February 07, 2008 | Business Standard

Tata Securities re-enters stock broking

Plans foray into commodities business, insurance distribution.

Tata Securities, the wholly owned subsidiary of Tata Capital, on Wednesday announced its entry into retail and institutional broking segment and said it is awaiting regulatory clearances for investment banking foray.

Avijit Bhattacharya, officer-in-charge of Tata Securities, said Tata Capital (which is a 100 per cent subsidiary of Tata Sons) also plans to foray into commodities broking, where it has already applied for licences from commodities exchanges.

Though Tata Securities has been in the stock broking space in the past through its joint venture with US-based TD Waterhouse group, it exited the business in 2004 after the foreign partner pulled out.

The company also plans to enter the insurance distribution business, where it requires approval from the regulator Insurance Regulatory Authority of India.

"Our objective is to be among the top five brokerage house in India in three years," Bhattacharya said. Through the merchant banking segment, Tata Securities hopes to garner advisory and syndication business through the strength of the 'Tata' brand.

Stock broking has been the top flavour for investors last year with Edelweiss Capital and Motilal Oswal Financial Services getting big response for their IPOs. Stocks like Geojit Financial Services, Angel Broking, Karvy Stock Broking and Brics Securities all received funding from foreign investors.

Market speculation is that another big Indian corporate house, the Birlas, may also enter the booming equity broking business.

Bhattacharya said Tata Securities have already built a team for institutional and retail research, which in coming weeks, will be increased. For the institutional side, Tata Securities has around 30-40 people and another 300-400 people make up the retail side.

Already, Tata Securities has received the membership of the National Stock Exchange, while it has reactivated its BSE membership card. Tata Securities will also provide portfolio management services (PMS) under the wealth management business of the company.

"Broking requires three ingredients. Strong brand, distributional reach and IT backbone," he said. "We already have a strong brand. The second and third can be achieved without any major hiccup."

At the moment, Tata Securities has 50 branches country-wide, which was distributing third-party mutual funds, fixed deposits, etc. for investors.

The company's major drive to beef up its staff strength and attracting clients began just nine months ago. Tata Securities claims to have client strength of 25,000, which will go up considerably once the plan is executed to perfection.