed

4

1.4 Limitations

Chapter II: Introduction to Security Brokerage Industry

5

7-19

2.1 Meaning of Security Broker

7

2.2 History of Security Brokerage Industry

7

2.3 History of Security Brokerage Industry in Nepal

9

2.4 Trading System in NEPSE

10

2.4.1 Market Timing

11

2.4.2 Securities Traded in NEPSE

11

2.4.3 Buy and Sell Order

11

2.4.4 Price Range in Trading

13

2.4.5 Order Execution

13

2.4.6 Order Life

14

2.4.7 Conditions for Execution of order

14

2.4.8 Settlement Process in NEPSE

15

2.4.9 Circuit Breakers in NEPSE

16

2.4.10 Individual Securities Price Range

16

2.4.11 Charges on Buying and Selling Securities

16

2.4.12 Brokerage Commission

17

2.5 Functions of Stock Broker

18

2.6 Importance of Stock Broker

19

Chapter III: Introduction to Sri Hari Securities (P) Ltd.

20-26

3.1 Introduction of Sri Hari Securities Private Limited

20

3.2 Why Sri Hari Securities?

20

3.3 Core Philosophy of Sri Hari Securities (P) Ltd.

21

3.3.1 Vision

21

3.3.2 Mission

21

3.3.3 Objectives of Sri Hari Securities

21

3.4 Share Holding & Capital Structure

22

3.5 Board of Directors

23

3.6 Organizational Structure

23

3.7 Products and Services offered

23

3.8 Departments and Function

24

3.9 Future Plans and Strategies

26

3.10 Upcoming Major Challenges and Preparations

26

Chapter IV: Analysis of Activities Done and Problem Solved 27-41 4.1 Activities done in Customer Service Department

27

4.2 Activities done in Documentation Department

32

4.3 Activities done in Finance Department

34

4.4 Activities done in Settlements Department

37

4.5 SWOT Analysis

39

4.6 Observed Gaps

Chapter V: Conclusion and Lesson Learnt

41

41-44

5.1 Conclusion

41

5.2 Lesson Learnt

43

Bibliography

Annex

LIST OF TABLES Page No: Table 1.1

Placement Table

4

Table 1.2

Time Allocation in Sri Hari Securities

4

Table 1.3

Activities Performed in Sri Hari Securities

5

Table 2.1

Brokerage Commission for Equity

17

Table 2.2

Brokerage Commission for Government Bond

17

Table 2.3

Brokerage Commission for all other except Equity and Government Bond

18

Table 3.1

Share Holding of Sri Hari Securities

22

Table 3.2

Capital Structure of Sri Hari Securities

22

Table 3.3

Members of Board of Directors

23

LIST OF FIGURES Page No: Figure 3.1

Shareholders Structure

22

Figure 4.1

T+3 Settlement

39

ABBREVIATIONS A.M.

Ante Meridian

AON

All or None

ATC

At The Close

ATO

At The Open

ATS

Automated Trading System

BBA

Bachelor in Business Administration

BBOS

Broker Back Office System

BFIs

Banking and Financial Institutions

BOK

Bank of Kathmandu

BT

Blank Transfer

CDS

Central Depositary System

CEO

Chief Executive Officer

CGT

Capital Gain Tax

CSD

Customer Service Department

CV

Curriculum Vita

DTC

Delivered To Clients

EOD

End of the Day

FIFO

First In First Out

FOK

Fill or Kill

FOM

Faculty of Management

GTC

Goods Till Cancel

IOC

Immediate or Cancel

KMC

Kathmandu Model College

KYC

Know Your Customer

LTP

Last Trading Price

NATS

NEPSE Automated Trading System

NEPSE

Nepal Stock Exchange

NRB

Nepal Rastra Bank

NT

Name Transfer

OT

Ownership Transfer

P.M.

Post Meridian

PAN

Permanent Account Number

RDTC

Ready To Deliver Client

SEBON

Securities Board of Nepal

SMS

Short Message Service

SWOT

Strengths, Weaknesses, Opportunities and Threats

T.U.

Tribhuvan University

WWW

World Wide Web

CHAPTER I INTRODUCTION 1.1 Background Internship is an academic, curriculum–based practical work experience in a particular field of study that enhance student’s learning, and for which a student is enrolled in different institutions or organizations. It provides students to participate in the real life organization setting outside the classroom and also provides opportunities through interactions, observations and work experience in the organization. So it can be defined as systematic and organized effort to study and observe the specific organizational situation. Besides this, the internship also helps the students to know how different activities in the organization are coordinated so that the synergistic effects are achieved and how the communication takes place in the corporate world. This will help the students to acquire social, technical and communications skills to work effectively in industry. As well as it helps to increase the confidence level of the student. As a partial fulfilment of the course structure of TU Bachelor in Business Administration (BBA), students are required to be engaged in any organization of their choice, as an intern at least for eight weeks, in final 8th Semester. The primary focus of this report is to highlight on activities performed and lesson learned as an intern in various departments at Sri Hari Securities (P) Ltd. (Broker No #56), Kamaladi, Kathmandu during the internship period from 1st April 2014 to 1st June 2014.

The internship report prepared under the guidance of Kathmandu Model College, Tribhuvan University and Sri Hari Securities (P) Ltd., gives the gimps of the overall security market environment and working processes of a Security Broker. Furthermore, the internship program is carried out to provide students with an opportunity for a career related experience in the real organization settings before they graduate.

1.2 Objectives of the internship The report is greatly shaped by its objectives. The main purpose of internship is to understand the general business practices of a stock broker. Besides this, the internship report has been prepared for the partial fulfilment of BBA course in Tribhuvan University. Putting it all together, the objectives have been shown as below: 

To learn about handling customers in Customer Service Department.



To know process involved in buying and selling securities using NEPSE system.



To learn about the process involved in Ownership Transfer.



To know about the clearing and settlement function of security brokers.



To know about share verification and share splitting.

1.3 Methodology Achieving set objectives of internship is only possible when the internship is completed with flying colors. For that proper selection of organization, placement in different parts of organization, performance of different types of activities and collections of different relevant data from primary and secondary sources has crucial role to play. So far the data collection for this report is concerned; both primary and secondary sources of data collection have been used. Personal interview and consultation with concerned staffs and customers have been conducted for the purpose of data collection. Primary Data have been collected through the means of field observation (i.e. Internship Period) and also through interaction with the concerned authorities. My personal experience during the internship period is also a source of primary data. Secondary data have been collected through various published journals, newspapers; annual

reports,

unpublished

data

and

official

website

of

NEPSE

(www.nepalstock.com) and Sharesansar (www.sharesansar.com). So the overall study can be viewed as a blend of descriptive explanatory as well as quantitative and qualitative study.

Page | 2

1.3.1 Organization Selection Organization Selection is the initial but crucial factor in internship, because it is the place where the intern gains practical exposure. What kind of organization is selected for internship matters a lot for meeting the desired objectives. As per the requirements for the partial fulfilment of Bachelor of Business Administration, the students have to select any organization for the practical exposure. After dropping the C.V. along with the recommendation letter of college, the intern was finally called upon for internship by Sri Hari Securities (P) ltd. (Broker No #56), Kamaladi, Kathmandu. There are several attributes of the Sri Hari Securities which attracted the intern in order to pursue the internship. First of all, the brokerage firm continues to remain amongst the most successful and reputed broker in Nepal (according to www.sharesansar.com). Second of all, it has just crossed the 3 years of licensing with highest trading volume. Sri Hari Securities Private limited has focused on using the latest technology in Broker Office Management. Thus, the technological factor of Sri Hari Securites has also attracted the intern to pursue the internship program.

1.3.2 Placement Regarding the placement, the intern was placed in the corporate office at Kamaladi, Kathmandu. The firm has the policy of placing the interns in different departments so that the intern could have the overall knowledge of the working procedure of security brokerage firm. The departments are separated on the basis of functions they perform. The departments in which the intern was placed during the internship were: 

Documentation Department



Customer Service Department



Finance Department



Settlement Department

Page | 3

Table 1.1: Placement Table Working Periods (Weeks) 1

Activities Done

2

3

4

5

6

7

8

Entry and ownership Transfer Customer Handling, Bill Report and Sale/ Purchase Report Floorsheet,

Payout

and

CGT

settlement Petty cash and Ledger Handling CDS

and

BOK

Clearing

&

Settlement

1.3.3 Duration The duration of internship period has been defined not less than eight weeks or six credit hours or ninety six hours of working time at any organization by Faculty of Management (FOM), so in order to fulfil this requirement, internship was done for two months starting from 1st April 2013 to 1st June 2013.

Table 1.2: Time Allocations in Sri Hari Securities SN

Departments

Duration

1.

Documentation

2 weeks

2.

Customer Service

2 weeks

3.

Finance

2 weeks

4

Settlement

1 week

5.

Overall

1 week

1.3.4 Activities Done The Sri Hari Securities is one of the financial intermediaries whose primary function is to execute the buying and selling transaction between the buyer and seller of financial assets. During the 8 weeks of internship period, various activities were performed as required by the department of the security broker as intern. Though the intern was not allowed to handle the critical cases, the general task was allowed to be done. Activities were performed under the supervision of the respective head of the Page | 4

department. The major activities done in the respective departments are presented below: Table 1.3: Activities performed in Sri Hari Securities Name of the department

Types of activities performed 

Documentation and entry of share certificates

Documentation



Ownership

transfer

of

the

certificates 

RDTC Letter



Opening and Managing Customer Accounts

Customer Service 

Handling Sales/ Purchase and Bill Report

Finance

Settlement



Journal Voucher and Petty Cash



Cheque Clearing and Settlement



Bank Reconciliation Statement



Sales/ Purchase Settlement in CDS



Certificate verification and Share Split



1.4

BOK Settlement

Limitations

This internship report is prepared based on the observations, experiences of the internship, formal and informal interview with the staffs and the secondary data available in the various media. The limitations faced during the internship period and during preparation of this report are as follows: 

The time period of eight weeks was not enough for a comprehensive study of the brokerage firm and industry.

Page | 5



Crucial data and information was not obtained due to busy and tight schedule of seniors and supervisors.



The flat organization structure of security brokerage firm does not allow us to learn more from the superiors.



The concerned personnel who were approached for sole purpose of information collection would not give most of the required information reasoning that the information was confidential.

Page | 6

CHAPTER II INTRODUCTION TO THE SECURITY BROKERAGE INDUSTRY 2.1 Meaning of Security Broker Stock brokers are the licensed agents who buy and sell stocks and other securities for both retail and institutional clients, through a stock exchange or over the counter, in return for a fee or commission. Stock brokers are the licensed agents who provide counsel on what and when to purchase and whether to hold or sell the securities. They execute the buy/Sell orders on the investor‟s behalf.

The percentage of the transaction as compensation received from either buyer and/or seller is called as Brokerage Commission. As an agent the stock broker is merely performing a service for the investor. This means that the broker will buy for the buyer and sell for the seller, each time making sure that the best price is obtained for the client. An investor should regard the stockbroker as one who provides valuable service and information to assist in making the correct investment decision. They are adequately qualified to provide answers to a number of questions that the investor might need answers to and to assist in participating stock market. Security brokerage firm comes into existence mainly with the objective of facilitating the buyer and seller of financial assets. According to Security Business Person Regulation, 2064 “Stock Broker means a corporate body or a company licensed as Stock Broker from the Board for providing brokering services of purchasing and/or selling the securities in the name of client only as per the client‟s orde...