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INSTITUTE OF MANAGEMENT TECHNOLOGY CENTRE FOR DISTANCE LEARNING GHAZIABAD

SYNOPSIS FOR PROJECT WORK

SECURITIZATION IN INDIABULLS

Name Enrollment No
colony,kapashera N.D. 37

: PRATEEK JINDAL : 0821000828

: 49, New

Address for Correspondence

Contact Number

: 9999008108

E-mail : prateekjindaal@gmail.com Course Questionnaire Attached : PG : No : Yes : 12 feb 2011 Major Area of Specialisation : FINANCE Resume of Project Guide : Yes Consent Letter from Guide Date of Submission

Content About Indiabulls Object of the company Introduction of Securitization Types of Securitization Securitization Securitization Objective of Securitization Benefits of Securitization Recommendation Resume of the guide Consent letter

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Indiabulls is one of the top Indian business houses with business interests in real estate, infrastructure, financial services, securities, retail, multiplex and power sectors. Indiabulls Group companies are listed in Indian and overseas financial markets. Indiabulls was founded by Sameer Gehlaut, Rajiv Rattan and Saurabh Mittal who are engineering graduates from the Indian Institute of Technology in Delhi..Indiabulls has been conferred the status of a Business Superbrand by The Brand Council, Superbrands India.' The three founders started Indiabulls Group by acquiring a minor brokerage company, Orbis Securities, in 1999. The group started it business as a stock-brokerage firm and pioneered online brokerage business in India before diversifying into other financial services areas such as consumer credit (2004) and mortgages (2005). The group partnered with Farallon Capital to purchase land-mark Bombay land assets and is currently building one of the largest integrated commercial real estate projects in India (valued at more than $2 billion). The group recently entered the Power generation business and aims to have more than 5000 MW of power generation under construction before 2008 end. The three founders today control the Indiabulls Group and own more than $2,000 million worth of stock. Sameer Gehlaut was recently listed in the Forbes Billionaires 2008 list, and Saurabh Mittal and Rajiv Rattan are each worth more than $500 million.

OBJECTS OF THE COMPANY

The main objects to be pursued by the Company on its incorporation are: 1. To carry on the business of portfolio management services, investment advisory services; custodial services; asset management services; leasing and hire purchase; mutual fund services and to act as brokers of real estate and financial instruments. 2. To provide financial consultancy services; to provide investment advisory services on the internet or otherwise; provide financial consultancy in the area of personal and corporate finance; publish books and CD ROMs and any other information related to the above. 3. To receive funds, deposits and investments from the public, Government agencies, financial institutions and corporate bodies; grant advances and loans; conduct advisory services related to banking activities, project financing, funding of mergers and acquisition activities; fund management and activities related to money market operations. 4. To operate mutual funds; receive funds from investors; equity or debt instrument research activity instrument in debt and/or equity instruments. 5. To hold investments in various step-down subsidiaries for investing, acquiring, holding, purchasing or procuring equity shares, debentures, bonds, mortgages, obligations, securities of any kind issued or guaranteed by Company. 6. To conduct the business of sale, purchase, distribution and transfer of shares, debts, instruments and hybrid financial instruments and to perform all related, incidental, ancillary and allied services. 7. To carry on the business of financing; provide lease and hire purchase services; to provide consultancy in the area of lease and hire purchase financing.

8. To conduct depository participant services; to conduct de-materialisation and rematerialisation of shares; set up depository participant centers at various regions in India and to perform all related, incidental, ancillary and allied services.

INTRODUCTION TO SECURITISATION
The securitization is the process of transferring loans to third parties through the issuance of debt whose cash-flows are collateralized by the loan pool. It is a process that converts illiquid assets into the liquid assets and provides an attractive funding source, because its cost is lower compared to the alternative funding schemes. Securitization is not only related to the assets in the balance sheet but also to future flow of the receivables and may be used as a tool for risk management.

Securitization has been mooted as an effective way of risk transference, though in most transactions, the major benefit sought by the originator is not economic risk transference but an accounting or regulatory transfer that leads to reduced regulatory capital requirement and an improved capital structure. Securitization, in its most basic form, is a method of selling assets. Rather than selling those assets "whole", the assets are combined into a pool, and then that pool is split into shares. Those shares are sold to investors who share the risk and reward of the performance of those assets. It can be viewed as being similar to a corporation selling, or "spinning off," a profitable business unit into a separate entity.

Securitization is a form of debt financing technology, developed two decades ago and actively used in a variety of forms to raise off-balance and alternative financing for companies and banks. In its most recent modification, synthetic securitization is used as a risk transfer rather than financing mechanism. In its most generic form, securitization involves the sale, transfer or pledge of the specified assets to a special purpose, bankruptcyremote vehicle or trust (SPV), which in turn issues notes or certificates to investors. Investors (banks, insurance companies and specialized funds) generally rely on those assets

and associated pledges for the redemption of their bonds, either from the cash flows generated by the assets or from the assets sale/ liquidation under adverse conditions.

TYPES OF SECURITISATION
Securitisation and structured finance are generic terms, which are applied interchangeably to include:

Asset and mortgage-backed securities (ABS and MBS). This is the most fundamental format of securitisation and involves the issuance of debt, or assetbacked securities, secured by a homogenous pool of assets. Securitised assets could include bank and finance company assets such as credit cards, auto loans, mortgages, real estate, equipment leases and corporate loans, or corporate assets like trade receivables, vendor financing and real estate. Initially, the term securitisation was used to mean ABS and MBS only.

Future flow (or revenue-based) financing. In this case, the financing is backed by specified revenues generated in the normal course of business of a given company export receivables, settlement and utilisation fees, workers remittances, etc.

Operating assets (or whole business) securitisation. The financing in this case is backed by the core operating assets of a company and typically has a strong real estate element.

Synthetic securitization. A combination of structured finance and credit derivatives techniques, synthetic securitization has recently come to address banks need for transfer of risk associated with given assets without the transfer of the assets themselves. It can be executed as partially or fully funded securitisation

OBJECTIVE OF SECURUTIZATION

The banks, FIs or NBFCs may seek to achieve one or more of the following objectives by securitisation 1. To create room in the balance sheet to meet the capital adequacy norms prescribed by the regulatory authority. 2. To increase return on equity by redeployment of the capital in higher yielding assets. 3. For the purpose of risk management. 4. To correct large exposures to borrowers, asset classes or geographical concentrations. 5. To reduce the cost of funds and achieve diversification of sources of funding.

BENEFITS OF A SECURITIZATION TRANSACTION

Internationally, securitization has developed from being a specialized field with only few companies resorting to it for funding a few years ago to being a very significant part of the total fund raising now for many companies. While its significance has become overriding in the financial sector, it has been gaining ground in other sectors as well. Internationally, 31% of all securities outstanding in the US markets at the end of first quarter of 2003 were issued through securitization of one kind or the other, which is higher than the overall corporate debt securities outstanding as on the same date. In India, securitization has been gaining quick ground and while it has not penetrated as much as in the US and other developed countries, it continues to grow fast and has become an important funding source for many companies. While there are a host of benefits that originators can derive from securitization. The actual benefits derived by some of the major originators in India are as follows: Alternative source of funding: Securitization offers an alternative source of funding to originators. For originators who are not themselves rated highly, securitization may reduce the cost of funding, while for others it may expand the investor base or provide access to the capital markets, which may not be otherwise accessible to them. This has been a major reason for some low-medium rated originators, especially in the non-banking finance companies (NBFCs) sector to enter into securitization transactions. Even for the highly rated originators, the overall cost of funds raised through securitization transactions has been comparable with that for other funding sources like fixed deposits. Risk management:

Securitization offers an effective tool for management of credit, interest rate and liquidity risks inherent in the underlying assets. It also provides an avenue for diversification of the portfolio by reducing large geographical, channel or obligor concentrations. Indian originators have used securitization as a tool for managing the concentration risk on individual borrowers as well as on specific sectors. Gain on securitization: A perceived benefit for some of the originators is the upfront gain booked by them at the time of the securitization transaction.

Capital structure/capital adequacy: The reported capital structure of the originator improves through securitization, as the funds raised are not accounted for as debt. This is especially useful when the originator rapidly expands its portfolio and must increase its financial leverage for the purpose. Capital adequacy benefits for both NBFCs and banks in India are governed by the Reserve Bank of India (RBI) regulations. For other sectors, the capital adequacy benefit in any case is not a primary driver to undertake securitization transactions. Currently, the RBI does not have specific regulations on securitization, but as and when such regulations are finalized, they are likely to be in line

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RECOMMENDATIONS
Securitisation is essential to the evolving global financial system because it provides a number of important economic benefits - through increasing the diversification of risk and reducing the costs of intermediation between savers and borrowers. Thus, we need to strengthen the securitisation process to safeguard its benefits and mitigate its risks. There are four important areas where corrective action could be particularly fruitful in enhancing the benefits of securitisation and reducing its risks: fixing the securitisation chain; understanding tranche exposures better; improving the OTD model; and enhancing regulation and supervision 1. Fixing the securitisation chain

Reduced complexity. It seems obvious that the risk of re- securitisation is vastly underestimated. In a way, this problem is currently being addressed by the markets themselves in that many of these structures have vanished, perhaps forever. No more than one securitisation layer, better collateral, more subordination. This process, perhaps, can be pushed further, with some of the more standardized products taken onto exchanges. Fewer re-securitizations and shorter securitisation chains will also help to better align incentives. Information transparency. Something that is often forgotten when thinking about "complexity" is that even analysis of "simple" mortgage securitizations is an information-intensive job. Often it is not so much modelling that is the problem, but the dispersion of information and the fact that its quality tends to deteriorate as it is passed along the securitisation chain. Clearly, shorter chains would help. Beyond that, better information is required. The Financial Stability Forum has made proposals in this regard, calling - for example - for more and timelier information to be made

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available, in a standardized format, on the nature and performance of the assets underlying securitised products.

2. Understanding tranche exposures: less reliance on ratings Tranches allow for the "ability to create one or more classes of securities whose rating is higher than the average rating of the underlying collateral asset pool or to generate rated securities from a pool of unrated assets". The rating agencies get their expected loss estimates right-thats the question. Well, certainly not in all cases. Indeed, in the past, additional mistakes have been reported regarding the valuation of structured products. Inadequate incentives between developers of securitized products and those paid for rating them may also have played a role. Perhaps more fundamentally, investors did not pay sufficient attention to the fact that ratings cover only one dimension of risk, and that the variability of the expected returns could be high. They also failed to realize that tranched instruments often have risk properties - especially in terms of illiquidity and rating transition probability - that are different from those of cash products. In any case, a key point was that one should not have generalized across all structured products. This is where information on risk properties other than expected loss comes in: multidimensional ratings, as proposed by various bodies recently, are one possible solution.

At the same time, we would probably want less - or less mechanistic - reliance on ratings. One benefit of the proposal to have a different rating system for structured finance instruments would be that the broad investor community would have to review existing investment mandates and guidelines.

3. Improving the OTD model: better risk management

The key insight here is not at all new, but it is worth repeating: tail risk exposures - including the risk of illiquidity - are not well measured by simple tools such as value-at-risk. So risk managers must rely on a wide ranger of tools to capture the multidimensionality of risk. One important aspect is better stress testing, as noted by the Basel Committee recently. More emphasis must also be placed on risk interactions, such as those between credit and liquidity risks, in hedging existing exposures. One example would be prime brokers' exposures to hedge funds and how these, through collateral arrangements and margin calls, can interact with liquidity risks.

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GAUARV MITTAL

OBJECTIVE To learn constantly and contribute consistently using my managerial, analytical, communication and leadership skills. PROFESSIONAL SYNOPSIS Almost 4 years of experience in business development ,Customer service & channel development Hands on experience in managing & leading sales team for achieving sales & revenue targets Knowledge of Equity, commodity and currency market for investment purpose A keen communicator with honed problem solving and analytical abilities. Monitoring competitor activities and devising effective counter measures

INDUSTRY EXPERIENCE March 07 Till Date Indiabulls Securities Limited Associate Vice President

Responsible for revenue generation of the entire branch along with individual targets. Handling and managing of clients especially HNI customers and guiding them in investing. Deciding and monitoring KRAs for the team members and recommending specific training programmes. Maintaining healthy relationship with clients for generating business and leading workforce towards accomplishing business and corporate goals

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Handling compliance and operations related aspects in derivative and capital market trading. Strategy formulation and Performance tracking/benchmarking of the team on a weekly basis. Initiating contact with potential customers for developing leads

SIGNIFICANT ACHIVEMENTS

First SRM to be promoted to post of AVP in 12 months in the NCR region.. Highest revenue generating SRM (App. Rs. 10 Lakhs per quarter) for two consecutive quarters

Recipient of Highest revenue generation award for financial year 2009-10 for overall performance .

EDUCATIONAL QUALIFICATIONS

May 2007 April 2004

BVIMR, New Delh BIMT, Meerut

MBA-IB B.C.A

EXTRA CURRICULAR ACTIVITIES Declared the Best Sports person at annual meet at BVIMR in 2006 Awarded College Colours at annual sports function for exceptional performance in Cricket

DECLARTION I hereby declare that the information provided herein is true to the best of my knowledge and necessary documents will be produced whenever required.

Feb, 2011 [Updated On] [GAURAV MITTAL]

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CONSENT LETTER
To,
Dean Academics, IMT CDL, GHAZIABAD,

This is to state that I GAURAV MITTAL have agreed to guide and mentor PRATEEK JINDAL, enrollment no: 0821000828 who is pursuing PG from your institute.

His specialisation is in FINANCE and his topic for project is SECURITIZATION IN

INDIABULLS

Thanking you,

Yours truly,

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GAURAV MITTAL