Voguestock, one of India's leading broking firms, says its vision is that a vibrant and developed capital market is an important tool for the economic development of the country. It is the channel through which various resources of the country are channelised for proper and balanced sectoral growth of the economy and the company's focus is towards increasing its role in the economic development of the country and to protect the interest of the investors and provide them efficient services at a reasonable cost.
In an exclusive interview with the Commodity Online, Managing Director of Voguestock Gopal K Agarwal further explained the mission and vision of the broking firm.
From a modest beginning, Voguestock has established its various divisions and branches to provide high quality of integrated services in the field of Capital Market. The basic strength of any service organisation is its work force. We take pride in our team and its motivation, says the MD. Excerpts from the interview:
You are more or less concentrated in north India? Is that a pattern or are you making forays into other parts of the country?
We are not concentrated in North India. Our operations are in eastern parts of the country also particularly West Bengal. We also have branches in Madhya Pradesh, Bihar, Maharashtra, Gujarat, Tamil Nadu in addition to UP, Rajasthan, Uttaranchal, Jharkhand, Punjab, Haryana and J & K. We are more concentrated in North India because our head office is in Delhi and we started our operations in this part of the country. There is no pattern in this growth, we are definitely making forays into other parts of the country.
In India hardly 3% population invest in financial market? Is that a sign of an emerging economy?
Traditionally India was a saving nation. Our capital markets were not very developed and therefore people all over the country did not have access to the investment avenues in the market. With the growth and development of this market people are realising that to participate in the prosperity and the economic development of the country, more and more people will have to invest in these markets.
But at the same time India has the largest savings, around 25%. Studies show hardly 5% of these savings come to financial markets? Why and what could be the reason for such a low penetration into investing?
Very little amount of saving comes to the capital market because people did not have access to investment avenues, further they were not properly educated and informed. With the advent of the National Stock Exchange and online trading, the penetration of the broking houses has reached to most of the geographical areas of the country and now attracting even rural population.
Do you have any private equity? If not, is there any move to have PE in the near future?
At present, we do not have any private equity. Broking sector is attracting private equity investors from around the world. India's growth trajectory is in its best form with 90% increase in the growth rate, this trend will continue in the coming years and people are expecting that by 2009 India would become the third largest market for private equity and venture capital investment. This is a very important part in our growth plan and definitely we are planning to have PE in the near future.
It is a known fact that there are illegal exchanges, also known as dabba trading, exist in various parts of the country. This is responsible for the bad press as far as the commodity market is concerned. Why do you think the people are attracted towards illegal exchanges more than they are towards you?
Yes, there are illegal exchanges and dabba trading in various parts of the country. India has a very large quantity of black money. This money can't come to the regular exchanges and therefore it is invested in these exchanges, secondly the margin requirements at legal exchanges sometimes act as a deterrent for people to come to these markets. Again, the taxation angle also attract people to these illegal exchanges. Further, the regulation and compliances with regard to exposure and risk management prevent people to come to the legal markets. But slowly the mind set of the people is changing as they have seen the true potential of growth when market manipulations are controlled, as has been done in the case of capital market. The government should also look into the matter of giving taxation benefit similar to the capital market.
What is the future? Online trading or offline? Where do you see the growth?
Future is definitely in the online trading. Online trading will see growth in future also as it has helped overcome most of the hassles of offline trading and has given complete transparency and parity to investors in all part of the country.
What is your take on rural penetration? Do you believe rural areas can be a match winner in terms of business for you?
Penetration in the rural areas can give tremendous growth to any broking house. Today also we see that the real growth is coming from non-metro cities mostly from small towns and cities. In commodity markets, many mandis are situated in rural areas and once these people will have access to online trading, the exchange market will have a very good rural thrust. We are definitely trying to expend our operations in rural areas.
Where do you see your firm five years from now?
During the last 3-4 years broking segment has seen tremendous growth. This growth is attracting many new and large corporate houses. The technological advancement in this field requires a huge investment in the form of networking, infrastructure and research & development. The competition together with the increase in cost of operation has squeezed the profit margin of medium and small organisations. This has led to concentration of business with large players. We have made a lot of investments into developing the infrastructure and have been able to create large network of branch/sub-broker/franchisee and retail client network. To meet the customer need we have also included in our products all the bouquet of financial services. We definitely hope to capitalise on these investments and see a good future for our organisation in the next five years. We will take all the routes for development like merger, acquisition, consolidation, private equity etc.