Mumbai: An increased saturation in the larger metros and greater availability of disposable income coupled with changing attitudes towards equity markets in smaller towns have caused stock brokers to focus on the latter for their expansion plans.
There are significant opportunities in the northern regions as well as pockets in the south and the east, according to industry experts. Brokerages are expanding not just to Tier-II and Tier-III cities and beyond.
The biggest cities such as Mumbai and Delhi are known as Tier-I cities and others are classified in decreasing order depending on various parameters such as commercialisation and population.
“We are looking at expansion in B-group cities, which have a population of between 4-10 lakh, in the north and the Punjab. We are looking to add 24 additional centres in these areas,” said Mayank Shah, CEO Anagram Securities. The company was recently acquired by Edelweiss Capital and has a presence in 140 places, and the planned additions would increase its reach by 17%.
Angel Broking plans to add an additional 120 centres over the next two years with a focus on smaller cities. “We already have a major presence in major urban areas. In this current fiscal, we are looking at adding 69 offices. Next year, we plan to add 51 additional ones,” said Dinesh Thakkar, chairman & MD of Angel Broking.
The routes of expansion for brokerages in these areas are also two-fold, setting up their own branches or entering through the franchisee route. Way2Wealth Stock Broking plans to increase its points of presence to 405 by March 2011, adding well over 150 centres.
“We are looking to expand by acquiring master franchisees and most of it would be in non-metro areas. There is an enormous opportunity, which has come about as a result of the focus on agriculture and the various schemes of the government,” said Shashi Bhushan, CEO, Way2Wealth.
“Some people are more comfortable dealing with people they know, in which case the franchisee model works best. Others are looking to use the services of a familiar brokerage, in which case setting up a branch makes sense,” said Dinesh Thakkar.
The expansion process does not have an entirely smooth run since non-metro areas can have certain limitations. “There is a shortage of talent or manpower that is required to run brokerages,” says Mayank Shah, drawing attention to the eminent position of metros as the hub of stock exchange activity from the perspective of trained manpower as well turnover.
Mumbai accounts for the biggest chunk of turnover on the National Stock Exchange as well as the Bombay Stock Exchange, accounting for 72.82% on the BSE and 54.84% on the NSE. Delhi, Kolkata and Ahmedabad were next in line, according to the latest data from the Securities and Exchange Board of India, which analyzed information for February.
source:Sachin P Mampatta / DNA/Tuesday, June 1, 2010 2:00 IST
Tags:financial services franchise,anagram securities, edelweiss capital,angel broking,franchisee route,way2wealth,master franchisees,franchise growth.
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